Insurance & Mortgage Blog

Mercury Insurance Group may face fines for overcharging

Slava — Tue, 13 Apr 2010 17:47:49 +0000

An inquiry in California alleges that the company violated state laws on how policies are priced and sold, perhaps affecting thousands of customers.

Mercury Insurance Group violated state laws meant to regulate how coverage is priced and sold and, as a result, overcharged perhaps thousands of Californians for homeowner and automobile insurance, the state Department of Insurance said Monday.

The state’s fourth-largest auto insurer failed to ensure drivers were not charged more after accidents in which they were not at fault, and refused to cover bartenders, artists and others unless they met stricter underwriting standards than other customers, a state investigation alleges.

Mercury could face fines of at least $5,000 for each violation under an enforcement action filed Friday, Insurance Commissioner Steve Poizner said. The company continued a number of activities that it had been ordered to stop years earlier, he said.

“Mercury Insurance has disregarded California’s consumer protection statutes and overcharged consumers,” Poizner said. “In addition, the department’s examination finds that Mercury Insurance has apparently continued to violate the law despite agreements with the state to terminate its illegal behavior.”

Mercury spokesman Coby King said the company had not overcharged customers or violated the law. He said the practice of restricting customers in certain occupations, such as artists and bartenders, was ended more than 10 years ago. In a statement, King intimated that Poizner released the report to further his campaign for the Republican gubernatorial nomination.

“This report appears to have been leaked to reporters in a manner designed to further the political interests of the commissioner, not the people of California,” the statement said.

Darrel Ng, a department spokesman, denied any political motives for the department’s action.

“The Department of Insurance takes very seriously its role in ensuring that insurance companies follow the law,” Ng said. “Mercury should spend less time imagining conspiracy theories against them and more time following California’s consumer protection statutes.”

Tips To Getting Your California Car Insurance

Slava — Tue, 13 Apr 2010 01:05:42 +0000

Confuse on which California car insurance provider to pick? The State mandated drivers to secure insurance. Getting an online quote will help you find an insurance company. Pick one that meets the State’s requirement. Include Uninsured/Underinsured Motorist Bodily Injury. Read this article for more insurance information.

You can get a California car insurance quote online. Quotes are now quite common on the internet. There are a variety of different types of quotes that you can get. Some types are just a single quote from particular insurance company. Other quotes from a website can come from several different sources.

Having California car insurance is critical, so if you don’t have it, go get an online quote right away. But before you start your quote, get some basic information on the insurance cover you want and list your vehicle information. Do always go for the cheapest insurance, but get the insurance you can afford.

You do not really need to spend a fortune just to get auto insurance regardless of its nature. There are different kinds of car insurance for you to choose depending on your needs and your budget of course.

Before you can actually get the best car insurance in California you need to know California car insurance requirements. This will help a lot in getting the California car insurance quotes that is right for you.

You must know that the state of California follows a Tort system in its automobile insurance. This means there must be someone found to be at fault for the accident. Hence, that person and his or her insurance firm should be responsible for all the damages caused by such an accident as stipulated in the policy.

In getting California car insurance quotes, it is important for you to know that the tort system varies for each States. State Law in California, in particular, requires a minimum of $15,000 per injured person up to a total of $30,000 per accident for Bodily Injury Liability limits. It also requires a minimum limit of $5,000 for Property Damage Liability coverage. This is most often referred as 15/30/5 coverage.

Residents in California had an average auto insurance premium of $1,650 in 2009. Since the national rate is $1,735, people have this feeling that the state has been collaborating with insurance companies to fix the rates so that there would be no need to look for better California car insurance quotes. This is why it is really important for you to look around to find the cheapest California car insurance.

Get insurance quote @ Slavsky

Getting a loan will be pricier

Slava — Mon, 12 Apr 2010 23:21:58 +0000

WASHINGTON (CNNMoney.com) — As the economy begins to mend, the cost of borrowing money for a big purchase could start to increase.

Mortgages, in particular, have flirted with record lows during the recession. Credit card rates have been bouncing upward and, while auto loan rates are expected to stay low for a little while longer, they can’t stay low forever.

The Federal Reserve has played a key role in keeping the cost of borrowing so low, through the so-called fed funds rate, a benchmark that determines the interest paid by consumers and businesses on a wide variety of loans. That has been near 0% since December 2008, as the central bank worked to spur greater lending and economic activity.

But as the economy heals, that rate is sure to come up, as will the cost of a lot of loans – although economists assure that borrowing costs won’t rise until the economy is ready for it.

“The important thing to remember the Federal Reserve has a mandate to maximize employment and keep inflation low, so interest rates may be going up, but it will be in the context of better job growth,” said Zach Pandl, an economist at Nomura Securities.

Mortgages: Apart from what the Fed does on interest rates, economists and Fed officials have been predicting higher mortgage rates for several months, as the Fed winds down credit programs that artificially spurred cheaper loans.

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No more taxes on short sales, foreclosures

Slava — Mon, 12 Apr 2010 05:24:10 +0000

After lots of wrangling, Gov. Arnold Schwarzenegger is finally ready to do right by strapped California homeowners. Currently, state law requires the payment of income tax on a homeowner’s canceled or forgiven debt on a short sale or foreclosure.

What it means in practice is that a struggling homeowner who has either lost his or her home or manages to sell it for far less than the amount of his or her loan has to pay thousands of dollars in taxes for the privilege.

The state law runs counter to a federal law that exempts many homeowners from federal taxes on canceled mortgage debt. It’s unfair and, given the bleak housing market, it’s also unseemly. It needs to be changed, and the Legislature has been trying to change it since last year.

In 2009, the Legislature passed a bill that would have aligned the state with the federal tax exemption. It would have aligned the state with a few other federal tax provisions, too. Schwarzenegger supported the mortgage tax realignment, but not the other provisions. So he vetoed it.

Last month, he vetoed SBX832, another bill that contained the mortgage tax exemption. This bill contained two other sensible tax provisions – a state tax exemption on government stimulus grants for energy companies pursuing renewable sources of power, and a 20 percent penalty for Californians who are caught cheating on their taxes. Business groups opposed the penalty for tax cheats, and the bill barely squeaked through the Senate. The governor decided to veto that one, too.

Thousands of Anthem Blue Cross customers await decision on rate hikes

Slava — Mon, 12 Apr 2010 04:49:32 +0000

The insurer had delayed the increases till May 1 pending a review by an outside actuary appointed by the state insurance commissioner. That report is expected within two weeks.

Thousands of worried Californians who buy individual insurance policies from Anthem Blue Cross will soon learn whether they face rate increases of up to 39% that were put on hold for two months amid a public outcry that helped revive national healthcare legislation.

California’s largest for-profit health insurer agreed to postpone the increases for many of its 800,000 individual policyholders until May 1 while an outside actuary, appointed by state Insurance Commissioner Steve Poizner, evaluated its spending practices.

The actuary report from Axene Health Partners is expected within two weeks.

Poizner said in February that he would stop Anthem’s rate hikes if the report shows that the Woodland Hills insurer spends less than 70% of its premium dollars on medical claims, as required by state law.

At the time, Poizner said that Anthem’s proposed increases could have a “devastating financial impact on hundreds of thousands of its policyholders in California.”

Poizner did not respond to requests for an interview. On Friday, representatives from his office and Anthem’s parent, WellPoint Inc., said the two sides had yet to address the rate hikes despite ongoing speculation that WellPoint might delay them an additional 30 days or limit the increases to 10% to 15% through the end of the year.

Poizner’s office is awaiting the actuary’s study. “Our next action is predicated on what the report says,” said Darrel Ng, a spokesman for the Department of Insurance.

A WellPoint spokeswoman acknowledged Friday that the Indianapolis insurer will not have adequate time to notify customers of any changes within two weeks. The company, Kristin Binns added, has no agreement with Poizner to extend the delay 30 days.

“No formal decision has been made yet, but it’s unlikely we’ll be in a position, given the timing, to implement any rate increase May 1,” Binns said. “It’s unclear at this point what happens.”

Frustrated policyholders say they have heard nothing from Poizner’s office and little from Anthem beyond a letter in early March informing them that their rates would not change for 60 days.

“I don’t know what we are going to do,” said Mary Feller of San Rafael, Calif., who faces a 39% increase for herself, her husband and daughter that would push the family’s annual insurance bill over $25,000.

Cost Of Earthquake Insurance Discourages Many Californians

Slava — Sun, 11 Apr 2010 04:04:19 +0000

SAN DIEGO — The earthquake that rattled Southern California this week was a gentle reminder that not many Californians, and not may San Diegans, have earthquake insurance. Only twelve percent of homeowners are insured.

This could spell trouble when the big one actually arrives. But there are reasons why so many people have chosen not to be covered.

The epicenter of the earthquake felt in San Diego on Sunday was in rural Baja California. And it did some structural damage in Mexicali, Calexico and El Centro. But it could have been much worse.

“California homeowners, in this most recent event, basically dodged the bullet,” said Glenn Pomeroy, CEO of the California Earthquake Authority, which is a state-managed non-profit that provides 70 percent of the earthquake insurance in California.

“Let’s say the 7.2 that happened on Sunday happened under Los Angeles. We would see massive destruction. Homes destroyed. Infrastructure badly damaged,” Pomeroy said.

The California Legislature created the earthquake authority after the costly Northridge Earthquake in 1994 drove most private insurance companies out of the temblor business. Pomeroy said the authority has the ability to cover billions of dollars worth of claims.

But property owners won’t get anything if they don’t purchase policies.

Pomeroy points out that the typical homeowner’s insurance policy explicitly rules out coverage for earthquake damage. He says many homeowners don’t realize this, or they believe federal disaster aid will come to their rescue in the event of a big earthquake.

Why Most Firms Won’t Drop Employee Health Insurance

Slava — Sat, 10 Apr 2010 13:50:21 +0000

“I’ve been ‘unofficially’ told by the H.R. manager of my employer,” wrote RG from Los Angeles, “that it will be cheaper for them to take the penalty than to continue insuring us.” RG’s question — whether it was true that “many, many companies will start dumping health insurance benefits” — was one of several we fielded last week about how the new health care reform law would affect small businesses. And though this query came from an employee, not an owner, of a large company, not a small one, clearly many entrepreneurs are also worried that they’ll have to abandon group coverage.

But as we’ve reported before (here and here), health policy analysts have told The Agenda that this massive dumping scenario is pretty unlikely. The fact is that most businesses that provide insurance for employees will continue to do so.

The concern arises from a misunderstanding about who actually pays the employer penalty. The term is something of a misnomer, economists say, because it is the workers who ultimately bear the penalty’s cost. As the nonpartisan Congressional Budget Office put it in an issue brief published last July (emphasis added), “Firms decide how much labor to employ on the basis of the total cost of compensation and choose the composition of that compensation on the basis of what their workers generally prefer.”

“Every increase in your health care benefits package is a decrease in your dollar wages or other compensation — it’s almost a one-to-one relationship,” added Robert Moffit, an analyst at the Heritage Foundation, a conservative think tank, in September when we first approached the topic. Conversely, then, any decrease in the health benefits package is an increase in other compensation, like cash wages, because employers can seldom cut compensation in a competitive labor market.

So the calculation that a small-business owner (or any employer, really) that offers insurance must make is not whether paying the penalty costs* less than providing coverage. Rather, it is whether paying the penalty on top of the wage increase necessary for the employee to buy coverage on the individual market is cheaper than providing employees with company coverage. But even that is not quite the total equation: because the company’s contribution toward insurance coverage is not taxable income for the employee, the value of that exclusion to the employee must also be added to the mix. (For an employee in the 25 percent tax bracket whose company pays 80 percent of the premium cost, say, that’s at least an additional one-fifth of the cost of coverage.)

Now, for a company deciding whether to dump coverage, here comes the hard part. (And you thought the last paragraph was the hard part?) Beginning in 2014, health insurance reform will provide inducements for poor and some middle-class families to gain coverage. Medicaid will be available to people making a third more than the federal poverty level. Those making up to four times the poverty level will get tax credits to defray the premium expense. At the same time, the individual mandate will require everyone to buy insurance or face a penalty.

Office vacancy rate rises in San Francisco

Slava — Sat, 10 Apr 2010 13:39:07 +0000

An amount of office space equivalent to 13 Bank of America buildings sits vacant in San Francisco today as companies continue to shed more square footage than they rent – a trend that won’t change until employers start putting more people behind desks.

The 13 million square feet of available space in the first quarter of 2010 translates to a 17.7 percent office vacancy rate, up from 14.7 percent a year ago and nearly one percentage point from the previous quarter ending in December, according to data released Friday by the real estate firm Jones Lang LaSalle.

Despite recent claims that the recession is waning and significant gains in the stock market, San Francisco’s unemployment rate, like that of other California cities, remains high at 9.9 percent – equating to approximately 45,000 potential workers. The state unemployment rate held steady at 12.5 percent in February.

Industries that continue to relinquish space include financial and other traditional professions. If there is expansion, it is in tech and biotech companies, according to Colin Yasukochi, research director at Jones Lang LaSalle.

“We are in a kind of transition period where more people are optimistic about the economy, but employment conditions have not necessarily changed for the better,” said Yasukochi. “Until that happens, we won’t see meaningful reductions in the amount of office space.”

Despite the fact that companies are continuing to give up space, new lease activity has picked up.

The amount of newly leased space in San Francisco during the first quarter of 2010 – 800,000 square feet – was up 8.2 percent from a year ago.

The 10 worst selling real estate markets in America

Slava — Wed, 07 Apr 2010 02:14:35 +0000

Worst performing cities:

Despite news that the pending home sales index jumped at the highest rate since 2001, some real estate markets are struggling along.

We’ve recently discussed the best small towns to buy a home and outlined most rapidly growing counties but today we’d like to reveal the areas that are struggling.

The 10 worst performing markets:

Below is the Forbes.com list of 10 worst performing housing markets with Forbes’ explanations as to why they are under-performing.

Milwaukee, WI: Some cities’ housing crisis stemmed from rampant overbuilding. Others can blame the decline of the manufacturing industry. Milwaukee has felt both. The worst-selling housing market saw a 47% increase in unsold homes between 2008 and 2009, thanks both to underlying economic problems and overzealous development during the housing bubble.

Denver, CO: Denver doesn’t come to mind as a housing-crisis hot spot, but the city that once looked like it would escape the housing bust unscathed now shows signs of strain. More than 42,000 homes are on the market in the metro, 27% more than last year.

Los Angeles, CA: Los Angeles has yet to recover from the blows it took when the housing bubble burst. Home sales fell by 5% in the metro between 2008 and 2009, while they rose, if only modestly, in most other large metros. Home sale prices peaked in late 2006, and it looks like the remnants of overbuilding will continue to clog the housing supply.

St. Louis, MO: The city has shed jobs and seen housing prices plummet. Inventory in the metro is up 36%, in part as a result of its 11% unemployment rate. Manufacturing jobs no longer drive the city’s economy, and slow sales are just one symptom of its economic maladies.

San Francisco, CA: Unemployment has reached 11% here, and home prices fell by 6% between 2008 and 2009. The area’s poor-home-sale performance shows that California’s housing woes spared no city.

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How To Profit By Providing Hard Money Real Estate Loans

Slava — Tue, 06 Apr 2010 19:39:34 +0000

Real estate prices are low, but the lack of available financing is preventing people from taking advantage of them. This of course presents an opportunity for investors. By providing hard money loans, investors can make a healthy profit with low risk. See the following article from REIClub for more on this.

It is a truism in real estate investing that money is made when you purchase; the profit is realized when you sell. The problem for the investor is that everyone is trying to buy at a discount. The competition drives the price of any worthwhile property near or up to full market value. Even so called distress sales; foreclosure, bankruptcy, probate, divorce, can result in competitive bidding.

The internet has been a great friend to the seller of property. Fifteen years ago someone with property to sell either had to accept a discount for a quick sale from one of the all cash “we close quick” buyers or spend months waiting for an offer while his property was listed in the “MLS Book”. Now, information about a property for sale is instantaneously transmitted to potential buyers worldwide. We have sold Houston apartment buildings to California based investors, a Bryan, Texas office – warehouse to a Singaporean transportation company, and an Austin church building to a Dallas based ministry looking to expand.

In years previous, being an all cash buyer allowed me to purchase property at 70 – 80% of real value. However, for the reasons mentioned above being an all cash buyer no longer warrants a 25% discount (by the way we are talking about REAL current value here, not some inflated appraisal done one year ago before prices dropped 30%). Going to auctions, subscribing to foreclosure listings, contacting probate lawyers, were no longer generating the deal flow I needed.

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