by John Darer® CLU ChFC CSSC RSP
Connecticut Heath Insurers have thrown gas on the fire by seeking immediate 20% increases in rates, according to a September 15, 2010 report in the Hartford Courant. Rising medical costs and federal health report laws were cited reasons.
Whether the State of Connecticut Insurance Department approves the increases in full, or in part. the increases could play a part in the value of personal injury cases where there is liability and includes a significant medical component.
There are a variety of ways to deal with future medicals in personal injury cases. Regardless of the approach used it is critical to address the issue to mitigate erosion of settlement proceeds.
When considering the funding of a medical policy as part of the settlement solution, calculating the cost of such solution one must recognize the cost of medical insurance increases. Based on what we know now, a 3% fixed increase would not be adequate. Moreover, be aware that these are just increases in premiums and do not reflect the deductibles, co-pays and co-insurance that may apply. Those must be factored in as well. An additional wrinkle is that most structured annuity issuers will cap contractually based increases to 5% or 6%. One must account for the gap and determine how it is to be funded.
The Connecticut story follows my recent post concerning historical premium increase in New York City for the past decade.