Today’s News: Nonprofit Health Insurers Hoard Cash, State Farm Sheds Home Insurance Customers and Ohio Auto Insurance Stays the Same for 40 Years
Reports show that many nonprofit health insurers have been hoarding cash, State Farm Insurance plans to drop home insurance customers and liabilityÂ auto insurance in the state of Ohio has remained unchanged for 40 years.
Nonprofit Health Insurers Hoard Billions in Cash
According to a new study fromÂ the independent group,Â Consumer Union, many nonprofit Blue Cross Blue Shield health insurance companies have hoarded $9.1 billion dollars (or $855 per member per year) in extra cash over the last decade. What’s worse, the companies have held on to this money evenÂ after proposingÂ double-digit premium rate hikes.
Seven out of 10 nonprofit Blue Cross Blue Shield companies held at least three times the amount that regulators required of them to maintain minimal solvency.Â With these reserves held,Â staff attorney from Consumer Union said the nonprofit should be able to reduce prices for consumers (Wall Street Journal).
State Farm Sheds 125,000 Home Insurance Customers
Recently, State Farm announced that it would be shedding 125,000 Florida homeÂ insurance customersÂ due to the increased risk of hurricane damage in the state. This news comes only weeks after the company announced that it would be dropping its flood insurance customers nationwide and leaving the National Flood Insurance Program.
What’s unfortunate for the disbanded customers is that their home insurance options are not plentiful with other companies, and many of those who are offering don’t have the same financial backing as State Farm, therefore resulting in them charging more (Naples News).
Ohio Auto InsuranceÂ Unchanged for 40 Years
The lucky residents of Ohio have benefited from minimum liability auto insurance limits that haven’t changed since 1970. However, according to the Daytona Daily News, theÂ low minimum limits have not been totally beneficial as they have created gaps between coverage payout and repair costs.
Why such a big gap? Because in 1969, a V-6 Chevy Impala four-door sedan sold for $2,894 while they currently sell for $24,290. With the cost of the car (and hence the cost to repair the car) being significantly higher, the coverage costs would need to increase above the current minimums of $12,500 one bodily injury/$25,000 all injuries/$7,500 property to be useful (Daytona Daily News).