Israeli heart patient Avram Hirschon went to China with a group of 14 other Israelis in search of a transplant. Chinese doctors were able to find Hirschon a new heart within weeks. When he asked after the donor, he was told “The boy was 21 years old. More than that you cannot know.”

Israel has one of the lowest organ donor rates in the world at fewer than 10 donors per million people, compared to Europe or the United States, where there are 15-30 donors per million people. China, on the other hand, has become one of the top destinations for those in need of organs due, in part, to a governmental policy that harvests the organs of prisoners on death row.

While health insurance companies officially condemn the practice, many end up funding their patients’ trips to China. Israeli Moti Pinitzman, who also flew to China last year for a heart transplant, told a Knesset investigating committee that his Meuhedet Health Insurance paid for the trip ‘to the last penny.’ In this committee, they are telling everyone that it is terrible and that they feel bad for the Chinese, and so on and so forth. In practice, they push us into the plane,” said Pinitzman.

Representatives from most of the major health insurance companies were present at Monday’s committee meeting, and uniformly agreed that they did not prefer to send patients to China. “We clearly see the problems in this practice but there is no clear court ruling for us to follow, and so when the patients come to us, we can’t always turn them down,” said a spokesman from another Israeli health insurer.

Said one Knesset member in reply, “The health insurance companies say that they only send people to ‘government approved’ hospitals. But the government is ‘approving’ harvesting organs from prisoners.”

Amnesty International maintains that many of the prisoners on death row are placed there for crimes such as stealing a chicken or drug use. While the Chinese government said that it had put to death 1,770 prisoners, figures collected by Amnesty international pointed to tens of thousands of prisoners who were put to death.

We wrote earlier about the speculators who have developed a niche buying life insurance policies from older people for a cash payment, retaining the policy and maintaining the premiums, and then collecting on the policy when the insured individual dies.

Apparently it’s developed into a full-blown scam that has the life insurance industry indignant. Today’s case study is Mr. Marvin Margolis, an 80-year-old Manhattan financial consultant who is described by the New York Times as “looking for investors willing to bet on when he will die.”

Two years ago Mr. Margolis bought a large life insurance policy. Now he’s considering selling it to a group of investors; a deal that should give him as much as $2 million to enjoy in his final years. In return, the investors will get the policy’s $7 million payout when he dies – which they hope will be soon, so they can stop paying his premiums.

Policies like Mr. Margolis’ cause particular concern. It was originally paid for with a loan from speculators who will get their money back, plus a profit, if it is sold to another group of investors, according to public documents. Even if Mr. Margolis does not sell, the loan will be repaid from the death benefit when he dies. In this instance, there are two groups of sharks circling the willing prey.

Insurance executives say transactions like Mr. Margolis’ may cripple their industry and make it harder for the average senior to buy life insurance in the first place. While that seems a benevolent concern, a look at the cash-flow structure of the life insurance industry indicates otherwise. It seems that life insurance is a healthy industry because it is not called on to deliver on a huge portion of the policies that are written.

Life insurance companies rely on policies lapsing before the policyholder dies. Last year, insurance companies reduced their financial exposure by $1.1 trillion when 19.8 million policyholders stopped paying premiums, according to the Insurance Information Institute. By comparison, the industry paid death benefits on only 2.2 million policies.

FEMA has announced that certain residents of Arizona need to buy flood insurance. Arizonans. Lots of them, in fact, as FEMA has identified 119,000 homes in the state that are built in FEMA defined floodplains. FEMA has grown somewhat sensitive to the flood issue since Katrina, and since its management of the federal flood insurance program has proven to be a disaster. Their floodplain maps are decades old, and many multiple claims have been filed and paid off under their jurisdiction.

Still, it doesn’t get a lot dryer than Arizona. While FEMA should be commended for their new sensitivity on flood control, Arizona wouldn’t necessarily be the state to begin renewed vigilance on the matter. Last time I was in Tucson, the city had no storm drain system. Convincing residents of that state that flood insurance is a priority is going to be a tough sell in most areas.

Nevertheless, FEMA is expressing its concern that only 27,000 of those homes identified as lying in a floodplain carry flood insurance. There is no mention in the news stories on the subject as to whether FEMA questioned the permitting agencies and zoning officials in the floodplain area about their criteria for development.

FEMA is merely anticipating what could occur, in the event of ‘a 100 year storm.’ That’s another term that is not likely to send Arizonans running to the phone to call the insurance agent. Last year, the federal flood insurance program serviced 108 claims for the state, which currently has a population of a little over six million.

There are going to be a lot of Baby Boomers who head into retirement just as uncertain about their financial future as the day they took their first jobs. Medical technology has resulted in people outliving most of their functioning appendages – and increasingly, outliving their retirement savings.

“Longevity insurance” provides guaranteed income typically starting after you turn 85, in exchange for an initial investment made perhaps 20 years earlier. Payouts are fixed and cover you and your spouse for as long as you live. There are some variations of this product (as with all insurance products, enough choices to confuse).You can opt for a death benefit, which guarantees that your account will hold a certain value that can be paid out to your heirs if you die before the payout age.

The products are a new spin on ‘deferred fixed annuities,’ which are typically tax-deferred investments set up to provide a guaranteed income stream starting at a predetermined age. According to an analyst with the Insurance Information Institute, a trade organization, “Longevity insurance is an old product that’s been dressed up in new clothing.” In other words, it’s an annuity with a few new features set up to emphasize a lifetime income guarantee.

If you’re someone who loses sleep over the prospect of outliving your savings, you may want to consider longevity insurance. But you also need to be fully aware of the downsides, which include the distinct possibility that you may not live long enough to see one dime in the way of return on your investment. It’s worth spending some money to keep the 2 AM pacing at bay, but be aware of the options so that you can maximize your investment.

Driven by a sharp decline in catastrophe losses from hurricanes and other natural disasters in 2006, the U.S. property/casualty industry posted a $24.4 billion net gain on underwriting through nine months. The net gain on underwriting through nine-months 2006 stands in stark contrast to the $2.5 billion net loss on underwriting through nine-months 2005.

But before you heave a sigh of relief over the survival of the beleaguered insurance companies, consider this: the industry’s positive underwriting results contributed to an increase in its net income after taxes to $44.9 billion in nine-months 2006 from $29.7 billion in nine-months 2005. Reflecting the increase in net income after taxes, the industry’s annualized rate of return on average policyholders’ surplus (net worth) rose to 13.4 percent in nine-months 2006 from 9.8 percent in nine-months 2005, according to ISO and the Property Casualty Insurers Association of America (PCI).

In other words, the ‘underwriting’ portion of the insurance companies’ business, that portion of their activity that cost them billions after Katrina and Rita and all the other hurricanes, that portion of their business that led to tens of millions of dollars in rate increases across the Southeast – that portion of their business left still left them with a net income of $30 billion dollars in 2005 – the Year of the Hurricane. If you’re an investor, a tough year means an ROI of just under 10 percent.

According to ISO’s Property Claim Services (PCS) unit, direct insured losses from catastrophes dropped to $7.6 billion in nine-months 2006 from $51.1 billion in nine-months 2005. Any industry that can take a $51 billion hit to the bottom line and still maintain a net (after taxes) of close to $30 billion is an industry with an ironclad cash flow. Where do you suppose it comes from?

“While the fact that no major hurricanes hit the U.S. in 2006 was certainly good news for the millions of consumers still recovering from the devastating impact of the 2004 and 2005 storm seasons, we view this development as an anomaly rather than a trend,” said Genio Staranczak, PCI’s chief economist. “Natural catastrophes still pose a huge threat to consumers and businesses along the Gulf and Atlantic Coasts.”

But not necessarily to the bottom line, if you’re in the insurance biz.

In the absence of Federal action on affordable health insurance for small businesses, states are continuing to look at options for their citizens. Missouri is the latest, with a proposal that would use Missouri’s state employee health care agency to administer a private insurance option for small businesses, and then use government money, potentially from the Medicaid program, to subsidize the premiums of lower-income employees.

Missouri’s plan would apply to businesses with no more 50 than employees that have not provided health insurance for at least one year. It’s estimated that over 300,000 people – almost half of Missouri’s total small business employees – work at a firm that does not offer health insurance and has not done so in the recent past.

Arkansas is beginning a similar program in January for business with 500 or fewer employees that have not offered an employee health plan for at least one year. Premiums in the insurance plan will be partly subsidized through Medicaid and that state’s tobacco settlement revenues.

Missouri’s estimated cost for the program would be $20 million. Some of that state money likely would be redirected from what’s currently paid to hospitals to reimburse them for the cost of treating the uninsured. The Missouri Hospital Association has been involved in developing the plan. It views the program as a way to reduce the number of uninsured people showing up at emergency rooms.

The hospital association’s interest was sparked by two trends: a declining number of employers offering health insurance and a rising number of workers declining coverage, in both cases because of costs, said Dwight Fine, the organization’s senior vice president for governmental relations.

If those trends continue, “we’re going to have such a large pool of uninsured that the system really begins to collapse,” Fine said.

A year ago New Jersey enacted a groundbreaking new law to extend parents’ health coverage to “kids” up to age 30. Contrary to expectations, its impact has been marginal.
State insurance officials estimate that 6,250 young people have become insured because of this policy — a fraction of the 100,000 expected. Meanwhile, as many as 500,000 people younger than 30 are in need of coverage.

Most group health policies end coverage when children turn 19 or, if they are in college, at 22 or 23. The New Jersey law makes coverage available until the adult child turns 30. Insurance broker David Oscar says it sounds like a good idea, but “in the practical world, it’s a nightmare” because each insurer implemented it differently. Brokers working through his agency sell insurance to 11,000 small businesses statewide, but “I don’t believe we’ve done more than 100 kids,” he said.

Reasons cited for the slow uptake include:

* Few potential customers know about it.

* Insurers have been slow to work out the details. Some have not allowed enrollment until a company’s annual renewal date.

* Several conditions must be met for eligibility. A dependent must be unmarried, for example, have no dependents and — unless a full-time student — live in New Jersey.

* Many employers are not affected by the state law because they self-insure or buy coverage in another state. The law applies only to employers whose insurance is regulated by New Jersey, not those subject to federal regulation or regulation in another state.

Finally, the premiums — between $2,300 and $3,300 a year — are still too high for many prospective customers. “Think of when you were 22 or 23,” said Brad Greenbaum, state president of the underwriters association and head of Fairfield-based Approved Management Concepts. “Your first apartment in northern New Jersey costs $1,800 a month. You lease a car for $300 a month. Now you’re choosing between the cable TV package and health insurance. You’re going to go with the cable package!”

Premiums on private and government mortgage insurance will become tax deductible next year for some borrowers for the first time, based on legislation passed by the departing Congress.

Private mortgage insurance is almost always required of borrowers who don’t have down payments of at least 20 percent. These policies protect the lender against default on the mortgage, while the borrower pays the premium. The policy is usually required until such time as the homeowner has realized an equity position of 20% of the home’s worth.

Government insurance is mostly offered through the Federal Housing Administration to borrowers considered too risky for traditional loans programs, usually first time home buyers. Borrowers who make less than $100,000 a year will be able to write off the full amount of their premiums. Homeowners making more than $110,000 won’t be eligible.

According to the trade organization Mortgage Insurance Companies of America, about twenty percent of the mortgages taken out in the last five years have required insurance.

The insurance can cost several hundred dollars a year and is a major addition to the monthly mortgage premium for many borrowers. The fact that it is now deductible may reduce the number of people who take out second loans in order to meet the 20 percent down mark – an additional burden that hampers many new homeowners in today’s inflated market.

The insurance industry is bailing out of the Mid-Atlantic coast, with some analysts predicting government intervention as the only answer – along the lines of Florida’s state-owned Citizens Property Insurance Corp.

The insurance industry is paying attention to climate change and to increased storm activity, and that is translating into skyrocketing premiums in Hilton Head and many of the other resort areas along the North and South Carolina coastlines

Premiums for single-family residences along the ‘Grand Strand’ have seen 100 percent increases and condominiums have seen up to 700 percent increases. The cost of insurance has been a contributor to drops in housing prices in the area. In Hilton Head alone, sales were down 40 percent over last year and prices dropped 6 percent.

While climate change and global warming have plenty of skeptics, said state Insurance Director Eleanor Kitzman, “The insurance industry believes in this issue and it is affecting the way they do business – which affects the citizens of South Carolina and the economy of this state and that gets my attention.”

Not only are premiums increasing dramatically, she said, but the availability of insurance is not keeping pace with the demand because of the continuing growth in coastal areas.

“The impact of this issue extends beyond rich people at the beach,” Kitzman said. “And they don’t have lifestyles, they have jobs. They have jobs in businesses and industries that impact and benefit the economy of this entire state.”

For example, BMW – one of the north state’s premier employers – likely wouldn’t be in South Carolina without the Port of Charleston. But the supply of insurance – at any cost – doesn’t seem likely to keep up with the demand.

Piper Aircraft Inc. has had been on a corporate rollercoaster in the last fifteen years, going through bankruptcy, layoffs and labor disputes in order to arrive at fiscal stability during recent times. Now, they are looking at an additional business burden that may send them looking for a new location in another state. Piper has had a 1,150 percent increase in its property insurance costs in less than two years.

The aircraft manufacturer is based in Vero Beach Florida and has seen its annual premiums jump from $400,000 in 2004 to about $4.4 million in 2006, not including a $600,000 storm-related surcharge.

According to the company’s CEO James Bass, property insurance is going to be a principal consideration during the decision making process over where to build their first jet. Also under consideration is whether or not to remain in Florida at all, where they employ over a thousand people. If the state wants to remain competitive for businesses, “there has to be some type of mitigation of that expense,” Bass said during an interview earlier this month at Piper’s headquarters.

“I mean, over a 10-year period, if I’m paying $4 million more in insurance … that’s a $40 million fee that I wouldn’t have to pay in some other location,” Bass said. “That’s a lot of money.” Other states courting the company – and there are several – will have an advantage when it comes to insurance, unless Florida lawmakers provide relief for businesses.

Last month the state’s new Florida Property & Casualty Joint Underwriting Association started writing policies for businesses that can’t get private insurance, but it only covers risks of up to $2 million. This service is for “businesses that couldn’t get any coverage,” said Bob Lotane, spokesman for the Florida Office of Insurance Regulation. “[However] there are businesses that can get written, but they’re at such high rates that it becomes a factor that influences how they decide to go forward in Florida.”

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