Buying insurance: don’t make thoughtless, hasty decision on coverage

As you dream about your move to a new home or apartment and enjoy your visions of larger closets and a pleasant kitchen, don’t forget one of the most important purchases for the new place: insurance.

If you’re buying a house, condominium or townhouse, the mortgage company will insist you buy what’s called homeowner’s or hazard insurance. And if you’re renting, well, your landlord’s insurance won’t replace your couch, stereo or even one pair of designer jeans if they’re lost to burglars, fire or a tornado.

Your homeowner’s or renter’s insurance also will include liability coverage to protect you if someone is injured on your property. You’re also covered away from home, if, for instance, you bonk someone on the golf course with an errant swing of that five-iron.

Aaarrgh! So many things to think about – find a home, find a mortgage, arrange the move and shop for insurance!

“I think homeowner’s insurance is one of the biggest things that tends to get overlooked,” said Paul Myers, an independent insurance agent with the Maguire Agency in Roseville. “Too many times, especially people buying homes tend to run in at the last minute, even a few days or hours before closing, and just sign up for insurance, maybe the lowest-cost one they can find.”

And renters often don’t think they need insurance.

Hasty, uninformed shopping, Myers said, can lead to misunderstanding about what the insurance covers, overpayment for a policy or purchase of a policy that doesn’t include as much coverage as one with another company for the same price.

“It’s not like automobile insurance, where there’s a very generic policy,” he said. “Price is important, but coverage is more important, especially that you get as much coverage as you need for the things that are really important to you.”

Insurance shoppers, he said, should ask lots of questions, especially specific questions about what is covered and for how much:

– The buildings. Basic home policies cover repairing or replacing your home and garage. But ask your real estate peoria agent to help determine how much your property is worth minus the land – you don’t need to insure the land because that will still be there even after the worst disaster.

– Personal property. Basic policies also cover repairing or replacing lost or damaged personal possessions; that coverage is automatic, although its scope may vary from company to company. Be sure to ask, said Jim Copouls, president of Stan Copouls Services, an independent insurance agency in Richfield.

Some companies may cover your possessions up to 50 percent of the home coverage – or $50,000 on a $100,000 home policy. But some may cover up to 100 percent; that is, on a $100,000 policy, if your house is lost, you’re covered for up to $100,000 on your personal possessions. He suggests that insurance buyers try to get some idea of how much their possessions are worth (“And they’re always worth a lot more than you think, especially when you have to replace everything,” he said), so you can buy more coverage for personal possessions if you need it.

– Living costs. Most homeowners’ policies cover the costs for you to live and eat elsewhere temporarily if your home is uninhabitable.

– Riders. In addition, you might need to buy “riders” to cover some of your special possessions, such as antiques, collections (clothing, cameras, ceramics, pinball machines, baseball cards), or if you have more than $1,000 worth of jewelry. To be sure you’re covered, ask your agent if you need a rider and how much more the coverage will cost.

– How much replacement. Many insurers now automatically make the coverage “guaranteed replacement cost,” as opposed to “cash replacement cost,” which is a good thing, Copouls said.

With cash replacement, you may be covered only for today’s value of your 10-year-old sofa (maybe $25; $75 if it’s leather, perhaps). With guaranteed replacement cost, you can buy new a new sofa equal in quality to the old one. That guaranteed replacement cost coverage may add $35 to $75 to your annual premium, depending on your policy.

– Liability. Homeowner’s insurance policies also cover liability, but some companies may automatically include $100,000, and others may include up to $300,000 worth of coverage, said American Family Insurance agent Bill Kolb, owner of Bill Kolb Agency in Edina. Ask how much is included, and consider whether to add more. For instance, you might want to bump up your liability coverage if you’re likelier than most to hurt someone else accidentally, if you tend to have a lot of visitors and parties, if your walkways are particularly hazardous or your children are particularly rambunctious and likely to break things elsewhere.

Dave Cummings, executive director of the Minnesota Insurance Information Center in St. Paul, said his organization, funded by state-based insurance companies, recommends that shoppers get three bids – making sure they’re for exactly the same coverage – from agents recommended by friends or relatives.

Some may grumble about paying insurance premiums, expecting never to make a claim. “But pick up the paper any day and you see things happening all over the place – city and suburb and rural areas,” said Kolb.

Water pipes burst. The grandchildren try out their crayons on someone’s new white linen wallpaper. Ice dams on the roof create moisture problems and ruin a closet.

“A lot of times people don’t know they’re covered, or they’re too embarrassed to call,” Kolb said. “But there isn’t a stupidity exclusion written into homeowner policies. If it’s accidental and sudden, call the insurance agent.”

In mid-December, when Gene and Mary Hagl came home after a few hours away to find their Brooklyn Center house filled with thick, black smoke, Mary Hagl’s first thought, after turning off the stove that had turned the pot roast to cinders, was what a chore it would be to clean up after the mess.

“But I said, well, let’s call the insurance company, and it was covered,” said Gene Hagl. “We thought we had turned the stove off when we left, but there was this awful greasy black smoke into and on top of everything.”

His insurance company, Minnesota Mutual Insurance, recommended a professional cleaning service. “They cleaned everything in the house, including the soup cans in the pantry,” he said. Insurance covered all costs, including an hourly wage to Mary Hagl when she insisted on cleaning some delicate fabrics herself.

“We know a lot more now, and we’re lucky we had good insurance and a good agent,” Hagl said. “But I’d sure advise people to shop well for a good company, good agent and good coverage. And to be sure of exactly what you have. That’s hard to do, but you can take pictures.”

Once you have your policy, Kolb said, an inventory – written or in photos or videos – is important, but not essential to the insurance company. When you make a claim, you’ll have to tell the insurance company what is lost or damaged, so if you’ve done a predisaster inventory, your job will be easier.

“In those emotional weeks after a loss, you might not remember all your summer clothing if it’s winter, or all of your tools, or Tupperware,” Kolb said. “But you’ll need to replace it, and the insurance company can’t replace it if you’ve forgotten you lost it.”

Insurance shopping tips

Shop early, months or weeks before your closing, not days or moments before. Shop around. You’re likelier to get better, cheaper coverage from an agent you really like if you have time to shop around. When you get price quotes from several companies, make sure the different plans include the same amount of coverage. Ask lots of questions about what personal possessions will be covered – your personal computer or collection of bowling balls or tea cozies. Ask about coverage that includes a place to live while your home is being repaired. Ask about replacement cost coverage. Are you covered for the actual cash value of an old item or for the cost of a new one? Ask about cost controls. You may get a reduced premium for: -A higher annual deductible. -A secure home with deadbolt locks, working fire detectors and a security system. -A fully updated electrical system. -Carrying both your home and auto insurance with that provider. -Being a longtime customer. -Negotiating with your mortgage company. Some mortgage companies insist the house be covered for full market value, but remember that the market value includes the land value, which likely won’t be lost to most perils. -Being a “mature” homeowner, age 55 and retired. -Being a nonsmoker.

What type of policy do you need?

House buyers: Lenders require you to have protection against loss or damage from perils such as fire and lightning, windstorm or hail, explosion, riot or civil commotion, smoke, vandalism, theft, burglary, damage from weight of ice, snow and sleet. Such insurance includes liability coverage, usually up to at least $300,000.

You can get bare-bones (HO1) coverage, but most homeowners opt for broad (HO2), special (HO3) or comprehensive (HO5) policies, with coverage and premium increasing as the numbers go up.

Some things aren’t covered in typical policies – flood, earthquake, war and nuclear accidents, for example, but you can buy special riders.

Insurance costs vary according to location, age and condition of your home, the amount of coverage and the deductible. Deductible choices generally range from $250 to $1,000. You’ll pay less on annual premiums with a higher deductible.

Condominium or townhouse buyers: You also must buy homeowners insurance – an HO6 policy, but it covers only personal property and the area within the home, including light fixtures, wallpaper, carpeting and appliances. The community association will insure the exterior and structure of the buildings, and get liability insurance for common areas. HO6 policies vary so greatly that most agents are reluctant to offer cost estimates. Premiums depend on the type of home; the type and extent of association insurance; the size, age, location and quality of the structure, and the individual owners’ insurance responsibilities.

Renters: Renters can buy insurance that covers replacement or repair of personal possessions if they are lost or damaged, plus liability coverage for accidents in their unit. A renter’s policy, or HO-4, costs about $70 to $120 a year for $15,000 to $20,000 worth of coverage.

Is this insurance right for you?

Several industry groups, government offices and consumer advocates offer tips to help understand long term care insurance.

Here are some of their suggestions and questions to ask, as well as some telephone numbers and addresses for further information.

Realize how the policies work

Most provide a fixed amount of coverage for each day in a nursing home or for home health care services like a visiting nurse, adult day care and other such services. Usually it’s from $30 to $100 or so a day. Some cover assisted living communities, which provide assistance with activities like eating, dressing and bathing. Almost all require a deductible period. Understand what the policy covers . . .

Does it require prior hospitalization before paying benefits in a nursing home or starting home health care, as some older policies do? Will it pay only for skilled nursing care, where you get 24-hour nursing and rehabilitative care? If so, this could be a problem if you need only custodial care, like help with eating or bathing. How long will the policy pay; consumer groups recommend three years as a minimum. . . . and what it doesn’t cover

Policies sold in Florida must include coverage for such things as Alzheimer’s disease, but they often don’t pay for mental illness, alcohol or drug addiction, treatment paid for by another insurer or the government, and attempted suicide. Your medical history does matter

Don’t let an agent tell you otherwise. You can be denied coverage for an existing condition, like heart disease or Alzheimer’s, if you have it when you try to buy the policy. Don’t buy insurance you can’t afford

This sounds simple but think about it. Some analysts recommend you spend no more than 10 percent of your annual income on such policies – unless you have large assets you want to protect if you get sick, like a house, business or stocks and bonds. If you are getting by on Social Security and have few assets, it might not make sense.

Consider buying inflation protection

This is important especially if you think you won’t use the policy for a few years. Nursing homes in Florida cost about $80 to $100 a day, which is usually what the policies cover after a deductible period that often runs 100 days. But the costs have risen quickly in recent years and there is little reason to expect it to stop. Without buying the inflation rider on the policy, you could be stuck with benefits that don’t cover the cost of your nursing home or home health care. Florida requires companies to offer at least a 5 percent annual inflation protection as an option.

You’re protected from cancellation

In Florida your policy can’t be canceled, unless you don’t pay or you lie about your medical history. But your long term care insurance rates can go up, if they are raised for all policyholders. The insurance is not cheap

Comprehensive policies that cover nursing home and home health care, with inflation coverage and coverage for from three years to lifetime, likely will cost from $1,000 to $2,000 a year per person for someone who buys a policy at age 65. There is usually a discount if a couple buy the coverage together. The cost increases quickly – sometimes doubling or quadrupling – if the policy isn’t purchased until age 75 or later. Some companies won’t sell to people over age 79. Check for group insurance coverage

Many businesses are adding the policies as an optional benefit for their employees. Such group plans can lower the annual premiums.

Review your old policy

Many of the critical comments about long term care insurance quotes involve older policies that set rigorous standards before paying benefits. A newer policy, with more lenient benefits, might work better – although it likely will cost more than what you are paying. Don’t feel pressured to buy

You have the right to take the company’s policy and review it with family, friends or your attorney.

Check out the agent or company- make sure the agent or company is licensed to sell in Florida. Call the Insurance Department’s Consumer Helpline at (1-800) 342-2762. You have a 30-day free-look period

By state law you can review the policy for 30 days and then cancel it for a full refund. If you return it, the Florida Department of Insurance recommends you do it by registered or certified mail.

Medigap health insurance plans

Recent (or about to be) retirees with medicare  insurance may not realize how few offers for private Medigap policies (to fill in where Medicare leaves off) are coming their way by phone or mail. The main reason: A 2010 federal law prohibits selling duplicate insurance protection, whether from employee benefits individually. That is if you have medicare supplement insurance that doesn’t cover costs as much as you like, insurance companies cannot sell you another policy if any part of it duplicates what you already have.

Extra policies to help pay for long-term care, cancer or other dread disease, $100-a-day hospital payments, etc., are likely to have coverage in bits and pieces and duplicate what you have, says Noel Morgan, consumer advocate at the Ohio Department of Insurance Senior Health Insurance Information Program.

Morgan explains: Say you have an employee retirement health care plan which has a dollar-benefits cap, or which pays 80 percent of your actual costs. You pay 20 percent, Medicare pays 80 percent. But 80 percent of your 20 percent can leave you with a high due bill; so can a dollars cap.

Dropping a limited benefit employer’s health care plan in order to buy a better one isn’t always possible when insurance benefits are part of a union contract.

Consumers aren’t breaking the law when buying extra health insurance, says Morgan. The law was meant to protect consumers from buying more than one Medigap policy with duplicate benefits. The law applies to insurance companies; and each violation is subject to a $25,000 fine and prison stay. Yet, Morgan adds, insurance companies-including some big names-continue to sell duplicate medicare insurance plans. And as long as you sign and the company accepts the contract, the company must pay the benefits listed.

Who enforces the law? After three years, the federal government hasn’t decided which federal agency will be the enforcer, Morgan adds. And, changes in the law to soften it for consumers’ need has failed in Congress – the most recent proposal was dropped from President Obama’s budget bill.

The Medicare and Medicaid cuts would help fund new benefits for seniors in the form of a medicare drug benefit and the beginnings of a long-term home and community health care program. But seniors have felt that the new benefits are not enough. To avoid attracting only high-risk subscribers  elders could sign up for the proposed new program only when they first became eligible for Medicare, usually at age 65, and for a limited time afterward.

14 Safety Tips for Aparment Living

There is no such thing as a burglarproof home or apartment.

“An apartment house is a neighborhood,” says Detective Sergeant Gary Hoss  from Houston. “It just happens to be vertical.”

Getting to know your neighbor in an apartment complex is just as crucial to crime prevention as it is in a neighborhood of single-family dwellings.

There is safety in numbers – a well-organized tenant association, for example, is a good first line of defense against crime of any kind.

It is just as important in Apartments in Houston to obey the simple rules of common sense: Don’t assume, for instance, that a main entrance downstairs guarantees protection. Always install a dead-bolt lock on your apartment door and a peephole.

Here are other tips for the apartment dweller from crime prevention program:

Never allow strangers to enter without proper screening. Refer solicitors to the manager.

Do not “buzz” the door open to anyone you do not know, and watch that strangers don’t come into the secured building as you leave.

If you are a woman living alone, use initials instead of your full name on the identification slot in the lobby.

Don’t leave notes for delivery people or others on your door that advertise your absence.

Check the elevator when it arrives, and don’t get in if there is someone there that you are uncertain of or consider “suspicious.”

Women riding in an elevator alone should always stand near the control panel. If accosted, press all buttons.

If a suspicious person enters the elevator while you are on it, exit before the door closes.

Always survey the hallway when you leave the elevator.

Avoid using the apartment building’s laundry room by yourself. Team up with a neighbor.

Make sure the lock or the key cylinder has been changed when you move into a new apartment.

Lock all doors and accessible windows before you leave your apartment.

Use a timer for a lamp or radio to make your apartment appear occupied when you are out late or on vacation.

Notify the building manager if you leave on vacation or other extended stay away from home.

Always report suspicious sounds, strangers or odd behavior.

Travel Insurance

What could be more pleasant than thumbing your nose at the rest of the world as it shrinks from sight through an aircraft porthole? With umpteen hours of travel ahead and cocooned in space with an exquisite dry white, you could read your visitors insurance brochure and reassure yourself that all is well. Or you could enjoy yourself instead.

Reading travel insurance is best saved for a day that is horrid to start with. Once you get past the pictures of Big Ben and the Statue of Liberty, there’s a black hole full of fine print.

You are better off buying a policy you can easily read and understand than one which is crammed with gobbledegook. Besides, when you buy a policy you sign a declaration saying you have read it and understood its contents. So take a handful of brochures home with you and take your time.

But it is vital you buy your travel insurance before you pay for your ticket and travel arrangements, otherwise you will not be covered against loss of deposit and cancellation charges if you have to cancel due to unforeseen circumstances.

Premiums and benefits generally depend on your choice of destination. To get adequate cover for travel to the US or Japan, for example, you generally need the maximum level of cover.

This is because medical expenses are very high in these countries and anything short of unlimited medical cover is a risk. So benefits (and therefore premiums) are highest for those regions.

Most insurers offer three levels of cover, although some carve the world into four geographic regions while others offer just two levels of cover.

Travel insurance offers a core of basic benefits including: emergency medical and dental care; refund of deposit and cancellation charges; additional travel and accommodation expenses; loss of baggage; accidental injury or death; personal liability, and hijacking.

Some insurers add extras such as: free cover for dependent children travelling with single parents or grandparents; loss of income benefit if you are injured on holiday and unable to work on your return; and resumption of journey – this is a benefit towards the cost of returning overseas if your holiday is disrupted because of a relative’s death or illness.

But there are exclusions and conditions attached, so claiming for any of these events is not all plain sailing. Getting compensation for something as simple as loss of baggage can turn into a nightmare, as the story below illustrates.

Most complaints heard by the panel are for claims rejected by insurance companies for stolen and lost baggage, usually on the grounds that the insured did not take reasonable precautions to protect possessions, or left them unattended in a public place.

Here’s a typical example. A man was travelling to Los Angeles and, due to the riots in that city, his flight was diverted and arrived in San Francisco at 11 pm, where a curfew was in force. He had no option but to spend the night at the airport.

He collected his luggage and placed it under a couch-type seat. When he awoke five hours later his money belt had been cut from his waist and his luggage was gone.

He reported his loss to the airport police. The insurance company rejected the claim on the grounds that the luggage and/or personal effects had been left unattended and that he had failed to take all reasonable care of them.

The panel upheld the company’s decision – at least for the luggage. Had the insured fallen asleep while guarding the luggage the result may have been different. But the insured took a positive decision to settle down and go to sleep, leaving his luggage unattended. The airport had a storage facility and his failure to use it amounted to a failure to take reasonable care.

But the panel ordered the company to compensate the man for the loss of$US350 in stolen cash as he was not regarded as having failed the test of reasonable care for keeping his money on him.

Pre-existing illness is another area which gives rise to many disputes. If you do not disclose an existing ailment to your insurer, you may well have any medical and dental claims knocked back.

“Pre-existing” is defined variously by insurers, with some taking a harsher view than others. It is usually defined as a known illness – either recurrent or one for which you have consulted a doctor for up to 90 days previously(pregnancy is treated as a pre-existing condition).

Insurers will generally cover pre-existing conditions for an additional premium once you have produced a doctor’s certificate showing you are fit to travel.

Most policies cover medical evacuations, but it is not enough for you to feel more comfortable being treated by a familiar person in Australia than the local doctor or hospital in your host country. The circumstances under which repatriation is carried out are limited by the terms of the policy, which are very tight and require the agreement of the insurer.

Similarly, while cancellation and additional expenses provisions offer peace of mind for emergency situations, such as a family member falling seriously ill or dying in Australia, there are exclusions that make such claims difficult to qualify for.

If the relative had a preexisting condition, for instance, it is likely you will not be compensated.

Another area to watch is high-risk sporting activities. While some insurers exclude these outright (or through waivers buried in the fine print), others are prepared to cover them. For instance, HCF will cover, at no extra cost, amateur snow skiing, water skiing, paragliding, parachuting and scuba diving, if you have an appropriate certificate. Cover-More will cover bungy jumping, ballooning, abseiling, parasailing, parachuting, paragliding and gliding at an additional premium.

Senior citizens are sometimes charged a loading. HCF charges 50 per cent more for travellers aged 70 to 74, and 100 per cent more for travellers over 74. Qantas, on the other hand, does not charge an extra premium if you arrange your trip through a Qantas Travel Centre, or you have a ticketed reservation on Qantas during the period of your cover. Some insurers will also ask for a certificate of good health from your doctor.

As was shown by Money’s survey of credit cards, some cards also offer free travel insurance. However, this is usually limited to accident insurance, with payouts ranging from $100,000 to $500,000, and so will meet only part of the needs of most travellers.

Liability insurance is required by law

In today’s society, you should have liability insurance to protect yourself against lawsuits. Homeowners and other real-estate owners buy insurance to protect against injuries on their property; auto business owners buy garage keepers liability insurance for protection against auto accidents; doctors, lawyers and other professionals need insurance to protect against malpractice claims.

While liability insurance is necessary to protect your life savings against lawsuits, it may not be sufficient. The insurance company that you expected to cover you against liability claims may disappear, exposing your personal savings to seizure.

A majority of firms with 1,000 employees or more are ready to contract product liability insurance to cover the risk of damages payments related to defective products.

In the manufacturing sector, one in every three firms intends to take out such insurance, according to a recent survey of the Marine and Fire Insurance Association. The survey covered about 4,800 companies.

The product liability system makes it easier for consumers to claim payments of damages inflicted on them by defective products, leaving manufacturers more sensitive to the management of risks involving their products.

The product liability system is expected to create a fresh market worth 200 billion dollars for the nonlife insurance industry, an industry official said.

The State Corporation Commission determined today that liability insurance is “readily available for most consumers with prices relatively stable,” and that the market generally is competitive.

However, the commission expanded its list of potentially non-competitive insurance lines to include environmental damage, asbestos abatement by commercial contractors, public housing and a broad range of products.

Liability for environmental damage, especially for underground fuel storage tanks, headed the list of new SCC concerns this year. Those lines were named most frequently by consumers surveyed for their views on the availability and affordability of liability insurance.

Insurance industry listens, dial its hot lines

The insurance industry, responding to both consumer confusion and disaffection, has opened a telephone Helpline to field all types of insurance questions and some complaints.

“We feel this is an example of industry desire to improve credibility with the American public. And we felt a need for an industrywide program. We want to be more responsive to consumer needs,” said Harvey Seymour, spokesman for the Insurance Information Institute, which represents property and casualty insurance companies.

The insurance industry endured a tough year in 1989, he said. California passed Proposition 103, which temporarily rolled back auto insurance rates. (The California Supreme Court since decreed that insurance companies have a right to make a reasonable profit.) Insurance was lashed in headlines ranging from “When an insurer fails,” in the New York Times in March to “Elderly urge Celeste to block increases in insurance rates” in The Plain Dealer in December.

And after shelling out $4 billion for Hurricane Hugo, the industry was hit with another $1 billion in claims from the San Francisco earthquake, Seymour said. Then Medicare catastrophic coverage was canceled and insurance companies were left scrambling again.

Increasing consumer concern and confusion were already being monitored by two insurance hot lines.

The insurance institute has operated one since 1981, “to make property-casualty insurance more understandable and offer unbiased information” said Seymour. Two years ago, the hot line received only 20,000 calls; last year, it logged about 70,000.

The Health Insurance Association of America maintained a hot line with the American Council of Life Insurance for 8 1/2 years; then went it alone after the council dropped out 1 1/2 years ago. The health insurance line has been fielding “lots of questions,” especially from older consumers, about such issues as Medicare supplemental insurance, long-term care insurance, and simply the meanings of words used in policies, said Melanie Marsh, hot line manager.

“A lot of our consumers are over 65 and may have been visited by three or four different agents trying to sell one type of policy. They call and tell us how nice the agents were, but that has nothing to do with the products being sold. They need lots of help to sort out the details,” said Marsh.

But callers often couldn’t distinguish one hot line from the other and many were frustrated when referred elsewhere, said Seymour. And the life insurance council was ready to renew hot line support.

“We felt an increasing need to provide assistance in a generic way, an increasing demand for attentiveness, in the last year,” said Henri Bersoux, spokesman for the life insurance council.

“The needs of the consumer are changing and the insurance industry is trying to adapt. Baby boomers are more concerned about loss of lifestyle than loss of life,” said Bersoux. And older policy owners are asking about cashing in insurance policies before death to avoid becoming penniless during catastrophic critical illness.

So on Jan. 1, the new insurance hot line was born to provide one-stop shopping for insurance information, and more comprehensive answers. In addition to the three major sponsors, a number of smaller insurance trade groups are supporting the hot line.

Free booklets covering answers to most-asked questions — and topics of great concern to insurers — will be sent, on request.

“And if we get a call from a consumer who is having an argument with an insurance company, we try to put the person in touch with a specific individual at the company,” said Seymour.

After Hurricane Hugo, the old insurance institute hot line quickly connected many people with their insurance company claim centers and “adjusters handled claims so promptly that many were hailed as local heros,” he said.

A sad revelation for many tenants after the hurricane, however, was that landlords do not insure tenants’ personal possessions, only buildings, he said. Tenant household insurance is vastly underused, even though it’s quite cheap, he said. While 95% of homeowners carry homeowners’ insurance, only 23% of tenants carry tenants’ insurance.

Insurance becomes fast growing industry in Russia

The rate of year-on-year insurance premium growth (222%) in the first half of 2009 exceeded the increase in consumer prices (210%), producers’ prices (145%) and GDP growth. Thus, the relation between the consolidated national insurance premium and GDP stood at 2.17%, compared to 1.5% in 2008, bringing Russia closer to the level of the most developed Western European countries, where the relation fluctuates between 2% and 3.5% of GDP.

This enabled Russia to fulfill one of the indicators laid out in a document on the development of the national insurance system in 2008-2010 early. The relation of insurance premiums to GDP is expected to stay at 2%-2.5% in 1999. Insurance, therefore, has made it as one of the most successfully developing industries in Russia.

A decline in the number of registered insurance companies and a reduction in actually functioning companies accompany the increase in the nominal amount of insurance operations. There are 1,724 working insurance companies in Russia, down by about 25%  from the beginning of 2008 to mid-2009. A total of 1,369 insurance companies provided information on first half results, 113 of these did not carry out insurance operations, making the total of functioning companies considered 1,247 or 73% of total registered companies.

Per capita insurance premiums remain extremely low. An increase from 124 rubles in the first half of 2008 to 275 rubles in the first half of 2009 cannot be considered significant enough to increase the level of insurance protection. Insurance premiums may have gone up to 2% of GDP, but that can be attributed to Russia’s relatively low GDP.

It is still early to start talking about the restoration of insurance premium and payment volumes in dollar terms. Insurance contributions totaled around $1.7 billion in the first half of the year, about 42% down on the same period in 2008. Insurance premiums per head dropped from $20 to around $12. Average half-year per head premiums top several thousand dollars in various developed countries and over $100 in East-European countries. Therefore, despite the relatively high rate of development in the insurance sector, the level of insurance protection for Russians remains low. INSURANCE COMPANIES SUCCESSFULLY COMPETE WITH OTHER FINANCIAL INSTITUTES FOR CLIENT FUNDS. The reasons behind production growth in export-oriented and import-substituting industries are clear, but the reasons behind growth in the insurance sector, which virtually does not export its services, are not so clear. Also, there are no nonresident insurance companies being forced out of the Russian market, as they are restricted from providing insurance services in Russia, apart from reinsurance. The volume of reinsurance services offered by nonresidents has probably even gone up in the first half of 2009, which has not only not hindered growth in the national insurance premium but is likely to have facilitated the process.

An explanation for the growth in insurance premiums lies in the analysis of their structure. Life insurance, which continues as in the last quarter of 2008 to account for the largest share of insurance premiums (39%), showed the biggest growth. The share of life insurance went up over 50% compared to the first half of 2008 and now exceeds the consolidated share of other voluntary insurance. Life insurance premiums probably increased less because people began to want to insure their lives or companies wanted to insure their employees and more because clients were interested in lowering tax and quasi-tax withdrawals from salary funds. Various points back up this theory, for example, the number of insurance agents through which classic life insurance policies were sold remained relatively unchanged. Also there were an extremely high level of life insurance payments (80%), just 10% under mandatory insurance and a seven-fold increase in life insurance loans, allocated by insurance companies to their clients. The share of personal insurance declined considerably probably due to the lower demand for voluntary medical insurance and accident insurance, that is, insurance which is most similar to life insurance. There was slower growth in private deposit account balances in commercial banks, whose salary payment services had been popular before the financial crisis.

Among the voluntary types of insurance, property insurance premiums also increased sharply. Center for Economic Analysis experts attribute the increase to the greater ruble insurance sums, as property costs and liability limits are usually fixed in dollar equivalent.

Mandatory insurance premiums went up 30%, due to slow growth in the national salary fund, the population’s high share of hidden revenue and the static minimum salary. Thus, the share of mandatory insurance in all types of insurance has virtually dropped to its 2004 level. LARGE INSURANCE GROUPS ARE BECOMING STRONGER ON THE INSURANCE MARKET. Russia’s market already has several dozen insurance groups responsible for the dominating share of assets and insurance transactions. Insurance groups usually come about through financial, industrial or financial-industrial groups, natural monopolies and regional administrations. However, there are at least two groups with ten-year histories. These were formed in a particular way.

Ohio Bank Approved To Expand Financial Services

The First National Bank of Zanesville recently gained approval from the Office of the Comptroller of the Currency to move into the financial planning, brokerage, insurance and annuities businesses, in a move to help expand its market presence.

The $1.2-billion-asset parent company, BancFirst Ohio Corp., recently acquired Chornyak and Associates Inc., a financial planning firm which also sells insurance but is not a full-service broker. It receives a commission, however, if customers purchase the mutual funds the planners recommend. The bank already has a trust company with insurance capabilities, but it was a small part of its business activities, mainly selling life insurance and annuities, according to chief financial officer Kim Taylor. Taylor said the trust subsidiary also offers some customers brokerage products.

"This provides a higher level of financial planning services to our customer base," he said, explaining the bank will provide the firm with its list of bank customers to solicit products, and brokers already in the bank’s branches will refer customers to the new affiliate.

Chornyak is located in Columbus, 50 miles from the Zanesville headquarters, and provides the added bonus of giving the bank additional presence in that market, where it currently has only one branch.

BancFirst acquired the financial planner by issuing 82,000 shares of stock, valued at around $2 million. The company is expected to bring in revenues in the $1.2 million-$1.6-million range.

Huntington Shoots For Title Insurance

Huntington National Bank recently received approval to get its foot in the door of title insurance sales in Ohio, anticipating a time when banks in that state will be able to own title insurance companies entirely. An accompanying lawsuit could have a significant impact on financial modernization legislation.

The Columbus-based company received approval from the Office of the Comptroller of the Currency April 8 to own a 10% stake in a local title insurance agency, Mound and Forth Title Agency, Ltd. In the application letter from the bank’s counsel to the OCC, the bank said the only reason it was applying for a minority stake is that it is prohibited from owning a majority interest in the company by state law. It added that it believes the state law is inconsistent with federal law and is "a prohibition or significant impairment on the powers of a national bank under the National Bank Act to own and operate a title insurance agency "

The bank, along with the Ohio Bankers Association, is suing the Ohio insurance commissioner in federal court to rectify that situation. Oral arguments are scheduled for this week.

Jeff Quayle, general counsel for the Ohio Bankers Association, said the state rule barring banks, Realtors, homebuilders and others from owning a title insurance company or a controlling interest in one "flies straight in the face of Barnett." Barnett refers to a Supreme Court decision which overturned an antiaffiliation law that severely limited banks’ ability to sell insurance to their customers. While bankers are fighting the rule in court, the Ohio Association of Realtors is working to overturn it with state legislation.

He added that the model Huntington is following of minority ownership has been done by other non-bank companies, such as homebuilders.

Industry watchers believe the case could have far-reaching effects on the banking and insurance industries because of its impact on financial modernization legislation.

"If this goes through before H.R. 10 passes, then clearly national banks can sell title insurance and it would be much harder for them to hold the provision in the House version of H.R. 10 that prohibits the sale of title insurance," said Buzz Gorman, legislative counsel for the Conference of State Bank Supervisors.