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The High — and Unexpected — Cost of Automation

Posted By staff reporter, Tuesday, January 29, 2019

Automation is the coming thing. The World Economic Forum said 1.4 million workers will lose their jobs due to automation in the next few years. Those employees will need to be “reskilled.”

The U.S. Bureau of Labor Statistics disagrees with that number and says the 1.4 million is just a fraction of the actual number that will be replaced. Those being displaced will need to find different occupations entirely. The forum’s report says 25% of that $34 billion will be covered by government so it will be up to business to handle most of the task.

And that leads to another aspect of the crisis. Some 252,000 of those who are displaced — or 18% — will not be able to economically reskilled.

That means government is going to have to step in with public assistance.

For insurance, automation does have some benefits. It can automatically handle claims processing and finance which means workers can concentrate on what is really important to insurance and that is customer interaction.



Source link: Axios



Tags:  The High — and Unexpected — Cost of Automation 

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Tax Reform & the Rubber Meets the Road — What to Expect Now?

Posted By staff reporter, Tuesday, January 29, 2019

The tax-filing season is officially here. Now what? We’re all still wondering how the so-called Trump tax reforms are going to shake out. Tax experts say the refunds — if you get one — will be larger than usual and the payout — if you must pay — will be less.

A story written by The Wall Street Journal and published on MSN — upon which this is based — gives definition to taxes and how the reforms work. Tax cuts and tax refunds are two different things. The cut is what people owed for 2018 compared to what they would have owed had the cuts not been made.

And — as you know — refunds come from the excess you paid in withholding and from deductions.

David Williams of TurboTax said the definitions are important to deciding just how well the reforms will work for you. “The real question that we can’t answer today is: What will their refunds look like vis a vis last year?” he said.

He points out two-thirds of us have already received our tax cuts by paying less in individual income taxes than we did in 2017. So a huge percentage of the $180 billion in cuts for 2018 have already happened. His estimate is an average household gain of $420.

Tax breaks like moving expenses, employee costs that are unreimbursed and state and local taxes were eliminated.

However, the Tax Policy Center said the personal exemption rose to over $4,000 and there are larger standard deductions and tax credits for child care. Tax rates for individuals dropped. Rates also fell for closely-held businesses, or those with a limited number of shareholders.

It estimates that 65% of U.S. households will get tax cuts averaging $2,180. On the reverse, 6% of us will see a tax increase of $2,760.

How we view the changes — says Mark Steber of Jackson Hewitt Tax Services — is very important. You won’t notice the changes if you compare the 2018 refund from 2017 taxes to the 2018 return. “We worry very much that there will be a perception that ‘My refund went down, I’m in a worse economic position,’” he said. “When, in fact, the reality could be the opposite.”

Business in the U.S. is hoping the cuts will stimulate spending.

That may happen. But what also may happen — says the IRS — is more people than usual will end up owing taxes. That’s because they didn’t withhold enough. Or they used to itemize deductions but now don’t.

This worries the Senate Finance Committee’s Ranking Member, Sen. Ron Wyden of Oregon. He said, “It seems unavoidable that millions of taxpayers who are expecting critical tax refunds will instead owe taxes.”

The IRS has always implemented penalties on people who underpay on their taxes. Those who have paid at least 85% of their 2018 taxes won’t face penalties. That’s down from 90%.

The Trump administration said it tried to write rules so refund patterns don’t change much. Last year 73% of us got refunds and the average refund was $2,899. However, with the tax tables


Source link: MSN Money

Tags:  Tax Reform & the Rubber Meets the Road — What to E 

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Gasoline Prices — The Nation’s Most Expensive are in the West

Posted By staff reporter, Tuesday, January 29, 2019



When it comes to the cost of a gallon of gasoline, AAA says seven PIA Western Alliance states are in the top-10 most expensive states. And number 11 is the PIA Western Alliance state of Montana.

A lot of things drive the price of fuel. The price of crude oil — obviously. Taxes on that fuel, too. Weather and delivery problems. Gasoline station owners have a say in the price, too.

So what do we learn about the price of gasoline from this information? It’s much more expensive to drive in the Western states than other places in the nation.


You Going?



The highest prices in the nation (the PIA Western Alliance states are in bold):

1. Hawaii

Regular — $3.69

Mid-Grade — $3.84

Premium — $3.98

Diesel — $4.23


2. California

Regular — $3.56

Mid-Grade — $3.71

Premium — $3.82

Diesel — $4.00


3. Washington

Regular — $3.32

Mid-Grade — $3.52

Premium — $3.65

Diesel — $3.50


4. Alaska

Regular — $3.25

Mid-Grade — $3.37

Premium — $3.47

Diesel — $3.31


5. Nevada

Regular — $3.16

Mid-Grade — $3.35

Premium — $3.50

Diesel — $3.40


6. Oregon

Regular — $3.14

Mid-Grade — $3.34

Premium — $3.50

Diesel — $3.35


7. Idaho

Regular — $2.94

Mid-Grade — $3.10

Premium — $3.27

Diesel — $3.40


8. Utah

9. Wyoming


10. Arizona

Regular — $2.82

Mid-Grade — $3.04

Premium — $3.25

Diesel — $3.23


The other PIA Western Alliance States:


11. Montana

Regular — $2.80

Mid-Grade — $3.03

Premium — $3.29

Diesel — $3.26


26. New Mexico

Regular — $2.45

Mid-Grade — $2.70

Premium — $2.93

Diesel — $3.10


The lowest priced gas prices in the nation. Most are in the South or the deep South.


51. Missouri

Regular — $2.11

Mid-Grade — $2.37

Premium — $2.63

Diesel — $2.92


50. South Carolina

49. Oklahoma

48. Texas

47. Ohio

46. Mississippi

45. Louisiana

44. Kentucky

43. Alabama

42. Delaware


Source link: MSN

Tags:  gas prices 

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Around the PIA Western Alliance States

Posted By staff reporter, Tuesday, January 29, 2019



Montecito Mudslides: Edison International says poorly designed and maintained debris basins are the reasons for the deadly mudslides that hit Montecito last year.

Over 20 people died. Damages to property is estimated at between $177 million and $204 million. The mudslides happened on January 18, 2018 when the first heavy rain of the season hit the top of the mountain above the city and loosed tons of mud and boulders onto the city.

Edison International has been sued for causing the mudslides because its equipment may have been responsible for the fire at the top of the mountain. The company — and its subsidiary Southern California Edison — countersued and blamed the city, the county and its inadequate infrastructure, and how that infrastructure was maintained.

In its complaint, Edison said, “With this cross-complaint we seek to ensure that there is a comprehensive review of the role many parties may have played in the large and tragic losses suffered by the community during the Montecito mudslides,” the company said. “It is well known that the Montecito area has always been at high risk for mudslides and debris flows. We believe that city, county and state governments, including flood control, water and transportation agencies, failed to ensure that Montecito’s infrastructure was adequate to reduce the impact of such natural disasters.”


Source link: Insurance Journal



Medicare Workshops to be Offered in Bonners Ferry: A series of three (3) free Medicare Workshop for individuals turning 65 and those approaching Medicare eligibility will be held Friday, February 1 at the Fry Healthcare Education Center, located across from the main hospital building of the Boundary Community Hospital, 6640 Kaniksu St., in Bonners Ferry.  Workshops will be held at 2:30, 4:30 and 6 p.m.

Caregivers and all those interested in learning how Medicare works are encouraged to attend.

The workshop will be led by Senior Health Insurance Benefits Advisors (SHIBA), a unit of the Idaho Department of Insurance.  SHIBA presenters will introduce the various parts of Medicare and explain some of the vocabulary associated with the program. 

Topics to be covered include:

  Timeframes for enrolling in Medicare

  Enrollment periods for Medigap, Medicare Advantage and Prescription Drug Plans

  How the different parts of Medicare work together — and when they don’t

To register for the workshop, please contact the SHIBA office at 1-800-247-4422.



Wildfire Mitigation Plan: Public Lands Commissioner Hilary Franz has unveiled a 10-year, $55 billion wildfire control plan and given it to the Legislature. The plan will add 30-full time and 40 seasonal firefighters to the Department of Natural Resources. It also adds two helicopters to the firefighting air fleet.

A wildfire training academy that can be used by other agencies will also be set up.

Source link: Claims Journal


Commissioner’s Legislative Priority

Click here for Washington Insurance Commissioner Mike Kreidler’s legislative priorities.

Actions by the Commissioner

Insurance Commissioner Mike Kreidler issued fines in December 2018 totaling $192,050 against insurance companies, agents and brokers who violated state insurance regulations.

Insurance companies

Accordia Life and Annuity Co., Des Moines, Iowa; fined $130,000, order 18-0250

Kreidler received 57 complaints about the company in 2016 and 2017 and started an investigation into its practices. The law violations included:

 Failure to maintain full and adequate records of more than 8,600 customer accounts.

Underpaid interest on the death benefit of a policy and failed to correct the problem until the consumer complained to Kreidler’s office. State law requires that insurance companies pay 8 percent interest.

Failed to provide annual statements to 21 consumers.

State Farm Life Insurance Co., fined $10,000, order 18-0410

The company failed to pay the correct amount of interest on death benefits to 1,251 Washington consumers. State law requires that insurance companies pay 8 percent interest.

Kreidler fined the following companies for violating Washington state insurance regulations:

    GPM Health and Life Insurance Co., Spokane, Wash.; fined $2,000, order 18-0468

    Monterey Insurance Co., Monterey, Calif.; fined $30,000, order 18-0490

    American Automobile Insurance Co., Earth City, Mo..; fined $10,000, order 18-0494

    Unified Life Insurance Co., Dallas; fined $4,500, order 18-0529


Agents and brokers

Kreidler revoked the licenses of the following insurance producers:

  Romaine Smith, Prosser, Wash.; license revoked, order 18-0146

  Francisca Yadira Rios, Pasco, Wash.; license revoked, order 18-0507

  Jacqueline Cone, Washougal, Wash.; license revoked, order 18-0515

  Jodi S. Campbell, Lonoke, Ark.; license revoked, order 18-0475

  Gary M. Enciso, Long Beach, Calif.; license revoked, order 18-0476

  Rachel Glover, Collins, Iowa; license revoked, order 18-0477

  Drucilla Clorene Wilson, Las Vegas; license revoked, order 18-0479

  Paul B. Wells, Las Vegas, license revoked, order 18-0498

  Deandre Maze-Carter, Phoenix; license revoked, order 18-0499

  American Underwriting Services LLC, Kennesaw, Ga.; license revoked, order 18-0503

  Romeo Evan Fulton, North Riverside, Ill.; license suspended, order 18-0504

  James Luis Vasquez, Bothell, Wash.; revocation rescinded, license surrendered, order 18-0480


Kreidler fined the following insurance producers for violating state laws:

  David M. Connolly and David Connolly Insurance Agency, Silverdale, Wash.; fined $500, order 18-0355

  Ryan M. Focht, Pullman, Wash.; fined $500, order 18-0482

  Alina Frenkel, Bellevue, Wash.; fined $500, order 18-0483

  Robert L. Johnston, Spokane, Wash.; fined $500, order 18-0491

  Paul F. Dent and Griffin Mac Lean, Inc., Bellevue, Wash.; fined $1,000, order 18-0488

  John C. Haskell, Jr., Mill Creek, Wash.; fined $250, order 18-0397

  Xandrea Powell, Suwanee, Ga.; fined $250, order 18-0395

  Terran Watters-Fletcher, Lawrencville, Ga.; fined $250, order 18-0401

  Benchmark Administrators LLC, Wayzata, Minn.; fined $250, order 18-0429

  Lawrence M. Koresko, Collegeville, Penn.; fined $250, order 18-0436

  George Lewis Kengle, Springfield, Ore.; fined $250, order 18-0478

  Thomas A. Dus, Elyria, Ohio; fiend $500, order 18-0506


Continuing education providers

  Risk & Insurance Managers Society of Washington, Seattle; fined $800, order 18-0513





Source link: Washington Department of Insurance

Tags:  Around the PIA Western Alliance States  insurance content  insurance news  Weekly Industry News 

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New Rule Could Boost Private Flood

Posted By staff reporter, Tuesday, January 29, 2019


The new rule requires mortgage lenders to accept private flood insurance as an alternative to insurance backed by the federal government.

A new federal rule being finalized could increase the number of flood insurance policies underwritten by private companies.

Private flood insurance now accounts for less than 5 percent of the residential market, and most private flood insurance policies cover commercial properties or residential properties that need coverage above the $250,000 limit on National Flood Insurance Program (NFIP) policies.

Treasury and the FDIC have already indicated their approval of the rule. If it is additionally approved by the Federal Reserve, the Farm Credit Administration, and the NCUA, the final rule will become effective on July 1, 2019.

The promulgation of the rule is required by a provision in the Biggert-Waters Act of 2012, which reauthorized and reformed the NFIP.

PIA National thanks these agencies for their years of hard work on the complex issue of private flood insurance and will continue to support efforts to increase the choices available to flood insurance consumers. PIA National also supports the long-term reauthorization of the NFIP by Congress, because the private flood market presently lacks the capacity and availability to fully supplant it.

The uptake of private flood insurance in the United States continues to be low due to such factors as lack of risk models, low consumer demand, high private premiums, and the availability of relatively inexpensive government-sponsored insurance.

During Hurricanes Harvey and Sandy, less than 20 percent of the houses that were flooded had flood insurance, highlighting the protection gap for the flood peril, says Risk Management Solutions' (RMS') Robert Muir-Wood.

The National Association of Insurance Commissioners (NAIC) has found that half of U.S. flood losses occur outside the designated high-risk areas, and a Lloyd's of London report found only 1 percent of properties outside of the defined flood zones have flood insurance.


Tags:  Hartford flood program  New Rule Could Boost Private Flood 

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Around the PIA Western Alliance States

Posted By staff reporter, Tuesday, January 22, 2019


Lara & Federal Shutdown: Insurance Commissioner Ricardo Lara strongly urges that insurance companies assist Californians who are affected by the Federal Government shutdown and may face delays in paying premiums or cancellation of policies. The Commissioner is asking insurers to be patient and work with these California residents during this difficult time.

 “The Federal shutdown is putting Californians at unnecessary risk of losing insurance coverage over late or unpaid bills,” said Commissioner Lara. “I am asking insurers to partner with me to protect our federal workers and contractors in California to give them some peace of mind during this time of uncertainty.”

The partial shutdown of the Federal Government is negatively affecting many California consumers, specifically those employed by the Federal Government and contractors who are not being paid their regular salary or receiving reimbursements when normally due. This delay in payment affects these consumers’ ability to pay their bills on time including insurance coverage, mortgages or other loans.

Commissioner Lara asks insurers to take into consideration the difficulties California consumers are facing and will continue to face until the current shutdown has ended. He urges insurers to relax due dates for premium payments, extend grace periods, waive late fees and penalties, allow forbearance with regard to the cancellation/non-renewal of policies, allow payment plans for premium payments, and exercise judicious efforts to assist affected policyholders and work with them to make sure that their insurance policies do not lapse.

Source link: California Department of Insurance


Medicare Workshops: Free Medicare Workshops for individuals turning 65 and those approaching Medicare eligibility have been scheduled in two Idaho cities.

The first is Thursday, January 24 from 2:30 p.m. to 4 p.m. at the Syringa Hospital Soltman Center, 600 W. Main St., Grangeville, Idaho. 

The second is Monday, January 28, from 6 p.m. to 7:30 p.m. at the St. Joseph’s Regional Medical Center, 415 6th St., Lewiston, Idaho.

Caregivers and all those interested in learning how Medicare works are encouraged to attend.

 The workshop will be led by Senior Health Insurance Benefits Advisors (SHIBA), a unit of the Idaho Department of Insurance. SHIBA presenters will introduce the various parts of Medicare and explain some of the vocabulary associated with the program. 

Topics to be covered include:

• Timeframes for enrolling in Medicare

• Enrollment periods for Medigap, Medicare Advantage and Prescription Drug Plans

• How the different parts of Medicare work together – and when they don’t

 To register for the workshops, please contact the SHIBA office at 1-800-247-4422.


Highway Fatalities: the Department of Public Safety is worried. Nevada’s highway fatalities rose to a 10-year high. The department said 331 people died 2018 in 301 crashes.

Department spokesman Andrew Bennett said most of them were in Clark County. “In 2008 we were at 324, then we dropped to the mid 200s from about 2009 to 2013 and we then we saw a steady climb into the 300s in 2014,” he said. “So, 331 is on the high end in the last decade, but we have seen a 4 percent population growth over the past two years in the state as well.”

Pedestrian deaths in Nevada dropped from 98 in 2017 o 80 last year. Bennett said it is the first decrease in nine years.

Source link: Insurance Journal


The Commissioner’s 2019 legislative priorities: Surprise billing (HB 1065 and SB 5031 "Protecting consumers from charges for out-of-network health care services")

This legislation will stop patients from getting an additional bill, after the patient’s health plan has paid the normal rate and the patient has paid their portion (such as a co-pay) when they receive medical care for an emergency at an out-of-network emergency room and when they have an approved surgery at an in-network hospital or surgery center but receive services, such as anesthesiology, radiology or lab services, from a provider who is out-of-network.

The prime sponsor of HB 1065 is Rep. Cody. The prime sponsor of SB 5031 is Sen. Rolfes.

HB complete bill language (leg.wa.gov) (PDF, 181.46 KB)

   HB bill history (leg.wa.gov)

   HB Status: Public Hearing, January 23, 2019, 1:30pm

   SB complete bill language (leg.wa.gov) (PDF, 176.78 KB)

   SB bill history (leg.wa.gov)

   SB Status: Referred to Health & Long Term Care Committee

Disaster resilience working group (HB 1040 and SB 5106 "Concerning the creation of a work group to study and make recommendations on natural disaster mitigation and resiliency activities")

This legislation will create a work group composed of legislators, state agencies, insurance companies and other key stakeholders to review and make recommendations on how to best coordinate and improve disaster resiliency work in Washington State, including possibly creating a central place for coordination and planning.

The prime sponsor of HB 1040 is Rep. Reeves. The prime sponsor of SB 5106 is Sen. Das.

  HB complete bill language (PDF, 68.24 KB)

   HB bill history (leg.wa.gov)

   HB Status: Public Hearing, January 16, 2019, 8:00am/Executive Session, January 22, 2019, 10:00am/Executive Session, January 23, 2019, 8:00am

   SB complete bill language (leg.wa.gov)

   SB bill history (leg.wa.gov)

   SB Status: Public Hearing, January 15, 2019, 8:00am/Executive Action, January 17, 2019, 8:30am

Medicare access and CHIP Reauthorization Act of 2015 (MACRA) (SB 5032 "Concerning Medicare supplemental insurance policies")

This legislation will align Washington law with recent changes in the Medicare and Children’s Health Insurance Program (CHIP) statutes, which seek to prevent overutilization of services. Washington must have these changes in place by January 1, 2020. The two key changes are:

As of January 1, 2020, new enrollees will no longer be able to purchase a Medicare Supplement Plan which provides coverage for the Part B deductible. This does not impact existing enrollees.

Allow but not require companies to offer a new Plan G with a High Deductible option. Currently, only Plan F has an additional High Deductible option.

The prime sponsor of SB 5032 is Sen. Cleveland.

   SB complete bill language (leg.wa.gov) (PDF, 86.39 KB)

   SB bill history (leg.wa.gov)

   SB Status: Public Hearing, January 18, 2019, 8:00am

Criminal Investigations Unit (CIU) Separate Funding (HB 1069 "Concerning the creation of the insurance fraud surcharge account")

This legislation will create a dedicated funding stream for the Office of the Insurance Commissioner’s (OIC) Criminal Investigation Unit (CIU), who are charged with investigating and preventing insurance fraud. The legislation will also increase that funding to allow CIU to keep up with the increasing amount of fraud referrals by adding five new staff. The funding will be provided by dedicating a portion of the premium surcharge already collected by the OIC for CIU’s exclusive use.

The prime sponsor of HB 1069 is Rep. Stanford

   HB complete bill language (leg.wa.gov) (PDF, 82.11 KB)

   HB bill history (leg.wa.gov)

   HB Status: Public Hearing, January 16, 2019, 1:30pm/Executive Session, January 18, 2019, 9:00am

Source link: Washington Department of Insurance

Kreidler and Innovators: Washington Insurance Commissioner Mike Kreidler is offering innovators in the insurance industry a new way to engage his office about potential products that may benefit consumers.

Kreidler announced an insurance innovation portal, Resources for insurance industry innovators.

Click here to access the portal that includes guidelines, a hotline and web form. This is designed to encourage companies, agents and insurance startups to contact his office early in the development of new products.

Kreidler noted that changing social and technological trends have created an opportunity for insurance entrepreneurs. 

“The insurance industry is constantly evolving and we want to make sure innovators understand the laws that guide insurance regulation in Washington,” Kreidler said. “We are eager to work with innovators as they prepare to bring products to market. We’re committed to fair and efficient regulation.”

The Office of the Insurance Commissioner regulates Washington’s $42 billion insurance industry. For more information, please visit www.insurance.wa.gov

Source link: Washington Department of Insurance

Tags:  Around the PIA Western Alliance States  insurance content  insurance industry 

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PIA Western Alliance Renames Annual Golf Tournament

Posted By staff reporter, Tuesday, January 22, 2019

See You in Salishan!

More information about this tournament can be found here.


Tags:  Dave Iwata Annual Golf Tournament  Salishan OR 

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See U in Salishan for the insurance industry event of the year!

Posted By staff reporter, Tuesday, January 22, 2019



Be here for the insurance industry event of the year!





The Professional Insurance Agents of Oregon/Idaho surveyed our members and found they are ready for us to host a full 3 day convention and we are thrilled to do so!

We will kick off our new program at the beautifully restored Salishan Lodge, Gleneden Beach,  located just a few miles south of Lincoln City on the beautiful Oregon Coast.

We'll make it worth your while with great networking, Golf, fantastic education and information and the best trade show of it's kind showcasing the latest in products and services.

We look forward to seeing YOU!



Tags:  2019 Oregon Idaho PIA Conference and Tradeshow  PIA Oregon Idaho 

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Update: Washington State’s Onerous Proposed 9% Capital Gains Tax

Posted By staff reporter, Tuesday, January 22, 2019

Washington Governor Jay Inslee has submitted the state’s next budget. Out of the budget proposal has come a bill that hugely impacts small business. The first — and most onerous — is a 9% capital gains tax on the sale of a business by a small business owner. The second is an increase in the B&O tax of 66%.

The bill is Senate Bill 5129.

The second part of the bill — so far — does not impact the independent insurance agent members of PIA Washington/Alaska. The sale of insurance is exempt. It is an increase for service industry businesses like attorneys, accountants, architects, etc.

The first part of SB 5129, however, will impact the association’s hard working entrepreneurs.

Last week the Senate Ways and Means Committee held a hearing on the tax. After hearing testimony — including that of former PIA Washington/Alaska President Dick Fournier and others in the insurance industry— it is predicted that the committee will send the bill onto the full Senate.

At that point, the PIA Washington will send out a call to action to oppose and will ask you to contact the governor and local legislators.

In his testimony, Fourier noted — like others in opposition — that hundreds of small businesses will be impacted. He said, “For many of us decades of work began small. We worked nights and on weekends, and sometimes seven days a week. Our client lists often came from a phone book and we reached them via telephone. As the business grew the plan was to eventually sell and use the profit of that sale for retirement.”

None of us — he pointed out — counted on losing 9% of that profit to this unfair tax. That 9% he said, “will have to be passed onto the buyer.”

He concluded by telling the committee that business owners — especially those of small business insurance agencies — work very hard for small commissions.

These agents, he said, “are among the hardest working people in the state. This is a top-heavy tax that is not fair and that will reduce the value of the business built by hard-working entrepreneurs.”

In an interview with Weekly Industry News, PIA Washington Lobbyist Mel Sorensen said, “For many, they have spent their entire professional careers building their businesses. The value in their business is frequently what they plan to rely on for their retirements. It’s simply damaging to expose them to a new 9% capital gains tax. For these reasons, we oppose the Governor's proposal to enact a new 9% tax on Capital Gains in Washington State.”

Testifying with Fournier was National Association of Insurance and Financial Advisors (NAIFA) spokesman Wayne Lunday.“That’s my retirement,” he said. “That’s the retirement of all the NAIFA members that are out there building those small agencies and small businesses. And it’s going to devastate them if they have to write a check for 9% of what their business is worth to the governor.”

The bill does have exemptions from the tax:

  The sale of a residence

  Property used in a trade or business

  Cattle livestock

  Timber and agricultural lands

  Traditional retirement accounts


The tax would tax long-term gains over $25,000 for a single filer and at $50,000 for joint filers. If passed, it starts in 2020.


Sources: Weekly Industry News, Whidbey News Times



Tags:  Update: Washington State’s Onerous Proposed 9% Cap 

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The Impact of PG&E’s Bankruptcy

Posted By staff reporter, Tuesday, January 22, 2019


Pacific Gas & Electric (PG&E) is going to declare Chapter 11 bankruptcy. The deed will be done before the end of January. The company has been blamed for a bunch of California wildfires — fires that killed dozens of people and burned down thousands of homes and other buildings.

Federal Judge William Alsup — who is adjudicating another PG&E disaster, 2010’s San Bruno natural gas pipeline explosion — says he’s “tentatively” concluded uninsulated power conductors caused the Camp Fire that destroyed most of Paradise in early November of last year.

“The single most recurring cause of the large 2017 and 2018 wildfires attributable to PG&E’s equipment has been the susceptibility of PG&E’s distribution lines to trees or limbs falling onto them during high-wind events,” the judge wrote. “This has most often occurred in rural areas where distribution lines use thirty-five to fifty-foot single poles and run through grass, brush, oak and pines. The power conductors are almost always uninsulated. When the conductors are pushed together by falling trees or limbs, electrical sparks drop into the vegetation below.”

Between the Camp Fire, and other fires and disasters the company is responsible for causing, it will end up owing $30 billion or more. Even though now allowed to pass those losses onto ratepayers, there just isn’t enough money available to pay all the claims.

So the new worry of the victims of those fires is whether PG&E will have enough cash to be able to pay claims.

PG&E’s Andy Castagnola said the company is “open to discussions with individual plaintiffs and their counsel to better understand their views about their cases and to make the best effort to identify a possible settlement range.”

However, once the Chapter 11 filing is made creditors can no longer go after the company for what they are owed and all lawsuits will likely be put on hold. In other words, the line for what crumbs PG&E has left will be quite long.

One option the company has discussed is to separate the natural gas operation from that providing electricity and then use the cash from that sale to pay the bills and take care of the lawsuits.

But that decision will be made down the road.

Some experts say what PG&E is doing and actually hoping to accomplish is to get out from under a law known as inverse condemnation. That means the company is responsible for all damage caused by its equipment even if it — in good faith — has done required maintenance and it is acts of God that caused the fires, or gas explosions or whatever.

Only the Legislature can change that law. The previous one refused — in spite of efforts by Governor Jerry Brown — to make that change.

That said, newly installed Governor Gavin Newsom and the new Legislature will have to figure out what to do next. It cannot — since power is required in the state’s Northern areas — let the company simply go away. Or does the state move from private owned utilities to those run by government?

The governor has said all options are on the table.

The biggest question — at this point — is whether the company will still provide power and how that will look. Spokesman Steve Malnight said “Employees are going to continue doing their job, and continue to get paid. Our most important responsibility is the safety of our customers and the communities we serve, and nothing that we are announcing today will impact that commitment.”


Source links: The Sacramento Bee — link 1, link 2, Insurance Business America, Insurance Journal


Tags:  The Impact of PG&E’s Bankruptcy 

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