Health insurance providers have recently used the flimsiest excuse to deny coverage of their policyholders. Will proposed reforms finally end the injustice?
By: Ringo Bones
Ever since Rocky Mountain Health Plans managed to get themselves in hot water after denying coverage of one of Colorado’s youngest citizens. A four month-old infant, whom Rocky Mountain Health Plans point out as overweight. Thanks to extensive media coverage – thanks to the baby’s father being very influential in their local media / TV network – Rocky Mountain Health Plans later reversed their decision - Not to mention a doctor’s examination which later confirmed that the four month-old baby to have a normal body mass index.
Back in May 2008, a law was passed in the United States that prohibits the firing of employees and insurance providers choosing to hike insurance premiums if genetic testing reveals a certain employee or policyholder to have a higher health risk than the norm. From our perspective, the passing of this law - which the late, great Senator Ted Kennedy was one of the main proponents – might seem like the great health insurance coverage reform that will finally save us all. And also, the former US Supreme Court Justice Sandra Day O’Connor was also very vocal on her campaign against any genetic testing that will be used to disadvantage any health insurance policy holder and employee. Especially if the test data could result him or her having to pay higher insurance premiums just to retain coverage or getting fired from the job due to being a “health risk”.
Unfortunately, unscrupulous health insurance companies – and their numbers are growing – have used the flimsiest excuses to deny their policyholders coverage. One of the flimsiest excuses getting media attention these days is the health insurance company claim – though not all of them fortunately – is that spousal abuse is a preexisting condition that could result in some policyholders a denial of coverage.
From overweight and underweight infants to spousal abuse, as 2009 draws to a close, we’ll probably be seeing more flimsy excuses that would be used by health insurance companies as a reason to deny coverage. Maybe one day, they’ll consider being too smart for your own good a preexisting condition thus leaving you high and dry in your time of need. I mean do we actually lose our value every time we see a doctor if health insurance providers consider us nothing more than “assets”?
Saturday, October 31, 2009
Tuesday, October 27, 2009
Will US Bank Closures Bankrupt the FDIC?
As American bank closures now reached the 100 mark, will this eventually bankrupt the Federal Deposit Insurance Corporation?
By: Ringo Bones
As bank after bank in the US are forced to close after stress-test failure compliance which at currently at the 100 mark is the most it had been since the fallout of the Savings & Loan scandal of 1989. But will this eventually lead to the bankruptcy and / or collapse of the Federal Deposit Insurance Corporation or FDIC? After all, if the FDIC gets its funding from the American taxpayer, it can never run out of money because it has always relied on revenues collected from taxes, right?
The Federal Deposit Insurance Corporation (FDIC) began life in January 1934 as part of President Franklin D. Roosevelt’s “New Deal” to make bank deposits – especially savings accounts – as secure as the US Government itself. Banks might and could still fail but depositors will never be left high and dry. All US banks, whether or not they are members of the Federal Reserve System, are eligible for deposit insurance if they meet the FDIC requirements usually by submitting to FDIC examinations and pay an annual assessment based on their total deposits. Virtually all of the American banks now participate in this system of deposit insurance.
Before a new bank can begin operations, it must satisfy the chartering authority on certain essentials. There must be a legitimate need for the bank’s services, it must be adequately capitalized, and it must be under competent management. Banks may not later open branches or change its capital structure without approval by the proper authority. And banks are required to submit regular reports on their condition. Banks are not allowed to pay interest on demand deposits, and the maximum rate it may pay on time deposits are set by the FDIC. It may not underwrite, that is, buy for resale or distribution, security issues other than those of the federal or state governments or their agencies. The bank must maintain reserves against its depositors equal to a specific percentage of its deposits. It may not continue operation if its capital has been impaired. If the book value of the stock (the capital and surplus in back of it) is below the par value, stockholders must pay an assessment to wipe out the deficiency or the bank will be closed.
The elaborately detailed control of banks today – that eventually lead to the rise of the Basel Accord / Basel II regulations about how much capital banks need to mitigate financial and operational risks – gives banking management less room than it once had for the exercise of its own discretion. But these regulations – that date back after the great economist John Maynard Keynes and his team was consulted by President Roosevelt in formulating a “New Deal” – have made an important contribution to the sound condition of modern commercial banking.
The recent American economic crisis has been largely defined by large financial institutions that are supposedly too big to fail that are taking excessive financial risk. Unfortunately, when they eventually – and do – fail, they take usually a number of smaller banks down with them. Thus causing the FDIC to provide pay outs to bank savings account holders. Even though the FDIC only has to pay up to a maximum set account, given the number of bank failures – now and in the near future – this could reach in the hundreds of billions of dollars. Given that American financial firms had always been too profitable thanks to the overly-generous US Government subsidies provided to them from the time when Ronald Reagan ruled the free world, will these financial institutions be always taking excessive financial risks with scant regard of whether it might bankrupt the FDIC? After all, the American taxpayer has always been their insurance underwriter of last resort, right?
Well-formulated financial reforms and regulations – especially ones with teeth – can become harder to legislate the further we seem to move away from the current crisis and into the “apparent (?)” state of economic recovery. Although recently the DOW reaching above 10,000 points is by no means an irrefutable indicator of true economic recovery. As some American financial institutions that are recently bailed out by American taxpayer money readily returned to they’re previous status quo of excessive executive bonuses and risk taking. Especially as the big fat profits slowly rolled in. Most of us will probably be asking who are these financial institutions responsible to - The companies’ shareholders or the state? Given that the US Government is now for all intents and purposes beholden to Chinese bond holders thanks to the Bush-Cheney consortium’s policy of using Chinese money to buy Arab crude oil, legislating effective financial regulations will now be at the whim and whimsy of corporation-owned lobbyists of Capitol Hill.
By: Ringo Bones
As bank after bank in the US are forced to close after stress-test failure compliance which at currently at the 100 mark is the most it had been since the fallout of the Savings & Loan scandal of 1989. But will this eventually lead to the bankruptcy and / or collapse of the Federal Deposit Insurance Corporation or FDIC? After all, if the FDIC gets its funding from the American taxpayer, it can never run out of money because it has always relied on revenues collected from taxes, right?
The Federal Deposit Insurance Corporation (FDIC) began life in January 1934 as part of President Franklin D. Roosevelt’s “New Deal” to make bank deposits – especially savings accounts – as secure as the US Government itself. Banks might and could still fail but depositors will never be left high and dry. All US banks, whether or not they are members of the Federal Reserve System, are eligible for deposit insurance if they meet the FDIC requirements usually by submitting to FDIC examinations and pay an annual assessment based on their total deposits. Virtually all of the American banks now participate in this system of deposit insurance.
Before a new bank can begin operations, it must satisfy the chartering authority on certain essentials. There must be a legitimate need for the bank’s services, it must be adequately capitalized, and it must be under competent management. Banks may not later open branches or change its capital structure without approval by the proper authority. And banks are required to submit regular reports on their condition. Banks are not allowed to pay interest on demand deposits, and the maximum rate it may pay on time deposits are set by the FDIC. It may not underwrite, that is, buy for resale or distribution, security issues other than those of the federal or state governments or their agencies. The bank must maintain reserves against its depositors equal to a specific percentage of its deposits. It may not continue operation if its capital has been impaired. If the book value of the stock (the capital and surplus in back of it) is below the par value, stockholders must pay an assessment to wipe out the deficiency or the bank will be closed.
The elaborately detailed control of banks today – that eventually lead to the rise of the Basel Accord / Basel II regulations about how much capital banks need to mitigate financial and operational risks – gives banking management less room than it once had for the exercise of its own discretion. But these regulations – that date back after the great economist John Maynard Keynes and his team was consulted by President Roosevelt in formulating a “New Deal” – have made an important contribution to the sound condition of modern commercial banking.
The recent American economic crisis has been largely defined by large financial institutions that are supposedly too big to fail that are taking excessive financial risk. Unfortunately, when they eventually – and do – fail, they take usually a number of smaller banks down with them. Thus causing the FDIC to provide pay outs to bank savings account holders. Even though the FDIC only has to pay up to a maximum set account, given the number of bank failures – now and in the near future – this could reach in the hundreds of billions of dollars. Given that American financial firms had always been too profitable thanks to the overly-generous US Government subsidies provided to them from the time when Ronald Reagan ruled the free world, will these financial institutions be always taking excessive financial risks with scant regard of whether it might bankrupt the FDIC? After all, the American taxpayer has always been their insurance underwriter of last resort, right?
Well-formulated financial reforms and regulations – especially ones with teeth – can become harder to legislate the further we seem to move away from the current crisis and into the “apparent (?)” state of economic recovery. Although recently the DOW reaching above 10,000 points is by no means an irrefutable indicator of true economic recovery. As some American financial institutions that are recently bailed out by American taxpayer money readily returned to they’re previous status quo of excessive executive bonuses and risk taking. Especially as the big fat profits slowly rolled in. Most of us will probably be asking who are these financial institutions responsible to - The companies’ shareholders or the state? Given that the US Government is now for all intents and purposes beholden to Chinese bond holders thanks to the Bush-Cheney consortium’s policy of using Chinese money to buy Arab crude oil, legislating effective financial regulations will now be at the whim and whimsy of corporation-owned lobbyists of Capitol Hill.
Monday, September 7, 2009
Can Takaful Insurance Improve Western-Style Insurance Schemes?
Given that Islamic financial institutions had weathered better than their Western counterparts, can Takaful insurance concepts help improve Western-style insurance schemes?
By: Ringo Bones
Just recently, many financial analysts based in London and New York City’s Wall Street were somewhat amazed to find out that financial institutions that practiced Shariah Banking Laws weathered better during our current global credit crunch in comparison to their credit derivatives obsessed Western counterparts. If this is true, then are there any benefits if Western-style insurance underwriters learn and adapt concepts of Takaful Insurance?
Believe it or not, many concepts behind our contemporary Western insurance underwriting schemes have their origins in the ancient civilizations that flourished in the Middle East. Ancient Babylonian artifacts had been found portraying King Hammurabi receiving the Code of Laws from the Sun God in 1800 BC. These laws contained early references to various types of insurance – namely marine, robbery, crop, and adoption. Back then it is declared by law that an adopted child reared by a family would in return provide for the family in his or her adulthood. Otherwise, the penalties for the failure to care for his or her foster parents are execution or slavery.
Takaful – the idea behind Islamic insurance – is based on the concept of social solidarity, cooperation, and mutual indemnification of the losses of members. The Takaful contract so agreed usually involves the concepts of Mudarabah, Tabarru’ (to donate for the benefit of others) and mutual sharing of losses with the overall objective of eliminating the element of uncertainty. Takaful is by no means a new concept in Islamic Commercial Law. It has been practiced by the Muhajrin (émigrés) of Mecca and the Ansar (supporters or followers) of Medina following the Hijra 2 of the Prophet Muhammad over 1400 years ago as an early form of risk management. Even though it is already been a very profitable business reality for years now, Takaful Insurance – as a profitable business entity – is almost became stillborn.
An overwhelming majority of Shariah Law scholars believe that conventional Western-style insurance – especially life insurance – is unlawful or Haram. Even as recently – relatively speaking - as 1903, some prominent Shariah Law scholars of most Arab countries declared that Western-style conventional life insurance were unacceptable. In 1974, the National Religious Council issued a legal opinion that conventional life insurance is not permissible because it contains elements of risk and uncertainty or Gharar, gambling or Maisir, and interest or Riba. In 1985, the Grand Counsel of Islamic Scholars in Saudi Arabia called the Majma al-Fiqh eventually approved the Takaful system as the alternative form of insurance written and structured in compliance with Islamic Shariah Law. The rational being that the Takaful system is a concept of protection for the good of society, thus approved as a means of co-operation and mutual help by the Grand Counsel.
The first formally established Takaful Insurance company was the Islamic Insurance Company of Sudan that opened its doors for business back in 1979 – six years before the Grand Counsel in Saudi Arabia deemed it okey. Given that the crude oil business is already a very lucrative post World War II industry in the Middle East plus the need of capital to process the “black gold”. The inevitability of Shariah Law compliant insurance industry is too good to pass up – Grand Counsel approval or not – because it represents a good source of much needed revenue for infrastructure development.
The establishment and eventual success of the Takaful Insurance system took quite a long and hard road indeed. Despite of some criticisms of Western financial analysts over the Takaful system like Moody's Investor Service's concerns over unused surplus liquidity. Not to mention still gray area of Shariah Law compliance of the reinsurance version of Takaful – which has still been an area of much debate. It did managed to avoid much – if not all – of its Western counterparts risky financial behavior and excesses. Not to mention the Takaful systems concerns over the sustainability of investment banking, which many see as nothing more than making money out of thin air. In short, Takaful Insurance system could teach its Western counterpart to remember prudent financial practices and risk management .
By: Ringo Bones
Just recently, many financial analysts based in London and New York City’s Wall Street were somewhat amazed to find out that financial institutions that practiced Shariah Banking Laws weathered better during our current global credit crunch in comparison to their credit derivatives obsessed Western counterparts. If this is true, then are there any benefits if Western-style insurance underwriters learn and adapt concepts of Takaful Insurance?
Believe it or not, many concepts behind our contemporary Western insurance underwriting schemes have their origins in the ancient civilizations that flourished in the Middle East. Ancient Babylonian artifacts had been found portraying King Hammurabi receiving the Code of Laws from the Sun God in 1800 BC. These laws contained early references to various types of insurance – namely marine, robbery, crop, and adoption. Back then it is declared by law that an adopted child reared by a family would in return provide for the family in his or her adulthood. Otherwise, the penalties for the failure to care for his or her foster parents are execution or slavery.
Takaful – the idea behind Islamic insurance – is based on the concept of social solidarity, cooperation, and mutual indemnification of the losses of members. The Takaful contract so agreed usually involves the concepts of Mudarabah, Tabarru’ (to donate for the benefit of others) and mutual sharing of losses with the overall objective of eliminating the element of uncertainty. Takaful is by no means a new concept in Islamic Commercial Law. It has been practiced by the Muhajrin (émigrés) of Mecca and the Ansar (supporters or followers) of Medina following the Hijra 2 of the Prophet Muhammad over 1400 years ago as an early form of risk management. Even though it is already been a very profitable business reality for years now, Takaful Insurance – as a profitable business entity – is almost became stillborn.
An overwhelming majority of Shariah Law scholars believe that conventional Western-style insurance – especially life insurance – is unlawful or Haram. Even as recently – relatively speaking - as 1903, some prominent Shariah Law scholars of most Arab countries declared that Western-style conventional life insurance were unacceptable. In 1974, the National Religious Council issued a legal opinion that conventional life insurance is not permissible because it contains elements of risk and uncertainty or Gharar, gambling or Maisir, and interest or Riba. In 1985, the Grand Counsel of Islamic Scholars in Saudi Arabia called the Majma al-Fiqh eventually approved the Takaful system as the alternative form of insurance written and structured in compliance with Islamic Shariah Law. The rational being that the Takaful system is a concept of protection for the good of society, thus approved as a means of co-operation and mutual help by the Grand Counsel.
The first formally established Takaful Insurance company was the Islamic Insurance Company of Sudan that opened its doors for business back in 1979 – six years before the Grand Counsel in Saudi Arabia deemed it okey. Given that the crude oil business is already a very lucrative post World War II industry in the Middle East plus the need of capital to process the “black gold”. The inevitability of Shariah Law compliant insurance industry is too good to pass up – Grand Counsel approval or not – because it represents a good source of much needed revenue for infrastructure development.
The establishment and eventual success of the Takaful Insurance system took quite a long and hard road indeed. Despite of some criticisms of Western financial analysts over the Takaful system like Moody's Investor Service's concerns over unused surplus liquidity. Not to mention still gray area of Shariah Law compliance of the reinsurance version of Takaful – which has still been an area of much debate. It did managed to avoid much – if not all – of its Western counterparts risky financial behavior and excesses. Not to mention the Takaful systems concerns over the sustainability of investment banking, which many see as nothing more than making money out of thin air. In short, Takaful Insurance system could teach its Western counterpart to remember prudent financial practices and risk management .
Monday, August 31, 2009
Everyday PTSD Compensation: Mental Trauma Over Sense?
As PTSD was redefined as something that could occur during peacetime work related activity, will falsified compensation claims be the rule, rather than the exception?
By: Ringo Bones
As Capitol Hill still ruminates over President Obama’s proposed healthcare reforms, the mental health side of healthcare insurance providers could face its toughest challenge yet ever since the DSM – IV definition of post traumatic stress disorder or PTSD as a psychological trauma that could also occur during peacetime related activity. Given the limit resources of most of the worlds mental health providers, could ordinary folks claiming PTSD compensation that they acquire during their 9 to 5 jobs deprive care to those who needed it most – like the returning veterans of our “Global War on Terror”?
Even though “everyday PTSD” or “9 to 5 PTSD” as it is being derogatorily called is still largely a phenomena of the working class of the affluent West. Due to the fact that cultures in other parts of the world that are staunchly clinging to their machismo still define seeking compensation for the “intangible” mental trauma that you got from work as a sissy act. These people’s views could change though given that the number of employees claiming work related PTSD that received monetary compensation is on the rise. Is the latest surfeit of gifted personal injury lawyers to blame?
Receiving a generous monetary compensation for peacetime work related PTSD is still not a piece of cake though due to the adversarial nature of the legal system that oversaw such claims proceedings. So a skilled personal injury lawyer is a must. The claims seeker often endures being presumed as a fraud in a court of law. But given that people who got a somewhat questionable PTSD compensation is on the rise while the true nature and level of trauma experienced in general peacetime society is still an unexamined phenomena. Should health insurance claims adjusters do their “homework” first before shelling out huge cash settlements to work related PTSD claims?
The problem with some overly generous cash compensation to peacetime work-related PTSD claimants - even though the funds are more often than not is doled out via structured settlements – is that there is no legal oversight whether the funds and resources are used to rehabilitate the PTSD claims seeker. Since these claimants are former valued personnel in the workforce, peacetime work-related PTSD claimants are better off undergoing a rehabilitation program – if they are genuinely suffering from PTSD. As opposed to just receiving monetary compensation to avoid being gainfully and responsibly employed, rather than being inebriated all day with their compensation money. Personal injury lawyers could also reacquaint themselves with the art of ethical practice.
By: Ringo Bones
As Capitol Hill still ruminates over President Obama’s proposed healthcare reforms, the mental health side of healthcare insurance providers could face its toughest challenge yet ever since the DSM – IV definition of post traumatic stress disorder or PTSD as a psychological trauma that could also occur during peacetime related activity. Given the limit resources of most of the worlds mental health providers, could ordinary folks claiming PTSD compensation that they acquire during their 9 to 5 jobs deprive care to those who needed it most – like the returning veterans of our “Global War on Terror”?
Even though “everyday PTSD” or “9 to 5 PTSD” as it is being derogatorily called is still largely a phenomena of the working class of the affluent West. Due to the fact that cultures in other parts of the world that are staunchly clinging to their machismo still define seeking compensation for the “intangible” mental trauma that you got from work as a sissy act. These people’s views could change though given that the number of employees claiming work related PTSD that received monetary compensation is on the rise. Is the latest surfeit of gifted personal injury lawyers to blame?
Receiving a generous monetary compensation for peacetime work related PTSD is still not a piece of cake though due to the adversarial nature of the legal system that oversaw such claims proceedings. So a skilled personal injury lawyer is a must. The claims seeker often endures being presumed as a fraud in a court of law. But given that people who got a somewhat questionable PTSD compensation is on the rise while the true nature and level of trauma experienced in general peacetime society is still an unexamined phenomena. Should health insurance claims adjusters do their “homework” first before shelling out huge cash settlements to work related PTSD claims?
The problem with some overly generous cash compensation to peacetime work-related PTSD claimants - even though the funds are more often than not is doled out via structured settlements – is that there is no legal oversight whether the funds and resources are used to rehabilitate the PTSD claims seeker. Since these claimants are former valued personnel in the workforce, peacetime work-related PTSD claimants are better off undergoing a rehabilitation program – if they are genuinely suffering from PTSD. As opposed to just receiving monetary compensation to avoid being gainfully and responsibly employed, rather than being inebriated all day with their compensation money. Personal injury lawyers could also reacquaint themselves with the art of ethical practice.
Thursday, July 9, 2009
Insuring Michael Jackson
It is a well-known fact that Michael Jackson is one of the top money earners of the U.S. and the global music industry, but how easy – or difficult – is it to insure the King of Pop?
By: Ringo Bones
Since the untimely and tragic passing of Michael Jackson back in June 25, 2009, his planned This is It tour seems to have become an insurance company’s nightmare. But given the sums of money involved, will the parties involved in insuring Michael Jackson gain financially in the end? After all, Jackson’s musical talent is well backed by having the ability to earn millions.
Ever since his musical prowess enabled him to earn millions of dollars with relative ease, Michael Jackson has always been designated into the special coverage risk aisle as an insurance coverage client - Not to mention his lifestyle choice. The price of such coverage tends to be high because the broad statistical basis for computing most insurance rates – i.e. statistical analysis that applies to us ordinary folks – does not apply to Michael Jackson’s highly individual risk.
So when the broker who facilitated in insuring Michael Jackson’s This is It tour bends over an underwriter’s box at Lloyd’s of London to discuss an insurance risk tailored to Mr. Jackson’s particular case. It is safe to guarantee that such discussions will be a lengthy one. Although Lloyd’s has for years been famous it’s willingness to underwrite unique risks for which adequate tables of probability are not available. Such as the cancellation of a major event due to the untimely death of an apparently healthy 50 year old man still in the prime of health.
Michael Jackson’s cancelled tour could also become the biggest ticket refund in history add to that the tour promoter AEG Live may have trouble collecting on it’s insurance only complicates matters. Insurers had sold an 18 million US dollar policy through Lloyd’s the famous London-based insurance market that was intended to help AEG Live recoup costs if the concerts the company was staging with Mr. Jackson were cancelled due to accident, according to the insurance company’s actuaries.
The insurance policy also could have provided coverage in case of cancellation due to medical-related issues according to a Lloyd’s insurance actuary. But that part of the coverage was dependent on the results of a physical that Mr. Jackson was scheduled to take. Thus raising the possibility that the coverage might not apply. Although Randy Phillips CEO of AEG Live had witnessed Michael Jackson passing his physical exam with flying colors in preparation for the upcoming tour several weeks before Jackson’s tragic and untimely death.
According to Bermuda-based insurer Validus Holdings Ltd., a group of insurers were covering the This is It 50-date concert series through the Lloyd’s insurance market, including its subsidiary Talbot Holdings Ltd. But Validus said it had less than $3 million at risk. But no matter what the outcome of the insurance pay-outs will be, Michael Jackson’s estate can still manage to cash-in on the cancellation of the This is It tour slated for July 13, 2009. There are even plans to release the video coverage of Michael Jackson’s elaborate rehearsals and full run-through at the Staples Center on DVD. Including the rehearsal footage two days before he died. Thus making it a part of a very good insurance policy from a financial perspective.
By: Ringo Bones
Since the untimely and tragic passing of Michael Jackson back in June 25, 2009, his planned This is It tour seems to have become an insurance company’s nightmare. But given the sums of money involved, will the parties involved in insuring Michael Jackson gain financially in the end? After all, Jackson’s musical talent is well backed by having the ability to earn millions.
Ever since his musical prowess enabled him to earn millions of dollars with relative ease, Michael Jackson has always been designated into the special coverage risk aisle as an insurance coverage client - Not to mention his lifestyle choice. The price of such coverage tends to be high because the broad statistical basis for computing most insurance rates – i.e. statistical analysis that applies to us ordinary folks – does not apply to Michael Jackson’s highly individual risk.
So when the broker who facilitated in insuring Michael Jackson’s This is It tour bends over an underwriter’s box at Lloyd’s of London to discuss an insurance risk tailored to Mr. Jackson’s particular case. It is safe to guarantee that such discussions will be a lengthy one. Although Lloyd’s has for years been famous it’s willingness to underwrite unique risks for which adequate tables of probability are not available. Such as the cancellation of a major event due to the untimely death of an apparently healthy 50 year old man still in the prime of health.
Michael Jackson’s cancelled tour could also become the biggest ticket refund in history add to that the tour promoter AEG Live may have trouble collecting on it’s insurance only complicates matters. Insurers had sold an 18 million US dollar policy through Lloyd’s the famous London-based insurance market that was intended to help AEG Live recoup costs if the concerts the company was staging with Mr. Jackson were cancelled due to accident, according to the insurance company’s actuaries.
The insurance policy also could have provided coverage in case of cancellation due to medical-related issues according to a Lloyd’s insurance actuary. But that part of the coverage was dependent on the results of a physical that Mr. Jackson was scheduled to take. Thus raising the possibility that the coverage might not apply. Although Randy Phillips CEO of AEG Live had witnessed Michael Jackson passing his physical exam with flying colors in preparation for the upcoming tour several weeks before Jackson’s tragic and untimely death.
According to Bermuda-based insurer Validus Holdings Ltd., a group of insurers were covering the This is It 50-date concert series through the Lloyd’s insurance market, including its subsidiary Talbot Holdings Ltd. But Validus said it had less than $3 million at risk. But no matter what the outcome of the insurance pay-outs will be, Michael Jackson’s estate can still manage to cash-in on the cancellation of the This is It tour slated for July 13, 2009. There are even plans to release the video coverage of Michael Jackson’s elaborate rehearsals and full run-through at the Staples Center on DVD. Including the rehearsal footage two days before he died. Thus making it a part of a very good insurance policy from a financial perspective.
Thursday, May 7, 2009
Microinsurance: Credit Insurance for the Little Guy?
Introduced as part and parcel in the financial service of microfinance / microcredit clients, does microinsurance really protect the “Little Guys” – i.e. microcredit-funded entrepreneurs?
By: Ringo Bones
Ever since the runaway success of Dr. Muhammad Yunus’ Banking for the Poor-inspired microcredit and microfinance programs across the globe, many microfinance institutions had began introducing microinsurance services in order to protect the financial successes of microfinance and microcredit clients against the onslaught of the global economic downturn. Given that some established “conventional” economist had always been skeptical of these “extremely subprime loans”, does microinsurance really protect these small business owners against the economic uncertainties of the global credit crisis circa 2009? Or is this just a “brilliant” financial instrument made to extract the maximum amount of profits from the poor microcredit and microfinance clients.
According to some official microcredit and microfinance service providers’ websites, microinsurance is defined as a system by which people, business, and other organizations funded by microcredit and microfinance programs make premium payments to share risks. Access to insurance with low premium rates enables microcredit funded entrepreneurs to concentrate more on growing their business – i.e. reinvesting a significant portion of their profits back into their business – while providing mechanisms that mitigate risks affecting property, health, and the ability to do work. Especially during the fiscal uncertainties of our current global economic downturn where every corporate and business entity of every size, shape or form are affected in a negative way.
The rationale behind microinsurance is to provide a system that will help poor people - especially microfinance and microcredit recipients – cope with sudden expenses associated with serious illness (current swine flu outbreak?) or loss of assets. Studies recently conducted on microfinance and microcredit recipients / clients have shown that merely having access to conventional savings accounts has also proved to be an incentive to save for that proverbial rainy day. Clients who join and stay in microfinance / microcredit programs have better economic conditions than non-clients do – at least from a cash-based / credit-based economic point of view.
The question now is does microinsurance – like it’s well established sibling, credit insurance had done to big business – really help microcredit / microfinance recipients? Though it is yet a relatively new financial scheme, microinsurance – at least on paper – could theoretically provide microcredit and microfinance institutions around the world the ability to provide financial security to their established clients. As an investor in our local microcredit / microfinance provider for almost five years, I’ve noticed that our local fish and fresh produce vendors had been enjoying relative financial security that can’t be found just ten years before. And this was the advent before microinsurance schemes were introduced. From my point of view, it is still way too soon to conclude that microinsurance – in actual practice – is just another useless business expense. Maybe we’ll check it out in a few months’ time.
By: Ringo Bones
Ever since the runaway success of Dr. Muhammad Yunus’ Banking for the Poor-inspired microcredit and microfinance programs across the globe, many microfinance institutions had began introducing microinsurance services in order to protect the financial successes of microfinance and microcredit clients against the onslaught of the global economic downturn. Given that some established “conventional” economist had always been skeptical of these “extremely subprime loans”, does microinsurance really protect these small business owners against the economic uncertainties of the global credit crisis circa 2009? Or is this just a “brilliant” financial instrument made to extract the maximum amount of profits from the poor microcredit and microfinance clients.
According to some official microcredit and microfinance service providers’ websites, microinsurance is defined as a system by which people, business, and other organizations funded by microcredit and microfinance programs make premium payments to share risks. Access to insurance with low premium rates enables microcredit funded entrepreneurs to concentrate more on growing their business – i.e. reinvesting a significant portion of their profits back into their business – while providing mechanisms that mitigate risks affecting property, health, and the ability to do work. Especially during the fiscal uncertainties of our current global economic downturn where every corporate and business entity of every size, shape or form are affected in a negative way.
The rationale behind microinsurance is to provide a system that will help poor people - especially microfinance and microcredit recipients – cope with sudden expenses associated with serious illness (current swine flu outbreak?) or loss of assets. Studies recently conducted on microfinance and microcredit recipients / clients have shown that merely having access to conventional savings accounts has also proved to be an incentive to save for that proverbial rainy day. Clients who join and stay in microfinance / microcredit programs have better economic conditions than non-clients do – at least from a cash-based / credit-based economic point of view.
The question now is does microinsurance – like it’s well established sibling, credit insurance had done to big business – really help microcredit / microfinance recipients? Though it is yet a relatively new financial scheme, microinsurance – at least on paper – could theoretically provide microcredit and microfinance institutions around the world the ability to provide financial security to their established clients. As an investor in our local microcredit / microfinance provider for almost five years, I’ve noticed that our local fish and fresh produce vendors had been enjoying relative financial security that can’t be found just ten years before. And this was the advent before microinsurance schemes were introduced. From my point of view, it is still way too soon to conclude that microinsurance – in actual practice – is just another useless business expense. Maybe we’ll check it out in a few months’ time.
Monday, April 27, 2009
Of Piracy and Occupational Disability Insurance
Given the cost of the upkeep of the commercial maritime traffic through the dangerous waters of the Gulf of Aden, will sky-high insurance premiums make this area a no go zone someday?
By: Ringo Bones
Occupational disability insurance is a relatively complex issue that often grabs the news headlines whenever a claim refusal happens, but can the various insurance providers still maintain economic viability when their regular customers are increasingly involved in insuring their business activities in increasingly hostile locales. Like the sea-lanes off the coast of Somalia.
At present, it is still economically viable – in spite of the rising insurance premiums and risk of piracy – for commercial bulk carriers to ply through the treacherous pirate infested waters of the Gulf of Aden to deliver their cargo of low-wage Asian manufactured goods. In order to meet the insatiable demand in European markets. But will that fateful day eventually come that commercial shipping through the Gulf of Aden will become so risky and prohibitively costly. So risky and costly in insurance premium terms that maritime traffic will be rerouted via the Cape of Good Hope as they travel from East Asia to Europe in spite of the additional fuel expenditure and longer transit time?
Currently occupational disability insurance issued to commercial shipping traffic in high-risk areas, like the Gulf of Aden, only cover the risk of injury and death by acts of piracy. But eventually, the occupational disability insurance being issued might someday include proviso for hazardous toxic waste exposure given that on-going preliminary investigation have shown that the Gulf of Aden had been used as an illegal toxic waste dump for over 20 years. Although the proof of the illegal toxic waste dumps that had been contaminating the waters of the Gulf of Aden are yet to be fully vetted and peer approved. Given that there is a clear and present danger that scientists working for the United Nations Environmental Program (UNEP) might be abducted and held for ransom as they collect for evidence of hazardous toxic waste contamination in Somali waters. And with the preexisting United Nations-style bureaucracy, the investigation could take awhile, but in time, it will eventually be proven. But for now, the need for strengthening and legitimizing the Somali government so that it can solve the piracy problem on its own terms has been given top priority.
Occupational disability insurance – also called permanent health insurance – comes in 2 basic types: occupational disability and general disability. An occupational disability policy provides the insured with a source of income in the form of disability benefits when the insured is no longer able to perform substantially all of the material acts of his or her occupation as designated in the policy. While a general disability policy typically provides benefits when the insured is unable to perform substantially all of the material acts of any occupation. Whether an insured under general disability policy satisfies the definition of total disability depends on the policyholder’s training, experience and future ability to secure gainful employment.
Given that the recent high-profile rescue of the Maersk Alabama skipper Capt. Richard Phillips and the US Navy SEAL team that rescued him might or might have been exposed to hazardous toxic chemicals being illegally dumped in the Gulf of Aden. Hopefully their permanent health insurance is sufficient to cover any future ill-effects of their “ordeal” without their insurance providers being dragged into the media spotlight in the near future due to claim refusals because of the lack of evidence of hazardous toxic chemical and radiation exposure. Or perhaps that lone surviving Somali teen pirate currently under FBI custody – Abduwali Abdukhadir Muse – could plead not guilty due to diminished capacity because of his exposure to the illegal hazardous toxic waste dumps in the Gulf of Aden. Looks like Somali piracy won't end any time soon.
By: Ringo Bones
Occupational disability insurance is a relatively complex issue that often grabs the news headlines whenever a claim refusal happens, but can the various insurance providers still maintain economic viability when their regular customers are increasingly involved in insuring their business activities in increasingly hostile locales. Like the sea-lanes off the coast of Somalia.
At present, it is still economically viable – in spite of the rising insurance premiums and risk of piracy – for commercial bulk carriers to ply through the treacherous pirate infested waters of the Gulf of Aden to deliver their cargo of low-wage Asian manufactured goods. In order to meet the insatiable demand in European markets. But will that fateful day eventually come that commercial shipping through the Gulf of Aden will become so risky and prohibitively costly. So risky and costly in insurance premium terms that maritime traffic will be rerouted via the Cape of Good Hope as they travel from East Asia to Europe in spite of the additional fuel expenditure and longer transit time?
Currently occupational disability insurance issued to commercial shipping traffic in high-risk areas, like the Gulf of Aden, only cover the risk of injury and death by acts of piracy. But eventually, the occupational disability insurance being issued might someday include proviso for hazardous toxic waste exposure given that on-going preliminary investigation have shown that the Gulf of Aden had been used as an illegal toxic waste dump for over 20 years. Although the proof of the illegal toxic waste dumps that had been contaminating the waters of the Gulf of Aden are yet to be fully vetted and peer approved. Given that there is a clear and present danger that scientists working for the United Nations Environmental Program (UNEP) might be abducted and held for ransom as they collect for evidence of hazardous toxic waste contamination in Somali waters. And with the preexisting United Nations-style bureaucracy, the investigation could take awhile, but in time, it will eventually be proven. But for now, the need for strengthening and legitimizing the Somali government so that it can solve the piracy problem on its own terms has been given top priority.
Occupational disability insurance – also called permanent health insurance – comes in 2 basic types: occupational disability and general disability. An occupational disability policy provides the insured with a source of income in the form of disability benefits when the insured is no longer able to perform substantially all of the material acts of his or her occupation as designated in the policy. While a general disability policy typically provides benefits when the insured is unable to perform substantially all of the material acts of any occupation. Whether an insured under general disability policy satisfies the definition of total disability depends on the policyholder’s training, experience and future ability to secure gainful employment.
Given that the recent high-profile rescue of the Maersk Alabama skipper Capt. Richard Phillips and the US Navy SEAL team that rescued him might or might have been exposed to hazardous toxic chemicals being illegally dumped in the Gulf of Aden. Hopefully their permanent health insurance is sufficient to cover any future ill-effects of their “ordeal” without their insurance providers being dragged into the media spotlight in the near future due to claim refusals because of the lack of evidence of hazardous toxic chemical and radiation exposure. Or perhaps that lone surviving Somali teen pirate currently under FBI custody – Abduwali Abdukhadir Muse – could plead not guilty due to diminished capacity because of his exposure to the illegal hazardous toxic waste dumps in the Gulf of Aden. Looks like Somali piracy won't end any time soon.
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