As the digital world has become a major driving force in our economy, intellectual property protection has also become a principal point of contention. In the software sector, online services and in biotech there have been dozens of lawsuits over the hijacking or misuse of intellectual property.

Traditional liability policies often don’t provide adequate protection for intellectual property or for defense of claims regarding unauthorized use of intellectual property. There are now two basic types of insurance policies that focus on this issue.

Infringement policies are designed for companies that recognize their exposure to a changing technological climate and are seeking protection against liabilities which are large in nature and which could, by their very size, disrupt corporate economics. The companies are purchasing infringement policies in order to smooth earnings due to exposure from ‘inadvertent infringement’ of somebody else’s intellectual property. This is particularly important to publicly held companies, for whom quarterly reports are critical to ongoing stability.

Enforcement policies are purchased by those who view intellectual property as a critical corporate asset that ought to be protected. Intellectual property can be stolen, infringed upon and invalidated. Most enforcement policies will cover the litigation expense and share in the recovery of theft and infringement claims. However if the intellectual property claim is invalidated, coverage will terminate and expenses paid to date must be returned to the company. Many alleged infringements are the result of employee movement from company to company. The issue of ‘who knew what’ and who owns what they knew make for intriguing courtroom dialogue.

On the Friday before Christmas, outgoing New York Governors George Pateki signed “Timothy’s Law,” a measure that mandates that insurance companies provide coverage for most mental illnesses. Under the law, health insurance providers are required to cover at least 20 outpatient visits and 30 inpatient visits per year for treatment of mental illnesses such as attention-deficit disorder, depression, schizophrenia, bipolar disorder and eating disorders.

The bill falls short, however, of providing comprehensive coverage for some of the most common mental disorders. Post traumatic stress disorder and dependency problems with drug and alcohol are excluded from the mandatory coverage required by the new bill. The legislation’s sponsors accepted the exclusion as a concession measure to obtain passage and are dedicated to expanding the bill’s mandate in future years.

The law is named for Timothy O’Clair, a young New Yorker who took his own life in at the age of 12 five years ago in 2001. Because his family’s health insurance did not cover Timothy’s mental illness, his parents, Tom and Donna O’Clair, were forced to give up custody of him so that he could qualify for treatment state-funded treatment.

Timothy’s parents have since led a public fight to win support for a legal requirement that insurance policies include coverage for treatment of mental as well as physical ailments. The two were present at the state Capitol when the governor signed the bill into law.

Many local governments and some state governments began turning to their pension funds to help pay for health care for retired public workers in the 1990s. Some are now regretting it. When the financial markets were producing soaring returns, governments sought to use the gains in their pension funds to help cover rising health costs.

About the time the stock market calmed down, the cost of health care took off. Municipalities and some state governments found themselves in situations similar to those of the big automakers, where commitments to benefit plans outstripped the revenue sources of the organization.

Rising medical costs are particularly wreaking havoc on public pension funds in Chicago; Battle Creek, Mich.; and the state of Alaska. They threaten longer-term harm in Cincinnati. In Chicago three separate pension funds for public workers have been paying for health benefits along with the usual retirement stipends.

For the Chicago Transit Authority’s pension fund, the problems are real now. A recent study showed that the plan, which covers nearly 20,000 people, could run out of money for retiree health care in early 2007 – and that the money to pay pensions could be gone by 2012.

Battle Creek’s pension fund for police and firefighters has been paying for retiree health care since 1980, when the benefits cost about $60,000 a year; now they cost $1.8 million. The pension fund was to run out of money for retiree health at the end of this year, but officials obtained an emergency 90-day appropriation from the city while they seek a longer-term solution.

In Alaska, where the state Constitution guarantees retired public workers’ health care, towns and school districts have been watching in amazement as their mandatory pension contributions doubled this year – even though Alaska tried to rein in costs by closing the state pension fund to new employees. The bills are growing to make up for prior years, when Alaska underestimated the cost of the health benefits by hundreds of millions of dollars.

This is really just a sampler. And then there’s Medicare and Social Security, two elephants on Capitol Hill that have been ignored by several administrations, both of which lost self-funding status years ago.

Two days after Christmas the Delaware Commissioner of Insurance announced his participation, along with twelve other State Insurance Commissioners, in two law suits protesting the use of credit scores in establishing insurance rates.

Delaware Insurance Commissioner Matt Denn has taken arguments against insurance industry use of credit scoring to the U.S. Supreme Court, filing a brief in a pending case involving the practice. Denn recruited 12 other state insurance commissioners to join Delaware in filing the brief. The other state insurance commissioners joining Denn on the brief include those from Arkansas, California, Georgia, Iowa, Kansas, Michigan, Montana, New Mexico, North Dakota, Oklahoma, Utah and Washington.

Denn’s amicus curiae, or “friend of the court,” brief was filed last Monday with the Supreme Court in Washington, D.C. in the cases of Safeco v. Burr and GEICO v. Edo.

The actual consumer plaintiffs in the case in the cases claim that insurance companies Safeco and GEICO violated the federal Fair Credit Reporting Act. The consumers said that when a consumer’s credit information resulted in the consumer receiving a higher rate, insurers should have sent out “adverse action notices” required under FCRA and acted in “willful” disregard of the FCRA in not doing so.

FCRA adverse action notices are sent to consumers by banks, landlords and others when a consumer’s credit report has caused them to be denied for a loan or a lease, for example, or even if a consumer is required to have a higher than usual down payment or deposit due to their credit score, the brief notes.

Denn and the 12 other insurance commissioners told the Supreme Court that they were filing their brief to “further their collective mission of protecting consumers by supporting interpretations of the FCRA that…put valuable information in the hands of consumers, provide appropriate incentives for insurance companies, to adopt procedures that assure compliance with the law, and hold insurance companies accountable when they adopt policies that recklessly disregard consumer rights.”

At the core of this dispute is the fact that, not only can auto insurance companies use your credit score as an index for your premium costs, they don’t have to notify you that credit has adversely affected your insurance costs. If credit scores are costing you money, their use ought to be transparent. It certainly is when you borrow money.

In 2005, 46 million Americans — or about 15 percent of the total population — lacked health insurance, according to a Census Bureau study. For families who don’t qualify for Medicare but can’t afford private coverage, a sudden accident or illness could lead to financial disaster. The dearth of affordable health insurance has engendered a new breed of what the New England Journal of Medicine classifies as ‘medical refugees.’ These are patients traveling abroad for heart surgery and other crucial procedures; a practice that has grown sharply in the past two years.

In India, the cost of medical care in the U.S. is seen as an economic boon. The situation in the United States and other countries where health care is expensive will contribute to tourists spending $2 billion on medical procedures in India by 2012, according to a study by McKinsey and the Confederation of Indian Industry.

There have long been stories of people traveling overseas for optional surgery. However the new crop of traveling patients is looking for more essential care. Indian hospitals welcome these sick travelers with open arms. “The current wave of medical treatment will mature over the next five years,” says Vishal Bali, CEO of Wockhardt Hospitals in Bangalore. Just in the last year, Bali said the number of medical refugees treated by Wockhardt has increased by 35 percent.

Kathleen Schneiderwind is one patient who needed hip surgery to relieve chronic pain. She and her husband lost their health insurance when they retired, and the hip-resurfacing surgery doctors promised would help cost $30,000 in the United States.

“We began to look at places outside the United States and traded e-mails with doctors in Turkey and India. It turns out that the doctors in Bombay were both more experienced in this particular surgery and would only charge a fraction of what we were going to have to pay at home,” said Barry Schneiderwind. Not only has the treatment been first-rate, they say, they have been able to pay for their plane tickets and even get some dental work and a vacation in Goa – all for $10,000.

The steep hike in health insurance costs has generally been attributed to the rise in the costs associated with new medical technology, along with the expense of the substantial bureaucracies required to run managed care programs such as HMOs and PPOs.

An additional factor has been raised recently by a Yale School of Medicine study. They point to the aging of the nation’s population as a factor in the increase of group health insurance rates. The population in group health private insurance is becoming older and wealthier at a rate greater than the population overall, a demographic shift that can add pressure to the already strained health insurance system.

This trend makes it harder for health insurers to pool risks since fewer younger people with lower health costs are covered by these employment-based plans.

Patricia Keenan, Assistant Professor in the Department of Epidemiology and Public Health, said “Older, more affluent people are more likely to keep their employer-based coverage as premiums rise while others increasingly get public coverage or go without altogether. Population aging combined with declines from rising premiums could further destabilize the employment-based health coverage system.”

She said private coverage has been in a slow decline since the late 1980s and younger and lower-income groups have disproportionately lost coverage. Keenan said even if the population with employment-based coverage remains quite healthy, costs of coverage could increase as the average age of people with group coverage rises.

Her point is that discussion of the impact of our graying population on health insurance costs has been focused primarily on Medicare and Social Security. “Well before we see the effects of baby boomers’ retirement on Medicare and Social Security financing, population aging combined with rising premiums could place more pressure on an already strained employment-based health insurance system.”

A new federal database for the first time allows companies, consumers, health care analysts and others to compare health insurance costs among the nation’s largest cities and other geographical areas. This new metropolitan area data table developed by HHS’ Agency for Healthcare Research and Quality (AHRQ) provides comparable statistics on average annual costs for companies and workers contributing to private-sector health insurance.

The estimates, which are from AHRQ’s Medical Expenditure Panel Survey for 2004 – the most current data – show large geographical variations in how much Americans pay for family coverage and individual coverage as well as how much employers contribute to workers’ health insurance premiums.

Some highlights from the new data for the 20 largest metro areas:

For family health insurance plans, Seattle workers contributed the most (an average $3,299 per year). New York City-area workers contributed the least ($1,851).

Average total premiums for family coverage were highest in New York City ($11,244) and lowest ($8,521) in the Riverside, California metro area, which includes San Bernardino and Ontario.

For individual coverage, Boston workers paid the most ($867). Workers in Riverside paid the least ($449). Total premiums for single coverage were highest in San Francisco ($4,185) and lowest in Riverside, ($3,012).

The database also provides comparisons within states. For example, in the northern and central counties of New Jersey and part of the New Jersey shore, workers contributed an average of $1,676 for family coverage. But in areas of New Jersey further from New York City, such as Atlantic City and Camden, workers contributed an average $3,079 – 84 percent more.

This and other databases comprise a critical component of the HHS ‘Value-Driven Health Care’ program. Using this new AHRQ database, consumers, health care analysts and others will be able to compare and evaluate health insurance costs between the nation’s largest cities and other geographical areas and make informed decisions about coverage.

While the data is interesting, overall the adoption of Health Savings Accounts (HSAs) – a key element of the ‘Consumer Driven Health Care’ designed to reduce employer health coverage burdens – has slowed each of the last three years. Federal sloganeering can only do so much.

The 2006 hurricane season was far more benign than predicted, but it may have done serious damage to efforts to salvage the floundering National Flood Insurance Program (NFIP).

When the soon-to-be reconstituted Congress adjourned two weeks ago, a bill to overhaul the National Flood Insurance program, whose debt to the U.S. Treasury is $17.3 billion, died in a Senate committee. So did virtually every other funding bill designed to keep the government functioning for the next nine months; in a remarkable display of petulance the lame duck legislature walked away from its primary budgetary responsibilities.

“It’s amazing,” said J. Robert Hunter, a former NFIP director and now an insurance expert for the Consumer Federation of America. “It’s such a broken program, and (lawmakers) knew it.”

NFIP is another star in the Federal Emergency Management Agency’s firmament. NFIP sells insurance that private firms long ago abandoned – with good reason. Some of America’s most flood-endangered properties are among the $800 billion in assets that the program insures for more than five million policyholders nationwide. About $50 billion of that property is in New Jersey and Pennsylvania.

The program’s flaws include heavily subsidized rates, dangerously antiquated maps of floodplains, and staggering losses paid on structures that are swamped repeatedly. Claims on one Philadelphia-area property, which FEMA has declined to identify, have been filed 22 times.

We’ve all heard about the operators of shaky businesses enjoying comfortable retirements after an unfortunate fire razed the business and fire insurance covered the losses. Now apparently, FEMA’s management has made it possible for the faltering businessman in America to start a flood as well.

Out of Bangalore comes the news that Air-India has put out a bid for fog insurance. This coverage would be designed to cover airline losses due to foggy conditions that persist for more than four days. Costs incurred include the rerouting of flights, cancellations and providing housing in local hotels for stranded passengers.

Air-India has received bids from a dozen companies. The new coverage is part of Air-India’s strategy to minimize losses stemming from inclement weather. “Although the weather-risk cover will be limited to India initially, we will extend it to airports at London, Paris, Frankfurt, and New York, where fog and snow are more severe,” according to an Air-India executive.

A competitor, SpiceJet, plans to get insured against not only fog, but also delays caused by technical snags, traffic congestion, and other exigencies. Another Indian carrier, Air Deccan, said its fog insurance scheme would be ready by next winter.

This is not the first time fog insurance is being considered by airlines. A similar attempt was made five years ago, but the interest from the insurance sector was minimal. A spokesman for the Indian insurance industry now maintains that fog insurance can be financially viable if an airline has large operations: “Since there are many competing players in the insurance industry now, it may be worth exploring.”
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There have been daily stories out of Florida for the couple of years about the implosion of the private property and casualty insurance business in the state. Most firms have dropped the coverage altogether, making the state-owned Citizens Property Insurance Corp the largest insurer in the state. Despite government intervention, homeowner rates have soared.

Florida’s schools are facing no less dramatic a collapse in the available coverage and the cost. For example, the insurance bill for Pasco County schools jumped from $2.8-million last year to $6.7-million this year, even though the amount of coverage dropped from $100-million to $50-million. That’s the maximum coverage that was available, even though school buildings are built to standards that often make them shelters for hurricane victims.

The coverage limits mean only 4.45 percent of the $1.1-billion in Pasco schools property is insured. And Pasco, which has had relatively little hurricane damage, is in fact better off than other places.

Statewide, school districts paid $178-million this year, an 81.5 percent increase over last year’s $98-million tab, according to a report from the Florida Association of District School Superintendents. But the amount of covered property fell 80 percent – from $7.4 billion last year to $1.5 billion this year. The result: Less than 3 percent of the value of Florida schools is covered. Two years ago, 21 percent of property was insured.