Government Health Program

The Federal Employees Health Benefits (FEHB) forms part of the Government Health Program. It is a system of managed competition through which employees health benefits are provided to :

Civilian Government employees
Annuitants of the United States Government.
The Government contributes 72% of the weighted average premium of all plans. The FEHB program which forms part of the Government Health Program allows some insurance companies, employee associations and labor unions to market health insurance plans to governmental employees.

“Open Enrollment” period:

In the Government Health Program, the employee will be fully covered in any plan he or she chooses without limitations regarding pre-existing conditions. Upon a life-qualifying event such as marriage, divorce, adoption or the birth of a child, changes may be made, even though open enrollment is closed. Part of the premium is paid for by the U. S. Government Agency the employee works for, but does not exceed 72%.

In 2010 about 250 plans participated in the Government Health Program. Employee unions that offer plans are:
National Association of Letter Carriers.
National Insurance Companies, such as:

Blue Cross and Blue Shield Associations.

Indian Health Services (IHS)

Part of the Government Health Program is the IHS which is responsible for providing medical and public health services to members of federally recognized Tribes and Alaskan Natives. In fact, IHS provides healthcare at 33 hospitals, 59 Health Centers and 50 Health Stations. 34 urban Indian health projects supplement these facilities with a variety of health referral services.

The IHS which forms part of the Government Health Program employs approximately 2, 700 nurse, 900 physicians, 400 engineers, 500 pharmacists and 300 dentists as well as other health professionals totalling more than 15, 000 in all. The IHS is one of two federal agencies mandated to use Indian preference in hiring.

Veterans Health Administration (VHA)

Forming part of the Government Health Program, is Veterans Health Administration. To be eligible for VA care benefit programs you must have served in the active military, naval or air service. Veterans who enlisted after September 7 1980 or who entered active duty after October 16 1981, must have served 24 continuous months or the full period for which they were called to active duty.

Preventive Care Services:

The following is offered in VA care :
Counselling on inheritance of genetically determined disease
Nutrition education
Physical examinations
Health Care Assessments
Screening tests
Health Education programs


Ambulatory (outpatient) and hospital (inpatient) diagnostic and treatment services:
Surgical (including plastic/reconstructive surgery)
Mental Health
Substance Abuse treatment
Prescription drugs (when prescribed by a VA physician)

The Military Health System

Part of the Government Health Program is the Military Health System that provides healthcare to active duty and retired U. S. Military Personnel and their dependents. Its primary mission is to maintain the health of military personnel so as to enable them to carry out their military missions, and to deliver health care during wartime.

The Military Health System has a $50 billion budget and serves about 9.6 million beneficiaries, including active duty personnel and their families and retirees and their families. MHS employs more than 137, 000 in 65 hospitals, 412 clinics and 414 dental clinics.

The U. S. Patient Protection and Affordable Act, enacted in 2010, has provisions intended to make it easier for uninsured veterans to obtain coverage. Under the Act, veterans with incomes at or below 138% of the Federal Poverty Line ($30, 429 for a family of four in 2010) would qualify for coverage as of January 2014. This group constitutes nearly 50% of veterans who are currently uninsured.


Part of the Government Health Program is Medicare, a national social insurance program administered by the U. S. federal government since 1966. It currently uses 30 private insurance companies across the United States and guarantees health insurance for America’s aged 65 and older who have worked and paid into the system, younger people with disabilities and people with end stage renal disease.

Part A: Hospital Insurance
Part B: Medical Insurance
Part C: is a public supplement option
Part D: covers many prescription drugs

Part A:

This covers in-patient hospital stays including semi-private room, food and tests. The maximum length of stay is typically 90 days. The first 60 days would be paid by Medicare in full except for one copayment of $1, 216 at the beginning of the 60 days. Days 61-90 require a copayment of $304 per day.

Medicare penalises hospitals for re-admission. Medicare will take back from the hospital these payments, plus a penalty of 4 to 18 times the initial payment. The highest penalties on hospitals are charged after knee or hip replacements, $265, 000 per excess readmission. The goal is to encourage better post-hospital care.
The beneficiary is also allocated “lifetime reserve days” that can be used after 90 days. These lifetime reserve days require a copayment of $592 per day and the beneficiary can only use a total of 60 of these days throughout their lifetime.

Part B

Part B of the Government Health Program helps pay for some services and products not covered by Part A, generally on an outpatient basis.
This coverage begins once a patient meets his or her deductible of $147 (2013), then typically Medicare covers 80% of approved services, while the remaining 20% is paid by the patient. This section covers:

physician and nursing services
laboratory and diagnostic tests
influenza and pneumonia vaccinations
blood transfusions
renal dialysis
outpatient hospital procedures
limited ambulance transportation
immunosuppressive drugs
hormonal treatments
durable medical equipment
prosthetic devices
cataract surgery and spectacles
oxygen for home use

Part C

A Medicare Advantage Plan is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organisations, Preferred Provider Organisations, Private Fee-for-Service Plans, Special Needs Plans and Medicare Medical Savings Accounts Plans.

Part D

Part D adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-For-Service Plans and Medicare Medical Savings Accounts Plans. These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.

Homeowner’s Insurance

Homeowner’s Insurance:

Homeowner’s insurance (HOI) is a type of property insurance that covers a private residence.  It is an insurance policy that combines various personal insurance protections.  It includes losses occurring to one’s home and its contents. Furthermore, it also includes loss of use (additional living expenses) or loss of other personal possessions.

Homeowner’s Insurance is a multiple-line insurance policy. This means that it includes both property insurance.   In addition liability coverage with a single premium.  The cost of Homeowner’s Insurance often depends on what it would cost to replace the house. Typically, claims due to floods or war are excluded from coverage.   Special insurance can be purchased for war and floods.

Homeowners should do annual comparisons on Homeowner’s Insurance policies.  Upgrades to your home improve the aesthetics of your residence but also increase its value.  Whenever an upgrade is done, you should contact your insurance company to ensure that you are not under-insured.  Items such as hot tubs, swimming pools and trampolines leave you more vulnerable to lawsuits.  These items will, therefore, increase your annual payment for Homeowner’s Insurance.

In every state except California, a low credit score can drive up the price of your Homeowner’s Insurance.  Someone with a credit score of 500 probably not only lets bills slip but also the general maintenance of a home which leads to claims.  Laura Adams, of, discourages clients from requesting a low deductible as this may encourage you to make frivolous claims.  In some instances, one claim can result in a 32% hike in premiums.

Insurance carriers give lots of discounts if, for example, your vehicle is insured with the same company as your residence.  Not smoking, being a retiree or living in a gated community can increase the number of discounts that you qualify for with the carrier.  When discounts expire, remembering to request new discounts can help save you money every month.

Many homeowners do not understand what exposures are covered under their home insurance policy, according to a consumer survey.  More than two in five Americans (41 percent) believe that a standard homeowner’s insurance policy protects against mould damage.   This misconception could prove extremely costly.  Mould remediation can cost tens of thousands of dollars.  It is often not covered by Homeowner’s Insurance, especially if it was caused by neglected maintenance such as a leaky pipe.

The Insurance Services Offices has standardised the following homeowner’s insurance policy forms in general use:

HO0 – Dwelling Fire Form

A form that provides coverage on a home against fire, smoke, windstorms, hail, lightning, explosion, vehicles and civil unrest.  It does not cover your personal property, personal liability or medical expenses.

HO1 – Basic Form

This form provides coverage on a home against 11 listed perils. The perils include fire or lightning, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles and aircraft, explosion, riot or civil commotion, glass breakage, smoke, volcano eruptions, and personal liability.

Exceptions include floods, earthquakes.  Most states no longer offer this type of coverage.

HO2 – Broad Form

A more advanced form that provides coverage on a home against 16 listed perils (including 11 on the HO1).

HO3 – Special Form

The typical, most comprehensive form used for single-family homes.  The policy provides “all risk” coverage on the home with some perils excluded, such as earthquake and flood.

HO4 – Contents Broad Form
The contents Broad, is a form for renters.  It covers personal property against the same perils as the contents portion of the HO2 or HO3.  An HO4 generally also includes liability coverage for personal injury or property damages inflicted on others.

HO5 – Comprehensive Form

Covers the same as HO3 plus more.  The contents are covered on an open peril basis.  Thus as long as the cause of loss is not specifically excluded in the policy it will be covered for that cause of loss.

HO6 – Unit Owners Form

The form for condominium owners.  It insures your personal property, your walls, floor and ceiling against all of the perils in the Broad Form.

HO8 – Modified Coverage Form

The form is for the owner-occupied older home whose replacement cost far exceeds the property’s market value.

Coverage Classification

For each policy, there are typically 5 claim classifications of coverage.  These are based on Standard Insurance Services office forms.

Section 1 – Property Coverage

Coverage A – Dwelling

Covers the value of the dwelling itself (not including the land).   This is in place to give a buffer against inflation.  HO4 (renters insurance)  typically has no coverage A, although it has additional coverages for improvements.

Coverage B – Other Structures

Typically limited at 10% to 20% of the Coverage A, with additional amounts available by endorsement.

Coverage C – Personal Property

Covers personal property, with limits for the theft and loss of particular classes of items.  (e. g. $200 for money, banknotes, bullion, coins, medals, etc.).   This has led to some calls for more choice.

Coverage D – Loss of use/Additional Living Expenses

Covers expenses associated with additional living expenses (i. e. rental expenses) and fair rental value, if part of the residence was rented, however only the rental income for the actual rent of the space, not services provided such as utilities.

Additional Coverage

Covers a variety of expenses such as debris removal, reasonable repairs, damage to trees and shrubs for certain named perils (excluding the most common causes of damage, wind and ice), fire department charges, removal of property, credit card/identity theft charges, loss assessment, collapse, landlord’s furnishing, and some building additions.  These vary depending upon the form.


These generally include earth movement, water damage, power failure, neglect, war, nuclear hazard, septic tank back-up expenses, intentional loss and concurrent causation (for HO3).


Flood coverage is available in the form of a separate policy both from National Flood Insurance Program and from a few private insurers.

Coverage E – Personal Liability

Covers damages which the insured is legally liable for and provides a legal defence at the insurer’s own expense.   About a third of the losses for this coverage are from dog bites.

Claims process

Insurance policies typically require that the insurer is notified within a reasonable time period.   A claims adjuster will investigate the claim.

Filing a claim may result in an increase in rates, or in non-renewal or cancellation.  In addition, insurers may share the claim data in an industry database (the two major ones are CLUE and A-PLUS) with Claim Loss Underwriting Exchange (CLUE) by Choice point receiving data from 98% of US Insurers.














Green building

By means of green building, consumers can benefit financially as insurers offer discounts on insurance coverage for green building.  The process of building this way is therefore environmentally responsible.   Eco-friendly construction is putting up structures that are beneficial for the environment. They are resource-efficient.  The construction thereof is energy-efficient.

Buildings often have a negative impact on our environment and our natural resources.  Responsible insurance carriers are happy to reward clients with discounted insurance coverage.  Negative aspects of energy waste include transporting materials hundreds or thousands of miles to building sites. Poorly designed buildings emit hazardous chemicals.  These chemicals are trapped inside the buildings affecting the health of the occupants.

Good building practice includes rammed earth construction.  This  also involves clay-based materials mixed with water.  This is rammed into a solid wall form.  Straw is a great insulator and bales of straw are used as the central structure of the house.  When compressed, straw is fire-resistant.

Other positive features are:

The use of solar panels for water heating; the collection of rainwater for garden use and the re-use of grey water; low energy light bulbs; cellulose insulation; lead-free paint; locally grown and harvested timber from sustainably managed forests.

Green building projects are increasing in popularity.   Between 2008 and 2010, green building projects increased by 50%.  They are projected to top $135 billion by 2015.  Owners of green buildings see higher property values.   Little changes are insulating water pipes. Bigger changes are installing solar panels and alternative water systems.

The return on investing in green building techniques now goes beyond good feelings and lower utility bills.  Green buildings may have more upfront costs than conventional but also have a lower overall risk.   Eco-friendly construction reduces risk and energy efficiency raises a building’s economic value.  Instead of costing building owners more to ensure new and complicated green additions, insurance rates actually decrease for green buildings and improvements.  Green buildings are safer and more resilient than conventional buildings, resulting in lower overall risk to insure.

Instead of costing building owners more to ensure new and complicated green additions, insurance rates actually decrease for green buildings and improvements.  Discounts on green insurance products are justified by safety data linking reduced emissions with accident and damage mitigating behaviour.  Green buildings are safer and more resilient than conventional buildings, resulting in lower overall risk to insure.

Two types of insurance are offered for green building.  The first, offered to conventional building owners, is a green-rebuild policy.   Another policy type, offered to owners of already-green buildings, insures existing green modifications against loss.

After years of inertia, the $16 trillion industry has begun to address climate change with mandatory risk disclosures and more products to help businesses and individuals reduce energy use.  In March, insurance regulators adopted mandatory climate-risk disclosure standards for insurance companies with annual premiums of $500 million or more.  These standards require the firms to report to regulators and investors the types of payout risks they may face due to climate change.

Insurance for green building are rapidly gaining traction in the marketplace.  Fireman’s Fund Insurance Co. offered the first commerrcial green policy.   Now several large companies offer insurance coverage for green building.  By 2009 over 22 companies offered 39 insurance products related to green building.

In the case of a loss, Fireman’s Fund Green Certification covers a rebuild to one level higher than pre-loss certification level and offers broad coverage of alternative green technology including vegetated roofs and underground water recycling systems.

Policyholders with Energy Star buildings are also eligible for a 5% discount.  Fireman’s Fund also covers lost tax incentives and utility discounts and, when losses exceed $10, 000, pays for a commissioning agent to oversee repairs and verify replacements.

Travellers Insurance Company provides an add-on Green Home Upgrade to its current policies and gives a 5% discount for homes already LEED certified.  Small businesses also qualify for additional green enhancements up to 5% of the total los

Although there are benefits to “going green” in the construction, development and operation of buildings, there are also risks unique to green building that will test the boundaries of coverage under typical liability insurance policies.

  Part of the appeal of green building is its self-sustaining nature, and there are few better examples of those types of measures than vegetative roofing and alternative power and water systems.




Other driver

You may be driving below the speed limit. You are obeying the traffic signals. Another driver ploughs into your car. In each instance, it does not necessarily mean that the other driver’s insurance company should pay your medical and car repair bills.

The small details of the accident matter. Rules vary from one state to another.   There must be proof of negligence for the other driver to be liable.

Attorney Benjamin Zimmerman is a partner with Sugarman & Sugarman, a firm of attorneys in Boston. He claims that if negligence cannot be proved, then you cannot win the case and if you cannot win the case, insurance companies know that and therefore will not pay.

An important aspect of a successful claim is to prove the other driver is at fault.

In states with no-fault auto insurance systems, your own insurance generally pays for your medical bills. This is regardless of who was at fault.

In New Jersey it is illegal to operate a motor vehicle without liability insurance coverage. In some jurisdictions. liability coverage is available either as a combined single limit policy, or as a split limit policy. Virginia does not require that the other driver carry car insurance.

There are instances when the other driver’s insurance company may refuse to pay out, even if you think it should pay out.

A sudden incapacitating medical event is a defence.  It is more common than people might think. The other driver may have a heart attack or stroke.  The person may not be liable if he loses control of the vehicle. If this person was aware of his medical condition, he should not have been driving a car.  He is therefore liable.

Another example is that of a pregnant woman who hit a car. The attorney managed to establish that the pregnant woman had enough time to pull to the side of the road safely. This could have happened before she was feeling flushed and fainted. Her insurance company then had to pay his client’s claim.

A collision from a fire truck racing to an emergency: The standard for proving that an emergency vehicle driver was liable is much higher than the standard for other drivers. Local and state jurisdictions have varying rules and timelines for filing claims against them.

 Most emergency vehicles enjoy immunity from liability for negligence.

If the other driver hits you because of an accident with a hit and run driver, you may be able to claim under your own uninsured motorist coverage. A driver is a criminal in all states in the USA if he fails to stop. The police must stop to provide immediate assistance.

However, when a thief takes a car, there is no permission or consent. Therefore, the car owner’s insurance will not pay. If the thief was caught and he had a policy. Hence his insurer would also not pay because insurance does not apply to criminal acts. You could sue the thief, but the chances of recovering any money damages are minimal. The car owner may be found partially liable if he did something negligent, which led to the theft.

There are instances when an accident occurs which is nobody’s fault. A deer may jump out in front of a vehicle causing it to hit someone else. A driver could be partially liable if he was exceeding the speed limit.

Certain states have comparative negligence laws when liability is calculated on a percentage basis. One party may be 30 per cent liable and the other party 70 per cent liable.

Comparative negligence laws dictate how the responsibility for an accident will be shared between the parties directly involved in an accident, where bodily injury or property damage was suffered.

The insurance company will make the injured party an offer based on what it believes to be the amount of negligence of its insured. The insurance company may interview the involved parties, including witnesses, and may also review the accident report in order to determine the amount of the offer.

An insurance company may believe that its insured was not more than 50% or more at fault.  They may not offer to pay any damages for the loss. The other driver may negotiate with the insurance company until a settlement is reached or until the two parties reach an impasse.

If a settlement cannot be reached, the courts make the final determination of comparative negligence.


Fires in California’s wine country started on 8th October 2017. At least eight of the state’s counties experienced the worst wildfires in California’s history.

Forty-three people died.  This included that of a firefighter. This death toll is also the largest loss of life from a single wildfire in California.

The Department of Insurance has stated that losses are expected to be more than $3.3 billion.  14700 families lost their homes.   Furthermore, fires destroyed businesses and vehicles.  Fifteen major insurance companies will cover these financial losses.

Insurance companies will not want to ensure areas previously considered low-risk for fire damage.  The insurance companies update risk models.

Especially noteworthy is that The California Department of Insurance has stated that insurance companies are not allowed by law to increase rates as they wish. Higher rates must be requested from the Department.  The Department presents Data history.   Raising rates or cancelling fire policies of citizens who have damaged or destroyed properties is furthermore against the law.

According to Nicole Ganley from the Property Casualty Insurers Association, insurance companies plan for fires in California. The firms prepare for such occurrences. An amount of $700 billion is available in case of wildfires as well as the backing of re-insurers.

According to Ms Ganley, even with sufficient history, it would take many years for wildfire insurance increases to trickle down to consumers.

History affects insurance hikes.  Does the home have a sprinkler system? Has the homeowner cleared vegetation away from the residence?

Insurance firms in California use a system called Fireline from Verisk Analytics to determine the risk to insured properties. The three factors are: –

* Fuel – nearby grass that can fuel a wildfire;
* Slope – steeper slopes  that can boost the speed of wildfires;
* Access – are firefighters able to reach the property with ease?


U. S. companies are urging federal aviation regulators to speed up the use of drones in disaster response and relief operations in the United States.

The consulting firm’s 32 Advisors propose the use of drones for various purposes.  These range from response planning and damage assessment to supply delivery.

The view from above is key for humanitarian response, which explains why satellite imaging has played a pivotal role in relief operations for almost two decades now. Satellites do however present a number of limitations. These include cost, data sharing restrictions, cloud cover, and the time needed to acquire images.

In contrast, drones can capture aerial imaging at a far higher resolution. They move quickly and at a much lower cost. Unlike satellites, members of the public can actually own drones. This therefore means that disaster-affected communications can launch their own drones in response to a crisis.

Groups like SkyEye in the Philippines and CartONG in Haiti are actively training local communities to operate their own drones for disaster-preparedness purposes.

Public comment is scheduled for April 24, 2015. The 52 page report is sponsored by companies that are involved in drone technology.  They thus hope to use the devices to cope with hurricanes, earthquakes, wildfires and other disasters. The sponsors include Boeing Co, Lockheed Martin Corp, United Parcel Service inc, IBM Corp, Willis Group Holdings Ltd and Zurich North America.

 The United States officially banned drones for civil and commercial use. This is unless the operation wins FAA approval under a process that many have found to be too slow. The proposed rules finalised late 2016 or early 2017.

More than 1700 migrants are believed to have died attempting to cross the Mediterranean from North Africa to southern Europe this year.  800 deaths occurred in one incident mid-April. The International Organisation for Migration has warned that the death toll could exceed 30,000 by the end of the year. The team conducted test flights at a simulated disaster city at Texas A&M University. Using infrared cameras, the aircraft could spot people trapped in the rubble.  They relayed these images back to humanitarian response teams for more effective delivery of aid.

Drones identify structural damage to buildings.  Insurance companies help victims with insurance claims.  However, the researchers found that for drones to be effective in such missions, they need to get into the air within 24 hours of a disaster.

Small marine machines cleared underwater debris after the Haiti earthquake in order to allow aid shipments to arrive.

Off-shore oil rigs use drones.  Machines can assist with raising the alarm when workers fall overboard.


In the United States, Bancassurance was banned until the repeal of the Glass Steagall Act in 1999.  It has not caught on as a practice for most forms of insurance.

There is no simple way of entering into bancassurance which is “best” for every insurer and every bank. The company’s internal and external environmental analysis and the goals of the company have to be clear and concise before a strategic plan is agreed upon.

The simplest form of bancassurance is that one party’s distribution channel can have access to the clients of the other organisation. When a bank and the insurance company enter into a distribution agreement and the bank automatically passes ‘warm leads’ from its client base to a competent, friendly insurance company, a very profitable relationship can result from such an agreement.

BIM (Bank insurance model) is a relationship between a bank and an insurance company. Using the banks sales channel, the insurance company uses the bank’s sales channel to sell insurance products to on-sell its particular policies to the bank’s client base. Bank staff and bank employees, even tellers become the point of contact and sales to the bank’s clients. Commission is shared between the bank and the insurance companies, however, the policies are managed by the different insurance companies.

Insurance companies ensure that the staff in the banks involved in the sales of insurance products are provided with product information, sales training and marketing campaigns and the BIM model has shown to be a very effective distribution channel.

Many feel that banks have too great a control over the financial industry as well as creating too much competition with existing insurance companies.

In China, bancassurance products have exploded across several product lines. However, in certain countries, bank insurance is largely prohibited. Most sales in U.S. Banks are life insurance, property insurance and mortgage insurance.

Traditional Insurance models (TIM) have to have larger sales teams and also work with third party agents and brokers. BIM (known as the Bank Insurance Model), is very popular in European countries such as Spain, France and Austria,and is also crossed with TIM for what is known as HIM (Hybrid Insurance Model). HIM is a combination of TIM and BIM.

Privatbank Assurance is pioneered by Lombard International Assurance which is a globally used wealth management company. This concept combines private banking and investment management services. Lombard applies expertise to create innovative wealth structuring solutions to meet the unique needs of high net worth clients using life assurance in conjunction with sophisticated financial planning.

Insurance activity in a bank is integrated with the usual bank processes and is referred to as “Integrated Models”. The bank collects the premium, normally by a direct debit order from the client’s bank account at that particular bank.

The workflows are automated between the bank and the insurance companies. The bank receives a commission for these transactions. For more sophisticated products, the bank’s staff has the support of specialised insurance advisors.

Certain life insurance products can only be sold by financial advisors who have obtained a minimal qualification and this is referred to as “Non-Integrated Model” so due to these rules, branch staff have been limited by regulatory constraints. Banks set up a team of financial advisors who are authorised to sell regulated insurance products. Mailing and telesales is the means by which the advisors target the bank’s clients. These financial planners are employed by the bank and they usually receive a salary plus commission from the bank.

Good reasons for banks to enter into bancassurance:

Due to the intense competition between banks, there is an increase in administration and marketing costs. As well as shrinking interest margins, there are limited profit margins in traditional banking products. New products such as bancassurance can increase production and therefore enhance profitability

Income that is generated is increased in the form of commissions from the insurance company.

The bank’s fixed costs are spread with the help of the insurance company bearing some of the costs.

The bank staff have more products to offer clients so this increases the productivity of the staff and in turn the efficiency of the bank.

The return on traditional deposit accounts has been of such a nature that customer preferences are changing and they are regarding insurance products and mutual funds in a more favourable light with regard to medium-term and long-term investment.

The main core of profitability for banks has been savings held as deposits for clients. By entering the life insurance business, the banks have found a way to offset some of their losses.

Favourable tax treatment of life insurance which is there to encourage private provision for protection and retirement planning make the purchase of insurance products more attractive to clients, thereby assisting the banks to increase profitability.

For example, the client wants to fund future education costs. He/she takes out permanent assurance. Simultaneously the policyholder can take out a mortgage loan and the bank can have the client assign the policy to the bank as beneficiary which results in a more widely based relationship with the customer.

The benefits of bancassurance for insurance companies:

Source of new business – previously unreached clients.

Source of new business – wide range of products (including banking products).

Both bank and insurers get exposure to the other’s distinctive management style and thus the great opportunity to learn and make improvements in their own operations.

Kidnap Insurance



Kidnap insurance is meant to guard people as well as companies operating in high-risk areas.  Locations most often named in kidnap policies include Mexico, Venezuela, Haiti and Nigeria, and certain other countries in Latin America.

Private corporations pay millions of dollars in ransom money every year.  Many insurance companies sell kidnap insurance policies.   An entire criminal industry surrounds the extortion of multinational corporations through kidnap for ransom.

Seventy-one percent of the kidnapping victims are male.  Sixty-nine percent of the victims are considered middle class.  These victims are shop owners, students and mid-level professionals.  Research into the kidnap industry in Mexico have found that organised crime groups are now targeting middle- class workers.  This is an attempt to expand the number of potential targets.

 The kidnappers charge a lower ransom demand, usually around $7, 669 (100, 000 Mexican Pesos). They are able to target a greater number of people.

Between 2007 and 2012 Senior military officers with the Eritrea’s military kidnapped and held for ransom about 30, 000 children between the ages of 16 and 17.  Students in Eritrea serve at a military camp in order to graduate from high school.  The officers would call the victims’ family to demand a ransom payment of $7, 500 in order to release the victim.  If the family were unable to pay the ransom demand, the children would be sold to Bedouin traffickers.

Researchers studying kidnap and ransom at Tilburg University in the Netherlands estimated that about $600 million has been paid out in kidnap and ransom money to the military.

Kidnap and Ransom insurance policies cover the perils of kidnap, extortion, wrongful detention and hijacking.  Kidnap and Ransom policies are indemnity policies. They reimburse a loss incurred by the insured.  The policies do not pay ransom on the behalf of the insured.  Typically, the insured must first pay the ransom, thus incurring the loss, and then seek reimbursement under the policy.

Losses typically reimbursed by Kidnap and Ransom insurance include:

1.  Ransom monies – Money paid or lost due to kidnapping.

2.  Transit/Delivery – Loss due to destruction, disappearance, confiscation or wrongful appropriation of ransom monies being delivered to a covered kidnapping or extortion.

3.  Accidental Death or Dismemberment – Death or permanent physical disablement occurring during a kidnapping.

4.  Judgements and Legal Liability – Cost resulting from any claim or suit brought by an insured person against the insured.

5.  Additional expenses – Medical care, PR Counsel, wage and salary replacement, relocation and job retraining, and other expenses related to a kidnapping incident.

Intended Audience:

The policies cover high profile families, non-governmental organisations and multinational organisations.  Some policies include kidnap prevention training.

Underwriting Considerations:

Insurance underwriters weigh many factors when considering a kidnap policy.  They include the country of residence of the insured and the type of industry of the insured.  The revenue of the insured is also considered as well as the travel patterns of any employees who may be covered in the policy.

Problems with Kidnap and Ransom Insurance:

One of the known paradoxes of Kidnap and Ransom Insurance policies is that those who have them are often not aware.  It can be provided by an employer hoping to protect the company and its assets.  It is believed that an employee with knowledge of his K & R policy might begin to act differently, or even collude in his own kidnap for fraudulent purposes.

Kidnapping in the US;

The risk of kidnap in the US and Canada remains relatively low, and the incidents which do occur are largely a by-product of other crime, including robbery and spousal abuse, or child custody disputes.  The threat of kidnap in North America is heightened by the operations of the violent drug cartels in neighbouring Mexico.

In line with this, the US border states of Arizona, New Mexico, California and Texas are reported to be the most affected by the “spillover”. This is due to their geographical proximity as well as the fact that drugs are trafficked directly into these states.

Cartels facilitate their operations along the borders. The fracking boom is the latest area to be exploited.  According to reports, cartels are taking advantage of activity surrounding the Eagle Ford Shale Play by stealing lorries belonging to energy companies, bribing truck drivers and contractors and possibly even “cloning” vehicles to resemble company lorries, all used to transport drugs.

In addition to this, the new roads which have emerged along the oil and gas fields are “inadvertently” circumventing the US border patrol’s highway checkpoints.  Cartel operations in the vicinity of the US border have previously led to a surge in reports of kidnaps, as well as extortion, violent home invasion, and also murders, and with cartels moving further into Texas, there is a substantial risk that there will be a further increase in such criminal activity in the state.



Insurance Riders

You’ve worked out how much life insurance you need.   A collection of life insurance policy add-ons, called Insurance riders, must be considered. Insurance Riders can give policyholders additional benefits.

Insurance Riders increase peace of mind because if something goes wrong, there is a Plan B.  When you buy life insurance, available Insurance riders vary by insurance company.   Costs also vary and depend on many factors, including your age, health and type of policy.

1.  Waiver of Premium Insurance Rider:

A waiver of premium rider usually associated with life assurance may be inserted into a policy at an extra cost.  The policyholder must have been disabled for a specific period, for example, six months.  Other requirements may be necessary such as the state of health of the policyholder and must be below a certain age.

2.  Disability Income Insurance Rider:

This is one of the most common insurance riders and one that may be particularly important to younger policyholders (typically, those under 40).

 Some insurers make this rider available through age 50.

You collect a regular income from the insurance company if you become totally disabled and can’t work.  The policy specifies the amount of the income.  Furthermore, whether it’s paid for a certain amount of time.  Some disability income riders pay out only if you become disabled from an accident. Others pay on accident and sickness.

3.  Guaranteed Insurability Insurance Rider:

This rider provides specific dates on which additional life insurance policies can be bought.  Usually, the older the insured gets, the fewer dates the policy owner has to purchase more life insurance. ( This rider lets you purchase additional life insurance at a later date without undergoing a medical exam or providing any evidence

4.  Term Conversion Insurance Rider:

Provides coverage for a certain period of time, such as 10, 15 or 20 years.  Permanent life insurance, such as whole life or universal life, provides coverage for your entire life, so your beneficiary receives a benefit no matter when you die.

This insurance rider lets you convert term life insurance into permanent life insurance without undergoing a medical exam.  It is especially attractive to young people starting careers and families who need life insurance but don’t have enough money yet to secure all the coverage with permanent life insurance, which has higher premiums than term life. There will be a deadline for when you must

There will be a deadline for when you must convert if you want to change the term policy to permanent life insurance without providing health information.  Understand the convertibility features before you buy.

5.  Accelerated Death Benefit Insurance Rider:

Accelerated Death Benefit Rider has become standard in the insurance industry. It is usually included automatically for free or offered at nominal cost.  This insurance rider lets you collect a portion of the policy’s death benefit if you become terminally ill with a short life expectancy, such as one year.  The policy spells out how much of the death benefit is available before death.  Usually, its capped at $250 000 to $500 000.  You can use the proceeds for anything, such as paying medical bills or living expenses.  Even though the insurer offers the rider free, the company may charge a fee if it is exercised.

6.  Critical Illness Insurance Rider:

A rider added to a life insurance policy to protect the insured against financial loss in the event of a terminal illness.

The insurer pays a lump sum if you’re diagnosed with any of the critical illnesses specified in the insurance policy, such as cancer, heart attack, coronary artery bypass, major organ transplant, stroke, kidney failure. (   Instead of reimbursing you for medical expenses, the way health insurance does, the rider provides money to use for any purpose during the course of the treatment.

Instead of reimbursing you for medical expenses, the way health insurance does, the rider provides money to use for any purpose during the course of the treatment.

7.  Child Protection Insurance Rider:

All emotion must be set aside when considering a child protection rider.  Although the death of a child typically would not result in income loss, as would the death of a spouse, the tragedy still would have financial consequences which could be an additional hardship for a bereaved family.  This term life insurance rider provides coverage for final expenses in case the unthinkable happens.  The coverage generally can be purchased in units.  Basic information about the child’s health is required for underwriting.

 This term life insurance rider provides coverage for final expenses in case the unthinkable happens.  The coverage generally can be purchased in units –  for example $1000.  Underwriting requires basic information about the child’s health.

8.  Accidental Death Benefit Insurance Rider:

If you die from an accident, this rider provides an additional benefit on top of the policy’s regular death benefit. The option is often referred to as double indemnity when the additional payout equals the original death benefit.  Sometimes the rider also includes additional payment for dismemberment.  You would collect money if you lost a limb or your sight.  Life insurers will consider your occupation and hobbies when determining premiums.

9.  Return of Premium Insurance Rider:

If you live to the end of the term, in exchange for paying the premium, in most circumstances you get all your money back. Some companies use a separate rider where others, like ING, write the return of premiums benefit into a basic policy.  You pay a higher premium for the opportunity to get your money back.  The big question to consider.  How does paying the extra cost for the return of premium rider compare to investing that money and buying a basic term policy instead? To find the answer, subtract the annual premium for a basic term policy from the annual cost of a return of premium policy.  The difference is how much you would have to invest each year during the insurance term.  Then calculate what annual rate of return you’d need on that money to beat the amount you’d get back from a return-of-premium policy.


There is no one-size- fits- all answer to whether any of these Insurance riders are right for you.  You’ll need to weigh policy options to find the best package for your needs. (

In some cases (depending on age, sex, tax bracket and other factors), you’d need to get more than a 7% rate of return on your investment to beat the return of premium policy

Rideshare drivers have insurance options

 Uber Rideshare drivers are covered by Uber insurance. While the app is turned off, you are covered by your personal insurance.  While the app is on, however, and you are waiting for a client, you are covered by neither.

In some cases, personal auto insurance policies are being cancelled. This happens when the insurance companies become aware that the driver works for Uber or Lyft. Therefore they are left with no personal auto coverage.

Consider this:

A person pulls up an app on their phone, types in the position where they are and need to be taken and orders your car. You drive to fetch them.

While you are driving you look at your phone to ensure that you are driving in the right direction. You hit a car whilst your attention is on your phone. It is not a big accident however bad enough that the other driver calls the police. You have to cancel your pick-up.

The police arrive.  You were driving for Uber. The police record your details. You submit your claim.

Your insurance company calls you. You drive in “rideshare”. As a result, your claim is denied. You are responsible for your own car repairs.  Furthermore, you must pay for the damage caused to the other driver’s car. Fortunately, nobody was injured.

The car insurance company then cancels your policy.

You contact Uber to find out if their insurance policy is going to cover the damage. Unfortunately not, says the receiver of your call. They state that as you did not have a passenger in the car, they are not liable for damages.

Lyft, Uber and Sidecar would prefer that you think of them as technology companies. Uber wrote in a legal finding with the CPUC (California Public Utilities Commission):-

Uber operates no vehicles and does not hold itself out or advertise itself as a transportation service provider. In fact and law, Uber does not provide transportation services of any kind and does not own, lease or charter any vehicles for the transportation of passengers. On the contrary, Uber is a technology company that licenses the Uber App to transportation service providers. The transportation service providers pay a fee to Uber to use its software technology; the passenger of the transportation service provider pays the transportation service provider for transportation received.”


Residents will pay a large proportion of the catastrophe caused by Hurricane Irma. The Consumer Federation of America made this statement.

Insurers have therefore developed higher wind coverage deductibles. Disclosures of new limits on payouts are often obscured in paperwork.  However, many consumers do not read or do not understand the documentation.

There will be about 300,000 claims for wind damage and 150,000 flood damage claims in the future.  These claims could reach more than $40 billion.

There are “anti-concurrent causation” clauses in policies. This means thus that cover for wind damage is excluded if an “uninsured flood” occurs simultaneously. Many policyholders,  however,  are stunned when they realise that wind coverage could disappear through a hidden backdoor in a policy.

The National Flood Insurance Program has $1.5 billion to assist in paying claims, as well as $5.8 billion in borrowing authority. $250,000 is offered for structural damage and $100,000 for damaged or lost contents. The residents need to survey damages as soon as possible. The policy of the NFIP is first to come, first served.

Insurance companies will use drones to assess damage as the use of insurance adjusters is very costly. Furthermore, this will speed up the payment to the Irma hurricane victims.

Tips for making claims include:

1. Take pictures and videos of losses.
2. Record expenditures of meals and hotel accommodation whilst away from home.
3. Having photos of damaged items could be very useful.

Two percent is the usual deductible of the insured value of a residence. Therefore on a $300,000 home, the deductible would be $6,000.  Most noteworthy is that this amount needs to be paid before an insurance company will pay out any amount to the insured.

Victims of Irma needs to know that the comprehensive section of their auto insurance also covers flooding.

President Trump issued the following for Florida:

1. Provide temporary housing.
2. Give financial assistance for home repairs.
3. Grants made available to help with medical, dental and funeral transportation.
4. Relief regarding unemployment for up to 26 weeks.
for state benefits.
5. Loans at low-interest rates to cover losses not covered by insurance.
6. Crisis counselling will furthermore be made available.