Leasehold Insurance In The Post Subprime Mortgage Crisis World

Given that it is now much harder to make an honest profit in our post subprime mortgage crisis world, should business start-ups avail themselves of leasehold insurance? 

By: Ringo Bones 

Although it is the intention of the standard fire insurance policy to protect against direct losses, protection of indirect losses by endorsement has since been widely developed. Among the forms of insurance that have been developed is the leasehold insurance – which can be a business start-up lifesaver in the austere economic environment of our post subprime mortgage crisis world. 

There may be a lease on the building for a stated number of years. If the lease states that it is terminated by a fire in a given proportion of a building and the amount of rent that would have to be paid for similar quarters is higher than under the lease, then a leasehold insurance may be obtained by the lessee. 

A lessee of a certain business property may have obtained a lease at a very favorable rental, for example, annual rental may be 15,000 US dollars for 20 years. However, if the building is destroyed by fire and the lessee had to obtain other similar premises, he or she might have to pay 18,000 US dollars annual rental. Leasehold insurance is available for a lessee to protect him or her against the additional cost that he or she would have to pay under such circumstances. 

Completion Insurance: A Hollywood Movie Industry Necessity?

Given that the commercial viability of a movie script – never mind its box office earnings potential – is still a hit-and-miss affair, is completion insurance a true Hollywood movie industry necessity? 

By: Ringo Bones 

The falling out between Mel Gibson and famed screenwriter Joe Eszterhas a few months ago had cast the light yet again on how Hollywood would make money in the austere fiscal environment of our post global credit crunch world. Earlier this year, Mel Gibson and Joe Eszterhas collaborated to make a big-budget epic Maccabees movie – i.e. about the origin of Hanukah of a historical Jewish figure often referred to as the “Jewish Braveheart”. The irreconcilable differences between Eszterhas and Gibson that eventually scrapped the proposed big-budget epic were due to Gibson’s insistence to rewrite the script in order for the film to convince Jews to convert to Catholicism. And completion insurance policies are created for such an occasion. 

Completion insurance – more often referred to as completion guarantee or completion bond – is a form of insurance offered by a completion guarantor company in return for a percentage fee based on the movie’s budget guaranteeing that the producer will complete and deliver the film based on an agreed script. This is often used in independently financed films to guarantee that the producer will complete and deliver the film based on an agreed script, cast and budget to the distributors thereby triggering the payment of minimum distribution guarantees not just to the producer – but also to the banks and investors who cash flowed the guarantee, as a discount, to the producer to trigger production.  

The Hollywood movie industry’s necessity for completion insurance was probably born by changes on how movies were made a little over 60 years ago. By 1951, all major studios had diversified themselves of their theater holdings, retaining instead their distribution organizations. Once this was done, the producers were suddenly freed of the obligation to maintain a flow of films merely to keep their affiliated theaters in operation. 

This practice, the basis of the “factory system” of production that had dominated the 1920s and 1930s had invariably sacrificed quality for quantity; but because the films were sold long before the first camera turned, there had been a certain economic stability in the industry. When pictures began to be bought on the basis of quality – or at least of presumable box-office appeal – the studio heads panicked. They cut back on production and looked for ways to effect economics in their studio operations. One way that occurred to them was to close out their contracts with their high-priced stars. 

Further complicating the production scene is the steady decline in the number of films made in the United States. In 1961, only 10 of the 39 pictures before the cameras were filmed in Hollywood; the rest were filmed elsewhere in the United States and abroad. The major studios, once geared to turn out as much as a picture a week each, can now barely muster two hundred a year among them – a figure, incidentally, which includes their releases of independent productions. As a result, more depends on the success of every picture. No longer can losses on one film be amortized by the success of a dozen others.

With production costs having spiraled from an estimated average of 400,000 US dollars per picture in 1937 to over 1.5-million US dollars in 1962, thus the studios simply cannot afford to take chances. Thus, a low-budget “original” by an unknown writer, with an actor that no one ever heard off, is certainly less attractive to studios than a hit play with a bevy of costly stars. Such “insurance” is considered necessary as a hedge against the hundreds of thousands of dollars that must be invested in such “below the line” costs such as settings, costumes, raw stock, laboratory processing, etc. A case in point was the 5.5-million US dollars that Warner Bros. reputedly paid back then for My Fair Lady would be considered good business. 

It protected the studio’s investment with a pre-sold commodity so far as the audiences were concerned, and offered the banks (the ultimate financiers of most movies) the kind of securities that they would be willing to advance money on. The net result is that whereas the soaring costs of production have caused alarm throughout the movie industry, most producers believe that the only way to stay in business is to - paradoxically - spend more money.  

Wedding Insurance: Luxurious Necessity?

Given that the average wedding now costs 25-thousand US dollars these days, are wedding insurance now fast becoming a “luxurious necessity” in this day and age? 

By: Ringo Bones 

Imagine your local governor announcing everyone should batten down the hatches and stay indoors because of a major storm will hit your neck of the woods. This is just what happened several months ago in New Jersey, where Governor Chris Christie’s warning that everyone should batten down the hatches and move indoors had caused the cancellation of scores of weddings to be held in the state’s picturesque and historic boardwalks. Given that weddings in this day and age now cost an average of 25-thousand US dollars, is it high-time for prospective couples to secure wedding insurance before they officially tie the knot? 

These days, a wedding insurance with a premium of 200 to 300 US dollars can recoup you of almost your entire 25-thousand US dollar wedding plan if ever it gets cancelled by a major storm or other inclement weather.  I mean insurance companies had been insuring against rain-outs of public events for years, right? Some “fancier” wedding insurance policies even cover force majeure. But will it cover the unused tins of up-market beluga caviar? 

Comet Insurance, Anyone?

First offered by insurance providers over a hundred years ago in anticipation of the Halley’s Comet return back in May 13, 1910, can insurance companies today be able to “peddle” comet insurance?

                                 

 By: Ringo Bones

            

 Unlike meteorite strike insurance, which offers to compensate the policyholder against the damage a meteorite impact’s kinetic energy may inflict on his or her property or person, comet insurance – when first offered to the public over a hundred years ago by insurance providers in anticipation of the May 13, 1910 return of Halley’s Comet – was, believe it or not, not for compensating policyholders against a kinetic energy type devastation to one’s person and/or property, but to protect one from what astronomers had previously found out before about comets thru spectroscopic means. As Halley’s Comet came near enough to Earth for spectroscopic analysis months before the May 13, 1910 return, astronomers found out that the comet contains vast amounts of cyanogen – a colorless, flammable and poisonous gas that is also present in simple and complex cyanide compounds.

       

 Experts at the time believed that “comet insurance” might be handy to compensate the typical policyholder in case the large amounts of cyanogen drifts into the Earth’s atmosphere and cause widespread damage to crops and livestock. Strangely enough, as opposed to what Walter and Luis Alvarez previously hypothesized about a sizable meteorite or comet impacting the Earth releasing huge amounts of kinetic energy that wiped out the dinosaurs a little over 65-million years ago, comet insurance was created to compensate the widespread damage that the large amounts of spectroscopically detected toxic cyanogen gas might cause widespread cyanogen gas poisoning.  And yet, when May 13, 1910 arrived, Earth passed through Halley’s Comet’s tail without any ill-effects.  So is “comet insurance” just something born out of our ignorance of comets?

      

 Back around 1986, during the scheduled return of Halley’s Comet – given its 76-year orbital period, Hollywood capitalized everyone’s fear and ignorance about comets by releasing a movie titled Maximum Overdrive. A science fiction movie where every mechanical contrivance started autonomously to kill humans after planet Earth passed through a rogue comet’s tail. So, does anyone still think paying premiums for comet insurance still make fiscal sense?

Japanese Hole-In-One Insurance: Over The Top Insurance?

To those folks knowledgeable about Japan’s golfing scene, would you consider Japanese golfers – even casual ones – paying for a monthly premium for a hole-in-one insurance rather over the top?

By: Ringo Bones

Question: “Why do Japanese golfers, even casual ones, buy and pay monthly premiums for a hole-in-one insurance?” The answer is, is that established Japanese golfing tradition requires them to share their good luck when they get that rather rare hole-in-one shot by giving gifts to all their golfing buddies. It is a Japanese tradition that can cost the (un) fortunate hole-in-one shooter as much as 10,000 US dollars or around one million yen depending on the prevailing FOREX rate of the US dollar to the Japanese yen. Is this dedication to the game or what?

When it comes to their dedication of Western-sourced hobbies and pursuits, the Japanese have always been blessed (or is it cursed?) with a healthy disdain for – as Robert Frost puts it: “Playing tennis without a net”. The Japanese understands and appreciate the challenge of creating something within a strict set of guidelines. You know someone really enjoys a hobby when they are willing to pay (a somewhat steep?) monthly insurance premium to afford to give gifts to friends – as in golfing buddies.

By contrast, golfers in America who hit a hole-in-one are traditionally supposed to buy drinks for everyone in the clubhouse, and this seldom cost more than 500 US dollars. At Cherokee County golf tournaments, a golfer can often win a new car by making a hole-in-one on a specific hole. And it is the car dealers who provide the insurance to pay the cost of giving away the brand new car to the lucky golfer who is lucky enough to have made that hole-in-one shot.

Sometimes I do wonder what a Japanese golfer actually gets for the (mis) fortune of getting a hole-in-one shot? A better afterlife? If it doesn’t equal or exceed the 10,000 US dollars that he or she gives away in gifts, then: “What’s really the point other that sharing their good fortune from a golfer’s perspective?” Probably you have to be Japanese too to answer such an existential question satisfactorily? Golfing insurance, anyone?

Can Computer-Aided Driving Lower One’s Car Insurance Premiums?

Given that the steepness of one’s car insurance premiums is directly proportional to their accident risk, can computer-aided driving result in a more equitable policy?

By: Ringo Bones

Given that there is now a near ubiquity of GPS navigation in the latest car models, the world’s leading automotive manufacturers have now engaged themselves in a toe-in-the-water exercise on the commercial viability of automotive computers that help improve ones driving skills – safety wise. As of late, lane-departure warning devices – computer-based smart devices that use the white lines on the road as a guide - have been tried out in order to improve the road safety aspect of one’s driving skills. They emit an audible warning to the driver whenever he or she deviates from the straight path, given that less-than-sober drivers swerve in and out of their designated lane.

Andrew Yeoman, managing director of Trimble – an in-car mini computer that collects data of one’s driving performance and also provides driving tips – could allow a driver’s insurance premiums to go down by making him or her into a less accident-prone driver. As of the late, the Trimble system had received good reviews by those who tried it out. Unfortunately, as with similar in-car driving aid computers, they don’t work reliably in not-so-well-maintained roadways where the white dividing lines are already faded off. If computer-aided driving becomes commonplace, will in-car computers that drives our cars more safely than us be the next big thing in automotive accessories?

Wellness Insurance Fraud: The Bane of Health Insurance Providers?

With the advent of therapeutic vacations, medical tourism and wellness holidays now payable by established health insurance providers, are these so-called outsourced medical procedures the new target of insurance fraud?

By: Ringo Bones

Recently, health insurance provider ERGO Insurance Group of Düsseldorf, Germany, experienced a rude awakening first hand on how it feels to be fleeced by some of their unscrupulous health insurance policy holders through wellness insurance fraud. During the past few years, a growing number of unscrupulous clients had been defrauding various health insurance providers by bogus medical tourism and wellness vacation bills and claims designed to enrich themselves and their complicit co-conspirators. Could this unscrupulous criminal enterprise over time eventually defraud health insurance providers out of business?

Most health insurance providers in Europe - not just in Germany - became a target of health insurance fraudsters due to their relative lack of due diligence procedures when it comes to processing policyholders' claims whether they are genuine or fraudulent. Phony doctors' bills / falsified documents propped up by local medical practitioners during the policyholders' wellness vacation and medical tourism procedures - which have recently been found out by the ERGO Insurance Group's ongoing investigation in Sri Lanka and other top medical tourism and wellness vacation spots around the world - are fast becoming de rigueur in recent health insurance fraud schemes. Even corrupt high-level local pfficials involved in the regulation of their own medical tourism industry are sometimes involved.

Sadly, 95% or more of the suspected cases of propped-up medical bills turned out to be bona fide cases of insurance fraud. Unfortunately, most court decisions involving health insurance fraud cases in the European Union tend to favor the suspected swindlers, making prosecution of health insurance fraud perpetrators very difficult on European soil. Could this make the wellness vacation insurance and medical tourism fraud cases the new bread-and-butter of local private investigation companies?