Tag Archives: insurance

Hurricane Risks in Florida Are Growing: Challenges in Securing Flood Insurance

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The threat of hurricanes in Florida is increasing, driven by anthropogenic climate change that warms our atmosphere and elevates sea surface temperatures in the Gulf of Mexico. Warmer conditions retain moisture, enhance hurricane intensity, and create more powerful storms, making Florida more susceptible to storm-related damage. During Hurricane Helen, extreme rainfall surged by 10%, with some regions in Florida receiving up to 26.95 inches of rainfall.

Jeremy Porter, a climate risk expert at the First Street Foundation, points out that soaring insurance costs reflect the significant effects of climate change in West Florida, where areas like Fort Myers Beach are grappling with recurring losses and expensive recovery efforts.

“In recent decades, we’ve been catching up with the reality of climate risks that weren’t adequately reflected in risk modeling. Now, as we reassess, premium costs are rising rapidly, impacting people’s household budgets,” Porter noted.

Due to a scarcity of home insurance options, residents are increasingly opting for coverage through Citizens Insurance Property Corp., a state-supported non-profit insurer in Florida.

Porter anticipates that by 2055, home insurance premiums in the Tampa Metro region could soar by 213% because of hurricane risks. Climate-related threats are similarly disrupting insurance markets in other states; for instance, Sacramento, California, may see a 137% rise due to heightened wildfire risks.

Porter also mentioned that declining home prices in Florida could influence insurance costs and accessibility. If property values fall below a certain threshold, insurers exposed to hurricane risks may view this as a warning sign, leading to increased scrutiny and potential hikes in premiums during the underwriting process.

Zillow data indicates that the value of homes in Fort Myers Beach has decreased by approximately $200,000 from pre-pandemic levels, with around 86% of last year’s sales reflecting this price drop.

Before Hurricane Ian, the average home value on Sanibel Island, a favored destination in Lee County, stood at nearly $1.3 million. Today, it has plummeted to $868,000, with 93% of homes having sold at reduced prices.

Joan Krempner, a part-time resident of Fort Myers Beach since 2016, stated that selling her home is not financially feasible after substantial rebuilding costs following Hurricane Ian. With few alternatives but to remain in Fort Myers Beach, Krempner expresses concern about the long-term implications of climate change on the community’s future.

“We must face that this is a long-term issue. The critical question is whether people want to keep investing in Fort Myers Beach,” Krempner remarked. “If there hasn’t been a hurricane in 30 years, the risk seems worthwhile for living in paradise. But if three major hurricanes strike within 18 months, doubt creeps in.”

Jacki Liszak, president and CEO of the Fort Myers Beach Chamber of Commerce, asserts that Fort Myers Beach remains an attractive place to live and visit, highlighting community efforts toward resilient architecture and the construction of homes above flood levels.

“Homes must be built strong and elevated,” Liszak emphasized. “This is beneficial. People are already here, and they’ll continue to come. They cherish this lifestyle—it’s truly a beautiful part of the world.”

Source: www.nbcnews.com

US Prosecutors Charge Major Insurance Firms with Paying Kickbacks for Private Medicare Plans

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The Justice Department has charged three major health insurance companies with engaging in illegal kickback schemes totaling hundreds of millions of dollars over several years, involving payments to insurance brokers who guided individuals to private Medicare plans.

Federal prosecutors also alleged that two of these insurers colluded with brokers to discriminate against individuals with disabilities by hindering their enrollment in private Medicare plans, based on the belief that these plans would be costlier.

Around 12% of Medicare beneficiaries, who are disabled and under the age of 65, qualify for the federal insurance program. Their intricate health requirements often lead to high care costs.

According to a complaint initially filed by whistleblowers, the Department of Justice has joined the case against the nation’s largest health insurance company, previously known as Anthem. Humana is also implicated for allegedly funneling kickbacks to three large brokers—Ehealth, GoHealth, and SelectQuote—to boost enrollment in Medicare Advantage plans, which have also been tied to fraudulent activities.

A complaint filed in federal court in Boston claims that the kickback scheme spanned from at least 2016 to 2021, accusing Aetna and Humana of discrimination against individuals with disabilities.

Aetna, Elevance, GoHealth, and Humana have denied the allegations, although others have not responded to requests for comments.

This lawsuit is one of the first indications of the Trump administration’s scrutiny of certain Medicare Advantage plans, which face ongoing federal oversight. Critics, including lawmakers, have condemned these popular plans for potential overcharging the federal government through aggressive marketing strategies. Over half of all individuals enrolled in the federal program are covered by Medicare Advantage plans.

During the Senate confirmation hearing for Dr. Mehmet Oz, he assured concerned senators about the oversight of Medicare plans, promising a “new sheriff” to address excesses.

Brokers play a crucial role in assisting senior Americans in selecting private Medicare plans. However, the allegations suggest brokers have directed individuals to plans that offer the highest commissions instead of the best fit for their needs.

In recent years, small local brokerage firms have been overshadowed by large national organizations that employ numerous agents and utilize call centers and websites like those mentioned in the lawsuit. These companies increasingly depend on technology to help brokers identify the optimal plans for callers, facilitating the kind of steering described in the allegations.

The Biden administration implemented regulations last year aimed at reducing the commissions insurance companies can pay to brokers for patient enrollments. Recent Congressional testimonies and consumer complaints have indicated that insurers are offering bonuses to brokers for enrolling more individuals in specific plans, regardless of their actual needs. However, the lawsuit is still pending.

Regarding cases involving disabled individuals, federal prosecutors have stated: “The efforts to specifically exclude beneficiaries are even more ruthless given that their disabilities may render them less profitable for health insurance companies,” said attorney Leah B. Foy. “We will continue to investigate and prosecute the greed targeting these beneficiaries.”

Source: www.nytimes.com

Increased hail size and insurance costs may result from climate change

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summary

  • So far this year, hail — not hurricanes, floods or tornadoes — has caused the most costly weather damage in the United States.
  • Research suggests that large hailstorms will become more frequent due to climate change.
  • Next year, scientists are planning the first field study of hail in the United States since the 1970s, and will track hailstorms in the same way they track tornadoes.

Barb Berlin was standing in the garage of her farmhouse near Inman, Nebraska, when she heard a sudden crackling noise.

“I thought it was a gun,” she said.

Then a streak of white appeared, and she realized the sound wasn't a gunshot, but hail.

Fist-sized hailstones pounded on the tin roof of Berlin's garage, and soon others began punching softball-shaped holes in the hood of her Ford Mustang parked outside.

“It was very loud and scary. I prayed a lot,” Berlin said, adding that she was worried about her livestock. “I've never seen hail like that before.”

Hail is a hidden danger: Despite the extreme weather this spring and summer, hail — not hurricanes, floods or tornadoes — caused the most losses in the U.S., according to Gallagher Re, a global reinsurance firm that tracks such data.

And as the planet warms, research suggests large hailstorms like the one observed in Berlin on Monday will become more frequent. A study published last monthThis suggests that the chances of smaller, less damaging hail will decrease.

A study by researchers at Northern Illinois University projects that the frequency of hailstones larger than about 1.5 inches could increase by 15% to 75%, depending on the amount of greenhouse gas pollution humans emit.

Hail occurs when thunderstorms circulate raindrops in the upper layers of the atmosphere, and typically occurs where temperatures are between -22°F and 14°F. Climate change affects hail because warmer temperatures create more energy to push air upwards. In a thunderstorm.

“We expect to see stronger updrafts in the future as the atmosphere becomes more unstable,” said Victor Gensini, a professor of meteorology at Northern Illinois University and lead author of the study.

According to the study, these strong updrafts allow hail to remain in the right places in the storm longer, allowing more ice to accumulate before the hail becomes too heavy and falls to the ground.

“Imagine trying to balance a ping pong ball on an upside-down hair dryer pointing up into the sky,” Gensini said, explaining how updrafts lift hailstones. “Now try balancing a baseball or a grapefruit. You'll need a stronger updraft to…
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Source: www.nbcnews.com

Will Allianz be the buyer for non-unicorn insurance company Luco in urgent need of a buyer?

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How quickly time passes! Just a few weeks ago, shortly after its acquisition by British group Admiral was announced, French insurance tech company Luko advertised itself on billboards in the Paris metro, joking about the fact that it had previously won the “Next Unicorn” award. I was confident enough to say so. Fast forward to this week, and its parent company, his Demain ES, is being put up for sale. Legal notice in newspaper After the Admiral abandons ship.

What happened during this time was a wild ride from offer to offer until the courts put the brakes on a roller coaster that won’t end soon for the more than 120 employees whose jobs are on the line. It was a great journey. They already know they work for a non-unicorn company, but they’re probably keen to know if their next employer will be Allianz.

As for policyholders, Luko insists there is no need to worry. “Luco Cover, the broker and manager of the contracts sold by Luco, and Luco Insurance AG, the insurance company of the Luco Group.” [are] separate entity […]. Therefore, Ruco’s insurance and brokerage operations will continue to operate as usual,” the company said.

But it will not be business as usual for Mr. DeMaine following the court’s decision revealed this week. The startup’s parent company entered into accelerated safeguard proceedings in June. However, as a result of bankruptcy, they are now subject to judicial restructuring, which is a bad omen, since this process often ends in liquidation.

Of course, Luko is still available. Therefore, the following notice will be published in the newspaper. But despite the agreement the two companies signed in June this year, it is not Admiral’s fault: it has now been confirmed that the British insurance group withdrew from the agreement on October 20th.

Admiral will pay 14 million euros for Luko Cover, with the full amount of 11 million euros plus an additional 3 million euros related to certain milestones. This partly explains why the M&A process has been bumpy: Luko says: 72 million euros It is easy to imagine how difficult it was for the debtor to respond as the debtor was in the middle of a standalone transaction. But as we understand it, the biggest development was the admiral’s withdrawal.

There may not be just one reason why Admiral threw in the towel, and the macro context may be at play. However, according to court proceedings, Mr Admiral instead blamed a €2.3 million disagreement that arose during due diligence regarding the accounting treatment of insurance premiums collected by Ruco Cover on behalf of the insurance company, while offering VAT relief. The prospect also raised eyebrows. TechCrunch reached out to Admiral and its French subsidiary L’Olivier for confirmation, but did not hear back.

Despite this, Luco was surprisingly quick to find an alternative, court documents reveal. On November 8, the company received a formal offer from Allianz for the same assets that Admiral planned to acquire, but no commitments were made on the human resources side.

Although Allianz’s proposal did not guarantee job security for Demain and its subsidiaries, it seemed to make sense on a strategic level. In fact, incumbent insurance companies are preparing for: launchA French DTC insurtech platform called Allianz Direct. Meanwhile, Luco’s critics acknowledged that the company became the poster child for direct-to-consumer home insurance in France before expanding further.

How much Allianz offered depends on who you ask. Demain made an offer worth a total of 14 million euros. The tribunal disagreed and concluded that it was worth €8 million, with the remainder going towards assuming the debt. But of course, that’s yesterday’s price, not tomorrow’s price.

Allianz’s offer for Demain may still be valid even with the company under judicial restructuring, but it would be surprising if the price remained the same. On the other hand, its surroundings may also change. Demain is now less constrained in his dealings than he was when he had to find someone to accept the Admiral’s proposal.

However, Luko has parts that are not currently available for sale.

Earlier this year, German insurer GetSafe had already acquired a German customer portfolio from Luco’s acquisition of multi-product insurer Koya in 2022.

In addition, Ruco has entered the non-payment rent insurance business. Obtaining Uncle In the same year, the portfolio is now Acquired by French broker Solly Hazard Partnered with Sada Sompo Insurance. Both acquirers confirmed that these transactions are complete and independent of Mr. DeMaine’s judicial proceedings.

Still, Luko may be able to sell more than the Admiral wanted to buy. But what we want to know more about is who will buy Demain. Was it Allianz, which offered Demain an advance payment of 25,000 euros a day to keep the company afloat? Or could it be another possible buyer whose names have been floated at some point, such as AXA, Ornikar or Leocare?

The worst case scenario is that all offers disappear. If that were to happen, some may wish the court had been more flexible in considering Allianz’s offer. A person close to the matter told TechCrunch that the latest decision was already a bit of a surprise to Ruco. But from a legal perspective, it seemed inevitable. French law Safeguard procedures do not apply to insolvent companies, as they currently do in Demain.

Even if courts had some leeway, they would probably be reluctant to set a precedent, especially now that bankruptcy-related proceedings are becoming more common. Earlier this month, French mobility startup Cityscoot declared went bankrupt and placed after Under judicial rehabilitation. Maybe that’ll make it to the top, and maybe Ruco will as well. However, despite the possibility, not every company that once was a future unicorn will be.

Source: techcrunch.com