Business and Finance

Anna University with more than hundred thousand students is one of the largest Indian University that offers students higher education in engineering, technology and allied sciences. The University located in Chennai was established in the year 1978 with the integration of College of Engineering, Madras Institute of Technology, and a few Technical Institutes in Chennai. Anna University Results are declared for every semester.

Often, California has been in the lead when it comes to legislating for fairness. When a service industry is acting in an arbitrary way and damaging the interests of consumers, you can usually rely on Sacramento to do something about it. So, for example, the Insurance Commissioner instructed auto insurance companies not to rely on ZIP codes when writing policies. The real basis on which to assess risk should always be the individual driver. It’s fair to look at the person’s experience, driving record, how far he or she drives every year, etc. That way you reward the good drivers with lower premiums and hit the bad drivers with higher premiums. This ends the discriminations of higher premiums for people living in predominantly black or Latino communities.

It would be great if we could see this change sweeping across the US, not just in auto insurance, but for all classes of insurance. Unfortunately, the insurance industry has fought the change tooth and nail wherever it has been proposed. Lobbyists with deep pockets have been able to keep the legislators at bay. The ZIP code approach remains the norm.

The most recent piece of research comes out of Chicago and relates to health plans. It seems it’s cheaper to live in the suburbs. The research used just over 3,000 ZIP codes in the Chicago area and, when analysing the rates charged, found that people living in the blue-collar suburbs west and south of Chicago paid almost 25% less for their insurance than those living in the downtown areas. Similarly, the residents of the northern suburbs paid about 15% less. Spread the net more widely and it turns out that everyone living between 15 and 25 miles from the downtown area pays an average of 13.5% less, while those who have moved 25 to 40 miles out of the city pay an average 25% less.

There are obvious explanations. The hospitals and clinics in different areas attract doctors and healthcare providers with different levels of experience and expertise. Operating costs will also change with local conditions. The level of support for public facilities and programs from local government naturally varies depending on the local tax take and political factors. These affect the rates for services the insurers can negotiate with the local provider networks. And then there are all the intangible factors based on the wealth or poverty of an area, the percentage of people without current health insurance, and so on. Put everything together and profiling by geography may produce very different results. This leaves us with an uncomfortable reality. As it stands, the health insurance industry is unregulated. It can charge what it likes using whatever factors it wishes to consider significant. As and when the healthcare reforms pass through Congress, some practices that produce unfairness will disappear, e.g. no more discrimination based on gender, no more discrimination by denying coverage to people with pre-existing conditions, no more caps on lifetime benefits, and so on. But the ZIP code abuse will not be affected. No matter where you live, you will be judged not on your actual health records but the “accident” of your address. Perhaps you should consider relocating to a better area to get the best health insurance rates.

Life is never fair. Just when you think you have hit rock bottom and things cannot get any worse, they get worse. You would have thought that a recession would mean premium rates would stay the same. In your dreams, you might have hoped for the rates to fall. After all, there’s massive unemployment – it’s the worst level of unemployment for more than sixty years. With household incomes falling and no job security, this is not the time to find premium rates increasing. Yet when those premium notices drop into your mail boxes, the evidence is there. And it’s not just you. Premiums are going up for most drivers. This is so unfair! All but three states in the union have mandatory liability insurance. For everyone who wants to stay legal on the roads, the price of driving is getting to deterrent levels. First it was the price of gas shooting up like a rocket. Now it’s those premiums! What’s going on?

There are two quite different problems coming together at the same time. One comes from the general downturn in the economy. The other is connected with the system of regulation for the insurance industry. On paper, the companies have an easy ride. They collect in the premiums, receive the claims, pay out on the claims and keep the balance as profit. Except the worst recession in decades caught them off guard. It all comes down to what insurers should do with the money they have collected in. Their answer was to invest most of it in the stock market. That way, they earned dividends and got capital growth until it was needed to pay out on the claims. But some invested in these new securitized bonds based on mortgages and other loans. So, when both the property and the capital markets were hit, insurers found themselves with big losses. Under normal circumstances, this would not have been a problem, but the insurance industry has to play by different rules. They are regulated by the insurance departments and commissioners for each state. To protect all you people who buy policies, the key rule is that the companies must have enough capital in reserve to pay out on the claims you make. When the stock and bond markets collapsed, many companies either broke the rule or were too close for comfort. So companies have been moving cash around between states to keep themselves legal and putting up the premiums to collect more.

It’s ironic that a rule designed to protect consumers should be pushing up the premiums so fast. Who would have thought the auto insurance industry would lose so much of the money they had invested. After all, they employ all these clever people called actuaries to measure the risks for writing policies. You would think they would have seen the risks of some of the investments they were making. Yet, like most of the other investment managers, the insurers were taken by surprise. The result is that, overnight, many were close to not having enough money to pay out on your policies. That was and remains a serious problem. That’s why the auto insurance industry is asking you all for more money.