We are questioned daily by customers asking why their insurance premiums increased more than the rate of inflation. The answer generally has just 2 parts: First, the insurance company taking the rate increase paid more in claims and expenses than it collected in premium and in order to make the 5% to 7% profit necessary to stay in business they have to raise prices. Second, insurance fraud has increased substantially since the financial crisis of 2008. This second reason for insurance premium hikes is something we all can help get rid of. The statement issued this week by Jeff Atwater, the head of Florida’s Department of Financial Services, describes the problem and what can be done about it: “The FBI estimates that the total annual cost of insurance fraud in our country tops $40 billion, and that doesn’t even include health insurance fraud. When you break that number down, it comes out to roughly $500 per family per year in increased premiums. There are as many types of insurance fraud as there are types of insurance, and crooks seem to always find a way to cheat the system. Our insurance fraud and arson investigators recently ran across an outrageous case that outlines just how bold some of these criminals can be and just how quickly thousands of dollars can be stolen. Late last year, a man from Orange County reported that his car, a 2016 Toyota Camry, had been stolen in the state of New York. A terrible ordeal, but it happens and that’s what insurance is for. Imagine the man’s surprise when just a few months later, his car is found on fire near Orlando. He’d already filed an insurance claim worth $10,000, and when the local fire department asked our arson investigators to look into the cause of the blaze, they quickly became suspicious. As the story unfolded, the man ultimately confessed that he paid someone $300 to destroy his car and to make sure it was never seen again. Why would anyone do that? Maybe he was tired of making his payments or perhaps he wanted a different car to drive. Whatever the reason, the fact remains: By stealing from his insurance company, he’s causing all of our insurance rates to rise.  Now he faces 20 years in jail, but the reality is that this sort of thing happens frequently.  It happens when people intentionally inflict damage to their homes or when they stage automobile accidents. It happens when employers cheat their way out of paying proper premiums for workers’ compensation. It even happens when people fake injuries to get out of going to work. Insurance is a business just like any other, and insurance companies can’t afford to absorb $40 billion in fraud without raising prices. I think we can all agree that no one enjoys paying more for their policies, and we must all do our part to help stop this cost driver.  If you see something that looks suspicious, say something. Our investigators are doing a great job, but they can’t be everywhere all the time. If you think there’s something they should look into, give us a call.”

If you see or know of fraud happening, call the appropriate number on this list if it is occuring in Massachusetts. Each state has their own fraud hotlines, check the website of your states attorney general.

Massachusetts fraud reporting numbers:

• Identify Theft – call the Attorney General’s Office Consumer Protection Division at 617.727.7780
• Welfare Fraud – call the Department of Transitional Assistance at 617.727.6950 or 1.800.FRAUD.99
• Unemployment Fraud – call the Executive Office of Labor and Workforce Development’s Division of Unemployment Assistance at 1.800.354.9927
• MassHealth Fraud – call their hotline at 877.437.2830
• Medicare/Medicaid Fraud – call the Inspector General’s Office at 1.800.HHS.TIPS
• Workers’ Compensation complaints about companies that do not have workers’ compensation insurance coverage – call the Department of Industrial Accidents at 617.727.4900 or 877.965.2267 (877.96.LABOR)

Find the entire newsletter here: https://www.ltmonline.com/jerrysiver

Individual articles include:

General Interest:

A project that pays off

A home improvement project can add value and comfort to your house. But before you start the demo, you need to do your homework. We offer a few tips to help make your remodeling dream a reality.

Saving money this summer

You don’t need to break the bank to have fun this summer. We suggest some ways you can save money on your summer activities.

By the numbers: marketable makeovers

How much value will that kitchen remodel really add to your home? Here’s a look at some home improvement costs versus value statistics from Remodeling Magazine.

Part-time passion or a career?

Turning your favorite hobby into a business may seem like a great way to earn money while doing something you love. But you have to be careful when it comes to the IRS’s tax rules. If the IRS views your activity as a hobby rather than a business, you may not be able to deduct all of your business type expenses.

Taxing teens

Will your teen have to pay taxes on the income earned at a summer job? We review the federal tax rules you and your teen should know.

Insurance:

What will your legacy be?

Are you looking for a way to have a lasting impact on the people and the causes that matter most to you? Life insurance may be the answer. It can help provide the financial legacy or charitable gift you desire.

Let’s talk insurance Q&A

• Do younger workers need to purchase life insurance early in their careers? • Is a person’s will the place to designate someone to handle the estate?

Retirement Planning:

Summer school — learn about RMDs

Contributing to a 401(k) retirement plan or a traditional individual retirement account (IRA) can be a tax-smart thing to do. Eventually, though, you’re required to take taxable minimum distributions from your account or face stiff penalties.

Let’s talk retirement Q&A

• Can life insurance be used to help children make up for a shortfall in their retirement and other savings?

Small Business:

Soft benefits that won’t bust your budget

To attract and retain top-notch employees, you need to offer a competitive benefits package. But that can be expensive. Adding some “soft” benefits, such as flexible work arrangements and employee recognition awards, can help enhance your traditional benefits package while helping to control benefit costs.

Let’s talk business Q&A

• What are the basics of group-term life insurance?

Standard:

Survival strategies for volatile markets

One day the markets are up and then the next day they’re down. While you can’t control the markets, you can create an investment strategy to help protect your portfolio from market fluctuations. We offer some steps to help minimize the effect of market volatility on your portfolio’s returns.

Let’s talk investing Q&A

• What should be included in an investment diary? • How can an individual manage multiple retirement plan accounts? Standard Financial Topics is also available in Spanish.

Winter edition, LTM

Articles included:

• Estate Planning
• Financial Resolutions
• Insurance
• Retirement Planning
• Home Health Care Dilemma
• Small Business Issues
• Investing Q&A

The August/September issue of Let’s Talk Money, our insurance and financial services newsletter is now available here: LTM

Our office is closing at 3:00pm today, February 2 2015. We are allowing extra time for our employees to get safely home before the roads become too dangerous.