Consumer eViews

Volume 2, Number 40, October 3, 2005  

Health insurance open-enrollment begins today for thousands of Floridians. Understanding and reviewing your health insurance each year and making changes as needed is a vital part of family financial planning.  

This year, you may want to consider a health savings account (HSA).  An HSA accumulates money tax-free to cover medical or health-related expenses. 

Many Florida employers are now making HSA-compatible plans an option for 2006.  The HSA comes with an accompanying health insurance policy with a higher family deductible than a traditional plan, which the HSA is designed to cover.  As a result, your monthly health insurance premiums could be significantly lower. 

Employers, workers or both can contribute to your HSA. Whatever is not spent in the HSA rolls over each year and earns interest tax-free. If you change jobs, your HSA may be transferred to your new employer if they offer a similar plan, or you can keep or spend they money you’ve saved in the HSA as long as it is spent on health services.  Money from an HSA can also be saved into retirement.

Take a look at your current health plan and compare the dollars - you may be surprised at the bottom line.

                                                          -- Tom Gallagher


First Meeting Slated For October 4th, Report Due January 15th

Tom Gallagher, Florida’s chief financial officer, announced a ten-member committee tasked with developing a standard homeowners insurance policy for Floridians that is both easy to understand and offers comprehensive coverage.  State lawmakers called for the committee in response to Gallagher’s concern that many victims of the 2004 hurricanes were not adequately protected because they either did not understand the complex language in their insurance policies or had not updated their policy limits to keep pace with increasing property values. 

“Time after time, in the hurricane recovery town hall meetings I held around the state and in calls to my office, Floridians said they were surprised at what their policies didn’t cover or that their coverage was not enough to rebuild their homes,” said Gallagher, who oversees the Florida Department of Financial Services. “The committee is tasked with developing a simple, plain-language homeowners insurance policy with the consumer in mind.

The new law, passed by state lawmakers in the 2005 session, requires Gallagher to appoint an advisory committee that includes two members recommended by Insurance Commissioner Kevin McCarty, two appointees from the residential property insurance industry, two property insurance agents, two consumers and Florida’s Insurance Consumer Advocate.  The committee must issue its recommendation to the Legislature by January 15, 2006. 

Along with announcing the members of the Standard Personal Lines Advisory Committee, Gallagher also announced the committee’s meeting schedule.  The first committee meeting is scheduled to be held in Room 110 of the Senate Office Building on October 4th, from 10 a.m. to 5 p.m., in Tallahassee.  The other scheduled meeting dates are October 28th, November 17th and December 6th.  The final meeting will be on January 4, 2006.

Members of Standard Personal Lines Advisory Committee 

CFO Gallagher’s designee – Rick Mahler, Deputy Chief of Staff, Department of Financial Services

Joel P. Curran – Towerhill Insurance Group, chief underwriting officer and senior manager.

Jim Graganella – Capital Preferred & Southern Fidelity Insurance Companies.  President / CEO.

Hector Fortune, Fortune Insurance.

Bruce A. Baker, USI Insurance Services of Florida, Inc.   

Rick Suarez, Miami, Florida, proprietor of Ready Windows.

Arnold Whisenant, Jacksonville, Florida, retired.


Dr. Elizabeth Beard Goldsmith, Florida State University, Professor.  National Association of Insurance Commissioner’s Consumer Representative.

Richard C. Koon, Office of Insurance Regulation, Senior Management Analyst, Director Policy Forms


Steve Burgess, State of Florida.


When a consumer complains about an investment, an investigator asks, "Did you receive a prospectus?" Then the question is, "Did you read it?"
Unfortunately, the answer to the first question is often "yes" and the answer to the second is usually "no."

Where you put your money matters. Be sure to invest with reputable, licensed companies and individuals so you can be assured that your assets are there when you need them.

Verify before you buy. In other words, make sure that the company, broker or agent is licensed to do business in Florida.  Before you sign a contract or write a check, click on these links to verify through our records that the entity is authorized and licensed to transact business in Florida or with Florida residents.

Many investors simply rely on verbal promises made by the securities seller. The fact is, a prospectus should be filled with information to help you evaluate the investment. A flimsy prospectus is a red flag.  
Over the years, many securities fraud investigations have been jeopardized because the information in the prospectus is different from what the investor says he was told.
Here's an example: You invest in an unsecured promissory note paying 10 percent. The securities seller, typically unlicensed to sell securities, says the investment is safe and guaranteed.
However, if you took the time to read the prospectus you would see it contained a significant disclaimer that said something like, "this is a high risk investment with no guarantee that the business venture will succeed or that interest payments will continue." What happened to safe and guaranteed?
Most offering brochures tell you about the business backgrounds of organizers and key personnel. This section should reveal positive and negative facts.  You would want to know if the president of the company has a criminal history, experience in the type of business being proposed or if the organizers were previously involved with business ventures that failed.
If you don't read anything negative in the prospectus, you should ask tough questions. Better yet, do independent research. Here are a few tips on what to look for when reading a prospectus.
Is the investment speculative? If yes, does the investment meet your personal investment objectives? You may be willing to accept more risk for a higher than normal rate of return. Carefully read the risks section. If no risks are identified, this is a red flag.
Is the investment listed on a recognized stock exchange? Is it registered with the Securities and Exchange Commission or state regulators? Stock exchange listing rules are demanding. While being listed on an exchange is no guarantee for success, at least you know the company completed the very demanding red tape required by the securities registration process.
Here's a tough one for most people. Are the shares offered at a fair price and does the financial data make sense? You may need to get help from a financial expert to figure this one out.
Do you understand the industry and does the business plan make sense? If you don't understand "how" the company will earn money, then maybe you should reconsider your decision to invest. Remember Charles Ponzi and his investment scheme.

Ponzi paid outrageously high returns so no one would investigate the veracity of his business plan of buying and selling international postal reply coupons. After his scheme collapsed Ponzi boasted that investors were blinded by the high rates of return he promised (50 percent in 45 days, 100 percent in 90 days). His business plan made no sense, but nobody took the time to evaluate it.
There are no guarantees that even if you read and understand an investment prospectus you will make money or the business will succeed. There are no risk-free investments, only investments with varying degrees of risk. Do your homework and invest cautiously. That way, your chances of losing money will diminish.

Call our consumer helpline at 1-800-342-2762 for more information and assistance. Visit Your Money, Your Life, the website for smart financial information for Floridians.

Consumer Services HelpLine
(800) 342-2762