INSURANCE

Some employers want to provide their employees with health insurance without having to pay for an expensive group insurance plan. One way to do this is by self-insuring. Typically, this means that the employer establishes a fund that it uses to pay the medical expenses of its workers and their families. Or, the employer pays the medical expenses as they arise out of current cash flow. This can be a cost-effective alternative to traditional insurance, but it can also be risky. If an unexpectedly large number of employees get seriously ill, their medical bills could wipe out the entire medical fund or require payments beyond the employer's ability to pay. If medical bills are unpaid, the employer will be exposed to lawsuits from other employees with unpaid medical bills of their own. In some cases, this could bankrupt a company.

If you're a business owner who has chosen to self-insure, stop-loss health insurance can help guard against this risk. Stop-loss insurance pays your employees' medical bills after you have paid a certain predetermined amount. Some policies are designed to protect you against high claims by any one employee or family member. Once you have paid the specified amount (e.g., $10,000), the insurance pays for the rest of the individual's medical expenses, up to the policy's coverage limits. Other policies protect you against an unexpectedly large amount in total claims. In this case, the coverage kicks in once you've paid a certain amount toward all of your employees' medical bills (again, coverage limits apply).

Stop-loss insurance can be a great source of financial protection, but you'll have to weigh the cost against the potential benefits to determine if this type of insurance makes sense for your business. If your risk exposure is relatively low (e.g., your employees are young and healthy), you may choose to self-insure without using stop-loss insurance for added protection. Or, after considering the estimated claims you are likely to pay and the premium for the stop-loss coverage, you may find that you're actually better off purchasing a group insurance plan to cover your employees and their families.

If you decide that stop-loss insurance is appropriate for your business, you'll have to find an insurer who offers this specialized product - not all do. And be sure to compare cost and coverage. Policies often vary widely, so it's important to choose one that meets both your needs and your budget.

Citizens Insurance, or Citizens, is the popular name of the Citizens Property Insurance Corporation, a government created not-for-profit insurer in the State of Florida. Citizens was created in 2002 to provide property insurance for home-owners who could not obtain insurance elsewhere. This is not the same company as Citizens Insurance Company of America, an unrelated property and casualty insurance carrier in the Midwest that has existed since 1915, or the Louisiana Citizens Property Insurance that was created for similar purposes.

As more and more companies have pulled out of the Florida market due to the extraordinary number of hurricane and sinkhole related claims over the last few years, Citizens has become not the insurer of last resort but the insurer of only resort for many Floridians. The cost of insurance and its availability has thus become an important "hot button" issue in Florida, especially in the 2006 elections.

From their web site: In 2002, the Florida Legislature passed a law that combined the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA) and the Florida Windstorm Underwriting Association (FWUA). This resulted in the creation of Citizens Property insurance Corporation (Citizens), whose goal is to more efficiently and effectively provide insurance to, and serve the needs of, home-owners in high-risk areas and others who cannot find coverage in the open, private insurance market.

Up until the beginning of 2007, Citizens Insurance charged its customers the highest legal rate (highest approved rate by the Office of Insurance Regulation) so as to avoid competing with private carriers. Insurance agents were actually prohibited from writing policies through Citizens if there was a private (not surplus lines) carrier who could write the risk. With the recent changes by the Florida legislature, agents may write a Citizens policy for customers if a comparable policy offered by a private carrier is 15% greater (Florida Senate Bill 2498 (the Glitch Bill) signed into law by Governor Crist on June 11, 2007). Also, customers are now allowed to keep their Citizens policy if they do not wish to be insured by an assuming carrier - an insurance company who is taking the risk from Citizens; previously customers who were "taken out" were not allowed a choice.