Dyman Associates Insurance Group

09/08/2014

Dyman Associates Insurance Group of Companies News: First-hand experience (almost) with fake car accidents

On May 28 of this year, Philadelphia District Attorney R. Seth Williams charged a South Philadelphia auto body shop owner named Ronald Galati, Sr. and a group of 40 co-conspirators in a nearly $5 million insurance fraud scheme. These charges were the result of a 16-month Grand Jury investigation of American Collision and Auto Center at 1930 S. 20th St. According to prosecutors, Galati would stage single-vehicle accidents because insurance companies( http://dymanassociatesinsurance.com/ ) consider them “no-fault” and routinely pay the claims without raising the car owners’ premiums. According to Grand Jury witnesses, Galati would say, “I live my life to cheat insurance companies.” Among those arrested were a former Philadelphia police officer, Douglas DiEmidio, and a mechanic with the city’s Office of Fleet Management, Robert Otterson.

Upon reading this story, I could not help but reflect on an episode in my own background that was a virtual carbon copy (remember carbon copies?) of this one. It took place around 1972, when I was a reporter for the Philadelphia Tribune, the nation’s oldest African-American newspaper. I had written several times about an insurance agent in West Philadelphia named Warren Scruggs, and he would occasionally call me with suggestions for legitimate human interest stories.

Warren always dressed in expensive suits, drove high-octane cars and generally gave the impression of being a mover-and-shaker. He was always dropping the names of “friends” who were highly connected politicians, athletes, business executives, media personalities, etc. He ran for City Council himself once as a Republican but lost badly.

He and his model-thin lady friend, Barbara, took my wife and me out to dinner a few times to an upscale steak-and-seafood restaurant on City Line Avenue, where he handed out big tips to valet parkers, servers, managers, etc., as if they were after-dinner mints. Naturally I assumed Warren, who was a big guy with a big personality — always laughing, slapping you on the back, etc. — was mega-successful as an insurance agent( http://dymanassocins.livejournal.com/ ).

Then one day Warren called me and said he had a proposal for me. “I know you don’t make much money there at the Tribune, and I know you put in long hours,” he said. (At the time I was paid about $150 a week before taxes, and I was working at least 50 hours a week.) “Well, I have a way for you to make about a couple months’ pay or more, and it will require very little work, just a few hours. I have quite a few other people involved, and I thought you deserve to be in on it, too. Want to hear more about it?”

Does a giraffe have a long neck? How could I say no? So here is the gist of what Warren said:

“All you have to do,” he said, “is drive down Chestnut Street between 52nd Street and 30th Street on the day and time that I tell you to do it. You will come to a stop at a red light. Another driver will come up behind you and hit your car but not very hard, just hard enough to put a small dent in your car. You will exchange information with this person, who will be insured by the John Hancock Insurance Company( http://www.linkedin.com/groups/Dyman-Associates-Insurance-Group-6616627 ).

“A couple days later a claims representative for John Hancock whose territory is West Philly will come to see you to ask you questions about the accident. He will recommend that you take your car to a particular repair shop to be fixed. You will tell him that you have low back pain since the accident, and you will also call a particular chiropractor whose name I’ll give you to get a series of treatments for your back.

“After you go for a few visits, the claims adjuster for John Hancock will offer you a settlement, maybe $3,000 to $5,000 or even more if you sign away any future claims against them. And they will pay your chiropractic treatments and the car repair shop, of course, and they will be very glad to do so. A low back pain case can drag on for years and possibly cost them a fortune, so they will be delighted to offer you the settlement to get the case off the books. Then you can go to Hawaii and splurge, which you can’t do on your newspaper salary!”

Warren pointed out that the car repair guy, the claims adjuster and the chiropractor were all in on the deal, of course, and all would get a cut of the action. I would be lying if I said that I was not tempted to get in on it, too, but of course I said no. I told my wife about the proposal, and she insisted that she would not have much fun in Hawaii if I was sitting in a jail cell in Philadelphia.

I did not think any more about it until about 10 months later when the “Big Story on Action News” was a press conference called by then-District Attorney Arlen Specter to announce the arrest of 23 people, including insurance agents, claims adjusters, auto repair shop owners, chiropractors, a medical doctor, etc. Specter said his office had broken up a massive ring of insurance scammers, and he would do his best to make sure they all did jail time. (Not many did.)

Read the full article here… http://chestnuthilllocal.com/blog/2014/07/31/first-hand-experience-almost-fake-car-accidents/

12/07/2014

Tips on Optimizing Guaranteed Income Sources in Retirement

Dyman Associates Insurance Group of Companies - In Part 2 of a three-part interview, T. Rowe Price's Christine Fahlund discusses getting the most out of Social Security benefits as well as longevity and long-term care insurance.

Christine Fahlund, senior financial planner for T. Rowe Price Group (TROW), retired in May after 18 years with the firm. Before her departure, Morningstar's Christine Benz sat down with her to get her wisdom on creating a successful retirement plan.

In Part 1 of the three-part interview, Fahlund discussed how to assess whether you've saved enough to retire as well as the benefits and pitfalls of working longer. In this section, she addresses lifetime income sources, including Social Security and longevity insurance.


Read more tips: http://dymanassociatesinsurance.com/

Christine Fahlund, senior financial planner for T. Rowe Price Group TROW, retired in May after 18 years

08/07/2014

Dyman Associates Insurance Group of Companies│Tips when considering life insurance

Few personal milestones compel someone to buy life insurance coverage like becoming a parent.

In the event of an untimely death, life insurance can serve as a financial safety net to ensure there’s money available to pay for everything from medical bills to a home mortgage and future college education costs.

Many Americans have taken steps to line up such a financial cushion.

At the end of 2012, 146.2 million individual life insurance policies were in effect, with coverage totaling $11.2 trillion, according to the American Council of Life Insurers.

Yet the distribution model has changed during the past few decades, and fewer Americans are relying on local financial advisers in their community to look at their overall financial situation and recommend a life insurance strategy, said Brian Bulakites, national sales manager for life insurance for Henrico County-based insurance company Genworth Financial Inc.

The Internet has enabled consumers to shop more widely for insurance, but it might also cost them the face-to-face advice that can be helpful, he said.

“The biggest thing we see in our industry today is that people don’t have advisers,” he said. “You want to find an adviser that you can build a relationship with — somebody that you can trust.”


Here are five tips for those looking to buy life insurance:

Learn insurance options
The overarching goal for new parents in buying life insurance is to provide financial security in case of the death of one or both parents.

“The first reason is for income replacement if one of the wage earners dies prematurely,” said E.G. Miller, an associate professor and executive director of the Risk and Insurance Studies Center at Virginia Commonwealth University.

“That means you need to determine how much income needs to be replaced.”

“In doing that, you would also factor in that there are some survivorship benefits for children and spouses in Social Security, even for people that are relatively young,” he said. “That is a base to build on, but it is not going to replace someone’s income entirely.”

However, life insurance policies can vary widely and provide financial benefits besides a death benefit.

“There are flexible products these days,” said Bulakites, such as indexed universal life insurance, which enables the policyholder not only to have a death benefit but also to accumulate cash for use as a supplement to retirement income, to finance a child’s education or for long-term care needs.

Life insurance policies generally fall under two categories: Term insurance and permanent insurance, which is often referred to as whole life or universal insurance.

With term insurance you pay a premium for a set period, commonly 10 or 20 years, and your policy entitles you to a specific amount of money. Unless the policyholder dies, triggering a payout, any premiums paid are lost once the policy term ends.

In contrast, whole life insurance policies cover insured individuals as long as they live. These policies also function as savings vehicles. A portion of the premiums paid for the policy are invested to provide a pool of money the policyholder can access, tax free, while he or she is still alive.

Such policies are generally more expensive than term life insurance, however.

Andrew Porter, a certified public accountant in California, advises clients who are new parents to avoid whole life insurance.

“The cheapest form of insurance, generally speaking, for healthy, young adults is term (policies),” Porter said.

However, Bulakites said he would not necessarily steer younger people away from permanent insurance and toward term. For some, permanent insurance might make more sense if their budget can absorb it.

Set coverage priorities
Generally, an insurance agent will help you determine an appropriate coverage amount for the policy by examining some of the key costs your family will have in years to come, such as the cost of child care, education and the mortgage.

In determining how much to pay for life insurance and the benefit, “you have to take into consideration what your other goals are,” Bulakites said. For example, “do you have an education fund for your kids?”

Another approach is to figure out how much income you’re expected to earn over your lifetime.

Although it might be tempting to think of life insurance in terms of a dollar amount, it makes more financial sense to tie that amount to a goal, such as paying off a mortgage or college tuition, Porter said.

“If you’re going to buy insurance, you want to have a specific use for each policy,” he said. Otherwise, “it opens the way for insurance agents to oversell insurance that you may or may not need.”

Life Happens, a nonprofit organization financed by insurance and financial companies, has an online worksheet to estimate your insurance needs before you meet with an agent: www.lifehappens.org/insurance-overview/life-insurance/calculate-your-needs.

Buy a policy early
The cost of life insurance doesn’t hinge on your credit rating, savings or assets. It’s determined by your age and the results of a medical evaluation that’s required every time you seek coverage.

If you’re a couple in your 20s and healthy, you’ll pay less than when you are in your 30s and 40s.

“If you can qualify now, it’s better to do it, versus waiting and something could change in your medical situation and you may end up not qualifying,” said Craig DeSanto, head of life insurance and long-term care at New York Life. “And the younger you buy, the cheaper it is.”

A 20-year-old man who is healthy and doesn’t smoke could be charged, on average, $32.53 a month for $500,000 in coverage on a 20-year term life insurance policy, according to an estimate by insurance quote portal TrustedChoice.com.

By comparison, a 50-year-old with the same health characteristics would be charged $111.38 per month for the same coverage.

Insure both parents
It’s common for both parents to work and contribute to household expenses and the costs of caring for their children.

That’s one reason experts recommend both spouses have life insurance, particularly if they both pitch in to pay the mortgage.

But even in cases in which one parent quits work to care for a young child, that parent should be insured.

“There is (a) common misconception that a spouse who is not working does not need as much coverage as their working spouse,” Bulakites said. “I would propose that they need the same amount of coverage and maybe even more.”

Bulakites said his wife maintained her life insurance when she decided to stay at home with their children.

“I travel a lot for my job,” he said. “If something happened to my wife, who would be home with the kids? If I don’t have an occupation that allows me to do that … I would need to hire someone.”

Learn more tips: http://dymanassociatesinsurance.com/

Few personal milestones compel someone to buy life insurance coverage like becoming a parent.

06/06/2014

Dyman Associates Insurance Group of Companies - READER'S VIEWS: Enabling or blocking health insurance fraud


When the subject of health insurance is discussed someone raises the argument that because Medicare or Medicaid is government programs, they are subject to fraud. This is usually an objection from politicians who support Free Enterprise and fear Big Government.

Let’s be honest with ourselves, any human event that involves something of value attracts fraudsters. A bank robber, a hacker, a big company submitting false claims; all fall into the category of fraud. Any googling of Medicare fraud brings up some infuriating examples. For example, health care industry giant HCA (which the New York Times notes was bought by Bain Capital in 2006) eventually settled a Medicare fraud scandal (overcharging) for more than $1.7 billion. Or, last May the feds arrested 107 health care providers, including doctors and nurses, in several cities and charged them with cheating Medicare out of $452 million. In 2010, 94 people were charged with submitting $251 million in phony claims. Fraud isn’t the product of scheming low-income beneficiaries – Mitt Romney’s 47 percent – it is most often committed by big companies and rich doctors, not a patient seeking a second colonoscopy.

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04/06/2014

Dyman Associates Insurance Group of Companies: Insurance fraud worth £3.5m uncovered every day, figures show

Insurers have exposed a record £1.3bn worth of fraudulent claims last year as the industry stepped up its war on cheats.

The amount, released by the Association of British Insurers (ABI), marks an 18% rise in value on 2012 and equates to £3.5m worth of insurance frauds being uncovered every day.

The ABI said there had also been a "significant" increase in people phoning up to report suspected fraudsters, indicating a growing acknowledgement that this was not a "victimless" crime.

In 2013, 118,500 bogus or exaggerated insurance claims were detected – more than 2,000 a week.

Fraudulent motor insurance claims were the most expensive and common to be exposed, with 59,900 dishonest claims worth £811m detected last year.

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Do you own a business? Is it running and doing successfully? Wanting a company that works for your business as diligent as you are? No need to worry and choose Dyman and Associates Insurance. We will assure you that you have chosen leading Business Insurance.

27/04/2014

Dyman Associates Insurance Group of Companies: Washington's new health insurance rules don't add up to access (guest column)


Scott Bond and Dale Reisner, Washington State Hospital Association and Washington State Medical Association


More than half a million people have newly enrolled in health insurance in our state. This is cause for celebration. People now have the security of knowing that if they get sick or injured they will not be devastated financially.

But insurance and access to health care (http://dymanassociatesinsurance.blogspot.ca/) are two different things. Will insurance companies contract with enough hospitals and physicians to serve all of these people — to provide the in-network care that people rightly expect?

Our state’s insurance commissioner, Mike Kreidler, is grappling with this question right now. Kreidler’s job is to ensure that health insurance is meaningful for consumers, so they can find a doctor and get the care they need. If you get sick, you need care, preferably at your physician’s office or local hospital. If you have to travel long distances to get this care, will you feel you are truly covered? If you cannot get to the right specialists for a potentially life-threatening condition, will you be satisfied with your coverage?

Kreidler is finalizing regulations defining minimal standards for access to care. But these proposed regulations fail to guarantee access to care; in fact, they may be a license to reduce access. Although these 27 pages of regulations set out specific requirements for access to in-network providers, they also contain huge loopholes. These loopholes allow insurance companies to be exempt from the new requirements without providing meaningful proof that they tried to bring facilities and providers into their network.

We know the system needs to innovate. Washington state’s hospitals, medical groups, clinics and individual physicians are using new ways to reduce costs. But we also need minimal standards to protect the consumer.

All Washington residents should have insurance plans that meet minimal standards for access to care. Obviously, there will be times when exceptions are needed. But shouldn’t we hope that rural residents can access care locally, or that people can get to the right specialists when someone is seriously ill?

The insurance companies are not happy with these regulations, either. The fact that both sides dislike these rules suggests they do not represent a reasonable compromise. The commissioner’s office has rushed these rules through so they will apply in 2015. This is unfortunate, because we need to get this right. The insurance commissioner should take more time to work on these rules to ensure that everyone who now has health coverage can get the care they need and expect.

Hospitals and physicians in our state have waited a long time for health care reform. We are delighted this day has come. But we want everyone who now has insurance to get the care they need so they can truly be on a path to a healthy life.

Scott Bond is president and CEO of the Washington State Hospital Association. Dr. Dale Reisner is president of the Washington State Medical Association, which represents physicians.

More than half a million people have newly enrolled in health insurance in our state. But will insurance companies contract with enough hospitals and physicians to serve all of these people?

26/04/2014

Life Insurance and the 831(b) Captive Insurance Company - Wait For The Test Case Before Signing Up


Dyman Associates Insurance Group of Companies

There is an old saying about life insurance: “Life insurance isn’t bought, it is sold.” The public doesn’t exactly clamor to buy life insurance, and if you don’t believe me then just try to find a life insurance store at pretty much any major retail mall. Instead, life insurance agent and financial planners (and increasingly accountants and attorneys) look for suitable prospects and opportunities to sell life insurance to those with a perceived need.

There is no doubt that while the public doesn’t really think much about buying life insurance, they have a need for it. Life insurance serves the purpose of funding the family’s continuation at death, and prevents the financial shock from the loss of the family’s main provider.

Life insurance is also sold as a tax shelter of sorts. Because the investment growth(http://ireport.cnn.com/docs/DOC-1116709) on the cash value of a life insurance policy is not taxed, and in fact may never be taxed, life insurance can sometimes be a very efficient investment. (And sometimes not — eventually, the cost of insurance which increases dramatically with age can significantly eat away at investment returns, and more often than not the investment returns somehow never quite match the pollyannaish predictions of the illustrations shown to prospective buyers — those illustrations with unrealistic financial projections being known in the industry as “liar ledgers”).

The problem with life insurance as a tax shelter is that typically it must be purchased with post-tax dollars. Historical attempts by creative attorneys and financial advisers to manipulate various tax-free strategies to encompass a life insurance policy have nearly all ended in disaster: VEBAs, 412(i) plans, and 419A(f)(6) plans all ended with the taxpayers often paying more tax in the end than if they had done nothing in the first place, and lawsuits against advisers for professional negligence nearly hit the epidemic point.

For somewhat obvious reasons, the IRS has typically gone after arrangements that were pitched to clients that they could purchase a large amount of life insurance with pre-tax dollars like a heat-seeking missile. Yet, advisers persist in trying to wed life insurance to things that it shouldn’t be hitched to, so as to obtain the result of a pre-tax purchase of life insurance — and big commissions to the advisers, who if in good with their insurance company, might make upwards of 40% of the first-year’s premiums paid in on a Universal Life policy, and upwards of 80% on a Whole Life policy (they almost never disclose these commissions to their clients, of course).

The latest attempt to wed life insurance to something that will result in a pre-tax purchase of life insurance is that involving smallish captive insurance companies. These companies make the 831(b) election so that they are not taxed on their premium income, with the result that the underlying company can quite lawfully pay some reasonable amount of premiums to the captive and take a current-year deduction for it, but the captive does not pick up the premiums received as income.

From a tax standpoint, the benefits of an 831(b) captive are not that great — most of the money should be used to pay claims if the actuarial calculations of the premiums are anything like close, and then the balance of the money is subject to capital gains taxes when the company is liquidated. In the meantime, an 831(b) captive is not allowed to deduct all, or even most, of its operating costs.

Plus — and here is where life insurance re-enters the picture — an 831(b) captive is internally taxed annually on its investment income, which further eats into the tax efficiency of the captive. But what if the captive could purchase life insurance — which grows tax-free — and thus avoid the tax on its investment income? Welcome to the life insurance tax shelter du jour.

There are now tax shelter promoters out there (many of them the same ones who sold VEBAs, 412(i), and 419A(f)(6) plans in past years) actively marketing and selling 831(b) companies as a conduit to purchase life insurance with pre-tax dollars. Sometimes they try to disguise the transaction by having the captive do a split-dollar transfer to a trust that buys the life insurance, or having the captive invest in a preferred share of an LLC that buys the life insurance. This is just putting lipstick on the pig. Others just tell their clients to purchase life insurance directly inside the captive.

The truth is that it is probably fine for a mature captive, meaning one that has been around for some years and has large reserves and surplus, to use a small amount of its investable assets to purchase a key-man policy, or maybe invest in life settlements or the like.

But this is not how the 831(b) captives are being sold; instead, clients are being shown illustrations where the life insurance is being purchased soon after the first premiums are paid to the captive (the advisers want their commissions now, not later), and the efficiency of the captive is being measured not in its effectiveness as a risk-management tool (it’s proper purpose) but rather as an investment and estate planning tool (the improper tax shelter purpose).

In reviewing these transactions, the presence of the 831(b) captive is simply a sham. Premiums in these deals are rarely calculated based on anything like real-world risks, but the promoters are making a determination of how big of a deduction the client wants, and then “backing in” the premium amounts with the help of actuaries who will testify that a $500,000 premium for $2 million worth of terrorism insurance for a business in Lenexa, Kansas, is reasonable, and, oh, also that the world is flat, water is dry, hot is cold, and the sun comes up in the West.

This issue came up at the Spring Meeting of the Business Law Section of the American Bar Association, where the Committee on Captive Insurance Companies (of which I am the outgoing Chair), had a panel presentation on Tax & Regulatory Issues With Captive Insurance Companies. [The opinions expressed herein are my own opinions, and are not anything like the opinions of the ABA or the Committee.]

The panel featured Prof. Beckett Cantley of John Marshal Law School in Atlanta, who discussed the fact that the IRS is taking a hard look at 831(b) captives that have purchased life insurance, and seem to be following their exact same avenues of attack that finally took down abusive VEBAs, 412(i), 419A(f)(6), and other abusive plans that offered pre-tax life insurance. Namely, the IRS is now conducting various promoter audits to obtain the client lists of the insurance managers whose 831(b) captives are involved with life insurance, as a possible predicate to making the purchase of life insurance within a captive a “listed transaction”, i.e., a presumed tax shelter that carries onerous reporting requirements and possibly very significant penalties.
Professor Cantley also spoke at some length about the technical issues about why the IRS would be absolutely right in taking down 831(b) companies with significant amounts of life insurance, but instead of me paraphrasing him, it is probably better to just read his excellent article on the subject: Cantley, Beckett G., Repeat as Necessary: Historical IRS Policy Weapons to Combat Conduit Captive Insurance Company Deductible Purchases of Life Insurance (February 2013). U. C. Davis Business Law Journal, Vol. 13, 2013. Available at SSRN: http://ssrn.com/abstract=2315868

And Professor Cantley is nothing like the only voice in the wilderness on this issue: Various other prominent captive tax attorneys have indicated that having an 831(b) captive be structured to invest significant assets in a life insurance policy is probably a pretty bad idea, and off-the-record statements from IRS and Treasury officials (not to mention the ongoing promoter audits) show that this is an area of intense interest, if not concern.


As well it should be. By identifying 831(b) companies that have purchased significant amounts of life insurance, whether directly or through split-dollar arrangements, etc., the IRS can more readily identify en masse captive arrangements that are technically defective insofar as they cover risk that barely exist and have premium amounts for certain policies that are not even in the time zone as reality. The potential return of unpaid taxes to the IRS would be tremendous, and such would be very cost-effective.

While there are many highly-credentialed and experienced experts in taxation that warn against an 831(b) being used as a conduit to purchase life insurance, there is pretty much nobody outside those selling the strategy who think that it is anything like a good idea. Those who do sell 831(b) captives bundled with life insurance are energetic, if not virulent, in their defense of the strategy, but that nobody else has signed on to the idea is by itself a great big bright waiving red flag.

Maybe time will prove them to be right, and the rest of us to be wrong. But who wants to be the test case and face the potentially massive penalties if this strategy crashes?

This is not to suggest that captives that have made the 831(b) election are inherently bad, or that the IRS is looking at such captives in isolation. There is no evidence of that, and in fact the vast bulk of 831(b) captives, not involved with life insurance, will qualify as valid captive arrangements. Nobody expects anything like a general pogrom against 831(b) captives anytime soon, and the IRS itself has not indicated any interest in that (as stated above, the tax benefits of 831(b) captives aren’t exactly earth-shattering when they are used as they are meant to be used as true risk-management vehicles).

At the very least, one should take a “wait and see” position in regard to this strategy, keeping in mind that not just a few highly experienced tax professionals are waiting to see it crash and burn, just like the VEBAs, 412(i) and 419A(f)(6) plans before it.

There is an old saying about life insurance: "Life insurance isn't bought, it is sold." The public doesn't exactly clamor to buy life insurance, and if you don't believe me then just try to find a life insurance store at pretty much any major retail mall. Instead, life insurance agent [...]