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State of Insurance AddressEvery January, the President gives His "State of the Union Address," where he summarizes what he sees going on in the country and where things might be headed. Well, this is the "State of the Insurance Industry Address" — as I see what the market may be doing in 2016 based on the years of experience I have this industry. I work with a lot of different companies, so it gives me a good overview of the market in general.

Personal Home and Auto coverages are going up (that was easy), but not too much — as there is still fighting over market share. The direct insurance writers (those that sell and are employees of one insurance single insurance company or product) will continue to lose market share, as more people want options. Realizing that one-size-fits-all approach typically means one size fits very few.

Many of the direct writer carriers are also competing against their own agents with their 1-800, faceless, wherever they are on the planet operations. Those carriers have a lot of infrastructure to pay for. Some are even moving to the independent insurance agent model to reduce overhead.

I do not see much of an increase coming in Umbrella policies. No, I do not mean your rain umbrellas — although I guess we could try and insure your rain umbrella. Umbrella policies that you can add to insure above your other policies for some coverages.

Small Commercial Business policies will not see much of an increase, as it seems everyone wants to sell these to small business as long as they are not making anything. Businesses that require more underwriting(validating) skills to get coverage will see carriers specialize more. So they will not typically drop a business industry but they also will not be competitive for the same coverages that those with special skills can make a profit on.

Workers Compensation Insurance for business will continue to be a sore point, as there are few insurance carriers who are willing to cover new ventures or those with high risk occupations — such as roofers and others — unless their minimum insurance premiums are really high. Now that the Arizona State Compensation Fund has turned into Cooper Point Mutual, businesses have fewer options.

Health Insurance has turned into a real circus. I knew this would happen because the Affordable Care Act is a major national change, and business will no longer look anything like it used to. It can be summed up as fewer carriers, fewer doctors, fewer plan options and less coverage. From the consumer, it's more money, more money and more money. The Individual Health market blew up this Open Enrollment season, as the carriers lost their proverbial shirt on their individual product and are trying to recover. Now, we have mostly shrinky-dink networks with no out-of-network coverage, so you are paying a lot more for less options.

Those people being treated for major health issues have coverage problems, and will continue to have coverage problems, as their medical resources are pulled out from underneath them. We lost Assurant and Meritus as individual health options in Arizona this year; next year it looks like United Healthcare will pull out of the individual health market.

Small Group Health Insurance is still moving along fine, but the 5 Employee And Under market will be interesting to follow. The current health rating/pricing system is fixed, so they cannot change rates based on the 2-50 employees (which is becoming 2-99). This means carriers are paying hardly any commissions to the 5 and under Group Health market. Consulting fees and fees to work on claims and billing issues cannot be too far off in the future. Larger groups are running good, except the companies and carriers still have to do a lot more paperwork now — which eats into both of their overheads.

Soon there will be only a few Health Insurance carriers in the market, so competition will be diminishing. Anthem is trying to merge with Cigna and Aetna is trying to merge with Humana. Healthnet is merging with Centene. The adventure continues.

So there you have it for 2016 and where the industry is going. As you can see, it is good to have a professional advise you, coverage options and rates are becoming more important as we navigate our budgets and it's crucial that we try to protect the things we have worked so hard to get.

Now, it is definitely time for a Guinness.


A new year can often mean changes to Arizona Group Health Insurance coverage. Call Colgrove Financial at (480) 830-2595 for guidance on choosing a new plan.
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  Mike Bowowski

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