Amazon Entering Banking Industry

Tech companies pose a clear challenge to banks and none more so than Amazon, which is reported to be in talks with JPMorgan Chase and other big retail banks to create a checking-account-like offering aimed at younger adults and those without checking accounts. This move would build on the company’s initial forays into financial products over recent years and be the start of its venturing into lending, mortgages, property/casualty insurance, wealth management and term life insurance, according to consultants at Bain & Co.

A recent Bain report on banking finds many financial services customers are all too ready and willing to ride the wave of disruption.

In its survey of more than 133,000 consumers across 22 countries, Bain & Co. found that more than half of U.S. respondents – and fully three quarters of those age 18 to 24 – are willing to buy a financial services product from established tech players, with Amazon atop the list of the most trusted. Apple and Google round out the top three.

While many in banking bet on fintech startups as the likely disruptors, Bain analysts contend established technology firms could pose the bigger threat. “Fintechs may have innovative products, but they struggle to build brand recognition or a distribution model that attracts many customers. Large technology firms already have established brands and customer access, which provide an almost unassailable distribution advantage,” the report notes.

According to Bain, Amazon is well positioned to succeed in U.S. banking because of its frequent purchases and customer reviews; a full commercial relationship including credit card on file; integration into consumers’ computers, smartphones, tablets, TVs and home audio devices; excellent service, including a great returns policy; and no major security breaches so far.

Once Amazon establishes a co-branded basic banking service, Bain & Co. expects the internet giant to move steadily but surely into other financial products including lending, mortgages, property/casualty insurance, wealth management and term life insurance.

Bain notes that Amazon could follow customers as they age and move through different life and family stages. and it has has the ability to personalize offers and communications. “Online shopping patterns already tell Amazon what it needs to know about customers’ life events, from getting married to having children to buying a house, which will allow the company to offer relevant financial services products—and information from those products will further increase the depth of the data,” the Bain report says.

“Amazon’s interest in banking is something we’ve anticipated for a while,” said Gerard du Toit, who leads Bain & Co.’s banking and payments sector in the Americas. “Checking and debit accounts are notoriously unprofitable, especially for a fee-free model aimed at younger customers, who often have little money to keep in the account. Most banks don’t relish serving this part of the market. But Amazon has a number of good reasons to dive in. Its incremental costs to do so will be almost nil and it stands to benefit in ways that go far beyond making money on bank accounts.”

Amazon can afford to go after this previously unprofitable segment in part because it can transform the economics of banking; Amazon does not have the burden of an expensive branch and contact center network – which Bain estimates comprises roughly 40 percent of a typical North American retail bank’s costs. The company can also avoid a lot of the customer acquisition costs borne by most direct banks because it already has digital relationships with so many Americans.

Amazon can also avoid dealing with bank regulatory compliance or managing the balance sheet. For example, Amazon’s retail banking partner would hold deposits, while Amazon would design and manage the customer experience and distribution.

Finally, Amazon can make it easy for customers to pay right from that account instead of with their credit cards, which impose fees for each transaction on Amazon or its third-party merchants. Bain estimates that Amazon could avoid more than $250 million in annual interchange fees in the U.S. alone.

“Amazon stands a very good chance of succeeding in banking, by disrupting the industry as it has in retailing,” said du Toit. “Customers indicate ample willingness to buy financial products from technology firms, and Amazon has earned their trust more than most other tech firms. It also possesses all the essential ingredients: digital prowess, a large customer base, an organization skilled at delivering pleasant customer experiences, and ample leeway to extend the brand into banking.”

Judging from the results the last time a tech giant named Google tried to sell insurance, Amazon also stands a good chance of failure. As Insurance Journal first reported in 2016, Google shut down its insurance sales operation Google Compare after only a year.

In doing so, the tech giant said that “the Google Compare service itself hasn’t driven the success we hoped for.”

In an analysis after the Google failure, experts told Insurance Journal that Google failed because it did not understand the insurance business. Some experts in online insurance shopping believe that Google realized it could make more money with its AdWords pay-per-click business than it could selling insurance and other financial products online.

This article is a repost from Insurance Journal and can be found here.

graphic of autonomous car

Uber Halts Autonomous Car Tests After Fatal Crash

Uber Technologies Inc. halted autonomous vehicle tests after one of its cars struck and killed a woman in Tempe, Arizona, in what is likely the first pedestrian fatality involving the technology.

The 49-year-old woman, Elaine Herzberg, was crossing the road outside of a crosswalk when the Uber vehicle operating in autonomous mode under the supervision of a human safety driver struck her, according to the Tempe Police Department.

After the incident, which happened at 10 p.m. local time on Sunday, she was transferred to a nearby hospital, where she died from her injuries. “Uber is assisting and this is still an active investigation,” Liliana Duran, a Tempe police spokeswoman, said in an emailed statement.Uber said on Monday that it was pausing tests of all its self-driving vehicles on public roads in Pittsburgh, San Francisco, Toronto and the greater Phoenix area. “Our hearts go out to the victim’s family,” a company spokeswoman said in a statement. “We are fully cooperating with local authorities in their investigation of this incident.”

Companies including Alphabet Inc., General Motors Co., Uber and Baidu Inc. are investing billions of dollars to develop autonomous-vehicle technology because it has the potential to transform the auto industry, transportation in general and the way cities work. One analyst has estimated Alphabet’s Waymo unit is worth at least $70 billion. The fatality in Tempe could slow testing, delay commercialization and undermine such optimism.

Testing has expanded to complex urban areas as states like Arizona and Texas take a light-touch regulatory approach and companies race to be first to commercialize the technology. That’s helped improved the systems, but also increased the chance of a pedestrian death. Experts have long worried about the impact deadly crashes could have on the nascent industry.

“We’re within the phase of autonomous vehicles where we’re still learning how good they are. Whenever you release a new technology there’s a whole bunch of unanticipated situations,” said Arun Sundararajan, a professor at New York University’s business school. “Despite the fact that humans are also prone to error, we have as a society many decades of understanding of those errors.”

The National Transportation Safety Board is opening an investigation into the death and is sending a small team of investigators to Tempe, about 10 miles east of Phoenix. The Department of Transportation’s National Highway Traffic Safety Administration dispatched a special crash investigation team.

The NTSB opens relatively few highway accident probes each year, but has been closely following incidents involving autonomous or partially autonomous vehicles. Last year, it partially faulted Tesla Inc.’s Autopilot system for a fatal crash in Florida in 2016.

The NTSB’s cautionary tone on the emergence of self-driving technology contrasted with the Department of Transportation, which revised its policy on self-driving vehicles last year in an attempt to remove obstacles to the testing of such vehicles.

“As always we want the facts, but based on what is being reported this is exactly what we have been concerned about and what could happen if you test self-driving vehicles on city streets,” said Jason Levine, executive director of the Center for Auto Safety, a Washington-based advocacy group. “It will set consumer confidence in the technology back years if not decades. We need to slow down.”

The Phoenix area is a fertile ground for experiments in the technology. Uber has been testing there with safety drivers behind the wheel. Late last year, Alphabet Inc.’s Waymo, which has tested in the Phoenix area for years, began removing the safety drivers to transport a small number of residents. (Waymo staff sit in the back seat.) General Motors Co. is also testing in the Phoenix area. A GM spokesman declined to comment, and a representative from Waymo didn’t return multiple requests for comment.

This article is a repost from Bloomberg written by Mark Bergen and Eric Newcomer and can be found here.

Why Companies Are Relaxing On Employee Drug Testing

Employers are struggling to hire workers in tightening U.S. job market. Marijuana is now legal in nine states and Washington, D.C., meaning more than one in five American adults can eat, drink, smoke or vape as they please. The result is the slow decline of pre-employment drug tests, which for decades had been a requirement for new recruits in industries ranging from manufacturing to finance.

As of the beginning of 2018, Excellence Health Inc., a Las Vegas-based health care company with around 6,000 employees, no longer drug tests people coming to work for the pharmaceutical side of the business. The company stopped testing for marijuana two years ago. “We don’t care what people do in their free time,” said Liam Meyer, a company spokesperson. “We want to help these people, instead of saying: ‘Hey, you can’t work for us because you used a substance,’” he added. The company also added a hotline for any workers who might be struggling with drug use.

Last month, AutoNation Inc., the largest U.S. auto dealer, announced it would no longer refuse job applicants who tested positive for weed. The Denver Post, owned by Digital First Media, ended pre-employment drug testing for all non-safety sensitive positions in September 2016.

So far, companies in states that have legalized either recreational or medicinal marijuana are leading the way on dropping drug tests. A survey last year by the Mountain States Employers Council of 609 Colorado employers found that the share of companies testing for marijuana use fell to 66 percent, down from 77 percent the year before.

Drug testing restricts the job pool, and in the current tight labor market, that’s having an impact on productivity and growth. In surveys done by the Federal Reserve last year, employers cited an inability by applicants to pass drug tests among reasons for difficulties in hiring. Failed tests reached an all-time high in 2017, according to data from Quest Diagnostics Inc. That’s likely to get worse as more people partake in state-legalized cannabis.

“The benefits of at least reconsidering the drug policy on behalf of an employer would be pretty high,” said Jeremy Kidd, a professor at Mercer Law School, who wrote a paper on the economics of workplace drug testing. “A blanket prohibition can’t possibly be the most economically efficient policy.”

Companies are having a hard enough time hiring, with unemployment hovering around 4 percent. “Employers are really strapped and saying ‘We’re going to forgive certain things,’” said James Reidy, a lawyer that works with employers on their human resources policies. Reidy knows of a half-dozen other large employers that have quietly changed their policies in recent years. Not all companies want to advertise the change, fearing it might imply they are soft on drugs. (Even former FBI director James Comey in 2014 half-joked about the need for the bureau to re-evaluate its drug-testing policy to attract the best candidates.)

Why the change? Pre-employment testing is no longer worth the expense in a society increasingly accepting of drug use. A Gallup poll in October found that 64 percent of Americans favor legalization. That’s the most since the company first started asking the question in 1969, when only 12 percent supported changing the plant’s status. Drug tests costs from $30 to $50 a pop, but the potential costs to an employer are far greater than the actual test.

In addition to helping ease the labor market, eliminating drug testing could have even broader benefits for the economy, said Kidd. Employers could hire the best, theoretically most-productive workers, he said, instead of rejecting people based on their recreational habits. Companies have said they lose out to foreign competitors because they can’t find people who can pass drugs tests, a particularly acute problem in the areas most affected by the opioid crisis.

Some jobs, such as those involving the use of heavy machinery, will always require drug tests. Excellence Health still drug-tests any employee working on a government contract, even in states where weed is legal. Companies are also reserving the right to test after an accident or if an employee comes to work notably impaired.

Not all companies are ready to change course. Restaurant Brands International Inc., which owns Burger King, hasn’t altered its corporate marijuana policy, said Chief Executive Officer Daniel Schwartz. Ford Motor Co. still treats pot as an illegal substance, according to a company spokeswoman.

Weed-averse employers have a notable ally: Attorney General Jeff Sessions. A longtime opponent of legalization, Sessions rescinded in January the Obama-era policies that enabled state-legalized cannabis industries to flourish. The uncertainty caused by the Justice Department’s actions may discourage companies from making changes.

Employers can also get discounts on workers’ compensation insurance for maintaining a “drug-free workplace” by, in part, drug-testing workers. But the types of workplaces forgoing pre-employment tests already enjoy relatively small savings. A job in an office setting, for example, won’t have very many workers’ compensation claims, compared to a factory. The money saved by meeting the qualifications for a drug-free zone isn’t worth it.

“We assume that a certain level of employees are going to be partaking on the weekends,” said Reidy, the employment lawyer. “We don’t care. We’re going to exclude a whole group of people, and we desperately need workers.”

This article is a repost from Bloomberg written by Rebecca Greenfield and Jennifer Kaplanand and can be found here.

ROP Life Insurance

What is ROP Life Insurance?
ROP stands for Return of Premium. If you have a term policy with a ROP rider, you will receive a refund of all premiums paid if you outlive your term policy.

What’s the benefit of ROP?
You get a refund of your money and is completely tax-free since it isn’t income, but simply a refund.

Are there any downsides to ROP life insurance?
Owners of ROP policies typically pay higher premiums for the benefit of getting their money back if they outlive the term policy.

Want to know more or get a free quote? Email us at life@gasparinsurance!

Changing the Perceptions about Working in the Insurance Industry

Author Bill Taylor explains the shift in perception about working in insurance.

I spend much of my time with senior executives from organizations in, shall we say, not the most glamorous fields: community banks, electrical distributors, heartland manufacturers, and, perhaps least glamorous of all, insurance companies. These executives are rightly proud of what their organizations do, and they can get people like me excited about their plans for growth and change. But they have one huge problem that literally keeps them up at night: Young people find their companies dull and don’t have much enthusiasm for a career in their field. I hear it time and again — How can we compete with Facebook or Google for young engineers? How can we attract digitally savvy marketers against Starbucks or Amazon?

Their challenge, in other words, is to make their “boring” companies “cool” — to persuade 20-somethings to join an organization or work in a field that doesn’t exactly sizzle. It’s a worthwhile challenge — indeed, a make-or-break challenge — but there are right and wrong ways to address it. Two recent articles, both chronicling efforts by insurance executives to make their field more alluring to the young crowd, show the promise and pitfalls of changing an industry’s image. They can help executives in lots of traditional fields think about how to battle for talent.

Let’s start with the pitfalls. A front-page article in the Wall Street Journal notes, insurance companies have to make 500,000 new hires over the next few years, as waves of industry lifers retire. Unfortunately, young people “just don’t want to work for insurance companies,” the Journal reports, which has led some companies to develop brash recruiting campaigns. One midsize company, based in Sheboygan, Wisconsin, built a recruiting video around a young actuary dressed as a zombie, to show that “we really like to have fun around here.” At college recruiting events, the company “served huge mounds of freshly cooked bacon” and installed a Ferris wheel at headquarters to entertain newcomers. Meanwhile, one life insurance giant opened an office in New York City featuring “spaces that feel start-uppy,” free beer any time, and weirdly named conference rooms such as “Asteroid Impact” and “Snake Bite.”

I appreciate the creativity, and I’m sure these initiatives are well intentioned, but I fear they miss the point. Young people have lots of access to zombie makeup and cheap beer. What they value is the chance to join companies that make a difference and where the work brings out the best in them. That’s why a giant insurance company such as USAAhas been able to build a passion brand in the marketplace and an energetic workplace. No one would accuse USAA of being boring — it provides vital financial services to active and retired members of the U.S. military and their families and has unleashed a staggering array of digital innovations. Its culture is fairly conservative — more starched shirts than Ferris wheels — but its appeal to young employees is undeniable. Substance matters more than style.

Another recent article, this one in the New York Times, offers a more promising strategy for making a “boring” industry cool. The article describes a program at Butler University in which students experience the intellectual rigors and human emotions of insurance, a field that “lacks sex appeal,” the article concedes. The premise of the program is that the best way to get young people excited about a field is to let them work in that field and see how intriguing it can be. So a group of students runs a company that insures, among other things, the school’s mascot, its collection of Steinway pianos, and the businesses of student-run organizations. The company competes with commercial insurers, which gives students the chance to outthink and out-innovate established players. “If you think insurance is boring,” the Times concludes, “you haven’t really thought it through. The industry is at least partly about the fascinating science of human behavior, from recklessness to neglect and our collective efforts to behave responsibly that never end in total success.”

Butler’s small program makes a big point. In addition to wanting to do work that matters, talented young people want a chance to work with big problems and tough issues. Consider a big bet on young talent made by Big Blue. IBM is hardly a boring company, but for years it had trouble recruiting against internet upstarts. Who wants to work there as opposed to Apple or Google? So it created a wildly successful internship program called Extreme Blue, in which college-age programmers tackle high-stakes projects and work closely with IBM’s most senior technologists. Getting a taste of real life at IBM has persuaded lots of young people to open their minds about a career at this “conservative” company.

So to all of you who are running companies, leading teams, or managing projects far away from digital hotspots: It’s hard to create an exciting or compelling future for your organization if you can’t make what you do exciting and compelling to talented young people. That doesn’t mean trying to mimic the trappings of life in Silicon Valley. It means giving young people a taste of life in your business, and giving them a sense that being in your business will make their life more interesting and satisfying.

This article is by Bill Taylor for the Harvard Business Review and can be found here.


ATM machines across the country are being targeted by a wave of criminals in search of an illegal high-tech payday. The Secret Service calls this phenomenon “jackpotting,” and are warning U.S. bank attacks are imminent.

It’s a modern day version of a bank robbery, but no weapons are used — only malware, a small device or two and a special key that can be purchased on the Internet. When cyberattackers take control of the machine, cash spews out of the ATM like a Las Vegas jackpot.

It’s a crime that Paulo Shakarian, an entrepreneurial professor at Arizona State University’s School of Computing, Informatics and Decision Systems Engineering, is quite familiar with. Shakarian directs the Cyber-Socio Intelligent System Laboratory for the university, which specializes in cybersecurity, social network analysis and artificial intelligence. Additionally, he is the CEO of CYR3CON, which creates software that uses machine learning to find actionable intelligence for cybersecurity.

“Jackpotting” got its start in Asia, Europe and Central America and has taken a year to reach the U.S.

Shakarian said there are factors that point to why a certain type of attack affects one company/country/locale and not another. These include:

Is there local hacker expertise relevant to a certain ATM model to make the attack profitable? For any attack to occur, there has to be a hacker who understands the target system and enough of the target system to make it worthwhile. Are there other attacks that are more profitable or less risky? While jackpotting was previously not seen in the U.S., credit card skimming was very popular, and this can provide better profits (a credit card skimmer can capture hundreds of cards before going detected) and lower risk (i.e. not every device accepting a credit card has a camera watching).

He explained cybercrimes are cyclical because of an inherent cat-and-mouse nature.

“When a certain attack gets popular, more people start to do it. We see this repeatedly with hacker communities on the dark web latching on to recent exploits and malware. Then, once the popularity reaches a certain level, more and more network defenders put in protective measures. This in turn makes the attack less profitable, so the hackers move on to the next thing,” said Shakarian.

Consumer information isn’t likely at risk with this particular crime, he added.

“Jackpotting deals with affecting the local machine and tricking it to disperse money—not money that is connected to a given account. However, a related attack called skimming does involve stealing personal information,” Shakarian said.

Recently, Connecticut police say they found more than $9,000 in $20 bills when they arrested two men suspected in an ATM “jackpotting” scheme.

The Hartford Courant reports security personnel at a Citizens Bank branch in Cromwell called authorities Jan. 27 after observing the men working on the machine while dressed as ATM technicians.

Officers arrived just as the ATM began to spew $20 bills. Police arrested 31-year-old Alex Alberto Fajin-Diaz, a Spanish citizen, and 21-year-old Argenys Rodriguez, of Springfield, at the scene.

The Secret Service had previously warned New England financial institutions that jackpotters may be arriving to the area. Officials say the crime involves installing malicious software or hardware at ATMs, forcing the machine to release as much as $50,000.

Fajin-Diaz and Rodriguez have been charged with federal bank fraud.

He explained the best long-term solution to combating these attacks to gain information on hacker plans via places like the dark web, “as it allows us to understand where they are headed in terms of target selection.”

Source: Arizona State University and the Associated Press contributed to this article.
This article is a repost from Claims Journal and can be found here.

NFL Players Could Really use some Disability Insurance

Most NFL players don’t purchase disability insurance despite the risk of injury from playing professional football, according to insurance underwriters.

Many players are unwilling to pay for the coverage and are sometimes advised against buying it, said Chris Larcheveque, an executive vice president of International Specialty Insurance, one of four companies authorized by Lloyd’s of London to underwrite these policies He estimates that only about 40 percent of NFL players have this coverage.

“A lot of guys who need it are rookies,” Larcheveque said. “They don’t want to spend $20,000, $30,000 or $40,000 on insurance. It’s a big chunk of money on something that is a safety net.”

For some players, though, the benefits of playing football with a net can be huge. As Bleacher Report noted, former USC wide receiver Marqise Lee stands to collect $5 million on his insurance coverage because a knee injury resulted in his getting drafted in the second round of last week’s NFL draft, instead of the first as had been widely expected. Lee, who was picked by the Jacksonville Jaguars, had what is known as a “loss in value” rider in his policy that triggers a payout if an injury caused him to get a less valuable contract than expected. 

Lee’s USC teammate Morgan Breslin wasn’t so lucky. Experts had expected him to be drafted in the first round, but he wound up not being selected at all. He has signed with the San Francisco 49ers as an undrafted free agent,” but the odds of making the NFL are long for him, making his benefit perhaps his only payoff for his years of football,” Bleacher Report says.

Kurt Peterson of Peterson International Underwriters says that while disability coverage is uncommon in football, most players in the National Hockey League purchase it. NHL contacts are guaranteed only when players are hurt during a game. Players buy separate coverage to protect them when they are off the ice, Larcheveque said. 

Fewer baseball and basketball players bother to buy disability insurance because their contracts are guaranteed. They tend to purchase this coverage when their contracts are coming to an end in case an injury lowers their value in free agency. Top European soccer stars also purchase this type of insurance.

“You really need to be coached and sold on it,” Peterson said.

Last year, International Specialty Insurance underwrote policies for about 80 college football players, roughly one-third of which included loss in value riders. Peterson says his company provides coverage to a third of the NFL’s first-round draft picks.

The NFL does provide limited disability coverage that offers benefits of about $180,000 after taxes. That’s not enough to compensate an injured player for the wages they could have earned, according to Larcheveque. 

An NFL spokeswoman referred questions about player insurance to the NFL Players Association. Union spokesman Carl Francis told MoneyWatch that it doesn’t discourage players from buying the coverage. Player careers last an average of three and a half seasons and are often shortened by injury.

Amid the growing concern about health problems with current and former players, the NFL Players Association last year teamed with Harvard University for a $100 million study of 1,000 retired players. Earlier this year, a federal judge rejected a$765 million settlement between the NFL and former players over the health effects of concussions. Because of the dangers of head injuries, many parents are becoming increasingly reluctant to allow their children to play tackle football.

This article is a repost from CBS News and can be found here.

Amazon, Berkshire, JP Morgan to form new Health-Care Company

It’s no secret Jeff Bezos has been looking to crack health care. But no one expected him to pull in Warren Buffett and Jamie Dimon, too.

News Tuesday that Bezos’s Inc., Buffett’s Berkshire Hathaway Inc. and JPMorgan Chase & Co., led by Dimon, plan to join forces to change how health care is provided to their combined 1 million U.S. employees sent shock waves through the health-care industry.

The plan, while in early stages and focused solely on the three giants’ staff for now, seems almost certain to set its sights on disrupting the broader industry. It’s the first big move by Amazon in the sector after months of speculation that the internet behemoth might make an entry. The Amazon-Berkshire-JPMorgan collaboration will likely pressure profits for middlemen in the health-care supply chain.

Details were scant in a short joint statement on Tuesday. The three companies said they plan to set up a new independent company “that is free from profit-making incentives and constraints.”

Stocks Sink

It was enough to sink health-care stocks. Express Scripts Holding Co. and CVS Health Corp., which manage pharmacy benefits, slumped 9.7 percent and 5.7 percent, respectively. Health insurers such as Cigna Corp. and Anthem Inc. also dropped.

The group announced the news in the very early stages because it plans to hire a CEO and start partnering with other organizations, according to a person familiar with the matter. The effort would be focused internally first, and the companies would bring their data and bargaining power to bear on lowering health-care costs, the person said. Potential ways to bring down costs include providing more transparency over the prices for doctor visits and lab tests, as well as by enabling direct purchasing of some medical items, the person said.

“I’m in favor of anything that helps move the markets a bit, incentivizes competition and puts pressure on the big insurance carriers,” said Ashraf Shehata, a partner in KPMG LLP’s health care and life sciences advisory practice in the U.S. “An employer coalition can do a lot of things. You can encourage reimbursement models and provide incentives for the use of technology.”

“Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort,” Bezos said in the statement. “Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”

The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable costs. In the statement, JPMorgan CEO Dimon said the initiative could ultimately expand beyond the three companies.

“Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” he said.

High Costs

Health-care spending was estimated to account for about 18 percent of the U.S. economy last year, far more than in other developed nations. Despite efforts to curb costs, studies suggest that U.S. doctors and hospitals continue to provide too much health care. In a survey of physicians’ perspectives published last year in the journal PLOS One, the average estimate was that 20 percent of medical care was unneeded, including about a quarter of tests, a fifth of prescriptions and more than one in 10 medical procedures.

Amazon, Berkshire and JPMorgan are among the largest private employers in the U.S., with a more than 1 million workers combined. And they’re among the most valuable, with a combined market capitalization of $1.6 trillion, according to data compiled by Bloomberg.

This isn’t the first time big companies have teamed up in an effort to tackle health-care cost. International Business Machines Corp., Berkshire’s BNSF Railway and American Express Co. were among the founding members of the Health Transformation Alliance, which now includes about 40 big companies that want to transform health care. The group ultimately partnered with existing industry players including CVS and UnitedHealth Group Inc.’s OptumRx.

Todd Combs

The latest effort is being spearheaded by Todd Combs, who helps oversee investments at Berkshire; Marvelle Sullivan Berchtold, a managing director of JPMorgan; and Beth Galetti, a senior vice president for human resources at Amazon.

Buffett handpicked Combs in 2010 as one of his two key stockpickers. Combs, 47, has been taking on a larger role at Berkshire in recent years, and Buffett has said that Combs and Ted Weschler, who also helps oversee investments, will eventually manage the company’s whole portfolio. Combs also joined JPMorgan’s board in 2016.

Sullivan Berchtold joined JPMorgan in August after eight years at the Swiss pharmaceutical company Novartis AG, where she was most recently the global head of mergers and acquisitions, according to her LinkedIn profile.

The management team, location of the headquarters and other operational details will be announced later, the companies said.

Buffett has long bemoaned the cost of U.S. health care. Last year, he came out in favor of drastic changes in the U.S. health system, telling PBS NewsHour that government-run health care is probably the best approach and would bring down costs.

“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Buffett said in Tuesday’s statement. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”

This article is a repost from Bloomberg and can be found here.

New Earthquake Faults Discovered in Beverly Hills

New data from state geologists show that an earthquake fault runs below Rodeo Drive and Beverly Hills’ shopping district, heightening the known seismic risk in an area famous for Cartier, Gucci, Prada and other luxury brands.

The California Geological Survey’s final map has the Santa Monica fault zone cutting through the so-called Golden Triangle, running between Santa Monica and Wilshire boulevards.

Sources: California Geological Survey, Mapzen, OpenStreetMap Raoul Ranoa/@latimesgraphics

The new map is a change from a draft version released last year that showed the fault zone ending on the western edge of Beverly Hills, near the corner of Wilshire and Santa Monica boulevards. Based on more information, the state now says the fault zone extends a mile farther northeast, through Beverly Hills’ central district and into the city’s civic center area.

Faults runs through Westside

The Santa Monica is one of several faults running through highly populated areas of Southern California to generate interest and concern from seismic experts and government officials. The fault zone cuts through the heart of the Westside, straddling or paralleling Santa Monica Boulevard through Century City and Westwood before veering due west, with segments running into Brentwood, Santa Monica and Pacific Palisades.

It’s capable of producing a major magnitude 7 earthquake. Experts believe the most recent earthquake on the Santa Monica fault occurred 1,000 to 3,000 years ago.

Interactive map
Interactive map: See where the new fault zones are located LAT/CGS/Google Maps

Over the last few years, the state has stepped up drawing official so-called Alquist-Priolo Earthquake Fault Zones across California, a required first step before seismic safety laws can apply to areas.

Areas with fault zones face limits on development. Owners of properties in these zones are obligated to hire geologists to ensure that new buildings or major renovation projects aren’t located directly on an active fault line.

The Beverly Hills shopping district has some of the priciest retail real estate in the nation, but the area is already fairly developed out with a mix of shops and mid-rise office buildings. It’s unclear whether there are any major developments that haven’t yet been approved by local governments that are on the drawing board in the fault zone.

“We’re all afraid of earthquakes,” said Norbert Wabnig, who runs the Cheese Store of Beverly Hills. “To know that there’s [a fault line] close to us, that’s even scarier.”

Rodeo Drive
PHOTO: Pedestrians stroll along Rodeo Drive in Beverly Hills. Christopher Reynolds

Buildings directly on top of faults can suffer major damage and destruction, as one side of the building moves away from the other.

During both the 1971 Sylmar and 2014 Napa earthquakes, homes built atop a fault suffered major damage as their foundations were torn apart, while homes just a few hundred feet away suffered far less damage, said Tim Dawson, senior engineering geologist with the California Geological Survey.

Larger buildings straddling a fault could be more vulnerable and completely collapse, Dawson said.

“We don’t want to put essential facilities on top of active faults, such as fire stations, hospitals, schools,” he said.

Along Santa Monica Boulevard

The Santa Monica earthquake fault zone is generally 1,000 feet wide, and runs west of Beverly Hills for more than eight miles, with the zone running through the Westfield Century City mall and the Mormon temple.

Earthquake faults can change land in ways that made them appealing generations ago for developers who were unaware of the seismic risk.

It was past earthquakes that made Santa Monica Boulevard a perfect spot for a major roadway and the Red Car trolley line — a flat area just below a hillside, Dawson said.

Los Angeles Marathon
PHOTO: Los Angeles Marathon runners make their way along Rodeo Drive in Beverly Hills on March 15, 2015. Marcus Yam / Los Angeles Times

Prehistoric earthquakes threw up the north side of Santa Monica Boulevard, Dawson said, forming the dramatic hillside perch that the Mormon Temple now calls home and moving it west toward the ocean. The area to the south of the boulevard is getting relatively lower and has also been shifting to the east.

California law does not require existing buildings in the zones to be altered. But it prohibits new development on top of fault lines.

State scientists have various degrees of certainty about the fault’s location. Some drawn paths are considered accurate based on detailed geology investigations on specific plots of land to identify a fault. Other sections of the fault are considered approximately located.

Yet other parts of the fault’s path are inferred, in which geologists connect the dots between two points along the fault and “we see a fault at point A, and there’s good evidence there’s a fault at Point B,” Dawson said. “Faults are typically continuous features — they don’t typically stop.”

State officials said the part of the Santa Monica fault they now believe runs through Beverly Hills’ shopping district is considered inferred based off of a geology investigation done in preparation for the Metro subway and geology data east of the civic center.

Beverly Hills spokeswoman Therese Kosterman said the city is aware of the new Santa Monica fault map issued by the state. “The current map has significant revisions from the earlier draft map that the city had commented on and so we are currently in the process of evaluating the changes,” Kosterman said in an email.

More study over the coming years and decades will help improve maps of the fault. One research technique state geologists hope to pursue with the U.S. Geological Survey is to send waves of energy underground, such as through a hammer, and then see how they move through the earth. If a fault is there, the energy will move in a specific way, and studying it will help scientists better map the fault.

Faults change development

The threat of destruction on top of faults is such a risk that some agencies have taken steps to vacate or demolish buildings directly on top of them. San Bernardino Valley College demolished seven buildings along the San Jacinto fault in the 2000s; in 1991, Los Angeles Southwest College tore down two that sat on top of the Newport-Inglewood fault.

In the San Francisco Bay Area, officials in Hayward ordered its historic city hall vacated after the Hayward fault was slowly tearing it apart. Fremont demolished its city hall after geologists said it was on top of the same fault.

In areas that were developed after fault map studies were published, developers have avoided building on top of the fault, placing buildings away from fault lines while still building in the fault zone.

Developers in Signal Hill built homes carefully away from the Newport-Inglewood fault; parks and trails were instead placed where the fault could more safely split in two.

In Huntington Beach, after the discovery of a fault underneath the northern portion of the Seacliff Village shopping center, developers demolished the center and rebuilt it, placing a parking lot directly on top of the fault.

Sometimes, though, it can be impossible to transform a small plot of land bisected by a fault line into a new development.

The release of this fault map does not mean scientists are done. Geologists don’t know where the Santa Monica fault ends.

“It’s possible it connects up with the Hollywood fault, and that’s what we’d really like to answer,” Dawson said. The Hollywood fault runs along the Sunset Strip in West Hollywood and through the heart of downtown Hollywood.

Connections to other faults

The Santa Monica fault, along with offshore faults as well as the Hollywood fault and the Raymond fault, which extends east into Pasadena and the San Gabriel Valley, form a major tectonic boundary in Southern California between the Santa Monica Mountains to the north and the Los Angeles Basin to the south. It is possible that the Santa Monica, Hollywood and Raymond faults could rupture nearly simultaneously in the same earthquake.

If there’s one silver lining, it is that the Santa Monica fault and its cousins, the Hollywood and the Raymond, move far more slowly than California’s most famous fault, the San Andreas.

One side of the San Andreas is moving past the other at a rate of 25 to 34 millimeters a year, far faster than the Santa Monica-Hollywood-Raymond system, which is moving around 1 to 2 millimeters a year.

That means while the southern San Andreas fault is expected to have large earthquakes every 100 to 200 years or so, thousands of years could pass between large earthquakes on the Santa Monica fault.

This article is a repost from LA Times and can be found here.

How Much Auto Insurance Coverage Do I Need?

How Much Auto Insurance Coverage Do I Need?

An auto insurance policy can include several different kinds of coverage.
Your independent insurance agent will provide professional advice on the type and amount of car insurance coverage you should have to meet your individual needs and comply with the laws of your state. Here are the principal kinds of coverage that your policy may include:

Liability for Bodily Injury – The minimum coverage for bodily injury varies by state and may be as low as $10,000 per person or $20,000 per accident. Many auto policies stop at a maximum of $300,000 or $500,000 per accident for Liability coverage. If you injure someone with your car, you could be sued for a lot of money. The amount of Liability coverage you carry should be high enough to protect your assets in the event of an accident. Most experts recommend a limit of at least $100,000/$300,000, but that may not be enough. This is no place for cheap auto insurance. If you have a million-dollar house, you could lose it in a lawsuit if your insurance coverage is insufficient. You can get additional coverage with a Personal Umbrella or Personal Excess Liability policy. The greater the value of your assets, the more you stand to lose, so you need to buy liability insurance appropriate to the value of your assets.

Liability for Property Damage – The minimum that you must carry varies by state, but that minimum is not likely to be enough to protect you in a serious accident. With many cars costing upwards of $50,000, you could easily be responsible for a substantial repair bill if you hit someone’s car and it is totaled. If you have a Personal Umbrella policy, you will be covered for excess costs, but your insurance company may require that you carry more than the minimum to qualify for a Personal Umbrella policy.

Collision – Covers the cost of damage to your own car in an accident. You don’t have to figure out how much to buy – that depends on the vehicle(s) you insure. But you do need to decide whether to buy it and how large a deductible to take. The higher the deductible, the lower your premium will be. Deductibles generally range from $250 to $1,000. Collision coverage is important to have if a car is new and valuable, but less important as the value of the vehicle declines. If the car is only worth $1,000 and the deductible is $500, it may not make sense to buy collision coverage. Collision insurance is not generally required by state law.

Comprehensive – Covers the cost of miscellaneous damages to your car not caused by a collision, such as fire and theft. As with Collision coverage, you need to choose a deductible. The higher deductible you choose, the lower your premium will be. Comprehensive coverage is generally sold together with Collision, and the two are often referred to together as Physical Damage coverage. If the car is leased or financed, the leasing company or lender may require you to have Physical Damage coverage, even though the state law may not require it.

Medical Expenses – Covers the cost of medical care for you and your passengers in the event of an accident. The limit you choose under Medical Expenses coverage is the maximum that will be paid for medical claims to each driver. Therefore, if you choose a $2,000 Medical Expense Limit, each passenger will have up to $2,000 coverage for medical claims resulting from an accident in your vehicle.

Uninsured/Underinsured Motorist Coverage – If you are involved in an accident and the other driver is at fault but has too little or no insurance, this covers the gap between your costs and the other driver’s coverage, up to the limits of your coverage. In some states, this coverage is limited to bodily injury, while in others it may cover property damage, as well. The limits required and optional limits that may be available are set by state law.

Personal Injury Protection (“PIP” or “No-fault”) – This coverage, required by law in some states, covers your medical costs and those of your passengers, regardless of who was responsible for the accident. The limits required and optional limits that may be available are set by state law.

This article is a repost National General Insurance and can be found here.

Your one stop shop for all your insurance needs.