Monthly Archives: July 2010

How much do actuarial execs make?

Actuary/blogger Claude Penland has been looking through SEC filings for the salaries of top actuarial executives. The tally so far:

  • $6.6 million for Joseph Taranto, FCAS, the CEO of Everest Re.
  • $5.1 million for David Foy, FSA, the CFO of White Mountains.
  • $1.6 million for Ray Barrette, FCAS, the CEO of White Mountains.
  • $3.5 million for A. Grieg Woodring, FSA, the CEO of RGA.
  • $1.5 million for Paul Schuster, FSA, who is senior VP of U.S. operations at RGA.

Obamacare’s mistake: The CLASS Act

I’m generally in favor of what Obamacare is trying to do – enable insurance companies to tamp down inflation expectations in the health care market, thus driving down costs long term.

But the legislation overreached in a couple of places, and the big one was the CLASS Act, which was Ted Kennedy’s last pet project. The CLASS Act created voluntary long-term care insurance, and it was one of the big areas of concern in the Office of the Actuary’s final critique.

I leave the pros and cons to Ezra Klein’s Wonkbook, only adding the Office of the Actuary had essentially the same critique as the CBO:

Continue reading

Tagged ,

Strictly personal: I am no longer a terrorist, gov’t says

Until now, only a few of my best friends knew the government thought I was a terrorist. I can talk about it now because, well, the government learned the truth, and what I learned may help you if you are on a government watch list.

I’m overstating things a bit, I guess, but for the last three or four years, I’ve had a special place on one of the terrorist watch lists – not because of anything I did but because my name – Jim Lynch – is common enough that some Jim Lynch somewhere on the earth was dodgy enough to keep an eye on.

This isn’t unusual. I know another actuary with a similarly common Irish name who’s on the list. I’m not giving his name because, well, it’s none of your business. The outlaws in Mr. X and me assume we share our names with some IRA baddies, but the real answer is probably prosaic, like a miscode by some well-burrowed bureaucrat.

Being a low-level terrorist suspect isn’t that big of a deal, really. I wasn’t fitted for an orange jumpsuit and the only time water was forced up my nose was during a bad flip turn at the pool.

But it was a hassle when I traveled. The government needed proof I was one of the (many, many) good Jim Lynches. I couldn’t print out boarding passes – which meant I would lose the seats I picked out and got stuck with what was left. So we sentence terror suspects to the middle seat.

And at the airport, someone had to look at my driver’s license before I could get a boarding pass. That meant I always got stuck in the baggage line. And it always seems – to the Ambrose Bierce in me – that every other person in the baggage line behaves as if it is their first time in a baggage line. So I would have to wait and wait and wait – just to prove that I am not going to blow up the plane.

Well, it looks like those days are over. About a year ago, I applied for a Redress Control Number from the Department of Homeland Security. The program is supposed to provide relief to unfortunates like me whose are no closer to a terrorist than when we appear in a phone directory.

You start here, click on “File a complaint/apply for redress,” fill out a form and send it in. A couple months later, you get back a letter with a Redress Control Number on it, and you are supposed to supply that number when you make your reservation.

Even so, getting the Redress Control Number is creepy, because as it assigns you the number, the government tells you the issue has been “resolved.” Notice you don’t learn what the resolution was. Oh, I was sure that anyone could see I’m the paragon of American values, but governments have been known to err, haven’t they?

And I’d been living with one mistake, so one or two more government goof-ups and I’ve got a wrong-way ticket to Guantanamo. I even started wondering if applying for redress was a signal to government that I really was as bad as my digital reputation seemed.

That’s the down side of crackdowns like these. They get the innocent wondering, and the fear of the Gulag becomes an instrument of control. It’s not even clear what’s being controlled, but to a government, control is always good.

But enough liberal prattle. This week, I got to test the program for the first time, flying three legs, including to Canada and back. Result: no hassles. I could print my boarding passes from home and didn’t need anyone at the airport to confirm I’m one of the good guys.

However, my family did get pulled over in the security line on an excess Barbasol rap. I packed a full can of shaving cream in an overnight. Apparently that’s too sinister, though judging by photos I don’t think Osama packs too much shaving cream.

Soupy Sales could never fly today.

Tagged ,

Wisconsin can’t raid its insurer’s surplus

Ashamed I didn’t spot this story earlier:

The Wisconsin Supreme Court ruled Tuesday [July 20] that the state must repay a medical malpractice fund more than $200 million it took to balance the budget three years ago, potentially throwing the current budget into disarray.

I wrote about this a few months ago. Basically, Wisconsin required health care providers to buy med mal coverage in excess of $1 million from a state run company. When the state hit budget problems, it liberated $200 million from the company’s surplus with no promise to every pay it back.

The company didn’t have $200 million. To scrape up the cash, it had to borrow $40 million – from the state. With interest.

This stuff happens from time to time at government-run insurance companies. Politicians don’t see a surplus against adverse results. They see a pile of cash to be spent, and they, frankly, steal it. If I ran a company that way, I’d be blogging from Leavenworth.

These sorts of thefts, I’m told, are common enough that some state-run insurers reserve – ahem – conservatively to keep money from the government’s hands. If the reserves get too high, the company gets battered by its customers, who believe their rates are unjustifiably high.

Fortunately for Wisconsin’s doctors, the Supreme Court agrees with me.

I feel terribly sorry for Wisconsin taxpayers, who have a big hole in their budget now. But the answer to that problem is raising taxes or lowering services, not stealing surplus.

Tagged

Attention sports fans

Via Claims Journal:

Former Chicago Bears tight end Gabe Reid never caught a touchdown pass during his three-year National Football League career, but he has caught hundreds of thousands of dollars from the Illinois Workers Compensation Commission.

Reid was awarded $325,000 after suffering a right knee injury while playing for the Bears from 2003-2006, according to a Chicago Tribune report.

It is the largest workers’ comp settlement for a pro athlete in the state of Illinois, an attorney told the newspaper.

Tagged

Why are they called efficient markets?

Ever wonder why they are called efficient markets? Eugene Fama wonders too, and he invented the term.

A show I would watch

In an interesting dissection of where AIG will get the money to pay off its $725 million class action settlement, D&O Diary throws out this tidbit:

Somehow it seems fitting that just this past week there were news reports that during a recent lunch at the Four Seasons Hotel in New York, where [ex-AIG chairman and CEO Hank] Greenberg was having lunch with former Citigroup CEO Sandy Weill, [Eliot] Spitzer approached Greenberg, stuck his hand out, and asked Greenberg if he would appear on Spitzer’s CNN show. Unsurprisingly, Greenberg declined. Can you imagine the look on Greenberg’s face? The world is a very strange place sometimes. Or, at least there are some strange inhabitants.

The whole article is a lot more meaty and points out that the Ohio settlement puts the tab for securities litigation from AIG’s hinky pre-2005 deals above $1 billion.

Tagged

Survey of actuaries on how to reduce health-care costs

With national healthcare spending expected to rise by hundreds of billions of dollars over the next 10 years, there needs to be a greater emphasis on finding ways to reduce healthcare cost trends. According to the findings from two recent surveys by the Society of Actuaries (SOA), actuaries and consumers both believe that more transparency within the U.S. healthcare system is the key to bending the cost curve downward: Actuaries believe there needs to be more transparency between doctors and patients, while consumers feel they could make more informed decisions if they had more information on medical procedures and options for care.

The entire article is here. My only thought is there isn’t much actuarial in the analysis. For example, you don’t need to be an actuary to believe that people could control costs better if they knew how much things cost. Nor does being an actuary bring any special insights to the questions in the survey, as far as I can tell.

Tagged ,

RIMS: Soft market ‘still going strong’

Second quarter rates down 2.5% for GL, 3.5% for property and D&O, 3.8% for workers comp, according to Advisen’s RIMS Benchmark Survey, summarized here.

Tagged

Agents’ survey: Rates fell 6.4% in Q2

Via Business Insurance, Conference of Insurance Agents and Brokers say large accounts fell 8.9%, mid-sized accounts fell 7%, and small accounts fell 3.4%.

Tagged