Insurance is a leverage tool

July 14, 2009

Insurance over the years has come to mean many things in our lives.

We buy auto insurance, home owner insurance,  life insurance & health insurance.  State by state rules are set by Commissions such as the State of Conn Insurance Department . With Auto, Home Owner & Life insurance the policy has limitations.  Such as 100/300 Liability provides a accident coverage limit of $100,000 per person and $300,000 per incident.  Or $200,000 Life Insurance coverage means the insured is protected in the event of their death the beneficiary receives $200,000.

Lloyds of London . Originating in the 17^th Century, the idea was to contract-guarantee a shipment of goods would travel from one port to another & Lloyds would take a premium to assure the ship or good arrived safely. When a shipment was loss, each business man would pay in their portion of risk.

Example: In 1906, an earthquake struck the City of San Francisco, California.  Lloyds of London paid out more than $50,000,000. In 2009, over 100 years later, that is at least multiplied 20 times the 50 million or over 1 billion dollars.  By the City of San Francisco purchasing the Quake coverage they assured its residents a success plan if a massive failure occurred.

The key that makes any insurance plan financially healthy is calculating as many risk exposures as possible. Upon adding in a profit, the “risk taker”  can then offer this plan to customers in their area of need.  

Here is my point. Twenty years ago, anyone could purchase a health insurance policy that was based on a “Daily Room & Board” factor. $100 a day, $200 day etc. This policy had limitations such as a $1 million limit overall. But the premiums reflected the coverage as well.

My parents were born in 1929 & 1931 respectfully. THEY DID NOT have health insurance. The maternity was paid for out of pocket and payments were made each month to the doctor and hospital.  Why was that affordable then and it is not affordable now ? Because of the various options and possibilities. Thus our infant mortality rate is one of the lowest in the world. Did you know the average age for an adult male in Afghanistan is age 35 ?

Welfare does  not work. #1)  People on welfare can’t get the basic care quick enough.  Most doctors office won’t make regular appointment for the welfare patients. #2) NY State stopped a Medical Doctor from lowering his office charge.   

President meets Robin Hood.  President Obama wants new a version of health care.  BUT what the Democrats are not telling you is what the details are. Any contract has to have terms and limitations.

The State of Conn requires auto insurance in order for a person to register a car. The limits are “20/40”. The coverage means $20,000 per person and $40,000 per accident. This coverage minimum as been in existence for over 20 years and has not changed.  But most adults that own a home and have other assets will pay extra for the greater protection. 

So what is the limitation on the Democrats proposal ? Asked your State Representative.

Maybe Joseph Courtney   can tell the taxpayers what the Limits of the proposal are.  On July 8, 2009, Mr Courtney posted a proposal called  House Tri-Committee Health Reform Discussion Draft .

Courtney’s plan does not address several items.

#1) How much do all of these changes impact the persons paying above the poverty limits ?

#2) How many citizens, actual people, paying above the poverty limitations of this proposal ?

#3) What is the limitation

#4) Taxes people that DO NOT enroll in Courtney’s plan an additional Two per cent, 2%, tax on their adjusted gross income as a penalty for not participating.  

#5) Taxes employers eight per cent, 8%, for not participating in the Courtney plan.

#6) Forces rebates to those investment plans that do not have a loss ratio of 85% or higher.

Mr Courtney is going to ruin a free market that has provided the best health care, the best medication and the best mortality rate a country has ever had.

Here is an example of an insurance company; sales, profit & protection.

In 2007, Travelers Ins Company, had sales of 26.0 billion dollars. Of that 19.4 billion was paid out in sales & administration. 1.6 billion was paid in taxes. Travelers made a gross profit of $6.6 billion or 17%. (Under Joe Courtney’s healthcare plan anything over 15% is excessive.)  

The Travelers employed 33,000 people. Not to mention contractors such as lawyers, accounts and other to defend their contracts. As of today the Travelers has $21.3 billion in net tangible assets.  Do you have 10 years worth of net savings built up to protect you from financial loss ?

When an automobile claim is submitted to an Conn insurance carrier, the law requires that carrier have enough money set aside from general accounts to pay off your claim when it settles.

How can any business succeed if they don’t know the limits of the risks ?                 

 

Carl Slicer, blog editor, www.VernonGop.com, Who do you trust ?

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Tags: Congressman Joseph Courtney, Conn Insurance Industry, Health Insurance, Healthcare, Rockville, Vernon