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NORTH BAY - Perhaps now more than ever, insurance is an industry of many moving pieces. Where one sector surges the other might subside. Local brokers and industry experts sounded off last week on trends in the market as well as rising topics, including fire, high-deductible plans and long-term care products.

Property/ casualty still a buyers' market

If anything about the recession could be considered positive, the continued soft property/casualty market might be one.

Where in normal economic times the competitive pricing that began in 2007 may have slowed by this year, suppressed exposure growth has held premiums and is not expected to slow until 2011, according to a recent industry report.

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"We have been thinking and expecting a change for some time, and we seemed to be nearing the trough of the down cycle. But with such a difficult economy, carriers know consumers can't bear an increase," said Napa-based Sander, Jacobs, Cassayre Insurance Services President and owner Jeff Erickson.

According to an industry forecast by analysts Conning Research & Consulting this month, competitive pricing will continue, but less dramatically in 2010, and begin to firm up the following year. Personal lines will be the first to increase, while the commercial side will likely be a mix of positive and negative price trending through 2011.

Another report released by MarketScout earlier this month said the market showed an average 6 percent decline in premiums in May, compared with an 11 percent drop in pricing for new policies in the same month last year.

Health care pricing increase slower, but what will be the cost of reform?

Benefits costs are expected to continue to climb next year, though at a slower pace, according to one industry report.

But local brokers worry legislators' race to submit a reform bill would come with an even greater cost to private buyers maybe not this year, but the next.

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"We have some concerns with the proposed public plan and whether there will be true competition," said Santa Rosa-based Sitzmann, Morris & Lavis Senior Consultant Victor McKnight, who recently traveled to D.C. to testify to legislators on the potential impact of the plan.

"Of particular interest is how they plan to compensate physicians. There have been some early conversations that reimbursement would be the same as Medicare, and since that under-pays physicians, that would create an issue where the public plan would have a distinct advantage. ... Everyone in a few years would be on the public plan."

Legislators continued to wrangle with different models for the reform last week, attempting to pass a bill before the August recession. The debate includes whether to implement an employer mandate, taxing benefits or the wealthy to pay for the $1 trillion price estimate and how to keep a proposed public health plan from driving up costs in the private market.

A watered-down version suggests incentives for healthy living and tax deductions for employers that provide coverage.

"My personal view is they need to slow down," said Jordan Shields Insurance Partner Keith McNeil. "It is so complicated and has so many moving parts that a heavy-handed approach brings in a lot of unintended consequences."

In purchasing now, even with slower price increases, brokers said most of their clients are making reductions to their benefits offerings, increasing employee deductibles, co-pays or premiums.

A report from PricewaterhouseCoopers expects rates to rise about 9 percent next year, which is slower than the 9.2 percent shift estimated this year and the 9.9 percent in 2008, though the increases are compounded year over year.

The report based on surveys, interviews and statistical data said overutilization of plans by workers fearing unemployment or benefit reduction will further pressure medical costs, but the national focus on health care may slow price increases. The company does not expect the federal reform efforts to impact pricing until 2010.

The hot topic: fire protection, long-term care and HSA vs. HRA

Major fires, a dry winter and recent catastrophic losses have put pressure on the pricing and availability of required homeowners' fire protection policies, according to local brokers.

"The insurance companies are very nervous about fire hazards and many are putting more pressure on inspections of people's properties in brush areas in both valleys," said Mike Applegate, commercial lines manager for St. Helena Insurance.

"It has been a difficult year for the insurance industry in general, and I think they have just been particularly tuned in to fire hazards."

He said many of his clients in Napa, where 75 percent of the area is considered high risk to fire, have experienced trouble renewing policies without further mitigating measures or extended shopping. A spokesman with the Napa Communities Firewise Foundation, a nonprofit focused on fire prevention and awareness, said insurers in some cases are now asking homeowners to practice more rigorous protection than state requirements.

"It's not a universally grim picture because they are helping protect the homeowner, but it can become a very contentious situation when they say, for instance, they must have 500 feet of defensible space around their home when the state only requires 100 feet," said Firewise spokesman Roger Archey.

Meanwhile, another major trend carriers are seeing is more demand for long-term care coverage as the population ages and people live longer. The coverage pays for care in an assisted living facility or for in-home assistance, which can prevent the need for residential care

"The change is happening in the age people are getting interested in long-term care coverage," Mr. McNeil said.

"Even if people don't feel old enough at the moment to worry, they look around at their parents or grandparents and say I don't want to be in same position as them. ... It's a slow and steady change, but five years from now I think it will be considered common, particularly as the baby boomers age."

Although the plans were first written more than 30 years ago, swift growth did not occur until last decade or so. The number of policies sold rose 213 percent between 1992 and 2002, according to a survey by America's Health Insurance Plans.

The number of buyers younger than 65, the wiser choice according to experts, also tripled between 1990 and 2006. One base plan, for example, would cost a 55-year-old $723 a year and grow to $305,305 in protection by age 75, where someone who purchased the plan at 65 would pay $1,365 annually and have just $187,431 in protection after 10 years.

"I think there is a lot of misconception that these plans just pay for nursing home care, but I really consider it nursing home prevention," said American Association for Long-term Care Insurance Executive Director Jesse Slome.

"Also, the fact is people are living longer."

Finally, probably of greatest discussion in specific product trends today is the huge number of employers switching to high-deductible, "consumer-driven" plans. For more than a year, brokers have reported a huge shift in interest, but many have mistakenly lumped health savings account-based versions with health reimbursement models.

"There is no doubt that the greatest trend in health benefits right now is employers switching to high-deductible offerings," said San Rafael-based Benefaction Insurance Agency President Samantha Ehlen.

"At the same time, there is still a great deal of misunderstanding in the plans."

She said the main difference between HSAs and HRAs is the unused money in the account. If the employee is generally healthy and does not use any of the money in an HSA account, those dollars stay with the employee. With a reimbursement account, the funds go back to the employer. Brokers more recently have said both versions experienced large premium increases in recent months, but generally HRA cost surges are less severe than savings accounts.