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Nonduplication Coordination-of-Benefits (Carve-Out Cob)
Requires that the combination of Medicare and the employer's plan cannot be more than the amount the employer's plan would pay without Medicare.
Insurance Industry News from ProgramBusiness.comMarket Analysis
WASHINGTON – The 2001 fourth quarter Commercial Insurance Market Index released by The Council of Insurance Agents + Brokers indicates that the insurance industry is showing the first signs of distress in the aftermath of the Sept. 11 terrorist attacks, with major commercial property/casualty premiums uniformly on the upswing and confusion in the market as carriers try to decide what they can and cannot cover and at what price. The survey compared rates over the last year and the last quarter. In the survey, the nation's largest commercial insurance brokers were asked both specific and open-ended questions regarding the market in the post-Sept. 11 environment, and their responses indicate emerging disruption and dislocation.
Rate increases continued through the fourth quarter, with the most significant hikes in the midsize and large accounts. Buyers in general are getting less coverage at higher prices. Brokers also reported more exclusions in general, but terrorism cover is scarce. And where it is available the limits are so low and the prices so high, many businesses are simply choosing to go without. The survey also showed there is no predictability on coverage or costs for many lines of insurance.
"This is not a crisis situation yet," said Ken Crerar, president of The Council, "but the uncertainty and confusion our members find when trying to place certain lines are sure to contribute to an overall unsettled business environment. It's too early to tell whether this disruption is a short-term response to the trauma of Sept. 11 or a more permanent market condition." The difficulties of placing and calculating risk were evident in the market survey, which is significant because it includes the period leading up to Jan.1, 2002, when about 70 percent of the reinsurance treaties expired and were up for renewal. Reinsurance is insurance purchased by carriers to minimize their exposure.
"Carriers seem in disarray and [it is] impossible to get responses until [the] last minute," one broker from the Southeast observed. "Underwriters are overwhelmed, don't have reinsurance in place and can't get quotes out on time. Many accounts [are being] transferred and reunderwritten. [The] market is a royal mess!" said another Southeastern broker. "The underwriters look critically at every single piece of business now. What used to be a slam dunk is no more. Coverages are harder to place, and rates are anywhere from 35 percent to 50 percent higher on even the cleanest accounts. Tougher, it's just tougher," said a broker from the Southwest.
Rates, meanwhile, continued their upward rise, a trend evident even before the Sept. 11 attacks. The brokers reported insurance rates for small accounts climbed on average 10 percent to 30 percent since last year, while nearly half said rates for medium and large accounts increased 30 percent to 50 percent. Prices shot up considerably by line, with commercial property and umbrella rates leading the way with sharp increases, in some cases as much as 50 percent to 100 percent. No accounts are being spared a rate hike.
"[The] main difficulty is that terms and conditions are often nonnegotiable. It is either take it or leave it," an agent commented. "Terms and conditions are being tightened across the board. Higher deductibles, lower limits and more exclusions are the rule rather than the exception," added a broker from the Midwest.Underwriting has moved beyond strict to burdensome in many cases. Some brokers reported that as many as five years of loss detail are being required, along with extensive financial data.
Group medical rates also continued to increase, with premiums for all sizes of accounts increasing from 10 percent to 50 percent.
Brokers across the country report they are coping with availability problems by turning to the<Click for the whole story...