Insurance Critique

Auto insurance - is your seatbelt fastened?

admin — Sat, 30 May 2009 21:05:02 +0000

I researched some statistics from government sites and here is what I found about seat belt use rates in different US states.
I sorted this table by seat belt use rate in 2008 to see who are the best in worst in 2008. Looks like Michigan, Hawaii and Washington have most disciplined drivers while in New Hampshire, Wyoming, Massachusetts and American Somao more than 30% of drivers ignore the seat belt.

It would be nice to see whether there is any relation between seat belt use rates and accident fatalities.

State or U.S. Territory	2001	2002	2003	2004	2005	2006	2007	2008	2007-2008 Change
Michigan	82.30%	82.90%	84.80%	90.50%	92.90%	94.30%	93.70%	97.20%	3.50%
Hawaii	82.50%	90.40%	91.80%	95.10%	95.30%	92.50%	97.60%	97.00%	-0.60%
Washington	82.60%	92.60%	94.80%	94.20%	95.20%	96.30%	96.40%	96.50%	0.10%
Oregon	87.50%	88.20%	90.40%	92.60%	93.30%	94.10%	95.30%	96.30%	1.00%
California	91.10%	91.10%	91.20%	90.40%	92.50%	93.40%	94.60%	95.70%	1.10%
Maryland	82.90%	85.80%	87.90%	89.00%	91.10%	91.10%	93.10%	93.30%	0.20%
Iowa	80.90%	82.40%	86.80%	86.40%	87.10%	89.60%	91.30%	92.90%	1.60%
Puerto Rico	83.10%	90.50%	87.10%	90.10%	92.50%	92.70%	92.10%	92.80%	0.70%
New Jersey	77.60%	80.50%	81.20%	82.00%	86.00%	90.00%	91.40%	91.80%	0.40%
Delaware	67.30%	71.20%	74.90%	82.30%	83.80%	86.10%	86.60%	91.30%	4.70%
Indiana	67.40%	72.20%	82.30%	83.40%	81.20%	84.30%	87.90%	91.20%	3.30%
Texas	76.10%	81.10%	84.30%	83.20%	89.90%	90.40%	91.80%	91.20%	-0.60%
New Mexico	87.80%	87.60%	87.20%	89.70%	89.50%	89.60%	91.50%	91.10%	-0.40%
Nevada	74.50%	74.90%	78.70%	86.60%	94.80%	91.20%	92.20%	90.90%	-1.30%
Illinois	71.40%	73.80%	80.10%	83.00%	86.00%	87.80%	90.10%	90.50%	0.40%
Dist. Of Columbia	83.60%	84.60%	84.90%	87.10%	88.80%	85.40%	87.10%	90.00%	2.90%
North Carolina	82.70%	84.10%	86.10%	86.10%	86.70%	88.50%	88.80%	89.80%	1.00%
Northern Mariana Islands	NA	NA	NA	NA	NA	NA	80%	89.80%	9.80%
Georgia	79.00%	77.00%	84.50%	86.70%	89.90%	90.00%	89.00%	89.60%	0.60%
West Virginia	52.30%	71.60%	73.60%	75.80%	84.90%	88.50%	89.60%	89.50%	-0.10%
New York	80.30%	82.80%	84.60%	85.00%	85.00%	83.00%	83.50%	89.10%	5.60%
Connecticut	78.00%	78.00%	78.00%	82.90%	81.60%	83.50%	85.80%	88.00%	2.20%
Vermont	67.40%	84.90%	82.40%	79.90%	84.70%	82.40%	87.10%	87.30%	0.20%
Minnesota	73.90%	80.10%	79.40%	82.10%	83.90%	83.30%	87.80%	86.70%	-1.10%
Alabama	79.40%	78.70%	77.40%	80.00%	81.80%	82.90%	82.30%	86.10%	3.80%
Utah	77.80%	80.10%	85.20%	85.70%	86.90%	88.60%	86.80%	86.00%	-0.80%
Pennsylvania	70.50%	75.70%	79.00%	81.80%	83.30%	86.30%	86.70%	85.10%	-1.60%
Guam	NA	NA	NA	NA	NA	NA	81%	85.00%	4%
Alaska	62.60%	65.80%	78.90%	76.70%	78.40%	83.20%	82.40%	84.90%	2.50%
Oklahoma	67.90%	70.10%	76.70%	80.30%	83.10%	83.70%	83.10%	84.30%	1.20%
Maine	NA	NA	NA	72.30%	75.80%	77.20%	79.80%	83.00%	3.20%
Nationwide	73%	75%	79%	80%	82%	81%	82%	83%	1%
Ohio	66.90%	70.30%	74.70%	74.10%	78.70%	81.70%	81.60%	82.70%	1.10%
Nebraska	70.20%	69.70%	76.10%	79.20%	79.20%	76.00%	78.70%	82.60%	3.90%
U.S. Virgin Island	NA	NA	NA	NA	NA	80.20%	NA	82.30%
Colorado	72.10%	73.20%	77.70%	79.30%	79.20%	80.30%	81.10%	81.70%	0.60%
Florida	69.50%	75.10%	72.60%	76.30%	73.90%	80.70%	79.10%	81.70%	2.60%
North Dakota	57.90%	63.40%	63.70%	67.40%	76.30%	79.00%	82.20%	81.60%	-0.60%
Tennessee	68.30%	66.70%	68.50%	72.00%	74.40%	78.60%	80.20%	81.50%	1.30%
Virginia	72.30%	70.40%	74.60%	79.90%	80.40%	78.70%	79.90%	80.60%	0.70%
Arizona	74.40%	73.70%	86.20%	95.30%	94.20%	78.90%	80.90%	79.90%	-1.00%
Montana	76.30%	78.40%	79.50%	80.90%	80.00%	79.00%	79.60%	79.30%	-0.30%
South Carolina	69.60%	66.30%	72.80%	65.70%	69.70%	72.50%	74.50%	79.00%	4.50%
Kansas	60.80%	61.30%	63.60%	68.30%	69.00%	73.50%	75.00%	77.40%	2.40%
Idaho	60.40%	62.90%	71.70%	74.00%	76.00%	79.80%	78.50%	76.90%	-1.60%
Missouri	67.90%	69.40%	72.90%	75.90%	77.40%	75.20%	77.20%	75.80%	-1.40%
Louisiana	68.10%	68.60%	73.80%	75.00%	77.70%	74.80%	75.20%	75.50%	0.30%
Wisconsin	68.70%	66.10%	69.80%	72.40%	73.30%	75.40%	75.30%	74.20%	-1.10%
Kentucky	61.90%	62.00%	65.50%	66.00%	66.70%	67.20%	71.80%	73.30%	1.50%
Rhode Island	63.20%	70.80%	74.20%	76.20%	74.70%	74.00%	79.10%	72.00%	-7.10%
South Dakota	63.30%	64.00%	69.90%	69.40%	68.80%	71.30%	73.00%	71.80%	-1.20%
Mississippi	61.60%	62.00%	62.20%	63.20%	60.80%	73.60%	71.80%	71.30%	-0.50%
Arkansas	54.50%	63.70%	62.80%	64.20%	68.30%	69.30%	69.90%	70.40%	0.50%
New Hampshire	NA	NA	49.6%*	NA	NA	63.50%	63.80%	69.20%	5.40%
Wyoming	NA	66.60%	NA	70.10%	NA	63.50%	72.20%	68.60%	-3.60%
Massachusetts	56.00%	51.00%	61.70%	63.30%	64.80%	66.90%	68.70%	66.80%	-1.90%
American Samoa	NA	NA	NA	NA	NA	NA	NA	55.70%

Health Insurance - Distribution of uninsured in US by income

admin — Thu, 28 May 2009 06:04:10 +0000

Today I spent some time playing with 2006-2007 census data and here is a simple chart which shows quite an important trend.

Bars on a chart below show what percentage of people from a certain income group are uninsured. From this chart it is very clear that groups of people with higher income tend to have significantly lower ratio of uninsured.

Today I also read in the new study that an average family with health insurance spends $1000 a year to cover costs for uninsured folks who got to an emergency room, received the care and didn’t pay. And each insured individual shells out $370 to support uninsured. Every time when uninsured person gets into a hospital and doesn’t pay for services hospital has to add this cost to their rates which automatically pushes up insurance premiums. In the same study it was reported that government programs like Medicaid and Medicare pay only 26% of uninsured costs while uninsured themselves pay 37%. This leaves 47% unpaid which adds up to 43 billion of unpaid bills which end up on our premiums…

Looking at all this data it gets quite obvious to me why Obama is trying to do something about health insurance during current recession. Lots of newly unemployed folks are also becoming uninsured which automatically adds to unpaid hospital bills and adds up to this 43 billion. And since lots of people are also in foreclosure right now percentage of unpaid bills will only grow. So unless this trend is stopped in several years we could end up in insurance costs which are several times more than what we pay right now… Not a very optimistic picture, right?

Table below showsdependency between number of uninsured individuals and their family income in more details.

	2006 (uninsured)			2007 (uninsured)
Family Income (People in families, in unrelated subfamilies, or unrelated individuals)	All	Uninsured	% of Uninsured	All	Uninsured	% of Uninsured
All………………………………………….	296,824	46,995	15.8	299,106	45,657	15.3
Less than $25,000……………..………	66,498	18,322	27.6	66,017	17,802	27.0
$25,000 to $49,999…………….………	73,244	14,483	19.8	70,404	13,732	19.5
$50,000 to $74,999…………….………	54,784	6,863	12.5	54,414	6,870	12.6
$75,000 or more……………….………..	102,298	7,327	7.2	108,271	7,253	6.7
In families or unrelated subfamilies….	246,566	36,572	14.8	246,959	34,992	14.2
Less than $25,000……………..………	40,431	10,958	27.1	39,683	10,453	26.3
$25,000 to $49,999…………….………	58,612	12,154	20.7	55,004	11,208	20.4
$50,000 to $74,999…………….………	49,282	6,379	12.9	48,407	6,367	13.2
$75,000 or more……………….………..	98,240	7,080	7.2	103,865	6,965	6.7
Unrelated individuals (15 or older).…..	50,258	10,423	20.7	52,147	10,665	20.5
Less than $25,000……………..………	26,067	7,364	28.2	26,334	7,349	27.9
$25,000 to $49,999…………….………	14,632	2,330	15.9	15,400	2,524	16.4
$50,000 to $74,999…………….………	5,501	483	8.8	6,007	503	8.4
$75,000 or more……………….………..	4,057	246	6.1	4,406	289	6.5

Life insurance - ancient roots

admin — Wed, 27 May 2009 18:52:27 +0000

I always wondered who invented all these “life insurance quotes”, “term life insurances” and other tricky phrases that you need to understand if you want to get right life insurance.
I was quite surprised to figure out that life insurance is probably one of the oldest insurances ever existed - though it would be probably quite an easy guess since who would insure cars in ancient Egypt :).
From “Roman sepulchral inscriptions” book by John Kenrick I got following interesting quote about kind of “life insurance” in Roman empire called burial club:
“As I have not seen the existence of burial clubs among the Romans noticed in any work on Roman antiquities, I will give some extracts from the monument referred to. It was found at Lanuvium, a town of ancient fame for the worship of Juno Sospita, about nineteen miles from Rome on the Via Appia. The inhabitants of this town appear, out of flattery towards the Emperor Hadrian, in whose reign the marble was erected, to have formed themselves into a college for paying divine honours to Diana and Antinous; a singular combination, which shows at once the degraded condition of the people, and the heartless formality of the established religion, which could be prostituted to such a purpose. The privilege of forming a college—or as we should say a body corporate—was most sparingly conceded, and most jealously restricted under the Emperors, who dreaded all secret associations as nurseries of treason. With this primary object of forming a college of the ” Cultores Dianse et An- tinoi” they combined that of a burial club, not forgetting the festivities which formed so important a part of all acts of religion among the Romans. To prevent disputes, the laws of the association were inscribed on marble, and probably set up in the temple of the two deities.“

Looks like a very strange mix of religion and insurance, isn’t it? But even more there - look at the marble contract below - it looks very similar to the current life insurance contracts (only in a slightly simpler language and using marble as a more time resistant document storage device). Looks like good lawyers and actuaries were working on it.

An amphora of good wine was to be presented to the club by a new member; the sum of one hundred sesterces to be paid as entrance-money, and five asses per month as subscription. Their meetings were not to take place oftener than once a month. If any one omitted payment for … months (the marble is here mutilated) no claim could be made, even though he had directed it by will. In case of the death of one who had paid his subscriptions regularly, three hundreds sesterces were alloted for his funeral expenses, out of which, however, fifty were to be set apart for distribution at the cremation of the body. The funeral was to be a walking one. If any one died more than twenty miles from Lanuvium, and his death was announced, three delegates from the college were to repair to the place where he had died to perform his funeral, and render an account to the people. Fraud was to be punished by a fourfold fine. Twenty sesterces each were to be allowed the delegates for travelling expenses, going and returning. If the death had taken place more than twenty miles from Lanuviu, and no notice had been sent, the person who had performed the funeral was to send a sealed certificate, attested by seven Roman citizens, on the production of which the usual sum for the expenses was to be granted. If a member of the college had left a will, only the heir named in it could claim anything. If he diead intestate, the quinquennales, or magistrates of the municipium, and the people generally, were to direct how the funeral should take place. If any member of the college in the condition of a slave should die, and his body, through the unjust conduct of hist master or mistress, should not be given up for burial, his funeral should be celebrated by his bust being carreid in procession. No funeral of a suicied was to take place. There are many other rules tending to preserve order and promote good fellowship, but there are all which relate to the burial club.