We are independent brokers of Health Insurance, Income Protection, Accident and Sickness, Life and Critical Illness policies.
We provide access to the whole of the Health Insurance market that will allow us to match your requirements to your budget.
It is also important to protect your health so that in turn you can protect your wealth.
Many people insure their pets, TV’s, Washing machines etc. but do not insure the one thing that is most important to realising their lifestyle and that is their salary. The Health Insurance Shop has specific expertise in Income Protection and Accident and Sickness insurance policies, where we deal with all of the major insurers and Friendly Societies to find the best policy for you. Whether that is day one cover, high monthly benefit or long deferment periods we will find the income protection or accident and sickness policy to give you the best value for money cover to meet your needs.
The Health Insurance Shop will also look at defining your family needs. We will assist you in finding the right Life and/or Critical Illness policy to meet the needs of your family in the event of death or critical illness. Would you prefer a lump sum or a monthly benefit? These are questions we can advise you on when you come to purchase a Life Insurance policy.
The service we bring to you is most important at point of claim, where we will be able to assist you in making your claim with your Health Insurance, Income Protection, Accident and Sickness, or Life and Critical Illness policies.
* When choosing an Income Protection policy the key things to consider are:
* Does it cover your own Occupation?
* When does it pay out?
* How long does it pay for?
* Is the premium fixed or reviewable?
* Are there any exclusions?
We have been at the fore front of selling Income Protection policies in the UK for a number of years and have access to policies to meet all requirements including that of professional sportsmen and security staff that are normally excluded from Income Protection policies.
We can also cover Income Protection, Health Insurance and Life Insurance for overseas workers and ex pats.
If it is personal insurance you want then "The Health Insurance Shop is your one stop shop"
Tuesday, April 7, 2009
About The Health Insurance Shop
Protecting Your Family
Health insurance is important in the event that you, or any member of your family is ever sick or injured.
Having this coverage will protect you from financial hardships. State Farm® offers various types of health insurance, so that you can choose the product that best suits your personal situation.
Choose the plan that best fits your individual needs.
Individual Medical Coverage
This is primary medical insurance coverage that is designed for people who don't have this type of coverage through their employer or another group.
Prescription Drug (Part D) Plans
Medicare Part D is prescription drug coverage available to those enrolled/eligible for Medicare Part A and/or Part B.
Medicare Part C (Medicare Advantage) Coverage
Medicare Part C (otherwise known as Medicare Advantage) is a Medicare health plan available to those enrolled/eligible for Medicare Parts A and B.
Medicare Supplement Insurance
This is designed for the senior citizen who participates in Medicare, yet desires additional coverage to help with many of the expenses that Medicare does not pay.
Supplemental Medical Insurance*
This is Ideal for supplementing your primary health insurance coverage. It provides you with a pre-determined benefit amount for those extra, unbudgeted expenses that arise.
Unless you tell us otherwise or benefits are assigned according to state law, the benefit is paid directly to you.
You decide how the money is spent.
Benefits may be paid for necessary:
* Hospitalization
* Accidental Injury
* Outpatient Surgery
* Extended Care
* Intensive Care
*Supplemental Medical is the marketing name for our Hospital Income, Hospital Indemnity and Hospital Confinement Indemnity policy series 97024.
How to find and keep affordable health insurance
The writers and editors at the Health Insurance Resource Center put the pieces of the medical insurance puzzle together for you in our Health Insurance 101 section, as well as shifting through the best information from across the Internet throughout our pages:
Finding individual health insurance for your family can be confusing. We provide several tools to help you make better choices.
* get health insurance quotes
* glossary of medical insurance terms
* information on high-risk insurance pools.
* Frequently-asked questions on health care
* Self-employed medical insurance
What can you do to provide low cost protection for your family's health? Here at the Health Insurance Resource Center, we strive to make you a better-informed consumer to aid you in your quest to secure and keep an adequate health plan for your family, regardless of your individual situation.
Lack of health insurance an epidemic – what should be done?
Nearly 16 percent of Americans – 47 million people – are uninsured. According to a story in USAToday, the people without health insurance aren't just the poor – they are all of us. Medical bills are the cause of more than half of all personal bankruptcies in the United States.
Urge Congress to act now – a call to action
Access to private medical insurance that is safe and affordable is easily the biggest domestic crisis facing us. Our advocacy page urges you to join us in urging Congress to support President Obama's call for health care reform. His plans are to ensure health plans do not discriminate on the basis of pre-existing conditions, expand access to the government's own insurance program, lower the cost on existing plans and give you the ability to keep your coverage if you switch jobs or become self-employed. Contact a member of the House of Representatives. Contact a US Senator. Contact the White House
Healthinsurance.org has long-held a well-deserved reputation for promoting health insurance reform, and with President Obama's election we are stepping up our efforts.
State Guides to health plans and health care quality
You'll also find information on the quality of health care in individual states from across the nation, spanning New Jersey to California. Each page also gives you the opportunity to receive quotes on protecting your family, getting pricing and details from competing companies. Many states are seeking ways to tackle the problem of access to affordable health insurance on their own, and we look to health care reform initiatives on our state pages. We also have links to the contact forms for your elected officials, so you can easily lend your support, or offer alternative ideas.
Affordable Health Insurance - Free Online Quotes
Tips for Finding Affordable Health Insurance
It can be a daunting task to find affordable health insurance especially if you are self employed or have a family that's not covered on your health plan at work. In addition to this, if you have a pre-existing condition, you are in real trouble because in most cases it will not be covered at all. One of the best ways to get affordable health insurance is with a group plan and this is normally done through an employer. That employer generally pays some or even all of the insurance cost for the employee but the employee may choose to add a spouse or a family member at an additional cost.
But, if you are self employed or lose a job, these affordable health insurance choices aren't offered to you, which can present a problem. However, you should be able to find something that is available for small business owners and self-employed people but it will be at a much higher cost. So, this makes it all the more important to shop around to help you find affordable health insurance. If you get quotes from several different companies, you'll be much more likely to find affordable heath insurance.
Top Health Insurance Carriers
When looking for a top health insurance carrier, you may consider looking into some big companies because they may give you the best rates. Often a larger company is capable of giving you a much better rate than smaller companies because they have more resources available to them to aid in offering better pricing. There are many large health insurance carriers to choose from in this day and age that can offer you the highest quality service at an affordable price. The key to finding one you like is to spend some time in research looking for the best carrier and then getting some quotes from them as well.
You may confuse best rate with best health insurance carrier but be advised that this is often not the case you and may not the quality of insurance you want with a cheaper coverage. In order to avoid any problems in this area, you should consider doing some research on the quality of coverage of the company you do decide to get your health insurance from. By taking the time to look into their payment history of claims, you can save yourself some time and hassle and know with certainty if you are choosing a top health insurance carrier after all.
Why You Should Compare Health Insurance Quotes
We are all looking for the best possible price we can get on the necessities of life, and health insurance is no different. This is why it's imperative to compare health insurance quotes to help you find the best one you possibly can. When you take the time to get several quotes, you are much more likely to get the best deal. These days it is extremely easy to do this with the aid of the Internet. You can easily log on these days and visit health insurance Websites and get several quotes at one time. This can allow us to compare prices and coverage. You need to be certain you look at the quality of coverage you will receive as well as the cost of the coverage. This will allow you to get the best of both.
It's very important for you to compare health insurance quotes to make certain you are getting the absolute best coverage possible. If you just commit to one health insurance company without shopping around, you could be making a huge financial mistake. Therefore, you should invest a few minutes to finding the best health insurance to meet your needs at the best price as well.
Online Health Insurance Resources
We have provided a number of online articles and resources to answer some of the most common question we receive about finding affordable health insurance coverage. Spending a little time researching before you choose a plan can make a big difference in the quality and price of the policy you end up purchasing.
I Introduction
Health Insurance, insurance designed to pay the costs associated with healthcare. Health insurance plans pay the bills from physicians, hospitals, and other providers of medical services. By doing so, health insurance protects people from financial hardship caused by large or unexpected medical bills.
People obtain health insurance from private organizations or from government agencies. All industrialized countries other than the United States have government-funded national health insurance systems that provide health insurance for virtually everyone. Countries with national health insurance generally consider access to healthcare to be a basic right of citizenship.
In the United States private organizations have traditionally provided the vast majority of health insurance coverage. The U.S. government operates some publicly funded health insurance programs but access is limited to specific groups, such as the poor and the elderly. Most Americans obtain private health insurance through their places of employment.
Americans pay the cost of health insurance in a variety of ways. Workers may pay for private health insurance by authorizing their employers to deduct a specified amount from their paychecks. Alternatively, individuals may work for employers who pay the direct costs of health insurance. People who do not receive health insurance through their jobs or through government programs can purchase private health insurance policies by paying premiums directly to an insurance company.
A Access to Health Insurance
In 2007 the U.S. Census Bureau reported that as of 2006 about 47 million people in the United States (about 15.8 percent of the population) lacked health insurance coverage. Those without insurance are usually self-employed, work part-time, or work in low-wage jobs, so they lack access to low-cost, employer-sponsored group plans. Many of these workers cannot afford to purchase individual healthcare insurance, but they do not qualify for coverage under government programs for low-income Americans. For example, in the early 21st century almost half (47.5 percent) of full-time workers in low-wage jobs were uninsured. Nevertheless, even without insurance, these individuals may be able to receive emergency care without charge or at reduced rates in government-run hospitals.
Although millions of Americans lack health insurance because they cannot afford it, many others cannot buy health insurance because insurers consider them at especially high risk of needing expensive healthcare. Insurers assess the risks posed by applicants for insurance and then group applicants into similar classes of risk. Americans who are considered average or better-than-average risks can usually purchase insurance policies at a relatively affordable price. When an applicant presents too much risk, however, private companies consider it difficult or even impossible to offer insurance coverage to that person.
For example, some private companies will not offer coverage to an individual with a known predisposition to develop cancer because he or she presents a high risk of needing expensive treatment. Also, the few companies willing to insure such high-risk individuals will charge higher premiums to assume the risks. Increased premiums often make the insurance policy unaffordable to high-risk individuals. Even worse, occasionally no insurance company will offer a policy to a person who presents an exceptionally high risk of needing expensive medical care, such as a person infected with the virus that causes acquired immunodeficiency syndrome (AIDS).
Some insurance companies have introduced clauses to their policies that are designed to keep costs down by denying access to private insurance for anyone who already suffers from significant medical conditions. Introduction of preexisting condition clauses in insurance policies became especially widespread in the 1980s and early 1990s. Many workers found it virtually impossible to change jobs if any member of their families had a serious health problem because preexisting condition clauses in their new employer-sponsored plan would deny them access to insurance coverage. The Congress of the United States addressed this problem by introducing the Health Insurance Portability Act of 1996, which requires most employer-sponsored plans to accept transfers from other plans without imposing a preexisting condition clause.
Congress further addressed the issue of preexisting conditions in 2008 when it banned any form of discrimination based on an individual’s genetic makeup. The Genetic Information Nondiscrimination Act forbids health insurance companies from denying coverage or raising the cost of premiums to individuals whose genetic makeup predisposes them to disease or other condition requiring medical treatment. The new law also prohibits employers from using genetic information to make decisions about hiring, firing, or denying compensation to an employee. Employers who are found to have misused this information face fines up to $300,000. See also Gene; Genetics.
B Insurance Costs and Quality of Healthcare
The costs of healthcare have increased dramatically for consumers and insurers, particularly since the 1980s. For example, in 1980 Americans spent $247.3 billion on healthcare. By 1999 that figure had more than quadrupled to $1.2 trillion, and it reached $2.3 trillion in 2007, according to one study.
One reason costs have risen is that Americans are living longer than ever before, and older people generally require more healthcare. In 1900 the average American had a life expectancy of about 50 years. In 2003 the average life expectancy was about 77.6 years. During the 20th century, the number of persons aged 65 or over increased 11 times. The elderly comprised only 1 in every 25 Americans in 1900, but represented 1 of every 8 Americans in 1994. By 2006 persons aged 65 or older represented 12.1 percent of the U.S. population. When older Americans join an insured group, the whole group’s healthcare risks—and costs—rise accordingly.
Advances in medical technology have also driven up the costs of healthcare and insurance. Medical procedures such as computerized tomography (CT) scans, magnetic resonance imaging (MRI) scans, and arthroscopic surgery are commonplace today, but they did not exist until the 1970s. Although such new technology sometimes allows healthcare providers to introduce less-invasive and less-expensive treatments, more often it provides new but expensive ways to treat conditions that were previously untreatable.
Increased use of healthcare has also led to a growth in healthcare costs. Americans are more likely than ever to seek professional health services for medical problems. For example, in 1991 there were an estimated 669.7 million visits to doctors' offices, or 2.7 visits per person. In 1999 there were an estimated 757 million visits to doctors' offices, or 2.8 visits per person. Many Americans today seek medical care for treatment of sexual impotence, attention-deficit hyperactivity disorder, and other problems that previously were not always considered health problems. Just as increased demand pushes prices up in other industries, increased demand for healthcare leads to escalating medical costs.
Low Cost Health Insurance
Finding low cost health insurance is a priority for many Americans today. But it isn't always easy to find a plan that fits within your budget, especially if you have pre-existing health conditions. If you have a family and would like to get coverage for everyone, consider getting a group health plan from your employer or on your own. These are the most affordable and include HMOs, PPOs and POSs.
Affordable Health Insurance Options
With the PPO, or Preferred Provider Organization, and HMO, or Health Maintenance Organization, you are given a network of physicians to choose from. Only the HMO requires you to choose one of their doctors as your Primary Care Physician (PCP). Using one out of their network would result to you enduring the full cost of the expenses rendered. With the PPO you get more freedom to choose any doctor, but by using one out-of-network will raise the co-payments. The premiums are higher for the PPO, making the HMO the cheapest. The POS is a combo of the two.
Another option you can go with is an HDHP, or High Deductible Health Plan. This may not seem like a low cost option, but once you pay the annual high deductible, your benefits will kick in. Plus, your premiums are much lower than average from the start. After enrolling in this type plan you will qualify for an HSA, or Health Savings Account, which allows you to save up tax-free money for your medical expenses - even for alternative healing treatments/procedures, eye care and chiropractor therapies. The HSA also allows you withdraw the money you’ve accumulated for other purposes once you reach retirement age
Thursday, March 19, 2009
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When you have questions about insurance discounts and coverage, when you want a personalized quote, or if you need to make a claim, it's good to know you can talk person-to-person with a licensed insurance professional, your Allstate agent.
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Get money-saving tips from Allstate Agents, ways to save on your house and car, links to other special offers and more. Check back often for new updates.
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Insurance Quotes
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Top Insurance Tips
1. Importance of a Good Driving Record
2. Life Insurance Offered by Employer
3. Homeowners Insurance vs. Title Insurance
4. Know your Health before you Shop
5. Offer Only Coverage your Employees Plan to Use
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Monday, March 16, 2009
Australia
Main article: Health care in Australia
The public health system is called Medicare. It ensures free universal access to hospital treatment and subsidised out-of-hospital medical treatment. It is funded by a 1.5% tax levy.
The private health system is funded by a number of private health insurance organisations. The largest of these is Medibank Private, which is government-owned, but operates as a government business enterprise under the same regulatory regime as all other registered private health funds. The Coalition Howard government had announced that Medibank would be privatised if it won the 2007 election, however they were defeated by the Australian Labor Party under Kevin Rudd which had already pledged that it would remain in government ownership.
Some private health insurers are 'for profit' enterprises, and some are non-profit organizations such as HCF Health Insurance. Some have membership restricted to particular groups, but the majority have open membership.
Most aspects of private health insurance in Australia are regulated by the Private Health Insurance Act 2007.
The private health system in Australia operates on a "community rating" basis, whereby premiums do not vary solely because of a person's previous medical history, current state of health, or (generally speaking) their age (but see Lifetime Health Cover below). Balancing this are waiting periods, in particular for pre-existing conditions (usually referred to within the industry as PEA, which stands for "pre-existing ailment"). Funds are entitled to impose a waiting period of up to 12 months on benefits for any medical condition the signs and symptoms of which existed during the six months ending on the day the person first took out insurance. They are also entitled to impose a 12-month waiting period for benefits for treatment relating to an obstetric condition, and a 2-month waiting period for all other benefits when a person first takes out private insurance. Funds have the discretion to reduce or remove such waiting periods in individual cases. They are also free not to impose them to begin with, but this would place such a fund at risk of "adverse selection", attracting a disproportionate number of members from other funds, or from the pool of intending members who might otherwise have joined other funds. It would also attract people with existing medical conditions, who might not otherwise have taken out insurance at all because of the denial of benefits for 12 months due to the PEA Rule. The benefits paid out for these conditions would create pressure on premiums for all the fund's members, causing some to drop their membership, which would lead to further rises, and a vicious cycle would ensue.
There are a number of other matters about which funds are not permitted to discriminate between members in terms of premiums, benefits or membership - these include racial origin, religion, sex, sexual orientation, nature of employment, and leisure activities. Premiums for a fund's product that is sold in more than one state can vary from state to state, but not within the same state.
The Australian government has introduced a number of incentives to encourage adults to take out private hospital insurance. These include:
* Lifetime Health Cover: If a person has not taken out private hospital cover by the 1st July after their 30th birthday, then when (and if) they do so after this time, their premiums must include a loading of 2% per annum. Thus, a person taking out private cover for the first time at age 40 will pay a 20 per cent loading. The loading continues for 10 years. The loading applies only to premiums for hospital cover, not to ancillary (extras) cover.
* Medicare Levy Surcharge: People whose taxable income is greater than a specified amount (currently $70,000 for singles and $140,000 for couples) and who do not have an adequate level of private hospital cover must pay a 1% surcharge on top of the standard 1.5% Medicare Levy. The rationale is that if the people in this income group are forced to pay more money one way or another, most would choose to purchase hospital insurance with it, with the possibility of a benefit in the event that they need private hospital treatment - rather than pay it in the form of extra tax as well as having to meet their own private hospital costs.
o The Australian government announced in May 2008 that it proposes to increase the thresholds, to $100,000 for singles and $150,000 for families. These changes require legislative approval. A bill to change the law has been introduced but was not passed by the Senate.[22] A changed version was passed on 16 October 2008. There have been criticisms that the changes will cause many people to drop their private health insurance, causing a further burden on the public hospital system, and a rise in premiums for those who stay with the private system. Other commentators believe the effect will be minimal.[23]
* Private Health Insurance Rebate: The government subsidises the premiums for all private health insurance cover, including hospital and ancillary (extras), by 30%, 35% or 40%.
[edit] Canada
Main article: Health care in Canada
Most health insurance in Canada is administered by each province, under the Canada Health Act, which requires all people to have free access to basic health services. Collectively, the public provincial health insurance systems in Canada are frequently referred to as Medicare. Private health insurance is allowed, but the provincial governments allow it only for services that the public health plans do not cover; for example, semi-private or private rooms in hospitals and prescription drug plans. Canadians are free to use private insurance for elective medical services such as laser vision correction surgery, cosmetic surgery, and other non-basic medical procedures. Some 65% of Canadians have some form of supplementary private health insurance; many of them receive it through their employers.[24] Private-sector services not paid for by the government account for nearly 30 percent of total health care spending.[25]
In 2005, the Supreme Court of Quebec ruled, in Chaoulli v. Quebec, that the province's prohibition on private insurance for health care already insured by the provincial plan could constitute an infringement of the right to life and security if there were long wait times for treatment as happened in this case. Certain other provinces have legislation which financially discourages but does not forbid private health insurance in areas covered by the public plans. The ruling has not changed the overall pattern of health insurance across Canada but has spurred on attempts to tackle the core issues of supply and demand and the impact of wait times.[26]
[edit] France
Main article: Health care in France
The French model of health insurance has been ranked by the World Health Organization as the best in the world, because it permits a high quality of care and nearly total patient freedom. The national system of health insurance was instituted in 1945, just after the end of the Second World War. It was a compromise between Gaullist and Communist representatives in the French parliament. The Conservative Gaullists were opposed to a state-run healthcare system, while the Communists were supportive of a complete nationalisation of health care along a British Beveridge model.
The resulting programme was profession-based : all people working were required to pay a portion of their income to a health insurance fund, which mutualised the risk of illness, and which reimbursed medical expenses at varying rates. Children and spouses of insured people were eligible for benefits, as well. Each fund was free to manage its own budget and reimburse medical expenses at the rate it saw fit.
The government has two responsibilities in this system.
* The first government responsibility is the fixing of the rate at which medical expenses should be negotiated, and it does this in two ways: The Ministry of Health directly negotiates prices of medicine with the manufacturers, based on the average price of sale observed in neighboring countries. A board of doctors and experts decides if the medicine provides a valuable enough medical benefit to be reimbursed (note that most medicine is reimbursed, including homeopathy). In parallel, the government fixes the reimbursment rate for medical services : this means that a doctor is free to charge the fee that he wishes for a consultation or an examination, but the social security system will only reimburse it at a pre-set rate. These tariffs are set annually through negotiation with doctors' representative organisations.
* The second government responsibility is oversight of the health-insurance funds, to ensure that they are correctly managing the sums they receive, and to ensure oversight of the public hospital network.
Today, this system is more-or-less intact. All citizens and legal foreign residents of France are covered by one of these mandatory programs, which continue to be funded by worker participation. However, since 1945, a number of major changes have been introduced. Firstly, the different health-care funds (there are five : General, Independent, Agricultural, Student, Public Servants) now all reimburse at the same rate. Secondly, since 2000, the government now provides health care to those who are not covered by a mandatory regime (those who have never worked and who are not students, meaning the very rich or the very poor). This regime, unlike the worker-financed ones, is financed via general taxation and reimburses at a higher rate than the profession-based system for those who cannot afford to make up the difference. Finally, to counter the rise in health-care costs, the government has installed two plans, (in 2004 and 2006), which require insured people to declare a referring doctor in order to be fully reimbursed for specalist visits, and which installed a mandatory co-pay of 1 € (about $1.45) for a doctor visit, 0,50 € (about 80 ¢) for each box of medicine prescribed, and a fee of 16-18 € (20-25 $) per day for hospital stays and for expensive procedures.
An important element of the French insurance system is solidarity : the more ill a person becomes, the less they pay. This means that for people with serious or chronic illnesses, the insurance system reimburses them 100 % of expenses, and waives their co-pay charges.
Finally, for fees that the mandatory system does not cover, there is a large range of private complementary insurance plans available. The market for these programs is very competitive, and often subsidised by the employer, which means that premiums are usually modest. 85% of French people benefit from complementary private health insurance.
[27][28]
[edit] Netherlands
Main article: Health care in the Netherlands
In 2006, a new system of health insurance came into force in the Netherlands. This new system avoids the two pitfalls of adverse selection and moral hazard associated with traditional forms of health insurance by using a combination of regulation and an insurance equalization pool. Moral hazard is avoided by mandating that insurance companies provide at least one policy which meets a government set minimum standard level of coverage, and all adult residents are obliged by law to purchase this coverage from an insurance company of their choice. All insurance companies receive funds from the equalization pool to help cover the cost of this government-mandated coverage. This pool is run by a regulator which collects salary-based contributions from employers, which make up about 50% of all health care funding, and funding from the government to cover people who cannot afford health care, which makes up an additional 5%.
The remaining 45% of health care funding comes from insurance premiums paid by the public, for which companies compete on price, though the variation between the various competing insurers is only about 5%. However, insurance companies are free to sell additional policies to provide coverage beyond the national minimum. These policies do not receive funding from the equalization pool, but cover additional treatments, such as dental procedures and physiotherapy, which are not paid for by the mandatory policy.
Funding from the equalization pool is distributed to insurance companies for each person they insure under the required policy. However, high-risk individuals get more from the pool, and low-income persons and children under 18 have their insurance paid for entirely. Because of this, insurance companies no longer find insuring high risk individuals an unappealing proposition, avoiding the potential problem of adverse selection.
Insurance companies are not allowed to have co-payments, caps, or deductibles, or to deny coverage to any person applying for a policy, or to charge anything other than their nationally set and published standard premiums. Therefore, every person buying insurance will pay the same price as everyone else buying the same policy, and every person will get at least the minimum level of coverage.
[edit] United Kingdom
Main article: National Health Service
The UK's National Health Service (NHS) is a publicly funded healthcare system that provides coverage to everyone normally resident in the UK. It is not strictly an insurance system because (a) there are no premiums collected, (b) costs are not charged at the patient level and (c) costs are not pre-paid from a pool. However, it does achieve the main aim of insurance which is to spread financial risk arising from ill-health. The costs of running the NHS (est. £104 billion in 2007-8)[29] are met directly from general taxation. The NHS provides the majority of health care in the UK, including primary care, in-patient care, long-term health care, ophthalmology and dentistry.
Private health care has continued parallel to the NHS, paid for largely by private insurance, but it is used by less than 8% of the population, and generally as a top-up to NHS services. There are many treatments that the private sector does not provide. For example, health insurance on pregnancy is generally not covered or covered with restricting clauses.[30] One of the major insurers, BUPA, excludes many forms of treatment and care that most people will need during their lifetime or specialist care most of which are freely available from the NHS. These include:-
ageing, menopause and puberty; AIDS/HIV; allergies or allergic disorders; birth control, conception, sexual problems and sex changes; chronic conditions; complications from excluded or restricted conditions/ treatment; convalescence, rehabilitation and general nursing care ; cosmetic, reconstructive or weight loss treatment; deafness; dental/oral treatment (such as fillings, gum disease, jaw shrinkage, etc); dialysis; drugs and dressings for out-patient or take-home use† ; experimental drugs and treatment; eyesight; HRT and bone densitometry; learning difficulties, behavioural and developmental problems; overseas treatment and repatriation; physical aids and devices; pre-existing or special conditions; pregnancy and childbirth; screening and preventive treatment; sleep problems and disorders; speech disorders; temporary relief of symptoms[31] († = except in exceptional circumstances)
BUPA's competitors include, among others, AXA, Aviva, Groupama Healthcare and Pru Health.
Recently the private sector has been used to increase NHS capacity despite a large proportion of the British public opposing such involvement.[32]. According to the World Health Organization, government funding covered 86% of overall health care expenditures in the UK as of 2004, with private expenditures covering the remaining 14%.[33]
[edit] United States
Main articles: Health insurance in the United States and Health care in the United States
The US market-based health care system relies heavily on private and not-for-profit health insurance, which is the primary source of coverage for most Americans. According to the United States Census Bureau, approximately 84% of Americans have health insurance; some 60% obtain it through an employer, while about 9% purchase it directly. Various government agencies provide coverage to about 27% of Americans (there is some overlap in these figures).[34]
Public programs provide the primary source of coverage for most seniors and for low-income children and families who meet certain eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors and certain disabled individuals, Medicaid, funded jointly by the federal government and states but administered at the state level, which covers certain very low income children and their families, and SCHIP, also a federal-state partnership that serves certain children and families who do not qualify for Medicaid but who cannot afford private coverage. Other public programs include military health benefits provided through TRICARE and the Veterans Health Administration and benefits provided through the Indian Health Service. Some states have additional programs for low-income individuals.[35]
In 2006, there were 47 million people in the United States (16% of the population) who were without health insurance for at least part of that year.[34] About 37% of the uninsured live in households with an income over $50,000.[34]
In 2004, US health insurers directly employed almost 470,000 people at an average salary of $61,409.[36] (As of the fourth quarter of 2007, the total US labor force stood at 153.6 million, of whom 146.3 million were employed. Employment related to all forms of insurance totaled 2.3 million.[37] Mean annual earnings for full-time civilian workers as of June 2006 were $41,231; median earnings were $33,634.)[38] The insurance industry also represents a significant lobbying group in the US. For 2008 insurance was the 8th among industries in political contributions to members of Congress, giving $28,654,121, of which 51% was given to Democrats and 49% to Republicans, with the top recipient of insurance industry contributions being Senator John McCain (R-AZ).[39] The leading contributor from the insurance industry — as measured by total political contributions — was AFLAC, Inc., which contributed $907,150 in 2007.[40].
Comparison
The Commonwealth Fund, in its annual survey, "Mirror, Mirror on the Wall", compares the performance of the health care systems in Australia, New Zealand, the United Kingdom, Germany, Canada and the U.S. Its 2007 study found that, although the U.S. system is the most expensive, it consistently under-performs compared to the other countries.[21] One difference between the U.S. and the other countries in the study is that the U.S. is the only country without universal health insurance coverage.
Read more...Comparison
The Commonwealth Fund, in its annual survey, "Mirror, Mirror on the Wall", compares the performance of the health care systems in Australia, New Zealand, the United Kingdom, Germany, Canada and the U.S. Its 2007 study found that, although the U.S. system is the most expensive, it consistently under-performs compared to the other countries.[21] One difference between the U.S. and the other countries in the study is that the U.S. is the only country without universal health insurance coverage.
Read more...Moral hazard
Moral hazard occurs when an insurer and a consumer enter into a contract under symmetric information, but one party takes action, not taken into account in the contract, which changes the value of the insurance. A common example of moral hazard is third-party payment—when the parties involved in making a decision are not responsible for bearing costs arising from the decision. An example is where doctors and insured patients agree to extra tests which may or may not be necessary. Doctors benefit by avoiding possible malpractice suits, and patients benefit by gaining increased certainty of their medical condition. The cost of these extra tests is borne by the insurance company, which may have had little say in the decision. Co-payments, deductibles, and less generous insurance for services with more elastic demand attempt to combat moral hazard, as they hold the consumer responsible.
Read more...Other factors affecting insurance price
A recent study by PriceWaterhouseCoopers examining the drivers of rising health care costs in the US pointed to increased utilization created by increased consumer demand, new treatments, and more intensive diagnostic testing, as the most significant driver.[20] People in developed countries are living longer. The population of those countries is aging, and a larger group of senior citizens requires more intensive medical care than a young healthier population. Advances in medicine and medical technology can also increase the cost of medical treatment. Lifestyle-related factors can increase utilization and therefore insurance prices, such as: increases in obesity caused by insufficient exercise and unhealthy food choices; excessive alcohol use, smoking, and use of street drugs. Other factors noted by the PWC study included the movement to broader-access plans, higher-priced technologies, and cost-shifting from Medicaid and the uninsured to private payers.
Read more...Adverse selection
Insurance companies use the term "adverse selection" to describe the tendency for only those who will benefit from insurance to buy it. Specifically when talking about health insurance, unhealthy people are more likely to purchase health insurance because they anticipate large medical bills. On the other side, people who consider themselves to be reasonably healthy may decide that medical insurance is an unnecessary expense; if they see the doctor once a year and it costs $250, that's much better than making monthly insurance payments of $40. (example figures).
The fundamental concept of insurance is that it balances costs across a large, random sample of individuals (see risk pool). For instance, an insurance company has a pool of 1000 randomly selected subscribers, each paying $100 per month. One person becomes very ill while the others stay healthy, allowing the insurance company to use the money paid by the healthy people to pay for the treatment costs of the sick person. However, when the pool is self-selecting rather than random, as is the case with individuals seeking to purchase health insurance directly, adverse selection is a greater concern.[12] A disproportionate share of health care spending is attributable to individuals with high health care costs. In the US the 1% of the population with the highest spending accounted for 27% of aggregate health care spending in 1996. The highest-spending 5% of the population accounted for more than half of all spending. These patterns were stable through the 1970s and 1980s, and some data suggest that they may have been typical of the mid-to-early 20th century as well.[13][14] A few individuals have extremely high medical expenses, in extreme cases totaling a half million dollars or more.[15] Adverse selection could leave an insurance company with primarily sick subscribers and no way to balance out the cost of their medical expenses with a large number of healthy subscribers.
Because of adverse selection, insurance companies employ medical underwriting, using a patient's medical history to screen out those whose pre-existing medical conditions pose too great a risk for the risk pool. Before buying health insurance, a person typically fills out a comprehensive medical history form that asks whether the person smokes, how much the person weighs, whether the person has been treated for any of a long list of diseases and so on. In general, those who present large financial burdens are denied coverage or charged high premiums to compensate.[16] One large US industry survey found that roughly 13 percent of applicants for comprehensive, individually purchased health insurance who went through the medical underwriting in 2004 were denied coverage. Declination rates increased significantly with age, rising from 5 percent for individuals 18 and under to just under a third for individuals aged 60 to 64.[17] Among those who were offered coverage, the study found that 76% received offers at standard premium rates, and 22% were offered higher rates.[18] On the other side, applicants can get discounts if they do not smoke and are healthy.[19]
Health plan vs. health insurance
Historically, HMOs tended to use the term "health plan", while commercial insurance companies used the term "health insurance". A health plan can also refer to a subscription-based medical care arrangement offered through HMOs, preferred provider organizations, or point of service plans. These plans are similar to pre-paid dental, pre-paid legal, and pre-paid vision plans. Pre-paid health plans typically pay for a fixed number of services (for instance, $300 in preventive care, a certain number of days of hospice care or care in a skilled nursing facility, a fixed number of home health visits, a fixed number of spinal manipulation charges, etc.) The services offered are usually at the discretion of a utilization review nurse who is often contracted through the managed care entity providing the subscription health plan. This determination may be made either prior to or after hospital admission (concurrent utilization review).
Read more...Comprehensive vs. scheduled
Comprehensive health insurance pays a percentage of the cost of hospital and physician charges after a deductible (usually applies to hospital charges) or a co-pay (usually applies to physician charges, but may apply to some hospital services) is met by the insured. These plans are generally expensive because of the high potential benefit payout — $1,000,000 to 5,000,000 is common — and because of the vast array of covered benefits.[10]
Scheduled health insurance plans are not meant to replace a traditional comprehensive health insurance plans and are more of a basic policy providing access to day-to-day health care such as going to the doctor or getting a prescription drug. In recent years, these plans have taken the name mini-med plans or association plans. These plans may provide benefits for hospitalization and surgical, but these benefits will be limited. Scheduled plans are not meant to be effective for catastrophic events. These plans cost much less than comprehensive health insurance. They generally pay limited benefits amounts directly to the service provider, and payments are based upon the plan's "schedule of benefits". Annual benefits maximums for a typical scheduled health insurance plan may range from $1,000 to $25,000
Inherent problems with multiple insurance funds and optional insurance
The basic concept of insurance is population solidarity. There are inherent risks in a population but the population absorbs the cost of risks to an individual by spreading the impact of incurred costs amongst the insured population. However, if the population is split into insured and uninsured groups, or into selectively groups (as with private insurance with pre-insurance selection either by the insurance company or the insured) the concept of population solidarity breaks down. Insurance systems must then typically deal with two inherent challenges: adverse selection and ex-post moral hazard.
Some national systems with compulsory insurance utilize systems such as risk equalization and community rating to overcome these inherent problems. Proponents of single-payer health care in the United States aim to provide the population of the country with health care from a single fund and thus avoid problems and costs associated with adverse selection, moral hazard, and private profiteering from
How it works
A health insurance policy is a contract between an insurance company and an individual or his sponsor (e.g. an employer). The contract can be renewable annually or monthly. The type and amount of health care costs that will be covered by the health insurance company are specified in advance, in the member contract or "Evidence of Coverage" booklet. The individual insurered person's obligations may take several forms[7]:
* Premium: The amount the policy-holder or his sponsor (e.g. an employer) pays to the health plan each month to purchase health coverage.
* Deductible: The amount that the insured must pay out-of-pocket before the health insurer pays its share. For example, a policy-holder might have to pay a $500 deductible per year, before any of their health care is covered by the health insurer. It may take several doctor's visits or prescription refills before the insured person reaches the deductible and the insurance company starts to pay for care.
* Copayment: The amount that the insurered person must pay out of pocket before the health insurer pays for a particular visit or service. For example, an insured person might pay a $45 copayment for a doctor's visit, or to obtain a prescription. A copayment must be paid each time a particular service is obtained.
* Coinsurance: Instead of, or in addition to, paying a fixed amount up front (a copayment), the co-insrance is a percentage of the total cost that insured person may also pay. For example, the member might have to pay 20% of the cost of a surgery over and above a co-payment, while the insurance company pays the other 80%. If there is an upper limit on coinsurance, the policy-holder could end up owing very little, or a great deal, depending on the actual costs of the services they obtain.
* Exclusions: Not all services are covered. The insureed person is generally expected to pay the full cost of non-covered services out of their own pocket.
* Coverage limits: Some health insurance policies only pay for health care up to a certain dollar amount. The insured person may be expected to pay any charges in excess of the health plan's maximum payment for a specific service. In addition, some insurance company schemes have annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum, and the policy-holder must pay all remaining costs.
* Out-of-pocket maximums: Similar to coverage limits, except that in this case, the insured person's payment obligation ends when they reach the out-of-pocket maximum, and the health company pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.
* Capitation: An amount paid by an insurer to a health care provider, for which the provider agrees to treat all members of the insurer.
* In-Network Provider: (U.S. term) A health care provider on a list of providers preselected by the insurer. The insurer will offer discounted coinsurance or copayments, or additional benefits, to a plan member to see an in-network provider. Generally, providers in network are providers who have a contract with the insurer to accept rates further discounted from the "usual and customary" charges the insurer pays to out-of-network providers.
* Prior Authorization: A certification or authorization that an insurer provides prior to medical service occuring. Obtaining an authorization means that the insurer is obligated to pay for the service, assume it matches what was authorized. Many smaller, routine services do not require authorization[8]
* Explanation of Benefits: A document sent by an insurer to a patient explaining what was covered for a medical service, and how they arrived at the payment amount and patient responsibility amount[9]
Prescription drug plans are a form of insurance offered through some employer benefit plans in the US, where the patient pays a copayment and the prescription drug insurance part or all of the balance for drugs covered in the formulary of the plan.
Some, if not most, health care providers in the United States will agree to bill the insurance company if patients are willing to sign an agreement that they will be responsible for the amount that the insurance company doesn't pay. The insurance company pays out of network providers according to "reasonable and customary" charges, which may be less than the provider's usual fee. The provider may also have a separate contract with the insurer to accept what amounts to a discounted rate or capitation to the provider's standard charges. It generally costs the patient less to use an in-network provider.
Health insurance
The term health insurance is generally used to describe a form of insurance that pays for medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. In each case, the covered groups or individuals pay premiums or taxes to help protect themselves from high or unexpected healthcare expenses. Similar benefits paying for medical expenses may also be provided through social welfare programs funded by the government.
By estimating the overall risk of healthcare expenses, a routine finance structure (such as a monthly premium or annual tax) can be developed, ensuring that money is available to pay for the healthcare benefits specified in the insurance agreement. The benefit is administered by a central organization, most often either a government agency or a private or not-for-profit entity operating a health plan.[1]
History and evolution
The concept of health insurance was proposed in 1694 by Hugh the Elder Chamberlen from the Peter Chamberlen family. In the late 19th century, "accident insurance" began to be available, which operated much like modern disability insurance.[2].This payment model continued until the start of the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance.[3]
Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. This firm, founded in 1850, offered insurance against injuries arising from railroad and steamboat accidents. Sixty organizations were offering accident insurance in the US by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in the US effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911.[4]
Before the development of medical expense insurance, patients were expected to pay all other health care costs out of their own pockets, under what is known as the fee-for-service business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs, but this was not always the case.
Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of Blue Cross organizations.[4] The predecessors of today's Health Maintenance Organizations (HMOs) originated beginning in 1929, through the 1930s and on during World War II.
Glossary
'Combined ratio' = loss ratio + expense ratio + commission ratio. Loss ratio is calculated by dividing the amount of losses (sometimes including loss adjustment expenses) by the amount of earned premium. Expense ratio is calculated by dividing the amount of operational expenses by the amount of written premium. A lower number indicates a better return on the amount of capital placed at risk by an insurer.
Read more...The insurance industry and rent seeking
Certain insurance products and practices have been described as rent seeking by critics.[citation needed] That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made. Sometimes this tax deferral is the only reason people use these products.[citation needed] Another example is the legal infrastructure which allows life insurance to be held in an irrevocable trust which is used to pay an estate tax while the proceeds themselves are immune from the estate tax.
Read more...Criticism of insurance companies
Some people believe that modern insurance companies are money-making businesses which have little interest in insurance.[citation needed] They argue that the purpose of insurance is to spread risk so the reluctance of insurance companies to take on high-risk cases (e.g. houses in areas subject to flooding, or young drivers) runs counter to the principle of insurance.[citation needed]
Other criticisms include:
* Insurance policies contain too many exclusion clauses. For example, some house insurance policies do not cover damage to garden walls.[citation needed]
* Many insurance companies now use call centres and staff attempt to answer questions by reading from a script.[citation needed] It is difficult to speak to anybody with expert knowledge.[citation needed] While policyholders find their premium payments decrease when dealing with companies who sacrifice the use of trained insurance agents, they also risk greater financial loss due to inadequate coverage protection.[citation needed] Those companies who invest in educated insurance agents provide a valued service to the community. Policyholders who work with knowledgeable insurance agents are more likely to identify needs, evaluate options, purchase sufficient insurance protection, and minimize the risk of heavy financial loss for themselves and their family.
Redlining
Redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. Racial profiling or redlining has a long history in the property insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.[15]
All states have provisions in their rate regulation laws or in their fair trade practice acts that prohibit unfair discrimination, often called redlining, in setting rates and making insurance available.[16]
In determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level. However, the use of such factors is often considered to be unfair or unlawfully discriminatory, and the reaction against this practice has in some instances led to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used.
An insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. Any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. This basic principle of insurance must be followed if insurance companies are to remain solvent.[citation needed] Thus, "discrimination" against (i.e., negative differential treatment of) potential insureds in the risk evaluation and premium-setting process is a necessary by-product of the fundamentals of insurance underwriting. For instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs). The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk. However, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination.
What is often missing from the debate is that prohibiting the use of legitimate, actuarially sound factors means that an insufficient amount is being charged for a given risk, and there is thus a deficit in the system.[citation needed] The failure to address the deficit may mean insolvency and hardship for all of a company's insureds.[citation needed] The options for addressing the deficit seem to be the following: Charge the deficit to the other policyholders or charge it to the government (i.e., externalize outside of the company to society at large)
Insurance patents
New assurance products can now be protected from copying with a business method patent in the United States.
A recent example of a new insurance product that is patented is Usage Based auto insurance. Early versions were independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance (U.S. Patent 5,797,134 ) and a Spanish independent inventor, Salvador Minguijon Perez (EP patent 0700009).
Many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. Independent inventors account for 70% of the new U.S. patent applications in this area.
Many insurance executives are opposed to patenting insurance products because it creates a new risk for them. The Hartford insurance company, for example, recently had to pay $80 million to an independent inventor, Bancorp Services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by Bancorp.
There are currently about 150 new patent applications on insurance inventions filed per year in the United States. The rate at which patents have issued has steadily risen from 15 in 2002 to 44 in 2006. [17]
Inventors can now have their insurance U.S. patent applications reviewed by the public in the Peer to Patent program.[18] The first insurance patent application to be posted was US2009005522 “Risk assessment company”. It was posted on March 6, 2009. This patent application describes a method for increasing the ease of changing insurance companies.[
Complexity of insurance policy contracts
Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold.
For example, most insurance policies in the English language today have been carefully drafted in plain English; the industry learned the hard way that many courts will not enforce policies against insureds when the judges themselves cannot understand what the policies are saying.
Many institutional insurance purchasers buy insurance through an insurance broker. While on the surface it appears the broker represents the buyer (not the insurance company), and typically counsels the buyer on appropriate coverage and policy limitations, it should be noted that in the vast majority of cases a broker's compensation comes in the form of a commission as a percentage of the insurance premium, creating a conflict of interest in that the broker's financial interest is tilted towards encouraging an insured to purchase more insurance than might be necessary at a higher price. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible.
Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. An agent can represent more than one company.
An independent insurance consultant advises insureds on a fee-for-service retainer, similar to an attorney, and thus offers completely independent advice, free of the financial conflict of interest of brokers and/or agents. However, such a consultant must still work through brokers and/or agents in order to secure coverage for their clients.
Global insurance industry
Global insurance premiums grew by 11% in 2007 (or 3.3% in real terms) to reach $4.1 trillion. The macro-economic environment was characterised by slower economic growth in 2007 and rising inflation. Profitability improved in life insurance and fell slighlty in the non-life sector during the year. Life insurance premiums grew by 12.6%, accelerating in the advanced economies with the exception of Japan and Continental Europe. Non-life insurance premiums grew by 7.6% during the year. Figures for premium income are not yet available for 2008, but the insurance industry is likely to see a slowdown in new business and falling investment revenue.
Advanced economies account for the bulk of global insurance. With premium income of $1,681bn, Europe was the most important region, followed by North America ($1,330bn) and Asia ($814bn). The top four countries accounted for nearly 60% of premiums in 2007. The US and UK alone accounted for 42% of world insurance, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the world’s population but generated only around 10% of premiums.
Controversies [edit] Insurance insulates too much
By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer,) a concept known as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability.
For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by the insured. Even if a provider were so irrational as to want to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal.
Closed community self-insurance
Some communities prefer to create virtual insurance amongst themselves by other means than contractual risk transfer, which assigns explicit numerical values to risk. A number of religious groups, including the Amish and some Muslim groups, depend on support provided by their communities when disasters strike. The risk presented by any given person is assumed collectively by the community who all bear the cost of rebuilding lost property and supporting people whose needs are suddenly greater after a loss of some kind. In supportive communities where others can be trusted to follow community leaders, this tacit form of insurance can work. In this manner the community can even out the extreme differences in insurability that exist among its members. Some further justification is also provided by invoking the moral hazard of explicit insurance contracts.
In the United Kingdom, The Crown (which, for practical purposes, meant the Civil service) did not insure property such as government buildings. If a government building was damaged, the cost of repair would be met from public funds because, in the long run, this was cheaper than paying insurance premiums. Since many UK government buildings have been sold to property companies, and rented back, this arrangement is now less common and may have disappeared altogether.
Insurance companies
Insurance companies may be classified into two groups:
* Life insurance companies, which sell life insurance, annuities and pensions products.
* Non-life, General, or Property/Casualty insurance companies, which sell other types of insurance.
General insurance companies can be further divided into these sub categories.
* Standard Lines
* Excess Lines
In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature — coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year.
In the United States, standard line insurance companies are "mainstream" insurers. These are the companies that typically insure autos, homes or businesses. They use pattern or "cookie-cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies.
Excess line insurance companies (aka Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licensed in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they are not required to file rates and forms as the "admitted" carriers do. However, they still have substantial regulatory requirements placed upon them. State laws generally require insurance placed with surplus line agents and brokers not to be available through standard licensed insurers.
Insurance companies are generally classified as either mutual or stock companies. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Demutualization of mutual insurers to form stock companies, as well as the formation of a hybrid known as a mutual holding company, became common in some countries, such as the United States, in the late 20th century. Other possible forms for an insurance company include reciprocals, in which policyholders 'reciprocate' in sharing risks, and Lloyds organizations.
Insurance companies are rated by various agencies such as A. M. Best. The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products.
Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well.
Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity (which is a 100% subsidiary of the self-insured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices.
The types of risk that a captive can underwrite for their parents include property damage, public and product liability, professional indemnity, employee benefits, employers' liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance.
Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent. This can be understood against the following background:
* heavy and increasing premium costs in almost every line of coverage;
* difficulties in insuring certain types of fortuitous risk;
* differential coverage standards in various parts of the world;
* rating structures which reflect market trends rather than individual loss experience;
* insufficient credit for deductibles and/or loss control efforts.
There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies. Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client.
Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. Third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. These companies often have special expertise that the insurance companies do not have.
The financial stability and strength of an insurance company should be a major consideration when buying an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies, such as Best's, Fitch, Standard & Poor's, and Moody's Investors Service, provide information and rate the financial viability of insurance companies.
Other types
* Collateral protection insurance or CPI, insures property (primarily vehicles) held as collateral for loans made by lending institutions.
* Defense Base Act Workers' compensation or DBA Insurance provides coverage for civilian workers hired by the government to perform contracts outside the U.S. and Canada. DBA is required for all U.S. citizens, U.S. residents, U.S. Green Card holders, and all employees or subcontractors hired on overseas government contracts. Depending on the country, Foreign Nationals must also be covered under DBA. This coverage typically includes expenses related to medical treatment and loss of wages, as well as disability and death benefits.
* Expatriate insurance provides individuals and organizations operating outside of their home country with protection for automobiles, property, health, liability and business pursuits.
* Financial loss insurance protects individuals and companies against various financial risks. For example, a business might purchase coverage to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a time. Insurance might also cover the failure of a creditor to pay money it owes to the insured. This type of insurance is frequently referred to as "business interruption insurance." Fidelity bonds and surety bonds are included in this category, although these products provide a benefit to a third party (the "obligee") in the event the insured party (usually referred to as the "obligor") fails to perform its obligations under a contract with the obligee.
* Kidnap and ransom insurance
* Locked funds insurance is a little-known hybrid insurance policy jointly issued by governments and banks. It is used to protect public funds from tamper by unauthorized parties. In special cases, a government may authorize its use in protecting semi-private funds which are liable to tamper. The terms of this type of insurance are usually very strict. Therefore it is used only in extreme cases where maximum security of funds is required.
* Nuclear incident insurance covers damages resulting from an incident involving radioactive materials and is generally arranged at the national level. See the Nuclear exclusion clause and for the United States the Price-Anderson Nuclear Industries Indemnity Act)
* Pet insurance insures pets against accidents and illnesses - some companies cover routine/wellness care and burial, as well.
* Pollution Insurance, which consists of first-party coverage for contamination of insured property either by external or on-site sources. Coverage for liability to third parties arising from contamination of air, water, or land due to the sudden and accidental release of hazardous materials from the insured site. The policy usually covers the costs of cleanup and may include coverage for releases from underground storage tanks. Intentional acts are specifically excluded.
* Purchase insurance is aimed at providing protection on the products people purchase. Purchase insurance can cover individual purchase protection, warranties, guarantees, care plans and even mobile phone insurance. Such insurance is normally very limited in the scope of problems that are covered by the policy.
* Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued in conjunction with a search of the public records performed at the time of a real estate transaction.
* Travel insurance is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, loss of personal belongings, travel delay, personal liabilities, etc.
Insurance financing vehicles
* Fraternal insurance is provided on a cooperative basis by fraternal benefit societies or other social organizations.[13]
* No-fault insurance is a type of insurance policy (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident.
* Protected Self-Insurance is an alternative risk financing mechanism in which an organization retains the mathematically calculated cost of risk within the organization and transfers the catastrophic risk with specific and aggregate limits to an insurer so the maximum total cost of the program is known. A properly designed and underwritten Protected Self-Insurance Program reduces and stabilizes the cost of insurance and provides valuable risk management information.
* Retrospectively Rated Insurance is a method of establishing a premium on large commercial accounts. The final premium is based on the insured's actual loss experience during the policy term, sometimes subject to a minimum and maximum premium, with the final premium determined by a formula. Under this plan, the current year's premium is based partially (or wholly) on the current year's losses, although the premium adjustments may take months or years beyond the current year's expiration date. The rating formula is guaranteed in the insurance contract. Formula: retrospective premium = converted loss + basic premium × tax multiplier. Numerous variations of this formula have been developed and are in use.
* Formal self insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. This can be done on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis, or by simply forgoing the purchase of available insurance and paying out-of-pocket. Self insurance is usually used to pay for high-frequency, low-severity losses. Such losses, if covered by conventional insurance, mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies. While this is true for all insurance, for small, frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords.
* Reinsurance is a type of insurance purchased by insurance companies or self-insured employers to protect against unexpected losses. Financial reinsurance is a form of reinsurance that is primarily used for capital management rather than to transfer insurance risk.
* Social insurance can be many things to many people in many countries. But a summary of its essence is that it is a collection of insurance coverages (including components of life insurance, disability income insurance, unemployment insurance, health insurance, and others), plus retirement savings, that requires participation by all citizens. By forcing everyone in society to be a policyholder and pay premiums, it ensures that everyone can become a claimant when or if he/she needs to. Along the way this inevitably becomes related to other concepts such as the justice system and the welfare state. This is a large, complicated topic that engenders tremendous debate, which can be further studied in the following articles (and others):
o National Insurance
o Social safety net
o Social security
o Social Security debate (United States)
o Social Security (United States)
o Social welfare provision
* Stop-loss insurance provides protection against catastrophic or unpredictable losses. It is purchased by organizations who do not want to assume 100% of the liability for losses arising from the plans. Under a stop-loss policy, the insurance company becomes liable for losses that exceed certain limits called deductibles.
Liability
Liability insurance is a very broad superset that covers legal claims against the insured. Many types of insurance include an aspect of liability coverage. For example, a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property; automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives, health, or property. The protection offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies typically cover only the negligence of the insured, and will not apply to results of wilful or intentional acts by the insured.
* Directors and officers liability insurance protects an organization (usually a corporation) from costs associated with litigation resulting from mistakes made by directors and officers for which they are liable. In the industry, it is usually called "D&O" for short.
* Environmental liability insurance protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of pollutants.
* Errors and omissions insurance: See "Professional liability insurance" under "Liability insurance".
* Prize indemnity insurance protects the insured from giving away a large prize at a specific event. Examples would include offering prizes to contestants who can make a half-court shot at a basketball game, or a hole-in-one at a golf tournament.
* Professional liability insurance, also called professional indemnity insurance, protects insured professionals such as architectural corporation and medical practice against potential negligence claims made by their patients/clients. Professional liability insurance may take on different names depending on the profession. For example, professional liability insurance in reference to the medical profession may be called malpractice insurance. Notaries public may take out errors and omissions insurance (E&O). Other potential E&O policyholders include, for example, real estate brokers, Insurance agents, home inspectors, appraisers, and website developers.
Credit
Credit insurance repays some or all of a loan when certain things happen to the borrower such as unemployment, disability, or death.
* Mortgage insurance insures the lender against default by the borrower. Mortgage insurance is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt.
Property
Property insurance provides protection against risks to property, such as fire, theft or weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance.
* Automobile insurance, known in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself. Throughout the United States an auto insurance policy is required to legally operate a motor vehicle on public roads. In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a no-fault system, which reduces or eliminates the ability to sue for compensation but provides automatic eligibility for benefits. Credit card companies insure against damage on rented cars.
o Driving School Insurance insurance provides cover for any authorized driver whilst undergoing tuition, cover also unlike other motor policies provides cover for instructor liability where both the pupil and driving instructor are equally liable in the event of a claim.
* Aviation insurance insures against hull, spares, deductibles, hull wear and liability risks.
* Boiler insurance (also known as boiler and machinery insurance or equipment breakdown insurance) insures against accidental physical damage to equipment or machinery.
* Builder's risk insurance insures against the risk of physical loss or damage to property during construction. Builder's risk insurance is typically written on an "all risk" basis covering damage due to any cause (including the negligence of the insured) not otherwise expressly excluded.
* Crop insurance "Farmers use crop insurance to reduce or manage various risks associated with growing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance."[12]
* Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the property. Most ordinary homeowners insurance policies do not cover earthquake damage. Most earthquake insurance policies feature a high deductible. Rates depend on location and the probability of an earthquake, as well as the construction of the home.
* A fidelity bond is a form of casualty insurance that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.
* Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not provide flood insurance in some portions of the country. In response to this, the federal government created the National Flood Insurance Program which serves as the insurer of last resort.
* Home insurance or homeowners' insurance: See "Property insurance".
* Landlord insurance is specifically designed for people who own properties which they rent out. Most house insurance cover in the U.K will not be valid if the property is rented out therefore landlords must take out this specialist form of home insurance.
* Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. When the owner of the cargo and the carrier are separate corporations, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance. Many marine insurance underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.
* Surety bond insurance is a three party insurance guaranteeing the performance of the principal.
* Terrorism insurance provides protection against any loss or damage caused by terrorist activities.
* Volcano insurance is an insurance that covers volcano damage in Hawaii.
* Windstorm insurance is an insurance covering the damage that can be caused by hurricanes and tropical cyclones.
Life
Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.
Annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance.
Certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. Some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed.
In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash value is not taxable under certain circumstances. This leads to widespread use of life insurance as a tax-efficient method of saving as well as protection in the event of early death.
In U.S., the tax on interest income on life insurance policies and annuities is generally deferred. However, in some cases the benefit derived from tax deferral may be offset by a low return. This depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation. A combination of low-cost term life insurance and a higher-return tax-efficient retirement account may achieve better investment return.