Thursday, December 27, 2007
Senior Scam Halted In Time For Christmas
California's Attorney General and Insurance Commissioner wrapped up a long-running lawsuit in time for the Christmas holidays.
In announcing a $7.2 million settlement with multiple organizations, the California AG's office did what few do in such settlements. $5 million of the settlement will go to restitution with $1 million fines for two different companies.
The scam worked like this:
California officials said that the companies tricked senior citizens into buying annuities—long-term financial vehicles with high penalties for early withdrawal. The annuities offered the possibility of future payments, but only after a lengthy surrender penalty period. Because of their long window to mature, California officials said the investments were not typically suitable for senior citizens.
One of the companies, Family First Insurance, reportedly sent sales representatives, who were not authorized to practice law, to senior citizens’ homes to provide legal advice on estate planning. Those representatives naturally did not disclose that their ultimate goal was to sell annuities. After preparing the living trust documents the agents returned to the seniors’ homes—under the guise of acting as their financial or estate advisors—and induced the seniors to move their liquid assets into annuities.
Family First will be forced to cease operating according to California officials, who offered some solid advice for consumers in the wake of the problems.
* Consumers should be wary if someone claims to a trust expert, senior estate planner or paralegal, or to work with an attorney who is an expert in estate planning. These agents are not attorneys and not experts in living trusts. If seniors need assistance with preparing a trust or other estate plan, they should seek out their own attorney whose expertise is in estate planning.
* Be wary of free seminars or sales presentation on living trust services.
* Use caution if the representative asks for access to your personal financial information while setting up or updating an existing living trust. Agents use this ploy to ultimately pitch annuity investments.
* Some may also criticize existing investments, saying that these investments carry more risk than the annuity.
* And finally, a big warning bell should go off if someone does not discuss the drawbacks of a particular investment option.
Labels: California, consumer, financial, insurance, investment, scam
Thursday, September 20, 2007
I'm Too Fat For My Car
Well, maybe not me personally, by myself with a bag of Doritos and a Big Gulp perched on top of the
cupholder since it won't fit inside the darn thing. But me and a couple of friends? Well, despite our relative success in life and being bright folks, we just may be too fat for our cars.
The National Highway Traffic Safety Administration long ago set "gross vehicle weight limits". Those rules essentially told manufacturers not to reinforce the chassis with tin foil, for example, because if a vehicle claimed to support a number of adults, each adult would be assumed to weigh 150 pounds. So a four passenger vehicle must carry 600 pounds safely.
Guess what? That includes luggage too.
But a funny thing happened on the way to the 21st century. Cars, those death traps Ralph Nader wailed about, got safer and more reliable. And Americans got heavier and fatter.
The Centers for Disease Control has
data showing the average weight of the U.S. population going back to 2002. That study shows American men weighed an average of 190 pounds while American women weighed an average of 163 pounds. (The study also amusingly shows men's waist sizes as 39 inches, which is possible for taller guys, but we think some of those waist measurements were from the guys who wear their pants two inches below their waist.)
Think about the averages again. If 4 men are in a car, the old vehicle standards presumes they weigh 600 pounds. In reality, they weigh an average of 760 pounds. Four men from the old standard are the same weight as today's standard.
USA Today examined this issue and spoke with
auto manufacturers about overweight Americans exceeding their vehicle's weight limits. The manufacturers swear to the paper there is a safety limit involved because, as
USA Today points out, two 200 pound men aren't supposed to be cleared to ride in a Corvette or a
Miata. We believe the manufacturers are conservative just like they are when your vehicle's fuel gauge reads empty, and you know you can drive to the gas station.
What is most worrisome for us is the idea being bandied about now that
insurance companies may soon be rejecting claims for structural damage to a vehicle if the combined passenger weight exceeds the manufacturer's posted weight.
Let's be clear. This is bad for consumers, this is bad for the insurance industry and this is bad for manufacturers who point at the government regulations. But those regulations are a minimum, the insurance companies know better and all the regulation in the world isn't changing that 190 pound statistic.
This is not a blog calling for a referendum on national healthy policy regarding obesity. We do need to address that issue through better education and reinforcement of the message. Just as smoking rates declined, obesity can also decline. But the facts are these:
American men in 2002 weighed an average of 190 pounds, not 150.
American women in 2002 weighed an average of 163 pounds, not 150.
Ask yourself this question:
Are you weighing less today than you did five years ago? And then ask this question. Why can't two men of average weight (regardless of whether that weight is healthy, the number is the number) drive in a Corvette without the chance for an insurance company to claim the vehicle was improperly operated?
Labels: insurance, overweight, safety, vehicle
Friday, May 11, 2007
Want New Homeowner's Insurance In California? You Won't Be In Good Hands
Allstate, a $40 billion company that has a P/E ratio of less than 8, demonstrated today how it keeps it financials looking so healthy.
The giant insurer announced that it would no longer write new homeowners policies in the entire state of California, effective July 1. Given that California is by far the nation's largest state, one knows the decision wasn't taken lightly, but cutting off the state is a drastic step.
Allstate, which insures nearly 20 million homes, had already taken similar action in hurricane haven Florida, as well as several other states where loss data or legal and regulatory issues made a compelling business case.
The company is free, of course, to sell its products where it likes, but one wonders how the Allstate agency owners in California are feeling this Friday morning. Sure, there are cars and life and all sorts of other insurance products to sell, but the company just cut off several tens of millions of people from using its homeowner product in the future.
They won't be in good hands. They'll be in someone else's hands
Labels: Allstate, California, insurance
