tag:blogger.com,1999:blog-21225893252445182242024-02-08T13:30:32.873-05:00CYA BlogComprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-2122589325244518224.post-91905821361353213762018-08-07T10:50:00.000-04:002018-08-08T08:27:14.561-04:00Thou Shalt Not Steal... Unless It's From An Insurance Company - Then It's Okay, Right?<div class="MsoNormal" style="font-family: Cambria; margin: 0in 0in 0.0001pt;">
I’m not sure how it happens but lately it seems more and more of my conversations wind up on the topic of insurance, insurance premiums and the inherent evil nature of the insurance industry.<o:p></o:p></div>
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Recently I was speaking with a friend who was all too happy to explain to me how unfair insurance was because it was so expensive. Then the topic turned to how the insurance companies dial up their rates and charge more premiums just to line their own pockets while taking advantage of policyholders. <o:p></o:p></div>
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Then I asked this person a question: “If you owned a business and each month 10% of your inventory walked out the door without being paid for, how long could you stay in business without raising prices?”<o:p></o:p></div>
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The response was something along the lines of, “What?”<o:p></o:p></div>
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Insurance companies raise and lower rates for any number of reasons but rarely do they raise rates to screw policyholders or engage in profiteering. More often than not, insurers adjust rates in response to economic or environmental factors that affect their ability to generate money to pay claims.</div>
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Some factors are high profile such as storms, fires, floods, etc… And others are not so obvious – such as fraud.<o:p></o:p></div>
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Depending on the statistics one chooses to believe, anywhere from 5% to 10% of claims filed with US insurers are fraudulent – with some insurers reporting fraud rates potentially as high as 20%. This results in US insurance companies paying out anywhere from $80,000,000,000 to $300,000,000,000 in fraudulent claims across all lines of insurance. That’s right -$80 Billion to $300 billion annually. <o:p></o:p></div>
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Lets look at 2017. As a result of Hurricanes Harvey and Irma, US insurers paid out approximately $650,000,000 in recreational boating claims alone - which means it wouldn’t be a stretch to assume $65,000,000 of recreational boating claims for those two events were based on fraudulent claims submissions.<o:p></o:p></div>
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Lets go further. Lloyds’ share of Hurricanes Harvey and Irma losses were in the neighborhood of $4,500,000,000 - which could mean that as much as $450,000,000 in claims could have been fraudulent. That’s nearly half-a-billion dollars for two events.<o:p></o:p></div>
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Switching gears<i>, The Economist </i>has reported in the past that in the United States the level of health insurance and Medicare/Medicaid fraud could be as high as $270,000,000,000 annually. $270 BILLION. </div>
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So what does this all mean? <o:p></o:p></div>
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It means insurance companies usually have a good reason to raise rates which results in everyone paying higher premiums – and the general public is usually an active participant in giving them permission to do so.<o:p></o:p></div>
Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-2099682005367675262018-06-10T13:02:00.001-04:002018-06-10T13:02:13.464-04:00The Only Thing That Blows Worse Than A Hurricane Is A Bad Hurricane Plan<div class="MsoNormal" style="margin: 0in 0in 0.0001pt;">
<span style="font-family: Arial, Helvetica, sans-serif;">Here we are once again at the start of another hurricane season and every media outlet under the sun is reminding us to start making plans for an active storm season. <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">And while this is good advice, I would warn you that most plans are created with their own inherent vices that can render them totally useless when the time comes for implementation. <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">With a few exceptions, most boats I’ve worked on (or written insurance on) have written hurricane plans that are kept with the insurance policy and only pulled out when needed. Some view them as nothing more than an extra layer of insurance administrivia required by an insurance company or management company.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">I would argue that a hurricane plan is one of THE most important parts of a comprehensive ship safety plan and is probably the most overlooked part when it comes to training crew – and it deserves more attention than it gets.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Try this out: the next time you’re on a boat ask one of the crew what the procedure is for man overboard or a grounding or a fire. They can probably discuss their duties, direct you to a station bill and a ship safety plan and show you a snapshot of the written procedure.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">But ask them what their hurricane plan is and they’ll probably refer you to the captain. Ask the captain and he’ll/she’ll probably give you an overview of the written plan which usually applies to only one storm scenario; and there are your inherent vices.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">What if the plan is to head up a river to a hurricane hole in Florida but the boat is in St Maarten? Or what if the plan is to head to a yard in South Carolina and haul out but the boat is in The Exumas? What if the yard is full? What if you have guests onboard? What if the boat is laid up and has only one person looking after it?<br /><br />Or – and here is a scenario I have dealt with – what if your vessel’s policy doesn’t cover you for storm damage during hurricane season so the plan is to head north to avoid the storm; but the storm formed quickly and you can’t get out of the hurricane zone in time?<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Now think about this - Does your crew participate in planned hurricane preparedness training drills? Have you installed the shudders? Is all securing hardware in tact and properly labeled? Have you checked the storm lines’ integrity, located and checked fenders and weights, etc…? <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Is your spot at that hurricane hole available? Is the marina that’s supposed to haul you out still able to do so? Do you have a plan to safely evacuate owners and guests or have you included them in the preparations?<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Last year in Florida, hundreds of thousands of people attempted to evacuate Florida by driving north to avoid a hurricane – at least, that was their plan. What they didn’t plan on was the fact that roads would be clogged, hotels would be full and gas stations would be empty. Thousands of people made the transition from evacuee to potential victim because they failed to plan PROPERLY.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">And what is a “proper” plan in yachting? It’s a plan that addresses multiple scenarios, multiple variables and multiple outcomes. As a result, the plan should have multiple contingencies. They should be proactive and not reactive. And most important, the crew should be as familiar with hurricane preparedness as they are with other shipboard emergencies. <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">In yachting, a written hurricane plan is not effective if it is not comprehensive, not communicated with all crew (and guests) and not included in the safety drills/training rotation; because plans don’t work because they’re written well; they work because they are implemented well. <br /><br /><br /><o:p></o:p></span></div>
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<br />Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-3699624085270770312018-06-04T11:05:00.000-04:002018-06-04T11:08:16.192-04:00If I Paid You $250,000 Would You Read Your Insurance Policy?<div class="MsoNormal" style="-webkit-text-stroke-width: 0px; caret-color: rgb(0, 0, 0); font-family: Cambria; font-style: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; margin: 0in 0in 0.0001pt; text-align: start; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">
<span style="font-family: "arial";"><span style="font-size: small;">While underway, a client’s vessel suffered a mechanical issue at which point the captain abandoned the original float plan and proceeded to a shipyard in a foreign country.<o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">Once there, the captain and local mechanics determined the damage was the result of shoddy workmanship in a previous shipyard. The captain then authorized the yard to make repairs so the vessel could get back to the United States. <o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">During the months-long yard period, components of the main engines were removed and kept ashore. Soon after, those parts “went missing” - adding an additional $60,000 to the repair cost.<o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">After months of repairs and more than $250,000 spent, the insured notified the insurer that he’d be filing a claim and expecting reimbursement; needless to say he was shocked when the company refused to pay. The client is now suing the insurer. <o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">Who’s right: the insured or the insurer? I’m not an attorney but I am a reader and I can tell you that in all likelihood the answer to that question is in black and white and contained in the “General Conditions” section of the vessel insurance policy. <o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">Here is an excerpt of that wording:<o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">Duties (of the insured) After A Loss<o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">In the event of an occurrence which may give rise to a claim under this policy…you and any insured person MUST:<o:p></o:p></span></span></div>
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<!--[if !supportLists]--><span style="font-size: small;"><span style="font-family: "symbol";"><span style="mso-list: Ignore;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></span><!--[endif]--><span style="font-family: "arial";">Give prompt notice to us or your agent or broker as soon as reasonably possible of any incident that may result in any kind of claim under this policy. If you think a crime has been committed you must also tell the police and, if appropriate, the coast guard or other maritime authority.<o:p></o:p></span></span></div>
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<!--[if !supportLists]--><span style="font-size: small;"><span style="font-family: "symbol";"><span style="mso-list: Ignore;">·<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-weight: normal; line-height: normal;"> </span></span></span><!--[endif]--><span style="font-family: "arial";">Protect the property from further damage or loss…<o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">In this case, the captain proceeded with repairs without authorization from the insurer AND waited several months to report AND - it could be argued - did not take proper steps to prevent further loss. (It was found out later that the yard was not fenced and did not employ a security guard.)<o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">We’ve had to explain to the owner that based upon the policy terms it’s very likely that neither he nor the captain had contractual authority to determine what was or was not a compensable claim. It’s also unlikely that either of them had the authority to act in such a way as to preclude an insurance company’s attempt to engage in what I’ve labeled “The Six Rules of Ate” (investigate, mitigate, negotiate, compensate and subrogate before they litigate) in order to settle the claim, which means that the claim more than likely could be denied. Why? Because no one informed the insurance company of the loss. <o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">In my opinion the cause of this failure is simple: It is because the insured and the captain failed to RTP – READ THE POLICY – and abide its terms. They made an assumption/bad decision and it cost them more than $250,000. <o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">I cannot stress how important it is to read and understand the terms of an insurance policy. It is NOT a “fire and forget” product. It is a dynamic product that obligates two parties to perform in accordance with one set of rules, and gives the party who plays by the rules an “out” should it be determined that the other is not doing the same.<o:p></o:p></span></span></div>
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<span style="font-family: "arial";"><span style="font-size: small;">Read policies, ask questions, get determinations and be informed. Insurance is a simple concept made more difficult by those who fail to understand the terms behind paying someone to have your back in the event of a loss.<o:p></o:p></span></span></div>
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Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-56823134745196560772018-03-19T10:34:00.000-04:002018-03-19T14:57:39.259-04:00How Much Does Eight Inches Of Snow Cost? Book A Charter Without Trip Insurance And Your Client Will Tell You.<div class="MsoNormal">
<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">Over the past several months thousands of flights in the northeast United States have been delayed or cancelled due to weather events, which means very bad news for thousands of travelers trying to escape the lingering winter weather by heading to The Caribbean or other warmer destinations.<o:p></o:p></span></div>
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<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">Normally, flight delays due to inclement weather are nothing more than an annoyance - a frustration at worst. But in the world of luxury charters there is a price tag on those annoyances, and they are exponentially higher for charterers than for regular travelers.</span><br />
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<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">Imagine if your charterer paid $250,000 (or more) to charter a yacht for a week and an airline tells them the flight to get them to the yacht is cancelled and the airline will TRY to get them re-booked and on their way tomorrow. On a one week charter the delay has just cost your charterer a minimum of $35,000 along with one full day of their trip. </span><br />
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<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">Along with the initial expense and frustration, your charterer and all of the guests have to pack up and head home or fight for a hotel for the evening with hundreds of other stranded passengers; which means now they are reaching into their pockets to pay for unplanned expenses while their yacht sits at the dock - fully fueled, provisioned and paid for - awaiting their arrival. </span><br />
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<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">To make matters worse, airlines aren't responsible for compensating passengers for hotels, meals, taxis, etc... due to weather delays. All they have to do is re-book the passengers on the next available flight. Here are few facts about weather delays and airlines' responsibilities:</span></div>
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<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">- Airlines, generally, do not have to compensate travelers for weather delays. They simply must rebook at no cost to the passenger;</span></div>
<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">- Airlines are not obligated to pay for hotels or meals for passengers on flights delayed by weather;</span><span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;"><br /></span><span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">- Airlines have their own delay/cancellation policies and can deal with them on a case- by-case basis and passenger-by-passenger basis; and</span><span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;"><br /></span><span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">- It is the passenger’s responsibility to cover non-flight-related costs due to delays/cancellations. These costs can include hotels, transportation, transfers and any and all pre-booked/pre-paid expenses at their destination. </span><br />
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<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">Regarding yacht charters...</span><br />
<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;"><br /></span><span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">- Charters do not automatically extend to make up for missed time due to charterers being delayed by weather in their departure city; and</span><br />
<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">- Charters do not automatically issue pro-rata refunds for missed time due to weather delays causing late arrival to the boat.</span><br />
<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;"><br /></span><span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">But don't worry. Trip insurance can provide travelers some solace in knowing that missed time on charter due to flight delays may be compensated; and when you're talking about a $250,000 charter you can see where trip insurance gets its value.</span><br />
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<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">Trip insurance can cover expenses associated with delays/cancellations such as meals, transfers and hotels. And trip insurance can compensate your charterers for the impact travel delays have on their charter, whether it's receiving benefits for lost days of charter or benefits for re-booking the charter or re-booking or rescheduling flights and hotels on the back end of an extended charter.</span></div>
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<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">Your charter clients should discuss this with a travel insurance professional (like myself) because if your charterers are delayed by one or two days they don't automatically get to extend their charter… and that costs them money; money they could get back. <o:p></o:p></span><br />
<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;"><br /></span><span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">I've been writing trip insurance for ten years and have written policies for trips valued from $6,000 to nearly $800,000, so insuring luxury yacht charters is not only possible - it's advised. </span><br />
<span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;"><br /></span><span style="font-family: "helvetica neue" , "arial" , "helvetica" , sans-serif;">And after having dealt with a number of claims, I can tell you that trip insurance works.</span></div>
Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-30885370235926792702018-03-14T11:16:00.000-04:002018-03-14T11:16:35.215-04:00Force Majeuer or Capitaine Paresseux Majeuer - Trip Insurance And Professionalism Save The DayThe following is a based upon a client's true story.<br />
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A lucky man's amazing wife booked a weekend charter as part of a European birthday. The charter was scheduled to begin in Italy and make a quick passage to France, but when the clients arrived at the yacht they were told by the captain that the seas were too high to depart.<br />
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The charterer was upset at the prospect of their $15,000 trip being cancelled, but wisely they had purchased trip cancellation/interruption insurance so they were confident that everything was going to be okay. As this was their first experience with chartering in Italy they soon realized that all the confidence in the world won't supplant the reality of the dark side of the Italian chartering experience.<br />
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Let’s set up our real-life scenario:<br />
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1)The charter client arrives for the charter. All furniture is covered up, the interior has not been readied, the hot tub is empty, the boat is not provisioned correctly and two crew members are unaccounted for;<br />
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2)The captain refuses to leave the dock saying the seas are too high, forcing the guests to spend their entire weekend at the dock (in spite of the fact that weather reports, sea state reports and photos of boats departing and arriving in the marina revealed no such adverse weather) or abandon their charter altogether with no refund and no offer of re-booking;<br />
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3)The charterer, wanting to file a trip interruption claim, requests from the captain confirmation in writing that the boat would not be departing due to inclement weather;<br />
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4)The captain refuses the request while continuing to prep the boat for its next charter and while boats of all types and sizes arrive and depart to and from the marina - in spite of his claims of inclement weather and all the while serving the guests with leftover provisions... and no hot tub;<br />
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5) The charterers - forced to make changes to prepaid hotels and helicopter/auto transfers at their expense - now seem to have no way to recoup the expenses incurred as a result of an unresponsive, unprofessional and unaccommodating captain;<br />
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6) The captain charged the guests <span style="background-color: white; color: #222222; font-family: arial, sans-serif;"><span style="font-size: x-small;">€</span></span>1,100 for arranging (not paying for) transport to France and withheld another <span style="background-color: white; color: #222222; font-family: arial, sans-serif;"><span style="font-size: x-small;">€</span></span>1,000 from the balance of the APA as a gratuity. When the guests complained the captain threatened them with police action.<br />
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Happy birthday.<br />
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When the charterers got me involved, along with their US-based charter broker, I explained to them how to file the claim and what the insurance company would need to process the claim. The charterer's broker went above and beyond her call of duty and - as a team - we were able to make headway in resolving this issue in spite of the unprofessional and unaccommodating yacht captain and his owner's representative.<br />
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Fortunately, the claim was eventually settled by the travel insurance company - but not before unnecessarily running the charterers/victims around in circles and, more than likely, souring them on ever chartering again.<br />
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There are three types of people in this industry: problem creators, problem solvers and those unfortunate few who can't make up their minds which one they are. All stakeholders in this industry need to remember that we are in business not simply to drive boats, sell insurance, sell yachts or sell charters; we’re in this industry to build relationships - and people pay us a lot of money to do so. <br />
<br />Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-34496987546085774132018-03-05T11:19:00.000-05:002018-04-27T07:56:30.995-04:00"It's a standard yard contract - nothing in it that I'm worried about."That was a quote from a captain during a recent conversation about a client's upcoming yard period.<br />
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It amazes me how diligent captains can be regarding safety training, project management, situational awareness and passage planning - but they'll slap their names on any old contract without reading it; not knowing that their signature could be just as financially ruinous as running hard aground or sinking the vessel. And it doesn't matter who signs the contract because it's the owner's assets that are on the line - so people signing yard contracts need to be sure what they're doing is correctly.<br />
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I'll use a hypothetical scenario to show you just how simple it is to let an insurance company off the hook.<br />
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Captain Einstein hauls out at XYZ Yard and prior to hauling he/she signs a standard yard contract containing a provision stating the yacht owner releases the yard from liability and assumes the yard’s liability and also says (for all intents and purposes) the yard won't be sued by the insurance company or the owner - even if the yard is negligent!<span style="mso-spacerun: yes;"> </span>Put into layman terms, the yard is saying, "Even if we screw up - we're not responsible and we're not paying." Why would anyone sign this without an insurance company giving them the okay?<br />
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During the yard period the captain uses a piece of yard equipment which malfunctions, strikes a transformer starting an electrical fire that quickly spreads and ultimately ignites and destroys several boats, injures a number of people and does significant damage to the yard.<span style="mso-spacerun: yes;"> </span>The root cause of the accident was determined to be that the piece of equipment had not been properly maintained by the yard - not user error.<span style="mso-spacerun: yes;"> </span>The yacht insurance company investigates, finds the yard contract, goes right to the section with the hold harmless/indemnification/release of liability, checks for a signature and:<br />
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<ol>
<li>Reduces the claim </li>
<li>Denies the claim or </li>
<li>Voids the yacht’s policy </li>
</ol>
The insurer has these options at their disposal based upon the fact that the captain did not have the authority to assume the yard’s liability (or act on behalf of the insurer) and the captain did not have the authority to release the yard from liability or waive the insurer’s rights of recovery - without written permission from the insurer. </div>
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"But Gary, it was the yard's negligence in maintaining the equipment that caused the loss." You are correct; BUT - when the captain signed that yard contract it may be argued that the captain assumed the yard's liability which means the captain assumed the yard's negligence thinking that his yacht policy would cover him automatically; and the captain does not have the authority to do this - and the insurer does not have the obligation to perform based upon the captain's actions.<br />
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Insurance policies are very clear as to what they will and will not cover and what they will and will not do or allow. Here are examples taken straight from the <b>exclusions</b> section of a company's yacht policy regarding assuming liability without prior written consent:<br />
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<li><i><span style="font-family: "times" , "times new roman" , serif;">(The policy excludes) Any liability assumed by an insured person<span style="font-weight: 700;"> </span>under any contract or agreement <b>without our prior permission</b>.</span></i></li>
<li><i><span style="font-family: "times" , "times new roman" , serif;">No assignment of or change of interest in this policy<span style="font-weight: 700;"> </span>or in any amount payable under it will be binding on or </span></i><i><span style="font-family: "times" , "times new roman" , serif;">recognised by us<span style="font-weight: 700;"> </span><b>without our prior written consent</b>.</span></i></li>
<li><i><span style="font-family: "times" , "times new roman" , serif;">No one covered under this policy<span style="font-weight: 700;"> </span>or acting on their behalf shall waive, limit or impair our<span style="font-weight: 700;"> </span>right to recover and/or the amount to recover against a third party before or after a loss.</span></i></li>
</ul>
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If a yard contract is signed without insurance company consent the yacht owner could be held personally financially liable for the damage to his yacht, other yachts, the facility, employees, crew, subcontractors, damage to the environment, civil/criminal penalties, etc... and the owner may not have an insurance company to defend him - even though the damage was the result of the yard's negligence.<span style="mso-spacerun: yes;"> </span></div>
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This is a very rough and basic example but it illustrates just how serious this situation can be - and it is entirely avoidable. </div>
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This is why I strongly offer this little bit of advice:<span style="mso-spacerun: yes;"> D</span>efer signing third party contracts until you receive written consent. Send the contract to the owner/manager/attorney and let them confirm the terms with the insurer before signing.<br />
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And captains, remember: get it in writing FIRST. Because the ass(ets) you cover just might be your own(ers)!</div>
Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-79073573264099229862018-02-14T14:17:00.002-05:002018-02-14T14:41:36.903-05:00Kickbacks Or Commissions: Who Gets Them - Legally?I was asked recently, “If I send you a client for insurance – how much of a finder's fee do I get?” My answer was simple: “If you have an insurance license specific to the product, we'll talk. If not, you get nothing.”<br />
<br />
I'm not sure how it works for yacht brokers and I do not know if any federal or state statutes govern the procedures brokers must follow in order to compensate unlicensed persons/third parties following the sale/charter of a vessel. Furthermore, I do not know if IYBA, MYBA, CPYB or brokerages have any professional standards or guidelines regarding the practice of providing financial incentives for referring business or compensation after a yacht or charter sells. I know it happens. I've seen it happen. Whether or not it is effectively regulated is a big unknown.<br />
<br />
Regardless, the insurance industry has federal and state statutes that dictate to whom compensation may be paid following the sale of an insurance contract. With specific regards to insurance there is very little grey area and it is regulated. Simply put, along with kicking back a percentage of commission to a person who purchases a policy, offering unlicensed people cash incentives to purchase insurance policies or paying a referral fee is illegal in the State of Florida, according to the Deceptive Trade Practices Act and Florida statute.<br />
<br />
Florida Statue section 626.9541 titled “Unfair methods of competition and unfair or deceptive acts or practices defined” defines rebating as: "knowingly… (b)<i><b> Paying, allowing, or giving, or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance contract, any unlawful rebate of premiums payable on the contract, any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract;</b></i>…" <br />
<br />
The statute also deals with compensating anyone - licensed or unlicensed - following the sale of an insurance policy. The following is from the Florida Statutes 626.112:<br />
<br />
<b><i>(8) No insurance agent, insurance agency, or other person licensed under the Insurance Code may pay any fee or other consideration to an unlicensed person other than an insurance agency for the referral of prospective purchasers to an insurance agent which is in any way dependent upon whether the referral results in the purchase of an insurance product. </i></b><br />
<b><i>(9) Any person who knowingly transacts insurance or otherwise engages in insurance activities in this state without a license in violation of this section commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. </i></b><br />
<br />
Again, I don’t sell yachts or charters so I can't make a determination of whether or not yachting industry brokers offering or giving portions of commissions to third parties is right or wrong; I'll let the yacht brokers and the principals of the yacht brokerages make that determination. <br />
<br />
Regarding compensating unlicensed insurers for referring business I'll simply say this - I know others do it but I don't. I sell insurance and I am happy to do what I do to help you and your clients have a great experience on the water; but I cannot risk my license to do it – and I would never expect anyone to risk theirs for me.Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-43674964309292416072014-05-19T06:29:00.000-04:002014-05-19T06:29:10.590-04:00A Captain's Guide To Voiding Insurance Coverage In One Easy Step<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">I seem to cover this topic quite a bit but it is very important so I'll keep covering it until we all have a firm grasp on it.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Recently I was having
an online exchange with a captain about insurance coverage being voided due to
acts of yacht crew and the captain commented that, “…if they (crew) can void
your coverage, your coverage is garbage.” While I can understand the emotion I
think it’s important to discuss the reality of just how easy it is to void
insurance coverage, but first lets start with some basics.<span style="mso-spacerun: yes;"> </span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">If you READ YOUR POLICY it
will tell you in no uncertain terms who the policy covers, what the policy covers, where the policy provides coverage, when the policy provides coverage, how the policy provides coverage and - most importantly - situations why a policy won't provide coverage. The 5 Ws and H of insurance. The terms of coverage, duties of the insurance company and the duties of the insured are spelled out in plain and relatively easy-to-read English; but still, captains and crew manage to find ways to reduce or void coverage. Today we'll look at one way to void insurance coverage and how to avoid it. </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;"><br /></span></span>
<span style="font-family: Arial, Helvetica, sans-serif;">A very common way (and probably the most popular and easiest way) to void your cover is to sign any contract that assumes liability, releases another party from liability or in any way attempts to modify terms of coverage or assign the policy without the insurer's written approval. And you can do ALL of these things by simply signing a yard contract - something I've seen not just captains do but mates, engineers and yacht managers do as well. Shockingly, as a bosun on a 43m even I was asked to sign one (and the answer is "no, I didn't sign it").</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Lets take a look at
some wording from a standard yacht policy. This wording comes from a single policy and is only a small portion of wording contained in the policy terms that deals with explaining how actions of the insured can lead to coverage being terminated:<o:p></o:p></span></div>
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<ul>
<li><span style="font-family: Arial, Helvetica, sans-serif;">“</span><i style="font-family: Arial, Helvetica, sans-serif;">Failure to comply
with any warranty will, in normal circumstances, void this insurance from the time of the breach</i><span style="font-family: Arial, Helvetica, sans-serif;">.” </span></li>
<li><span style="font-family: Arial, Helvetica, sans-serif;">“</span><i style="font-family: Arial, Helvetica, sans-serif;">If the insured gives
up rights to recover damages from anyone who may be liable so as to deny Us the
benefit of such recovery had We made payment of a claim, We may consider this policy null & void</i><span style="font-family: Arial, Helvetica, sans-serif;">.”</span><span style="font-family: Arial, Helvetica, sans-serif;"> </span></li>
<li><i style="font-family: Arial, Helvetica, sans-serif;">"This insurance shall inure to Your benefit only and shall be void in case this policy or the interest insured thereby shall be assigned, transferred or pledged without Our previous consent in writing…"</i></li>
<li><i style="font-family: Arial, Helvetica, sans-serif;">"You must assume no obligation, admit no liability…without Our written permission…"</i></li>
<li><span style="font-family: Arial, Helvetica, sans-serif;">“</span><span style="font-family: Arial, Helvetica, sans-serif;"><i>We do not provide liability coverage</i></span><i style="font-family: Arial, Helvetica, sans-serif;"> for: liability assumed by You under any contract
or agreement unless specifically endorsed hereon…</i><span style="font-family: Arial, Helvetica, sans-serif;">"</span></li>
</ul>
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<span style="font-family: Arial, Helvetica, sans-serif;">Now lets look at
wording from a local yard contract and compare what it requires to what the insurance policy forbids:</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><i>"...YACHT
OWNER agrees to release YARD...from any
liability to YACHT OWNER for, and
YACHT OWNER will defend, indemnify and hold YARD, its co-ventures,
partners, customers, contractors, officers, shareholders, members, directors,
employees, agents, invitees, vessels, masters, and crews, and the
representatives of any of them (collectively called "YARD GROUP") harmless from and against all suits,
actions, claims, and damages based upon personal injury, death, property
damage, or loss, whenever occurring, suffered or incurred by YACHT OWNER, its
own contractors and sub-contractors, or its invitees, or the officers,
employees, agents, invitees, or representatives of any of them (collectively
called "YACHT OWNER GROUP"), arising out of or in any way directly or
indirectly connected with access to (including without limitation ingress and
egress) and/or use by any member of YACHT OWNER GROUP of any vessel or property
owned and/or operated by YARD GROUP... whether
or not caused or contributed to by the sole or partial negligence, strict
liability, or fault of YARD GROUP, or the un-seaworthiness of any vessel or
appurtenance owned or operated by YARD."</i> <o:p></o:p></span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span>
<span style="font-family: Arial, Helvetica, sans-serif;">Did you catch all of that? </span><span style="font-family: Arial, Helvetica, sans-serif;">If you - or any crew member - sign a yard
contract with this wording you are telling the yard that the owner’s insurance
policy will cover ALL liability and ALL negligence of the yard; effectively you are agreeing that the
yacht’s insurance policy will become the yard’s insurance policy – and you do
NOT have the authority to make that call without the insurance company giving
you prior written approval to do so.</span><span style="font-family: Arial, Helvetica, sans-serif;"> </span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">I
cannot stress this enough.<span style="mso-spacerun: yes;"> </span>You – as a
captain – do NOT have the authority to negotiate terms of cover for or on
behalf of the owner/vessel without the prior written consent of the insurance
company. You do NOT have the authority to assume liability and you do NOT have the authority to assign the policy.<span style="mso-spacerun: yes;"> Doing so can - and probably will - void cover. This is not "garbage" - this is basic insurance procedure.</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Regarding yard
contracts, a maritime attorney friend of mine said, “Most captains are signing these
things without understanding what they’re signing until there is a problem and
at that point it’s too late.”<span style="mso-spacerun: yes;"> </span>The
executive vice president of an insurance company and head of yacht underwriting
told me, “What we find is the captains don’t understand what they’re signing
and the yards don’t understand what they’re asking people to sign – but they’re
still signing.”<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">A lack of
understanding seems to be a common theme so lets lay down some ground rules
with regards to third party contracts and how to deal with them.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">First, send the contract
to the vessel’s owner and insurance agent before signing and do NOT sign the
contract until you get written approval to do so.<span style="mso-spacerun: yes;"> I suggest having captains/crew avoid signing them all together. </span>Next, make sure the yacht owner's representative
reads the contract and then get written confirmation from the insurance company
that the yard's contract is acceptable before signing.<span style="mso-spacerun: yes;"> </span>Some insurers require vessels to submit a list of work to be done for underwriting approval prior to the work being started and they also require a copy of the yard’s liability cover.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"> <br />
</span></div>
<span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-bidi-font-weight: bold;">Most importantly,<b> </b></span>do not take advice on signing yard contracts from anyone not authorized to exercise
authority over the yacht's insurance policy. And here’s the kicker:<span style="mso-spacerun: yes;"> </span>as a captain you do NOT have this authority. Neither
do owners.<span style="mso-spacerun: yes;"> </span>Neither do yard owners, yacht
managers, brokers, etc…<span style="mso-spacerun: yes;"> </span>The only party
who can make that call is the insurance company.</span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span>
<span style="font-family: Arial, Helvetica, sans-serif;">If you sign a hold harmless and if you assume the yard's liability without an insurer's permission or assign the terms of your yacht policy to another risk you can count on your coverage being voided and there's no excuse for this happening - ever. And this is just one of many ways captains and crew can easily void a yacht's insurance cover, regardless of that policy being "garbage" or not. </span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">My point is this: Ask questions, engage the insurance agent/company, call an expert. As one charged with the huge responsibility of taking care of the owner's asset you owe the owner at least that much; and it doesn't cost you anything. </span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span>
<span style="font-family: Arial, Helvetica, sans-serif;">You see, w</span><span style="font-family: Arial, Helvetica, sans-serif;">hen you purchase an insurance policy you
purchase all of the insurance expertise and advice that goes along with
it.</span><span style="font-family: Arial, Helvetica, sans-serif;"> </span><span style="font-family: Arial, Helvetica, sans-serif;">Use the agent, the broker, the
underwriter, the insurer’s legal department, etc… and avoid making the mistakes
that could lead to the policy being voided because if the policy is voided due to the actions of captain or crew it's not the policy that's "garbage," but rather the actions of the offending crew member - which could lead to his career being trashed.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Next week we'll discuss what could happen if you, as captain, void an owner's insurance cover.<br />
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Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-13610328112783027122014-05-12T06:25:00.000-04:002014-05-12T06:27:35.235-04:00With Drama Below Deck Safety Suffers On Deck - The Media's "Reality" Of Yachting Is Fake<div class="MsoNormal">
I was having a rather intense conversation with a captain
friend of mine (and member of the Yacht Captains Association) about a continued
effort by the media to glamorize our industry without paying attention to the reality of the inherent dangers in yachting. As a result, we have begun to see an influx of young crew who enter the industry with the misguided notion that it's okay to party and screw their way through the industry; responsibility be damned. We both
agreed that, as a result, our industry could be heading down a very slippery slope.</div>
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<br />
Here's a little reality you won't see on any reality show.<br />
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The IMO puts out stats on merchant mariner casualties each year, and the statistics show that deaths among crew run between 100-200 crew each
year for all reporting sectors. According to the USCG between 700 and 1,000 recreational boaters will die in the US each year. In the past week alone the Sun Sentinel has reported on a man killed after being caught up in the props of a boat; two boaters who were rescued by the USCG after their boat flipped and; another accident resulting in death in the Jupiter Inlet.</div>
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Furthermore, so far this year we’ve seen hundreds of passenger deaths due to a lack of attention to safety and another couple dozen people died after their 30' boat capsized with more than 60 people on board.<br />
<br />
“But Gary – this has nothing to do with yachting.” Perhaps. But it DOES show that maritime activities have inherent dangers that result in thousands of injuries and deaths each year. And it does show (unscientifically) that it appears people are more likely to die in the recreational marine industry than in the commercial industry. And while certain desperate circumstances may
be the driving force in some cases, these deaths support the notion that no amount of passion, emotion, desperation or drama can override the realities of the dangers of our
industry, nor can these aspects prevent injury or death. Stated simply: In the reality of an onboard emergency there is no room for drama. </div>
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It's a bit of a paradox, actually. Because the most important safety element on board a yacht - the human element - is the same element a certain "reality" TV show uses to exploit conflict and salacious onboard drama in order to sell their show to networks and advertisers. Basically, they are cashing in on a huge part of what responsible yachtsmen and women do NOT want in the industry - drama. <o:p></o:p></div>
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It's funny to watch the trends the media creates. Put out a show about Navy SEALs and everyone wants to be a
SEAL.<span style="mso-spacerun: yes;"> </span>Put out a show about space and
everyone wants to be an astronaut.<span style="mso-spacerun: yes;"> </span>Put
out a show about drunk, horny yachties and suddenly that’s what permeates the
industry.<span style="mso-spacerun: yes;"> </span></div>
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Perhaps, instead of focusing on the crew member sitting on a
PFD while hanging on the anchor chain drinking a beer making out with a stew
while on charter, these shows should show more instances of deck crew engaged in MOB drills or
collision/grounding drills or fire drills, or an engineer dealing with a fuel leak or a chewed up impeller.<o:p></o:p></div>
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And instead of showing idiots running around naked and drunk maybe the show should infuse its content with sidebars on the dangers of onboard fires or what happens to the guests
and crew when a guest’s son is killed while riding a waverunner, or a guest has
a heart attack snorkeling, or a crew member is injured doing their job in order to
protect the guests. <br />
<br />
And lets not forget about crew members in foreign ports who are mugged, robbed, beaten, raped and murdered… THIS is the unglamorous reality of our industry; yet viewers are more concerned with who the deckhand is screwing or what type of bug the stew is going to have up her butt today. TV "reality" is produced while REAL reality is ignored.</div>
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Whether we (or "reality" TV) choose to acknowledge it, we work in a dangerous industry.<span style="mso-spacerun: yes;"> </span>More people die
in marine-related incidents each year than in aviation-related incidents;<span style="mso-spacerun: yes;"> </span>BUT the media continues to focus on all the BS drama that a lot of crew
seek to avoid.<span style="mso-spacerun: yes;"> </span>Why?<span style="mso-spacerun: yes;"> </span>Because drama labeled “reality” sells.<span style="mso-spacerun: yes;"> This needs to change.</span><o:p></o:p></div>
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I’m going to give another shout out to the Yacht Captains
Association because I truly believe we need an organization like this in order
to re-direct our industry back to an ideology of “Safety First.”<span style="mso-spacerun: yes;"> </span>We need responsible and qualified captains and crew who take their jobs seriously and focus on the safe operation of vessels, and who understand that if the vessel is
operated safely the fun will naturally follow.<o:p></o:p></div>
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We need a paradigm shift in our industry.</div>
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<span style="mso-spacerun: yes;"> </span><o:p></o:p></div>
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These days we are seeing an increasing number of MCA and
USCG ticket holders taking positions for which they are not suited which,
potentially, puts everyone on board and within the vessel’s LOA in danger.<span style="mso-spacerun: yes;"> We see green crew hired on large vessels for which their present skill-sets are not adequate. We see captains who overlook alcohol and drug use or who overlook basic watchstanding guidelines whilst underway. And now we have the added benefit of a "reality" show that glamorizes irresponsible and/or unqualified crew. And it all contributes to increasing the likelihood that an accident will happen…and accidents WILL happen.</span><o:p></o:p></div>
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<span style="mso-spacerun: yes;"><br /></span></div>
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Steps need to be taken to redirect the focus of yachting from this perceived carefree, glamorous lifestyle back to safety.<span style="mso-spacerun: yes;"> </span>The MCA and USCG must step up their efforts
of safety compliance and enforcement, insurance companies must also overhaul
their underwriting guidelines with regards to who can and can’t operate a vessel, and everyone in the industry should support the YCA in its efforts to support captains, to assist captains, to mentor captains and to ensure that capable and qualified captains are onboard (and in command of) yachts; captains who understand that safety is our
number one priority – not ratings or readers. And crappy reality TV shows need to be more responsible when they represent our industry to the general public (yeah, that'll happen…). A paradigm shift.<o:p></o:p></div>
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Regardless of your feelings on the glamorization of our industry (I think it’s clear where I stand on the issue), when it
comes down to it the FACTS regarding our industry remain the same in spite of any contrived "reality" a TV show chooses air, and the facts are:<span style="mso-spacerun: yes;"> </span>the work is hard and requires knowledge, experience and skill; the danger is high and requires situational awareness, maturity and responsibility and; the
injuries and deaths are real – the TV shows and articles are not.<o:p></o:p></div>
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Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-17075073854868259352014-05-05T07:12:00.000-04:002014-05-05T08:20:01.054-04:00Drugs And Yachting: Who Is Responsible For Irresponsible Crew?I was talking with a stewardess last week who was telling me about her situation on board with a chef/stew team who enjoy a bit of Bolivian Marching Powder and she asked me, “Why don’t insurance companies require drug testing for crew?”<br />
<br />
The answer is simple: It is not necessarily the insurance company’s responsibility to make sure crew members are sober and drug-free; it’s the owner’s responsibility. That’s right; it’s not the insurance company’s job to be HR manager for their clients and manage yacht crew. Although insurance companies insure vessels based upon manning requirements and licensing agencies may require drug testing at renewal or upgrades and insurers may review and approve captains, they do not search for, vet, interview, drug test, hire/fire, or pay captains or crew. That’s the owner’s responsibility - through his captain.<br />
<br />
Just as is the case in most every employment contract, the owner (captain) is responsible for conducting thorough interviews, running background checks, and obtaining all the information he needs in order to make a decision regarding hiring employees. Insurance companies don't necessarily mandate drug testing as a condition of cover; they require owners to exercise due diligence during the hiring process and then provide the insurer with a "warranty" regarding the seaworthiness of the vessel and a warranty stating that the vessel will be used responsibly, legally and in accordance with its stated intended purpose. Since it is the owner's responsibility to make this promise to the insurance company, then the owner needs to know if he's hiring "clean" crew, so the owner has to submit his "warranty" that he is doing so.<br />
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What is a warranty? A warranty is “…a term of the policy whereby a state of fact exists or is stated to exist and or the insured person undertakes to do or not do something or to fulfill or not fulfill some condition. If the insured person does not strictly comply with the terms of the warranty, cover under this policy will cease and any loss that occurs at that time or thereafter will not be paid.”<br />
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In an insurance contract (specifically a yacht insurance contract) there are a lot of these warranties at play. Let's look at a few.<br />
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Compliance warranties lay out obligations of the insured. The compliance warranty states the insured will, “comply with all laws, rules and regulations that apply to the uses to which the insured employs the yacht.” This means the owner promises that he and his crew will abide all laws while using the yacht - including drug laws.<br />
<br />
The warranty of seaworthiness says that the owner has the responsibility of maintaining the yacht in a seaworthy condition and ensuring the yacht is operated responsibly. The owner must exercise due diligence and ensure that crew hired to operate the vessel do so in accordance with all applicable local, national and international laws and regulations. And I would be willing to bet that there are few - if any - jurisdictions that allow employees to keep, transport and use drugs recreationally.<br />
<br />
At the end of the day, it is the yacht owner's responsibility to make sure that the yacht is crewed with professional staff that are suited to their positions by education, training and experience - NOT the insurance company's. And if an owner utilizes the services of a crew agency or management firm the owner must ensure that those organizations act in his best interest. If a crew agency or management firm does not act in good faith or fails to perform due diligence, and that failure leads to a loss, it remains the OWNER’S responsibility. <br />
<br />
And if a loss occurs and it is determined that drug use played a role in a loss, the insurer may argue that the owner’s failure to exercise due diligence regarding his crew lead to the loss – and at that point the insurer may have cause to deny claims or cancel the coverage, as per the terms of the insurance contract which means the owner can be held personally responsible for the loss without having the benefit of an insurnace company to defend him.<br />
<br />
Regarding drugs, some folks feel a little recreational drug use is harmless while others feel it is absolutely wrong. I’ll avoid opinion and stick with facts: the recreational use of controlled substances is illegal and I would be willing to bet the USCG and MCA would have a problem licensing those who test positive for illegal substances. (I wonder if people with this cavalier attitude toward drugs would feel the same about recreational drug use if they applied that attitude to commercial airline pilots.)<br />
<br />
Furthermore, local, state and international standards and licensing authorities notwithstanding, all yachts have crew operations manuals that are very clear on alcohol and drug policies - and every employee who signs their employment contract promises to abide these policies - so it's up to the captain to ensure that crew strictly obey on board policies designed to keep EVERYONE on board safe<br />
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I advocate routine drug testing in spite of the fact that insurers don't require it because in this day and age it is the safe and responsible thing to do. I’ve heard the argument that owners don’t want to have to pay for drug testing – in which case those owners had better be prepared to personally pay for any claims that are the result of “polluted” crew members causing the insurance company to reduce or deny claims.<br />
<br />
So what have we learned? It is the yacht owner's responsibility, through his captain and crew, to ensure the yacht is seaworthy and adequately crewed for its intended use and the owner must warrant this seaworthiness to the insurance company; which means captains MUST be vigilant in their efforts to ensure that they and their crew uphold ALL legal and social requirements in order to make that warrant true.<br />
<br />
I would go one step further and say it is the responsibility of the captain and crew to exercise discretion, responsibility and respect for the owner and his assets and entirely avoid the use of illicit drugs while under the employ of a vessel. The owners spend millions and millions of dollars on their yachts and millions more crewing them, fueling them, provisioning them and insuring them - only to potentially have their insurance cancelled and their yacht and perhaps their personal assets attacked as the result of irresponsible crew. <br />
<br />Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-87167645267008974742014-04-07T08:56:00.000-04:002014-04-25T09:24:23.131-04:00NEWSFLASH: The MCA and USCG Grant Licenses To Operate Yachts NOT To Insure ThemIt never ceases to amaze me that captains – by virtue of
their experience behind the wheel – feel qualified to offer insurance counsel
to their owners.<br />
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Now, some captains have a greater grasp of insurance issues
than others- granted; but on Friday last a captain called me to discuss a basic
insurance issue. He didn’t fully grasp
the concept and kept asking questions that did not apply to his owner’s
situation or scenario. I asked him if
he’d like me to discuss this with his owner via a conference call and he said,
“No – I’m shopping the insurance. I
don’t want to bother the owner with this silly stuff.”<o:p></o:p></div>
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“Silly stuff.” Hmmm…<o:p></o:p></div>
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The ONE thing the owner has that puts its money where its
mouth is. The ONE thing that, if done
correctly, will pull an owner’s financial butt out of the fire faster than any
captain. The ONE thing that, if done
wrong, a captain can walk away from leaving the owner to pay the tab.<o:p></o:p></div>
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Folks, insurance is not “silly stuff” and it certainly
should not be attended to by anyone not qualified to do so or by anyone who thinks
it’s “silly stuff.”</div>
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There are a number of reasons why unqualified people should
not step outside their area of expertise, but I’ll leave the common sense
arguments alone and focus on the legal aspect.
<o:p></o:p></div>
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Florida statutes state that unless you are licensed
insurance agent it is unlawful to engage in insurance activities:<o:p></o:p></div>
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<i><span style="font-size: x-small;"><b>69B-222.060 Unlawful Activities by Unlicensed Insurance Personnel</b></span></i></div>
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<i><span style="font-size: x-small;"><b>The following actions are never allowable by unlicensed personnel.</b></span></i></div>
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<i><span style="font-size: x-small;"><b>(1) Comparing insurance products; advising as to insurance needs or insurance matters; or interpreting policies or coverages.</b></span></i></div>
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<i><span style="font-size: x-small;"><b><br /></b></span></i></div>
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Note the phrase “never allowable.” Not a whole lot of grey area there.<o:p></o:p></div>
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There is a reason for this. It is because insurance professionals know
insurance and understand the ramifications of an improperly structured
insurance policy. We know the financial
consequences of coverage gaps or coverage exclusions. We know how to explain the product and (in some cases) we have the authority to make statements and assertions on behalf of an insurer.<o:p></o:p></div>
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And think about this:
A unlicensed captain behind the wheel of an insurance policy is just as financially
dangerous as an unlicensed insurance agent behind the wheel of a yacht. And when things go wrong it’s the owner who
is screwed. Insurance professionals get
this – captains may not.<o:p></o:p></div>
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Captains should not counsel owners on insurance, make
insurance determinations, base insurance decisions on cost, negotiate insurance
contracts, negotiate any contract with insurance conditions, etc… It’s outside their area of expertise no
matter how many times they tell you, “I’ve been doing this for years,” because <span style="line-height: 13pt;">I’ll tell you all one thing right now: Dedicated insurance professionals have
forgotten more insurance than most captains will ever know.</span></div>
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<o:p></o:p></div>
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I’ve said it before and I’ll say it again: do what’s right by your owners and ALWAYS
refer them to a qualified insurance professional. And if a captain is spouting off insurance
information ask him/her to produce an insurance license, E&O insurance and confirmation
of a selling agreement with an agency or insurance company. Otherwise, kindly thank him/her and get your
insurance counsel from someone qualified to provide it.<o:p></o:p></div>
<!--EndFragment-->Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-57406734085529991722014-03-24T10:06:00.000-04:002014-03-24T10:07:12.729-04:00Hold Harmless Forms? Hold The Phone! A Yacht's SOP Can Lead To Yacht Owners And Charterers Being SOL<div class="MsoNormal" style="mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="font-family: Arial, Helvetica, sans-serif;"><i>This post is a bit lengthy but it’s a very important topic that all parties to a charter contract need to read and understand.</i><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">I was talking shop last week with a charter broker and she asked, “What if my client has to sign a water toy indemnification form on the yacht?” </span><span style="font-family: Arial, Helvetica, sans-serif;">My response was, "Why are guests being asked to amend charter contracts by yacht crew?" </span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">If you are a captain or crew on a boat and you are reading this, pay attention and please contact me if you have any questions on this topic and I'll gladly give you a detailed explanation as to why what you are doing is wrong and potentially dangerous.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">People think of water toy indemnification forms/hold harmless agreements as standard operating procedure that are just matters of formality - which could not be further from the truth. These “harmless” indemnification forms can be dangerous if they are not understood. And having charterers sign them AFTER the charter contract has been consummated can have disastrous consequences. </span><br />
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</span> <span style="font-family: Arial, Helvetica, sans-serif;">Okay, let's start by defining terms. </span><br />
<ol>
<li><span style="font-family: Arial, Helvetica, sans-serif;">Indemny/indemnification: to make a party whole or to (financially or monetarily) restore that party to their pre-loss position.</span></li>
<li><span style="font-family: Arial, Helvetica, sans-serif;">Hold harmless: releases one party from responsibility or liability, regardless of which party is negligent.</span></li>
<li><span style="font-family: Arial, Helvetica, sans-serif;">Negligence: an act or a failure to act that causes property damage or bodily injury to a third party. </span></li>
<li><span style="font-family: Arial, Helvetica, sans-serif;">Third party; anyone other than the insured or the insurance company.</span></li>
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<span style="font-family: Arial, Helvetica, sans-serif;">Most hold harmless/indemnification forms I've seen usually read, "(Party A) agrees to hold harmless AND indemnify (Party B)," with Party B being defined as - in the case of yacht chartering - the owner, the captain and crew, the management company, charter agent, charter brokers, yacht broker, all contractors and subcontractors, all provisioners, all board members of the owning entity, family members of the board, the family dog and that crazy guy from high school… just to name a few. So what this says is that the only person who bears legal/financial responsibility is the charterer. And still they sign...</span><br />
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</span> <span style="font-family: Arial, Helvetica, sans-serif;">Now, when it comes to water toy indemnification forms the one thing we must all understand that is vitally important is this: when a charterer signs a water toy indemnification form they are not simply agreeing to pay for the water toy or pay the yacht owner for any damages; they are agreeing to be personally financially responsible to <b><u>anyone</u></b> affected by any damages AND they are assuming liability once held by the yacht and her insurer. Basically, the charterer is now the insurance company. Does this sound "harmless" to anyone?<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Let's look at a scenario:<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The bosun of a 50m yacht reports to the first officer that the throttle on waverunner A sticks a little. The first officer takes the report and delivers it to the captain. The captain authorizes the first officer to call for a service tech to come repair the waverunner. The service tech arrives. The bosun is off the boat so the first officer takes the service tech to the waverunners and mistakenly shows the tech to waverunner B. The tech opens the engine compartment, checks the throttle cable and throttle body, makes some adjustments, tests the throttle, shows the first officer the throttle works properly, signs off on the service, gets paid and leaves. The service is logged in waverunner A's log - but waverunner A was never serviced.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Next week a charter boards. Prior to launching waverunners the captain has the charterer sign a water toy indemnification form. Waverunners A and B are launched, guests board and off they go. While enjoying the day waverunner A's throttle sticks and the waverunner is now out of control. The operator bails off. The waverunner bounces of a boat, hits a person on a kayak then screams onto shore killing a person laying on the beach before burning up the engine. <o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">So, the negligent act of the yacht crew failing to service the waverunner has now lead to third party losses. Who pays? </span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">Well, the insurance company will investigate and upon being notified that the charterer assumed all liability they can walk away leaving the charterer to deal with the claims. The charterer then turns to his charterer liability carrier only to find out that signing the water toy indemnification form voided his CL cover, so the charterer may now be liable for: damage to the other boat, damage to the kayak, damage to the person in the kayak, civil and criminal penalties, compensation for the death of the sunbather, etc… and he owes the yacht owner a new waverunner. </span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">A possible (and I'll say "likely") scenario is that the yacht owner's policy will step in and defend the yacht owner, but - and this is very important - any amounts the insurer spends defending the owner from third party claims for which he was held harmless by the charterer and which are the result of the negligent acts of the charterer may be claimed against the charterer - and the charterer's liability insurance will more than likely not defend the charterer. Why? Because he signed the water toy indemnification form.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">I've asked FYBA reps, AYCA reps, MYBA reps, CYBA reps, charter agents, charter brokers, etc… why these forms are there in the first place and no one can give me a solid answer. The only answer I can come up with is that the authors of these contracts don't fully understand what these hold harmless forms do and how they can impact an insurance policy. I understand the concept and in some cases hold harmless agreements work; just not here.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Furthermore, yacht crew who ask guests to sign these forms on board have no clue what they are asking guests to sign and should not ever have a hand in independently negotiating this particular aspect of a charter contract - EVER - because here's the deal: If the vessel is properly insured and if the water toys are properly insured and the guests are instructed as to their proper use and they are properly instructed by one qualified to instruct them and they are monitored, then there should be no need to release anyone from liability. </span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">So when you're negotiating charters and a captain requests the indemnification forms be signed ask them, "Why?" If he/she responds, "Because we don't want to be responsible for the damages," tell them, "That's why the vessel has insurance and charter contracts have loss/damage clauses." <span style="mso-spacerun: yes;"> </span>If they tell you it’s “boat policy” have them provide you written documentation of the boat’s operations manual, the boat's insurance policy and an insurance policy endorsement allowing them to negotiate terms of coverage without insurance company approval. Better yet, have them call an insurance professional who can evaluate the policies and inform them of the impact these forms could have on the charterer's insurance policy and the yacht owner's policy.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">I am not trying to make insurance specialists out of charter agents, brokers or captains – but what I AM trying to do is to help everyone understand the variables in play so that mistakes do not happen.<span style="mso-spacerun: yes;"> This is a very sensitive issue and the relationship between contract and policy is delicate at best which is precisely why charter brokers/agents, captains/crew, yacht managers, etc… should not be automatically requesting indemnification forms or hold harmless agreements be signed as a matter of SOP. I'm not telling anyone how to do their jobs, I'm just letting you all know to let attorneys and insurance professionals do theirs.</span></span><br />
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</span></span> <span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-spacerun: yes;">Next week I'll give you the brutal, no nonsense reality of insurance terms and charter contracts.</span></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">As always, I am here to help so <a href="http://www.cyacht.net/" target="_blank">please call or email</a> and we’ll take good care of you and your clients! </span></div>
Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-90686557839624018242014-03-17T12:49:00.001-04:002014-03-21T10:03:06.954-04:00The Affordable Care Act Unmasked<div class="MsoNormal">
I was having a discussion with a friend of mine recently and
as is usually the case during a conversation between a recovering health
insurance professional and a registered nurse the topic turned to health care,
health insurance and the Affordable Care Act.<o:p></o:p></div>
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I told my friend my ideas about lowering expenses and costs
associated with health care in the United States and she encouraged me to write
these ideas down in hopes of opening dialogue among folks who have interest in
this concept and who may be able to communicate these ideas with someone in a
position to possibly consider taking a more effective approach at resolving the
issue of the high cost of health care and health insurance in America.<o:p></o:p></div>
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Some may think my ideas are silly, foolish, immature, stupid, etc…and that's fine. I'm not trying to convince anyone of anything. I'm simply spreading information in hopes that people will see that regardless of your feelings on our health insurance and health care systems, our government has failed us.</div>
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<o:p></o:p></div>
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Okay, so hear we go.<o:p></o:p></div>
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First of all let’s define some terms because the government
and the supporters of the Affordable Care Act (ACA) have failed miserably in
this regard, which has Americans using terms improperly.<o:p></o:p></div>
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First and foremost we must all understand that there is a
night-and-day difference between “health care” and “health insurance.” Health CARE is not health INSURANCE which means the Affordable CARE Act is a grossly misleading title - the ACA is actually a mandatory/compulsory Health Insurance Act, but I'll get to that.<span style="mso-spacerun: yes;"> </span>For the sake of this discussion we will keep
the definitions simple.<o:p></o:p></div>
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<ul>
<li>Health care - the provision of care to a patient by a
medical professional </li>
<li>Health insurance - an
insurance product that provides insurance for health risks</li>
<li>Health insurance company - a company that sells a health
insurance product</li>
<li>Insured – one who purchases insurance</li>
<li>Patient – one who receives care</li>
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Now open your mind.<span style="mso-spacerun: yes;"> </span><o:p></o:p></div>
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At present, depending on who you believe, there are anywhere
from 14 million to 43 million Americans without health insurance.<span style="mso-spacerun: yes;"> </span>And while the ACA has enrolled approximately
5million new insurance customers (a significant percentage being tracked
straight into the Medicare plan) the problem of an underinsured population
still exists and will exist until the government works WITH all stakeholders in
the health insurance and health care industry to solve the underlying problems; because while there are 5 million enrollees in the government plan, more than six million have lost their coverage since January 1, 2014. <o:p></o:p></div>
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So what are the underlying problems?<span style="mso-spacerun: yes;"> </span>There are a few.<o:p></o:p></div>
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First there is fraud. According to the FBI, health insurance fraud is running
right at $80,000,000,000 per year.
Eighty BILLION dollars. This fraud is perpetrated by patients, health care providers,
health care facilities, drug companies and medical supply companies, etc… which
leads to a trickle down effect. Here’s
how.</div>
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If an insurance company is paying fraudulent claims it
negatively effects their bottom line in the form of greater losses and assumption
of more risk which could lead to the need to hold more cash in reserves to pay
claims.<span style="mso-spacerun: yes;">
</span>In order to do so the insurance companies are forced to increase
premiums to meet their financial obligations - which forces people to pay more premiums or lose coverage… and they end up hating insurance companies labeling them "evil" or "greedy."<o:p></o:p></div>
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Do you see the irony?<span style="mso-spacerun: yes;">
</span>These “ greedy, evil” insurance companies that continue to raise rates are simply
responding to being stolen from. <span style="mso-spacerun: yes;"> </span>And while insurance companies continue to get fleeced for billions, expenditures
for health care exceed our national rate of inflation – a negative financial
“double whammy.” And the ACA does
nothing to solve this problem.</div>
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Another main factor of increasing health care costs is
increasing fees charged by doctors and facilities. You see people are ignoring the increasing power that doctors and facilities have over insurance companies. It is the proverbial financial tail wagging the dog. They have operated unchecked for decades and now we’re paying the price. <br />
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An economist from Princeton
University stated, “Everyone is beating up on the insurance companies but
(they) may be shooting at the wrong target.” Warren Buffet said, “Insurance is not the problem,” and Paul Ginsburg said, “…no one has focused on the providers' power to get higher rates from insurers.” There are reports that fees charged by physicians and
facilities are increasing at a rate more than twice that of our annual rate of
inflation; and again, the ACA does nothing to solve this problem.</div>
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<o:p></o:p></div>
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So the main factors driving health care cost increases which lead to higher rates for health insurance is abuse of the system and greed - and not necessarily by insurance companies. <span style="mso-spacerun: yes;"> </span>These abuses cost the system
and its end users tens of billions
of dollars per year.<o:p></o:p></div>
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And who’s to blame?<span style="mso-spacerun: yes;">
</span>WE ARE; but it’s much easier to blame the insurance companies because no
one understands insurance which is why when a president irresponsibly tells you
that the insurance companies are to blame you don’t understand or appreciate
the depth of his irresponsible and callous disregard for the truth. The president and his colleagues are lying to us when they tell us the government can create a better and more efficiently operating health care/health insurance plan than the private sector. Why? Because they don't have a dog in the fight. Whether or not they succeed or fail WE will pay the bill; and if they fail they will blame someone else for failure - probably the insurance companies (which is pretty much what they're doing already).<o:p></o:p></div>
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Just so we're clear on the role of insurers I think a quick sidebar might be in order regarding the role of health insurers. Health insurers have certain obligations and do certain things. Here are the top obligations: </div>
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<li>Underwrite health risks / assume risk transferred by insureds</li>
<li>Generate revenue; turn a profit</li>
<li>Sell patients to doctors and hospitals</li>
<li>Sell doctors and hospitals to patients</li>
<li>Provide a platform to receive premium payments and pay claims</li>
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Assuming health insurance companies should be altruistic and benevolant entities is misguided. Insurance companies are in business to make money and they try to build their products to maximize profits and minimize premiums to claims ratios. <br />
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And while we're on topic, it is not out of the ordinary for a health insurance company to run at a 75% loss ratio ($0.75 of every dollar goes toward claims) which means the remaining 25% of premium dollars pay for operating costs. Would people call YOU greedy if you demanded a raise from your boss because 75% of your paycheck went toward paying off debt leaving you with 25% to pay for food, rent/mortgage, utilities, gasoline, insurance, etc… if a significant portion of your debt was due to people stealing from you? </div>
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Enter the Affordable Care Act.<br />
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Al Gore had his “Inconvenient Truth” and now
Obama has his “Convenient Lie.” I will be brief on this but I will give my honest and brutal
opinion. The Affordable Care Act is an abortion of legislation that
adds another layer of governmental interference to a problem that the framers
have completely failed to solve because they have completely failed to address
and understand the underlying reasons as to why Americans are uninsured or are
struggling to pay their monthly health insurance premiums.</div>
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<o:p></o:p></div>
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You see, the government thinks that the reason why Americans
can’t afford insurance is because insurance companies are evil, uncaring,
unfeeling, heartless money-grabbing whores; but the same can be said for any number of industries such as banking,
entertainment, sports, fast food, candy/soda, clothing, cosmetics… and the list
goes on.<span style="mso-spacerun: yes;"> </span><o:p></o:p></div>
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Throughout the rollout of the ACA the government repeatedly demonized insurance companies, bad-mouthed their underwriting practices, verbally assaulted their policies and tried to convince America that the insurance companies deserve to shoulder the blame for the predicament in which we find ourselves. Forget about insurance fraud, insurance and health care abuse, public assistance abuse, etc…the government has put a lot of effort into convincing the minions that insurance is expensive because of the greed of insurance companies, and this just isn’t true. I think it was Lenin who said, "A lie told often enough becomes the truth."</div>
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<span style="mso-spacerun: yes;">Think about this: insurance companies are in business to make a profit but when people defraud them of $80 billion each year it makes it hard to do so, so they have to take measures to hedge against the financial crimes perpetrated against them. So blame them if you must, but understand their position. Insurance companies raise rates because we force them to do so, but the ACA supporters tell us it's the insurance companes' fault that rates are increasing - and t</span>he government telling us that it’s the insurance
companies’ fault that they are defrauded of $80 billion a year is like
saying that a woman who dresses provocatively deserves to be raped. The argument is so fundamentally flawed that
if it weren’t so tragic it would be laughable.</div>
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Why is the government selling the ACA this way? Two reasons. The first reason is because the worse they make the insurance industry look the better the government looks; and the second is because the government doesn’t understand the problem which means the trillion-dollar
solution they’ve given us is a non sequitur. But let’s blame the insurance
companies… Deflecting responsibility is a move invented by the government and they used it to perfection to pass the act and they continue to use this move in support of it; but Americans are becoming wise to this tactic.</div>
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<span style="mso-spacerun: yes;"> </span><o:p></o:p></div>
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Basic ACA review.<br />
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As we all know, the ACA places a legal requirement on Americans to
obtain health insurance – either through their employer, individually or in the
newly created health insurance marketplace.<span style="mso-spacerun: yes;">
</span>If they don’t they may be fined indefinitely and increasingly. It mandates that insurance companies have
to insure people regardless of health condition, it provides minimum levels of
coverage and attempts to “level the playing field” based upon gender and age.<span style="mso-spacerun: yes;"> </span>It also places requirements on businesses to
provide health insurance for their employees. Good stuff, for the most part. <o:p></o:p></div>
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BUT, it also gives businesses an “out” in that they do not
have to provide insurance for part-time employees which has lead a large number of
businesses to cut back hours on employees, effectively giving them a pay cut
AND forcing them to pay for 100% of their health insurance. Furthermore, some
businesses have found that paying the fines is less expensive than providing
insurance. (<i>I'm purposely not addressing "gender equity" and "age-based premium equity" - another blog, another time</i>)<br />
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Also, non-partisan reports are that between six million and seven million people have actually LOST coverage due to plans being non-ACA compliant or through employers cancelling their employer-sponsored plans. Couple that with the fact that there are thousands of people who have gone on to the government site, signed up for cover and either have not paid their premium OR the insurance company of the plan they've chosen has no record of their enrollment or their payment and you can see that the ACA is inherently flawed. And for those of you who argue, "Things have to get bad before they get better," I say, "BS!"<br />
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This particular aspect of the ACA proves that the government that
created, supported and backed the plan has almost no grip on the reality of its
effects on Americans who –unlike them – have to show up to work each day and work to pay for their own health insurance one way or another. <span style="mso-spacerun: yes;"> </span>The ACA is the government’s attempt to force a pseudo-social
program through a private sector delivery system coupled to a government-run management platform using negative reinforcement
while attempting medical homogeny. And,
AGAIN, it does not address the problems. </div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
So now that we have our context out of the way lets look at
my solution.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Since fraud and abuse are two of the
major underlying problems – and the experts agree that the insurance companies
are having their collective hands forced – is the solution to inject 43 million
new patients into a broken system or should the solution seek instead to be an actual SOLUTION and not an expensive sociopolitical experiment?<span style="mso-spacerun: yes;"> </span>I vote for an actual solution.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Let's set this up using a silly and simple example.<span style="mso-spacerun: yes;"> </span>If you’re driving down the road and you get a flat tire you would be more likely to:</div>
<div class="MsoNormal">
</div>
<ul>
<li><span style="text-indent: -0.25in;">pull over, change your flat tire then have the
puncture repaired or the tire replaced; OR</span></li>
<li><span style="text-indent: -0.25in;">abandon your car and buy a new one</span></li>
</ul>
I would assume that most responsible adults would get out
and change their tire. You see, there is nothing wrong
with your car - you just have a flat tire.
So you fix the flat and you’re back on the road. Well, there’s nothing wrong with our health insurance and health care systems - we just have a breakdown in one of the major elements. We don't need new systems, we need to fix the ones we have… and the ACA doesn't do it.<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
Fact:<span style="mso-spacerun: yes;"> </span>The United
States has one of THE BEST health care systems in the world.<span style="mso-spacerun: yes;"> </span>Perhaps not THE best, but definitely one of
the best.<span style="mso-spacerun: yes;"> </span>People come from all over to
get health care here; most of the time paid for by our tax dollars.<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span><br />
<span style="mso-spacerun: yes;"><br /></span>
<span style="mso-spacerun: yes;">F</span>act:<span style="mso-spacerun: yes;">
</span>The US has one of the most abused systems in the world.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
And as far as access goes, if you are inside our borders –
regardless of your citizenship – and you need to see a doctor, you have
access.<span style="mso-spacerun: yes;"> </span>The US has exceptionally easy
access to doctors and providers. These
are not points that can be argued.<span style="mso-spacerun: yes;"> </span>If
you say our health care system is bad and there is no access you are wrong. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
So we have exceptionally high quality of care and we have
arguably some of the easiest access to that care but we are sitting around
complaining about affordability while doing nothing to stop the root cause of
escalating costs.<span style="mso-spacerun: yes;"> </span>And our government
thinks a new plan will solve the problem.<span style="mso-spacerun: yes;">
</span>I have news for you – it, alone, will not.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
SOLUTION ALERT<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
My solution is very basic and will probably draw some ire
for its simplicity and perceived basis in fantasy but I’m putting it out
there.<span style="mso-spacerun: yes;"> </span>My solution is obvious and simple:<span style="mso-spacerun: yes;"> </span>We eliminate systemic abuses.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
See?<span style="mso-spacerun: yes;"> </span>Simple. So how do we do this?</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
Well, Obamacare is going to cost us $1,500,000,000,000, and economists and experts agree that in spite of its best
efforts health insurance rates will continue to go up and no one has in any way, shape or
form addressed the cause of these increases; and until systemic abuse is reduced
or eliminated costs will continue to go up with or without the ACA.<span style="mso-spacerun: yes;"> Putting $1.5 trillion into a broken system is a very bad idea.</span><o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
And let me say this:<span style="mso-spacerun: yes;">
</span>The ACA is not a bad idea because it’s “social medicine” or “national
healthcare” becuase it is neither of those.<span style="mso-spacerun: yes;"> </span>The ACA is a bad idea
because it is built on a fundamentally flawed concept that in order to make
health CARE affordable we must make health INSURANCE compulsory. If you take away one idea from this please let it be this one: <br />
<br />
<div style="text-align: center;">
YOU DON'T MAKE HEALTH CARE AFFORDABLE </div>
<div style="text-align: center;">
BY MAKING HEALTH INSURANCE COMPULSORY </div>
</div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"> </span><o:p></o:p></div>
<div class="MsoNormal">
You see this is NOT an affordable CARE act – this is a
mandatory insurance act; and again – health care is NOT health insurance.<span style="mso-spacerun: yes;"> Repeating</span> – this is NOT an affordable care act,
it is a mandatory INSURANCE act.<span style="mso-spacerun: yes;"> </span>Make
sure you understand this as we move forward.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
My idea for a solution is as follows:</div>
<div class="MsoNormal">
</div>
<ul>
<li>First - instead of spending $1.5 trillion on a flawed social
experiment, we come up with a realistic amount of budgeted tax dollars to expand
funding to the FBI and create a no-nonsense anti-fraud team that will work
inside insurance companies to set up systems to prevent insurance fraud, track
down the fraudsters and recoup money. </li>
</ul>
<ul>
<li>Second – work with tech companies to create a
technologically advanced reporting system for ALL stakeholders to eliminate
fraud in all aspects of health care.
Obama is spending billions creating a “data hub” which is
ridiculous. I propose re-directing
spending to upgrade the MIB and develop a claims reporting, filing, payment,
UR, platform that – like the MIB – will be universal in scope for all insurance
stakeholders; which means all stakeholders can communicate across a unified
platform to track claims by patients, reporting by doctors, etc…We work toward biometric coding for ID cards, streamlined
reporting of claims, caps on incentives offered to providers/facilities who
test drugs, etc… and we put in place penalties for non-compliance by all stakeholders not just the end
users.</li>
</ul>
<ul>
<li>Threatening people with penalties and enticing them with tax credits that they may or may not qualify for is ridiculous. Businesses should receive more credits, concessions, benefits, etc… for providing plans for their employees, period. As it stands, businesses are encouraged to cut back on full-time employees and do away with plans. Encouraging people to buy expensive crap that is always going to be crap that will increase in cost is moronic - penalizing them for not doing so? Idiotic.</li>
</ul>
<ul>
<li>Next. The government should encourage insurance companies to work with tech companies to continue to
push and fund these advances in order to stay out in front of fraud and abuse. Perhaps tax breaks, perks or subsidies that
reward and support insurers who reduce fraud and save policyholders money. “What?
Give insurance companies MORE money?”
Yes. Money they will spend making
their products better – which benefits insureds/patients.</li>
</ul>
<ul>
<li>We re-tool the FDA to streamline the introduction of new
meds and new technology. This hastens
the product to market, lowers costs on the front-end, lowers the price tag on
the back end and (God forbid) helps America keep pace with the rest of the
world in medical advances available to patients – which might mean Americans
get healed faster instead of treated longer, which does what to long-term health care costs?</li>
</ul>
<ul>
<li><span style="text-align: justify;">The government and private insurers work together to
develop a national UCR fee schedule so that all doctors, all hospitals and all
medical supply companies are playing from the same sheet music. We legislate fees and reduce or eliminate
balance billing inside any and all insurance contracts. If a doctor contracts with an insurer he/she is bound by the contract and the reimbursement rates and he/she cannot balance bill any patient at any
time under any circumstances. If you provide a service inside the terms of an insurance contract you are
bound by that contract – period. If people are cash patients this rule does not apply. This
means that doctors, hospitals, patients and insurance companies all play by the
same rules and when you ask, “How much is this going to cost me,” a billing
specialist should be able to tell you a cash price and an insurance price. Anti-competitive?
</span><span style="text-align: justify;">Nope. Let doctors, providers,
facilities and insurers compete based upon service and quality of care so that
their financial success is based upon the results they get not the amounts they
bill. Even Warren Buffett said, "We are paying for procedures not results" and this needs to stop. Further to this, fewer bills go unpaid, fewer
people go to collection, less debt charged off, etc… and doctors who sign contracts
know exactly what they will be paid and customers know that the law is on THEIR
side regarding the financial aspect of their treatment.</span></li>
</ul>
<ul>
<li>And with regards to underwriting, pre-ex, etc… if the government worked WITH insurance companies toward this systemic solution and they did help them reduce their exposure to fraud, the insurance companies might not be so hesitant to voluntarily yield to requests by the government to modify coverage terms, and (and go with me here) with an $80 billion reduction in fraud the insurers might be able to affordably expand coverage, remove restrictive terms and negotiate more competitive and consistent contracts with providers. </li>
</ul>
<ul>
<li>Finally: Health care services will be paid for by users either with
insurance or cash money. If you are a
cash-patient you are on your own BUT you can BE a cash patient. You should not be forced to buy something you
don’t want or need, but if you receive care you WILL pay for it one way or another. Either you have insurance, you pay for services at the time
services are rendered, you work out a payment plan with the provider or have your
wages garnished. Bankruptcy will not
remove medical debt. Exceptions, of
course, for true indigents.</li>
</ul>
<div class="MsoNormal">
See? None of these solutions involves creating a trillion dollar boondoggle. They all focus on the abuse and fraud that has created our expensive system. They focus on introducing solutions not adding an additional layer of problems.<br />
<br />
If we could come up with a strategy to reduce the amounts
paid for fraud and systemic abuses and work toward paying for consumption and
stabilizing costs we could put billions and billions of dollars each year back
into our own pockets without spending hundreds of billions each year to further
populate a system that is broken!<span style="mso-spacerun: yes;"> But we have to understand that everyone has to stop pointing the finger of blame and start taking personal responsibility to solve the problem.</span><o:p></o:p><br />
<span style="mso-spacerun: yes;"><br /></span>
If we are to provide affordable health insurance and affordable health care then we must do so by understanding that the problem with affordability is not a product problem, an access problem or even and affordability problem: it is a systemic problem and any solution needs to target repairing the system and not rebuilding the products made expensive by it. </div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<span style="mso-spacerun: yes;"><br /></span></div>
<div class="MsoNormal">
The ACA (in its present form) is not the solution to the problem – it is an extension of the initial problem
masquerading as a solution.<span style="mso-spacerun: yes;"> And while the government is to be commended for spending time addressing the issue I think they really need to admit that t</span>he ACA is a
cop out. <span style="mso-spacerun: yes;"> </span>It is nothing more than the
appearance of progress. The sad news is our government doesn’t understand this and
because they don’t understand this they lie to us and send us the bill.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Please understand this: I believe that everyone should have health insurance BUT I am against the ACA in it's present form; but being against Obamacare doesn't mean one is against affordable access to health care and health insurance. It simply means that I do not agree with the argument that to make health CARE affordable we make health INSURANCE compulsory and use financial penalties to enforce compliance. It's anti-competitive and adversarial.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
There you have it. <span style="mso-spacerun: yes;"> </span>My
insurance rant on what I would suggest as solutions to fix the system instead of simply covering
up the problem and convincing everyone that the issue of affordability is the
insurance companies’ fault when in fact it is OUR fault. I have specifically left out other aspects that affect our health care systems such as an aging population and a population that is fatter, lazier and sicker than ever before…<br />
<br />
<div style="text-align: center;">
<b>Regardles, it's my opinion that making something affordable should focus on reducing or eliminating factors that contribute to unaffordability and NOT on adding more factors that contribute to unaffordabiity - which is what the ACA does.</b></div>
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Again, I believe with all my heart that every American should
have health insurance.<span style="mso-spacerun: yes;"> </span>And I also
believe that if the system can be fixed then there is room for the ACA and
private-sector insurers without the need for mandatory compliance or penal provisions. We need to create a system that is affordable that people want to be a part of and<span style="mso-spacerun: yes;"> w</span>e CAN create a system that is affordable and
fair for everyone; but it’s going to take more than just an improperly labeled,
emotionally marketed, ineffective law to do so. And it’s going to take more
than a catchy slogan or a warm feeling of hope and change.<span style="mso-spacerun: yes;"> </span>It’s going to take WORK.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Work that can’t be farmed out to day laborers.<span style="mso-spacerun: yes;"> </span>Work that can’t be sent overseas.<span style="mso-spacerun: yes;"> And t</span>he work that needs to take place is the
work that we elect officials to do – so we must force them to work and get this
done or fire every last one of them.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
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Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-41540707148439363342014-02-24T07:46:00.000-05:002014-02-24T07:46:10.607-05:00ALWAYS Know The Rules Of The Game You're Playing Before You Pay To PlayAs you can see if you read the post directly under this one I’ve said my piece on speaking in absolutes or making statements about insurance products (or any products for that matter) sold using words such as “always” or “never” or “total” or “absolute…” but don’t just take my word for it, take a look at what Florida Statutes say about it.<br />
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<i>Florida Statute 817.4(5) states:<br />
The phrase “misleading advertising” includes any statements made, or disseminated, in oral, written, or printed form or otherwise, to or before the public, or any portion thereof, which are known, or through the exercise of reasonable care or investigation could or might have been ascertained, to be untrue or misleading, and which are or were so made or disseminated with the intent or purpose, either directly or indirectly, of selling or disposing of real or personal property, services of any nature whatever, professional or otherwise, or to induce the public to enter into any obligation relating to such property or services.</i><br />
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<i>626.9541 Unfair methods of competition and unfair or deceptive acts or practices defined.—<br />
(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS.—The following are defined as unfair methods of competition and unfair or deceptive acts or practices:<br />
(a) Misrepresentations and false advertising of insurance policies.—Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, comparison, or property and casualty certificate of insurance altered after being issued, which:<br />
4. In any other way, an advertisement, announcement, or statement containing any assertion, representation, or statement with respect to the business of insurance, which is untrue, deceptive, or misleading.<br />
(e) False statements and entries.—<br />
1. Knowingly:<br />
a. Filing with any supervisory or other public official,<br />
b. Making, publishing, disseminating, circulating,<br />
c. Delivering to any person,<br />
d. Placing before the public,<br />
e. Causing, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public… any false material statement.</i><br />
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Again, I am not making a specific legal determination here but I am suggesting that using certain words in advertising could lead to a reasonable person expecting something that a product cannot deliver. And in insurance, saying a policy will “always” pay is not "always" true – and saying as much could be misleading, at best. <br />
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Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-28656218078696051432014-02-16T15:02:00.000-05:002014-02-19T07:52:44.290-05:00Insurance Is A Conditional Promise, Not An Absolute ObligationI have received two emails from an insurance broker advertising boat insurance with the following claim:<br />
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<b>“If your insured’s boat burns or sinks is it always covered by insurance? With our boater’s assistance program YES.”</b><br />
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Now, as an amateur wordsmith and a moderately informed insurance agent with fully paid-up E&O coverage, I can say – with a reasonable amount of certainty – there is no policy in existence that will guarantee it will “always” cover a loss. Upon further examination of this agent’s claim I found the fine print which included the following:<br />
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<i>Boater's Assistance is available for pleasure boats only; boats used for charter, commercial, rental or other use do not have consequential loss. Personal watercraft (jet skis) do not have consequential loss.Consequential Loss does not apply to boats that are unseaworthy. Unseaworthy includes boats left unattended (abandoned), neglected, not reasonably fit for intended use, lack of reasonable state of repair to maintain the boat against loss or damage from ordinary weather conditions. The loss must be a direct and sudden event.</i> <br />
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This particular agent/broker was trying to explain a fairly technical insurance concept (consequential loss) in as few words as possible then he/she was trying to use that concept to attract clients by making a promise that no policy can keep – using a literary “absolute” to convince them that their insurance company would “always” pay a loss. <br />
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The theory of <i>consequential loss</i> is tedious at best. It is considered an indirect loss or a loss that comes about as a result of direct damage to property. Having consequential loss coverage can be handy if a direct loss results in an event that causes a more severe loss or a total loss or causes you to continue to experience a loss after the direct loss. See? It’s a bit tricky and can’t be explained in an advert – or even my blog. <br />
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This advert is making a fairly significant claim about "always" paying claims which makes me think, "if it sounds too good to be true it probably is." As an example: in this instant consequential loss would not “always” pay if you: chartered your boat, rented your boat, commercially registered your boat, set fire to your own boat, sank your own boat, paid someone to destroy your boat, hired someone to steal your boat, sold your boat for cash or parts then reported it lost/stolen/missing, etc… <br />
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Nor would it “always” pay in the event of gross negligence, fraud, or in the event that the actions of the owners constituted a breach of contract between owner and insurer or obligated the insurance company outside the scope and terms of the insurance contract.<br />
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Point being, insinuating that consequential loss coverage (or any insurance coverage) will “always” cover a loss is misleading at best, and while this particular advert tried to "fine print" its way out of the corner it was painted into, in using the word "ALWAYS" it walks a fine line between what is right under the law and what is allowed under the law. I will defer official determinations to our esteemed legal professionals and the various state insurance regulatory authorities. <br />
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Over all, as an insurance professional I understand what this advert was trying to do but as a responsible insurance professional I understand that in this industry making guarantees is dangerous and speaking in absolutes is just plain foolish.<br />
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Folks, don’t buy insurance based upon the promises of an advert, and be sure you ask questions any time you think something seems even the slightest bit out of the ordinary. And if you don't understand something, call a professional and buy insurance from someone who takes the time to explain to you not only the benefits of the policy terms but the most important concept you need to know about your policy: when it WON’T pay.<br />
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And always remember: never speak in absolutes.Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0tag:blogger.com,1999:blog-2122589325244518224.post-57399612463320859202014-02-08T12:58:00.002-05:002014-02-08T16:35:29.408-05:00If I Paid You $250,000 Would You Read Your Insurance Policy?In an article published in Bloomberg Business Week, Congressman Mike Quigley (D-Ill) is backing a bill that would eliminate tax breaks for mortgage interest on what he calls “luxury yachts” used as second homes, saying the interests of owners of second homes are of no concern to him.<br />
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Over the next ten years this cutting edge piece of sh… legislation could radically slash the $8 billion second-home mortgage deductions taken in the US each year by – hold on to your hats - $150million… a staggering number for anyone who doesn't know how to divide 150,000,000 by 8,000,000,000.<br />
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So, with more than $100,000,000,000 in insurance fraud taking place each year, Quigley is more bent on going after people who put money into the economy as opposed to going after those who steal money from it. Hey Mike - don't forget to renew your MENSA membership.<br />
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With more than 12 million boats registered in the US (and the average mortgage running right at $50,000) this deduction is available to roughly 600,000 boat owners. This deduction is also available for owners of second homes, cabins, condos, townhomes, recreational vehicles, etc… so long as it has a place to eat, sleep, and go potty and the person spends 14 nights there per year. Quigley and the dems want the deduction gone for any piece of property that could be classified as a second home. This is yet another attempt at economic parity by his party that will have little effect on the wealthy and will end up penalizing the "average Joe" boat owner. <br />
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Sticking with his party's “since the majority of the people can’t use this loophole we’re going to close it” mentality, Quigley said, “There is no reason taxpayers should subsidize luxury yachts.” Obviously Quigley doesn’t understand the difference between a tax deduction and a subsidy - and he certainly doesn't understand what a "luxury yacht" is. That's okay - I'm here to help.<br />
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I’ll go slowly so Mike and his colleagues can understand… A subsidy is when the government gives you other people’s money to spend and a tax deduction is when they don’t take as much of your money from you after a year of spending it... but for people like Quigley who don’t know any better, the quote has legs, baby!<br />
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And if you want to know what a luxury yacht is, come visit us in Florida and we'll show you around. I'm sure you can deduct your travel expenses.<br />
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Here’s the deal: The "luxury yacht" mortgage interest deduction is only available to 5% of owners of all registered boats in America. Five percent. So, apparently, 11,400,000 American boat owners are either paid-in-full or they don’t own what Quigley woiuld consider a “luxury yacht.” <br />
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Thank you Mike Quigley for supporting a piece of legislation that would take away a deduction readily available to all boat owners (and owners of second homes of all varieties) that have a mortgage on a boat with a head, a hot plate and a place to sleep - regardless of value - while accounting for a less than 2% reduction in total second home mortgage deductions over a 10 year period – whether the second home floats or not.<br />
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While you're busy fighting for pennies you're costing taxpayers dollars and creating what could amount to an economic disincentive to purchase "second homes." Now stop screwing around and get to work on legislation that makes a difference!<br />
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Comprehensive Yacht Assurance Bloghttp://www.blogger.com/profile/05755433476353386496noreply@blogger.com0