Intern Insights: Insurance Buzz

July 23, 2012

There has been a lot to talk about in the insurance industry over the course of the last few weeks, from the introduction of a Medicare Tax per the ACA, the Mass Chamber Health Co-op, to Google facing a huge fine from the Federal Trade Commission because of a corporate liability lawsuit. When the average consumer thinks about insurance, their mind most likely defaults to auto and home, but the scope of insurance extends far beyond just these.

In Google’s case, they could have been more prepared for such a lawsuit had they taken a different approach their corporate liability risk management. Now Google is facing the largest fine ever handed down by the FTC. Google violated the privacy rights of its users and circumvented privacy settings to track user web-searches as a means of target marketing. Whether it was intentional or not, Google could have been better prepared to mitigate this risk. Now they face a $22.5 million fine that can be eliminated by preventative action. Fortunately, Google carries $47.62 billion in cash on their balance sheet, making $22.5 million look like pocket change.

Per the Patient Protection and Affordable Care Act, there will now be a 3.8% tax levied on investment income for individuals whose adjusted gross income exceeds $200,000; $250,000 for couples filing jointly. They will be taxed on the amount of investment income that causes them to exceed this barrier. The tax is applicable to interest income, dividends, rent, annuities, royalties, income generated from passive nonbusiness activities, capital gains, and interest in a partnership or S-Corporation. Without offering any political basis, to avoid digging my own grave, such a tax could generate some market instability. Investors who might take a significant hit per this tax could sell their securities prior to the law’s January 1steffective date. It could also cause some investors to cash out of businesses or partnerships to avoid taxation. For most, though, there are not many other places to put your money and see the same returns.

Recently, The Massachusetts Association of Chamber of Commerce Executives voted to implement a Health Co-op with Harvard Pilgrim, Fallon, and Health New England to give small business owners a break from high healthcare costs. Businesses with 1 to 50 employees that work a minimum of 30 hours a week can engage in the Co-op, so long as they are a member of a Mass Chamber of Commerce or other business associations. The Health Co-op slashes rates by 3% for Harvard and Fallon and 5% for Health New England. The vitality of small businesses is essential to the economic stability of Massachusetts. Households keep the economy flowing and cutting costs of healthcare could indirectly mean higher wages or more disposable income for these households.

Each week, I try to make an observation of aspects of working in an office that do not pertain to my tasks at hand, whether they be financials, marketing, etc. Last week, I talked about a girl at Dunkin Donuts that knows my order before I even walk in. This past weekend, I was at the beach with my family and my dad and I decided to go get an ice cream. We got to the snack-shack, and the woman working there guessed my dad's order before he could say a word. She knows I have three younger brothers and that one is a lifeguard for the public beaches. She knows my brothers' names and what they usually order as well. It is not every day that you stumble upon a business that operates that way. Actually, businesses like that are few and far between. I believe that is what separates Murray & MacDonald from other agencies. We do not see our customers every day, week, or month (depending on how well you drive), but we still develop personal relationships with clients. I see it every day: customers come in with a simple task and end up talking to associates for a while, just having friendly conversation. We are not a Fortune 500 company, we are not traded on the NYSE, and we do not have dozens of locations. Customers come to Murray & MacDonald to be treated well, have even the most minute problems worked out, and walk away with a feeling that other agencies simply cannot deliver.