Volume 5 Number 51-52 December 19, 2008
One of the many gifts of being a Floridian is the diversity of our cultures and the holiday celebrations that unite us in expressions of gratitude and good will. This time of year, we should count our blessings and remember how fortunate we are to live in this beautiful state.
I am thankful for another year of service as your Chief Financial Officer and for the dedication and commitment to public service demonstrated by the employees in the Department of Financial Services. Our work is never finished, and we pledge to continue to do our part to help protect and safeguard Floridians and their assets every day.
Now that it is well into December, many of you have likely prepared for family gatherings by trimming trees, wrapping gifts and exchanging cards with friends and loved ones. I encourage you to remember your fellow Floridians whose good fortune may not mirror your own during this special time. The opportunities to reach out and make this a happy holiday for all abound.
Let us also remember the men and women in the United States armed forces who will not be home with their families for the holidays because they have committed their lives to defending the gift of freedom. I hope you will join me in keeping them in your hearts and thoughts as you spend time with your family and friends.
We also want to keep in mind our new leaders who are preparing to assume roles in a new administration in Washington.
On Wednesday Chief Financial Officer and State Fire Marshal Alex Sink joined Tallahassee City Fire Marshal Chief John Gatlin and local firefighters from the Tallahassee Fire Department to provide holiday fire safety tips to Floridians. Every year, fires occurring during the holiday season claim the lives of over 400 Americans, injure 1,600 more, and cause over $990 million in damage.
“Florida is such a wonderful place for friends and family to visit during the holidays, but it’s also important amidst the excitement to take extra precautions this time of year,” said State Fire Marshal Sink. “All it takes is something very quick, like a candle left unattended or a turkey-frying novice, to turn a holiday tradition into a potential fire hazard.”
The most important tips State Fire Marshal Sink urges are:
State Fire Marshal Sink also encourages Floridians to visit her website, www.MyFloridaCFO.com, for additional fire safety tips and information from the Division of the State Fire Marshal.
“I am encouraged the Florida Legislature recognized that our state needs immediate, fiscally responsible action in Tallahassee to make ends meet. I hope that the Legislature will work together to identify ways to reduce expenditures and balance the budget with a long-term, sustainable vision for Florida’s future.”
Wayne Johnson has been promoted to Director of the Division of Rehab and Liquidation. He worked as the Assistant Director of the division since 2001, and as the Interim Division Director since August.
“I am thrilled about the position,” said Johnson. “I think the division does a lot of great work for the state of Florida, and I’m honored to have this opportunity.”
As director, Johnson will oversee 118 employees in their efforts to marshal assets and pay claims of insurers ordered into receivership in Florida. In addition to receivership staff, Johnson indirectly supervises 30 legal, accounting, reinsurance and claims vendors that assist the receiver. He is responsible for the administration of a $1 million state budget and oversight of approximately $250 million of receivership assets.
Johnson worked previously in positions with the Department of Insurance and Department of Financial Services. He began his employment with the Department of Insurance as an Examiner and was then promoted to Financial Administrator with the Bureau of Property and Casualty Insurer Solvency in 1992. In 1994, Johnson became the Bureau Chief and was responsible for the solvency regulation of all property and casualty insurers doing business in Florida. He is a Certified Financial Examiner and graduate of Florida State University.
Department of Financial Services lawyer and Tallahassee native Bill Tharpe recorded the fastest time of all sprinters in the 100-meter dash at the 17th annual Florida Senior Games State Championships. He ran a 12.79 to set a new record in the 60-64 age group. His gold medal-winning time of 27.32 in the 200 meter was .001 of a second shy of the record in his age group. Tharpe, a graduate of Leon High in the mid 1960s, began running competitively six years ago.
The competition was held in South Fort Myers High School in Lee County. More than 2,000 athletes competed in 23 sports in the Olympic-style sports festival for athletes age 50 and over. The 2008 Florida Senior Games State Championships was a qualifier for the 2009 National Senior Games, to be held in August in the San Francisco area.
The Florida Senior Games State Championships is a program of the Florida Sports Foundation, the official sports promotion and development organization of the State of Florida, held in conjunction with the Lee County Sports Authority and Lee County Parks and Recreation Department. Qualifiers for the 2009 Florida Senior Games State Championships begin in January 2009. See complete results at www.flasports.com.
Recently an investment scam was uncovered in the investment capital of the world - Wall Street. A respected investment manager allegedly ran a giant Ponzi scheme with a possible loss of $50 billion. Unfortunately many investors put most or all of their funds in this one plan. One of the wisest rules of investing is to spread the risk.
Bernard Madoff ran a vast options game made popular by inviting investors into the fold. Anxious for an invitation to join, investors entrusted their money to Madoff. A part-time resident of Palm Beach, Madoff convinced many neighbors, friends and acquaintances to invest in his funds. This type of affinity fraud grows from the natural trust among friends and relatives.
Never make an investment based solely on the recommendation of a member of an organization or religious or ethnic group to which you belong. Remember that the person telling you about the investment may have been fooled into believing it is legitimate. Before considering an investment, independently verify any offer by calling the Department of Financial Services Consumer Helpline toll-free at 1-877-MY-FL-CFO (1-877-693-5236) to find out if the company, broker and investment are legitimately registered, and if there is a complaint history.
Watch out for an investment manager who wants total control of your money, and asks for checks to be made out to the manager individually or to a company he/she controls. Your funds are safest when held separately, in custody at a broker-dealer firm regulated by the Financial Industry Regulatory Authority (FINRA) and backed by the Securities Investor Protection Corporation. Contact the firm directly to make sure your money is with them, and check it out through FINRA. Get copies of your statements directly from the broker-dealer firm. A broker who guarantees or assures investment performance, brags of great returns or is very aggressive or overly persuasive should alarm you. And check any investment record that looks too steady over the long term: Ponzis like to keep it looking steady to avoid redemptions.
If an investment seems too good to be true, then it probably is. Similarly, be wary of any investment that is said to have no risks. The greater the potential return from an investment, the greater your risk of losing money.
Scam artists frequently pay out high returns to early investors using money from later arrivals. Accordingly, early investors — including friends you’ve known for years — may be wildly enthusiastic about a scheme that may collapse entirely once you’ve invested.
Everyone wants the perfect investment, offering high returns with little or
no risk. The problem is, no legitimate investment is like that. High returns
involve high risk, which means you could lose some or all of the money you
invest. Investment frauds target those who don’t understand this basic rule of
investing. Many are nothing more than illegal Ponzi schemes, in which early
investors are paid with money collected from later ones. Don’t risk losing your
Florida Chief Financial Officer Alex Sink announced this week that a Boynton Beach woman who pleaded guilty to misappropriating $194,000 worth of insurance premiums has been sentenced to 10 years in prison.
Kelley Ann Killelea, 27, was found guilty on December 12 of stealing money from the Gary P. Lawrence Nationwide Insurance Agency in Lake Worth when she worked there as a customer service representative. The investigation was conducted by detectives with the Department of Financial Services, Division of Insurance Fraud (DIF). Circuit Court Judge Jorge LaBarga handed down the sentence; charges were prosecuted by the Palm Beach State Attorney’s Office.
“I commend the investigators and prosecutor for holding this woman accountable for her actions,” said CFO Sink, who oversees the department and its two law enforcement agencies. “Her criminal behavior put Floridians at risk of not having the coverage they paid for and needed.” During the last fiscal year ending June 30, 2008, DIF investigators made more than 800 arrests.
A detailed examination of the Lawrence Agency’s Washington Mutual Bank records by the Division of Insurance Fraud uncovered that Killelea misappropriated the funds from 77 insurance premium payments over an 18-month period. The stolen homeowners and automobile insurance premiums were intended for Citizens and Nationwide Insurance.
In addition to ten years imprisonment, Killelea is sentenced to 20 years probation and was ordered to pay $194,000 in restitution to Citizens and Nationwide Insurance. Killelea paid $20,000 restitution to Citizens Insurance at the time of the sentencing and is ordered to make monthly payments of $700 payable over the 20-year term of probation.
Insurance fraud in Florida has been estimated to cost Floridians as much as $1,400 a year per person. The DIF investigates various forms of fraud in insurance, including health, life, auto, property and workers' compensation insurance. Depending on the estimated loss amount, the department will pay up to $25,000 for information directly leading to an arrest and conviction. Anyone with information about this or any other suspected insurance fraud is asked to call the department's Fraud Fighters Hotline at 1-800-378-0445 or log on to www.MyFloridaCFO.com/fraud. Complaints can be tracked online.
As the economic downturn continues, more people are losing their homes to either foreclosure or financially motivated downsizing. In fact, foreclosure filings increased by five percent in October, a 25 percent increase from October 2007.
As homeowners, most people carry a mortgage and, therefore, have no choice but to purchase homeowners insurance as a requirement of their loan. But, for renters, the choice is their own — and many people facing financial uncertainty might choose to go without renter’s insurance, even though they have most of the same risks as homeowners when it comes to protecting possessions or being liable for accidents at home.
Some of the most common misperceptions include:
Consumers used to having homeowners insurance as part of their mortgage may not think about needing to obtain a renter’s insurance policy. Here are some tips for former homeowners who are now renting and for renters who have not yet purchased renter's insurance:
1. How much renter’s insurance do you need? Talk to your insurance agent or company about the property you want to protect and the property hazards for which you would like to be insured. Your agent can give you policy coverage specifics based on Florida residency and the type of policy you want. Your agent will answer any important questions you have about:
2. Is there a discount on renter’s insurance if your residence has particular safety features, like a burglar alarm? Many insurers will reduce your premiums for fire or burglar alarms, fire extinguishers, sprinkler systems and/or deadbolts on exterior doors. Some companies might also offer discounts if you have more than one policy, such as car insurance, with them. Be sure to ask about any discounts you might be entitled to.
3. Are you covered in the case of flood, hurricane winds or earthquake? These natural disasters are not generally covered by a renter’s or homeowners insurance policy. Ask your insurance agent or company if your policy fully protects you or whether you need to purchase additional coverage.
4. Are your possessions insured for the actual cash value or the replacement cost? Actual cash value is the amount it would take to repair or replace damage to your home or possessions after depreciation while replacement cost is the amount it would take to repair or replace your home or possessions without deducting for depreciation. Speak with your insurance provider to determine whether purchasing replacement coverage is worth the extra cost.
5. Does renter’s insurance only cover your possesions at home? Many policies do not limit protection to home-based situations. For example, items you have insured often are covered if they are stolen from your car or damaged while not on your property.
6. Is personal liability included? A renter’s insurance policy covers your personal property and your personal legal responsibility (or liability) for injuries to others and/or their property while they are on your property.
7. Will you receive additional living expenses if you have to live somewhere else while your apartment is being repaired? If there is damage to the building you are renting and you must live elsewhere while the building is being repaired, you will have coverage for additional living expenses incurred during the reconstruction period.
8. How do you expedite your renter’s insurance claim? A home inventory – along with photos and proof of ownership – make it easier to file an accurate, detailed insurance claim in case your possessions are damaged or destroyed in a disaster. Make periodic updates to your inventory of belongings and supplement them with photos or videos. Keep sales receipts or cancelled checks for certain possessions to validate insurance claims. Store copies of your insurance policies, key receipts and inventories away from home or in a fireproof safe.
Remember, the more detailed documentation you supply during the claims process, the fewer problems you’ll have with the claim itself. A home inventory can also help determine how much coverage you will need from your renter's insurance policy. Download a free home inventory checklist (look for Section 2) in the Florida Department of Financial Services' Financial Tool Kit at http://www.myfloridacfo.com/Consumers/Guides/disaster/docs/homeowners_tool_kit_2008.pdf.
A recent NAIC survey found that 48 percent of homeowners didn't have any inventories of their possessions. Of those with a checklist, 58 percent lacked receipts and 32 percent didn't have any photos. A comprehensive list of your belongings and their value will help you file an insurance claim after a disaster. Creating an inventory and storing it in a safe location away from home is one of the most basic — and most effective — disaster preparedness steps anyone can take to help protect themselves and their financial future.
The NAIC survey also found that 43 percent of U.S. adults with homeowners or renter’s insurance owned policies that provided a replacement cost payout. Of the remaining consumers, 27 percent indicated their policies insured their homes for the actual cash value, while another 28 percent did not know which type of coverage they purchased. Understanding the terms of your policy and reviewing your coverage on an annual basis will help you avoid surprises if the need for a claim arises.
If you have questions about your insurance policy, contact the Florida Department of Financial Services Consumer Helpline at 1-877-MY-FL-CFO (1-877-693-5236).
A well-designed landscape not only can add beauty to your home but it also can reduce your heating and cooling costs. On average, landscaping for energy efficiency provides enough energy savings to return an initial investment in less than eight years. If you were already planning to landscape, these tips provide an ideal way to beautify your home while saving on your monthly energy bill.
Landscaping your home for energy efficiency can reduce your heating and cooling bills, the largest component of your home's energy use. Your overall landscaping strategy will depend on your regional climate.
Solar heat absorbed through windows and roofs can increase your air conditioner use. Incorporating shading concepts into your landscape design can help reduce this solar heat gain, reducing your cooling costs.
Plant trees to shade your home, reducing your cooling costs in the summer months. Typically, newly planted trees will begin shading windows in their first year and will reach your roof in five to ten years.
Trees can be selected with appropriate sizes, densities, and shapes for almost any shading application. To block solar heat in the summer but let much of it in during the winter, use deciduous trees. To provide continuous shade or to block heavy winds, use dense evergreen trees or shrubs.
Shading and evapotranspiration (the process by which a plant actively moves and releases water vapor) from trees can reduce surrounding air temperatures as much as 9° F (5°C). Because cool air settles near the ground, air temperatures directly under trees can be as much as 25°F (14°C) cooler than air temperatures above nearby blacktop.
Planting shrubs, bushes, and vines next to your house creates dead air spaces that insulate your home in both winter and summer. Plant so there will be at least 1 foot (30 centimeters) of space between full-grown plants and your home's wall.
During winter, dense, low-lying trees and shrubbery on the north and northeast sides of your home can help protect your home against wind chill.
In the hot-humid region of Florida, channel summer breezes toward the home; maximize summer shade with trees that still allow penetration of low-angle winter sun and avoid locating planting beds close to the home if they require frequent watering. From the U.S. Department of Energy Website
For 2008 federal income taxes, personal exemptions and standard deductions will rise, tax brackets will widen and workers will be able to save more for retirement, thanks to inflation adjustments by the Internal Revenue Service.
By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, have been adjusted for 2008. Key changes affecting 2008 returns, filed by most taxpayers in early 2009, include the following:
Paying a little extra on your loans can save you many dollars in interest payments. This strategy works the same for mortgages, student loans, auto loans, credit cards or any loan that allows you to prepay the balance.
Round your monthly payment up a little. If your payment is supposed to be $321 each month, try sending a check for $350 each month. You won’t miss the extra $29, but over time that extra money will add up.
Automate your monthly payment at a higher amount than required. Automatic deduction makes it easy to send pre-determined amounts to your lender without having to write a check. Now you won’t be tempted to keep the extra portion of your payment if money is a little tight one month.
Pledge to send windfall amounts to the lender. Rebate checks, tax returns, and garage sale proceeds are all great sources of “found” money. Since you weren’t expecting this money, you won’t need it to pay your regular expenses.
Make payments every four weeks instead of once a month. Check with your lender to make sure you can do this - then you will have made a total of 13 payments instead of 12 - an extra monthly payment for the year. This will reduce your principal balance and increase your interest deduction for your taxes.
A mortgage payoff calculator can help you calculate the amount of interest saved by paying your mortgage off early. This is achieved by increasing the monthly mortgage payment with the extra money directly deducted from your mortgage principal balance. Then the amortization schedule is based on the lower number of years it will take to pay off your mortgagea with the extra payments. For instance, a 30-year mortgage with extra principal payments could theoretically become a 25-year mortgage, reducing the amount of interest paid and paying the loan off five years earlier than the mortgage contract required. You can find a mortgage payoff calculator on the Web.
Find a balance between paying off debt and investing in savings. Paying off debt now while working toward building a savings puts you in control of your money. You may want to pay slightly more than the minimum payment required on your debt and put the rest in savings.
With banks and the economy in the news so much lately, many people are thinking more about the safety of their money. The good news for consumers is that federal deposit insurance coverage has significantly increased, primarily as a result of a temporary boost in the basic insurance limit from $100,000 to $250,000. That's also why the Federal Deposit Insurance Corporation has issued an explanation of the new changes along with tips and information to help bank customers better understand their insurance coverage and how to be sure all their deposits are fully protected.
The advice was published as a special edition of the agency's FDIC Consumer News (the Fall 2008 issue) entitled "Your New, Higher FDIC Insurance Coverage: How You Can Be Fully Protected." Among the key points made in the publication:
Other articles describe various steps depositors can take to be sure they're fully protected by FDIC insurance, why and how to use the FDIC's online deposit insurance calculator called "EDIE," and common misconceptions depositors have that can inadvertently result in being over the federal insurance limit and at risk of loss if their institution fails.
"Your New, Higher FDIC Insurance Coverage" can be read or printed at www.fdic.gov/consumers/consumer/news/cnfall08. To order up to two free paper copies, use the online form on that same Web page or call the Federal Citizen Information Center toll-free at 1-888-8- PUEBLO (1-888-878-3256) weekdays from 8:00 a.m. to 8:00 p.m. Eastern Time and ask for Department 89.
The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information about financial matters, free of charge. Current and past issues of FDIC Consumer News, including previously published special editions, are online at www.fdic.gov/consumernews.
There also are two ways to subscribe to the quarterly FDIC Consumer News. To receive an e-mail about each new issue with links to stories, go to www.fdic.gov/about/subscriptions/index.html. To receive the newsletter in the mail, free of charge, call the FDIC toll-free at 1-877-275-3342, send an e-mail to email@example.com or write to the FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226.