DAVID CAMERON today urged an immediate 1p cut in National Insurance for small firms to save jobs at risk in the credit crunch.

The reduction in payroll tax would save a small business with four staff about Ј100 a month over a six-month trial period, he claimed.

His move, announced at a summit with small-business leaders, came as the political focus turned from the Ј500 billion banking bail-out to the imminent danger of massive job losses and home repossessions.

The plight of small firms, hit by punitive 15 per cent bank loan rates and costly red tape, was rising rapidly up the agenda. Mr Cameron said: “Good small firms will be going to the wall unless we give them help.” He said the Tory proposals targeted “the most vulnerable” micro firms: “It would help keep them to keep their employees and get through an extremely tough time.”

The Government has signalled it would delay plans to allow 4.5 million parents to demand flexible hours, even though the promise, to people with children under six, was approved by the Labour conference only last month and trumpeted by Gordon Brown.

Business Secretary Lord Mandelson has ordered a review of all Labour promises that could load extra costs on struggling firms. Other plans that could be sacrificed may include extending paid maternity leave from 39 to 52 weeks and an extra bank holiday. Mr Mandelson’s department would not comment.

A new poll showed the Tory lead has been whittled down to eight points less than half what it was two months ago in the wake of Mr Brown’s plaudits for the banking rescue.

The YouGov poll in the Mirror put the Conservatives on 42 per cent, Labour on 34 and the Liberal Democrats on 14. It found six in 10 felt Mr Brown had handled the financial turmoil well compared with a third who said he had done badly. Some 40 per cent backed Labour to handle the economy, compared with 28 per cent preferring the Tories.

Treasury minister Yvette Cooper said small businesses were one of Labour’s top priorities. She told GMTV: “Banks are not lending to each other or to the rest of us. In particular that means not lending to small businesses.” The Government also urged banks to give extra time to home-owners falling behind on mortgage payments, in the hope of curbing repossessions.

Chancellor Alistair Darling said he aims to use his next Budget to spend Britain’s way out of recession, including bringing forward big construction schemes to stave off job losses.

Mr Cameron, who invited small firms bosses to a seminar in the Commons, yesterday proposed a VAT holiday for small and medium-sized firms, which he called the “lifeblood” of the economy.

WHAT THEY’RE PROMISING SMALL BUSINESSES

Conservative

●A 1p cut in employer national insurance for six months for those employing four or fewer staff. A business with a Ј150,000 annual wage bill could save more than Ј100 a month, equal to 15 per cent interest on an Ј8,000 overdraft. Cost: Ј225million.

●Deferring VAT for six months for small and medium-sized firms.

●Cutting small companies’ corporation tax rate to 20p over time. It is now 21p and due to increase to 22p in April 2009.

Labour

●Ordering government and councils to speed up payments to small firms and contractors to ease cash-flow problems. 10-day target in the public sector with pressure on private firms to follow suit.

●Flexitime plans for 4.5million parents will be delayed until the downturn ends. Longer maternity leave could also be shelved to ease costs on companies.

●Budget to bring forward major construction projects to stave off job losses in the building trade.

Worried about AIG’s tumble? Here are some steps you can take

After the Federal Treasury announced its $85 billion bail-out of American International Group last week, many consumers wondered if their insurance policies were safe.

AIG requested the massive loan because of a cashflow crunch, due to bad investments in mortgage derivative products, which could bankrupt its insurance assets. The U.S. Treasury granted the loan, because a collapse of the nation’s largest insurance company would affect too many American policyholders and threaten financial markets worldwide, said Treasury Secretary Henry Paulson.

But is your insurance policy safe?  The short answer is, experts said, yes.

“There’s no reason to panic or pull your policy out of AIG, because the (insurance) companies are secure,” said Melissa Gannon, vice president of insurance and bank ratings at thestreet.com, an investment information site.

Other insurance companies also seem to be safe. “You can’t leap to the conclusion that because AIG is having this problem, it will go into other insurance companies,” said Gannon. 

Here are seven ways you can check.

Find out who owns your insurance. Even if you think you do not have AIG policies, your insurance company may be an AIG subsidiary. For example, AIG owns SunAmerica (retirement annuities), 21^st Century (auto insurance), and American General Life and Accident. You can check your insurance company’s Web site, do an online search, or ask your agent.

Even if you own AIG insurance, experts said you do not need to panic.

“The issues that compromised the financial integrity of AIG were at the holding company level, not the underlying insurance subsidiaries, (which) were heavily capitalized,” said Tom Sullivan, Connecticut insurance commissioner and executive committee member of the National Association of Insurance Commissioners. Even if AIG were to file bankruptcy, said Sullivan, the underlying cash reserves would be enough to fulfill all insurance claims.

Strict state regulations requiring insurance companies to set aside reserve funds for insurance claims provide a strong cushion for policyholders, said Sullivan.

Check the financial health of your insurance company. You can check the balance sheet of insurance companies, to assess its financial strength. The NAIC Web site posts information — including assets and liabilities — of insurance companies.

You can also find out your insurance company’s ratings. Although there is no national rating system, various market research companies rate insurers, based on their financial health. For example, thestreet.com offers ratings, ranging from A to F.

You can also find out an insurance company’s balance sheet by looking at its quarterly reports, which are often posted on a company’s Web site, said Nell Newton, healthcare and insurance industry editor at market research firm Hoover’s. Annual and quarterly reports will show you a company’s investment activities.

Large insurance companies which have diversified into international markets and non-insurance products are most at risk, said Newton. Publicly-held companies under pressure to earn shareholder returns are also financially riskier, said Newton.

In contrast, regional and mutual insurance companies — owned by private investors and policy-holders, respectively — are more financially conservative, said Newton. “They didn’t go off trying to … turn themselves into something other than bread-and-butter insurance companies.”

Check the insurance guarantee limits of your state. In the unlikely event that an insurance company goes bust and cannot fulfill claims, each state has a Guaranty Fund to back policies. “It’s a social safety net, much like FDIC (Federal Deposit Insurance Corporation) insures deposits for banks,” said NAIC’s Sullivan.

Each state’s Guaranty Fund has a different limit, with a nationwide average of about $350,000 per claim. In Connecticut, for example, if a fire burned down your house and car, you could claim up to $500,000 for each — or $1 million total. NAIC.org provides a link to each state’s insurance department, where you can check the guarantee limit.

Policyholders may one day have more guarantees, as lawmakers consider regulation at the federal level, said NAIC’s Sullivan, who believes state regulators are already working effectively. 

Meanwhile, some academics are proposing industry-led regulatory agencies, which would have the financial motivation to back policyholders. “Having a guaranty fund owned by the industry, managed by the industry, financed by the industry, paying the company policyholders — we think is the right solution,” said Guillaume Plantin assistant professor of finance at London Business School, and co-author “When Insurers Go Bust: An Economic Analysis of the Role and Design of Prudential Regulation.”

“If they don’t take the right conservative action, the future losses of the company will be theirs,” said Plantin. “So they have the right monetary incentives to take care of the situation.”

Meanwhile, keep paying your insurance premiums, said experts. Even if your insurance company fails in a worst-case scenario, you need to be current on policies to claim against guaranty funds.

Find out the surrender value of your policies. If you decide to dump your insurance company, find out how much it will cost you. Many life and annuity insurance policies offer a reduced “cash” or “surrender value” for early termination.

You can read the fine print of your policies or call your insurance company to find out.  Alternatively, find out how much a new policy will cost. It may actually be more.

“It’s best for people take a measured approach, educate themselves, make sure they understand their position, and then make a decision based on that,” said thestreet.com’s Gannon.

Consider using different companies. Experts say it may be safer to have different companies covering different policies, depending on the insurance company’s specialty.

“If a consumer just wanted to be really careful, find a company that specializes (in a certain type of insurance), and just stick with that,” said Hoover’s Newton.

Talk to your insurance agent. Your agent or broker may not know all the financial positions of its insurance companies or even want to discuss it. Three large insurance groups and companies — the National Association of Life Brokerage Agents, Travellers Insurance and The Hartford — all declined comment for this story.

But your agent should be able to answer some of the above questions, and make recommendations.  If not, you might want to reconsider your agent.

Sit tight. If you have AIG insurance, the company may be sold soon, since that was one of the Treasury’s bailout conditions.  “The lazy person’s way is to just sit tight and see who buys (AIG) up,” said Hoover’s Newton.  

If you do not own AIG, you can also sit tight.  “It’s a big rocky road, but… things will calm down,” said Newton.

Then wait and watch AIG’s surgery. If all goes well, taxpayers may actually benefit from the AIG bailout when the loan is due in two years. In 1979, when the government guaranteed loans to Chrysler Motors of $1.2 billion, it earned taxpayers $300 million in profit when Chrysler repaid the loan four years later.

“AIG has a trillion dollars on their balance sheet,” said NAIC’s Sullivan. “The federal government will more than likely make money on this deal.” 

Increase in vehicle insurance prices has been clearly outlined since the second half of the year. According to the recent investigations the price advance makes up to 3.4% during the last six months. The data were collected from more than ten insurance companies during the last year.

First of all, this price rise is caused by the increase of medical care and vehicle repair costs. It’s also essential to be well informed of each insurance company, to make a comparison and to be aware of the factors, which influence the price of an insurance policy. These factors are numerous. We pointed out several of them:

1. Insurance costs depend on your state of residence.

2. Proper exploitation of the vehicle. For many insurance companies give a discount for small mileage (10000 miles every year), don’t forget to inform the insurer of your annual mileage if you fall under this criterion.

3. Determine the market price of your car, its category, type and age. An insurance policy price directly depends on the age of a vehicle, and it’s not economically sound to insure old cars.

4. Familiarize yourself with insurers’ conditions and terms and choose the most appropriate for you. Prices for one and the same insurance policy differ from company to company. Also get to know about all possible discounts.  www.Insure4USA.com is an online insurance market which enables you to buy insurance in internet. You can immediately get a precise evaluation and insurance price from more than ten leading companies, and quickly and safely buy a policy.

5. Precise information about you and your vehicle will help the insurer to make the most accurate calculation of a price.

6. If you are a young driver don’t worry. Most companies offer youth programs and discounts. Contact your insurance agent to get more information about such programs.

7. Multiple cars and drivers.

8. Good credit history is of help to save some money on insurance.

9. One more factor of price decrease is the car’s security. That means the safer is your vehicle (including antitheft alarm and theft-prevention system) the less money you need to pay for the insurance.

10. Choosing a franchise for your insured accident.

With the help of internet you can make a detailed analysis of insurance market, choose the most convenient insurer and compare the prices. You don’t need to ride somewhere to buy an insurance policy, just buy it online – it’s easy, quick and safe!

The franchise can be considered as a unconditional obligation from the insurance company to compensate at own expense a part or the caused losses in the set cases and in the set size. The franchise in auto insurance can be conditional and unconditional.

In the case when the contract sets insurance with an unconditional franchise at payment of the insurance indemnity the size of the indemnity sets without the size of the franchise anywhere.
In some cases that the insurance indemnity is covered by franchise the insurance company pays to the insurant nothing.

Example: The unconditional franchise is set as 5% of the insured sum in 10 thousand dollars, that is $500. The loss in a road accident is $1200. So the client will receive 1200 – 500 = 700 dollars.

The conditional franchise: in this case the insurant assumes indemnity engagements at own expense if they are under the set size. If the loss size excess amount the insurance company will compensate the caused losses in full.

For example: the insurance contract sets a conditional franchise in $500. All losses under $500 the insurance will compensate at own expense. If the loss is $600 the insurance company will compensate all $600.

The franchise amount can be set in percents of insurance amount or in absolute value (monetary).
In some cases franchise can be set in percents of the caused losses size.

At will of the client almost all auto insurers execute contracts with fraznchise. More often contracts with an unconditional franchise are met.
At some contracts the insurance company sets the franchise without fail. For example, in contracts where the small fault risk is high.

It is really to save at buying a policy with franchise. From some franchise size the price of the insurance contract starts to reduce. Besides the client saves his time not making out a heap of certificates for a couple of scratches.
And that who regret money for even small repairs have to drive more carefully. But even that is most likely a positive side for the automobile owner.

Albertans will learn today whether they’ll shell out more for auto insurance, after proposals to hike premiums as much as 37 per cent were made to a panel deciding what drivers should pay.

Premier Ed Stelmach said Wednesday he expects the province’s Auto Insurance Rate Board will take a “very pragmatic, responsible approach” and shy away from proposing a 37 per cent jump for Nov. 1 — which would see the average Alberta driver pay $225 more a year.

“I don’t anticipate such a large increase, but we’ll have to wait until tomorrow,” Stelmach said in Calgary.

According to government sources, Finance Minister Iris Evans has privately made it clear she won’t allow an increase in the double digits. If the recommendation is for a hike of 10 per cent or more, sources said Evans will intervene.

The auto board’s decision was to be released at 11 a.m. today. It comes after two days of hearings on insurance premiums last month, a debate dominated by insurers and lawyers.

Auto insurance companies argued they’re facing higher costs that demand higher premiums. They pointed to a court ruling in February that struck down the Alberta government’s $4,000 compensation cap for minor soft-tissue injuries, such as whiplash, suffered in traffic crashes.

The ruling has thrown a massive wrench into the market, said Jim Rivait, a vice-president with the Insurance Bureau of Canada. He contends insurance companies’ costs will soar if the province loses an appeal to reinstate the cap.

The government’s appeal is slated for September. If the case gets to the Supreme Court, a final judgment is unlikely until 2010.

“Hopefully (today’s) decision recognizes the uncertainty we are under,” Rivait said Wednesday. “Do we know definitely for tomorrow what’s needed . . . before we have the decision of the court? Not exactly.”

“However, potentially there could be a need . . . for 37 per cent.”

Opposition parties are calling on the auto board to hold the line on insurance premiums.

“The insurance companies are making huge profits and there’s no justification in my view for an auto rate insurance increase,” said NDP Leader Brian Mason.

Edmonton Liberal MLA Hugh MacDonald argues, like Mason, that insurance companies can afford to absorb extra costs.

“Consumers, especially in this province, are faced with escalating costs for everything, whether it’s for fuel, for electricity or for food,” MacDonald said. “Consumers need a break.”

At last month’s hearings, the Canadian Bar Association released a report claiming insurance companies made more than 20 per cent profit in Alberta between 2003 and 2006. The report argued injury claim costs were never out of control. The insurance bureau has disputed the report’s findings.

The auto board heard several arguments for raising premiums on Nov. 1, but also got an analysis suggesting rates should decrease 3.2 per cent even in the absence of a soft-tissue cap.

Britain’s cyclists should face up to the theft risks inherent in bike ownership, a home insurance provider said today.

Sainsbury’s Bank has released new bike theft data, showing that 1,208 cycles are stolen every day in the UK. A surprisingly large proportion – 16 per cent – of these cycles was found to have been stolen from people’s homes.

The home insurance provider derived the data from studying customer theft claims details from 2004 to June 2008. Bikes are often covered by home contents insurance policies.

Bike thefts have hit the headlines recently due to the leader of the Conservative party, David Cameron, being captured on camera after falling victim to the crime. The politician had attached his £1,000 mountain bike to a bollard while shopping in Notting Hill’s Portobello Market before it was stolen.

Commenting, Neil Laird at Sainsbury’s Bank said: “David Cameron is far from being the only person to have a bike stolen. Unfortunately, bicycles are a popular target for thieves as they can be relatively easy to steal and re-sell. It’s important cyclists consider their bike security at home as well as away.”

Sainsbury’s also issued anti-bike theft tips, along with its home insurance claims data. Investing in a secure lock, recording and registering the cycle and marking or tagging the bike all came highly recommended from the provider.

The state’s insurers will be able to increase rates for mobile home insurance, though not as much as they’d hoped, the North Carolina Department of Insurance said Friday.

The hikes, which go into effect Dec. 1, are the first ones approved in the state in more than a quarter-century.

They also vary by area. The increases are much lower in the Triangle and areas west than they are on the coast, where wind and severe weather puts mobile homes at greater risk.

For one type of insurance, MH(C), rates will be increased by 24.4 percent for 18 coastal counties. But they’ll go up by only 2.9 percent elsewhere in the state, including in the Triangle. Insurers had sought hikes of 228 percent at the coast and 10.7 percent in the other 82 counties.

For the other type of mobile home insurance, MH(F), rates will go up by 25 percent on the coast and will remain unchanged elsewhere. Insurers wanted increases of 260 percent on the coast and 2.9 percent elsewhere.

The two types of mobile home insurance vary slightly in what they cover.

Insurers collected $121 million in premiums for mobile home insurance in 2006, the Insurance Department says. There were 17 companies writing mobile home policies in North Carolina in 2004, the most recent year for which data is available, according to department spokesperson Chrissy Pearson.

Tennessee officials razed fairgrounds bleachers damaged by a tornado in Clarksville, Tennessee.

Parks and Recreation Director Kevin Cowling said the tornado on May 3 moved parts of the concrete bleachers 2 inches. A structural engineer determined they were unsafe.

City chief of staff Jim Durrett said the city received $8,000 in insurance for the damage — not enough to repair the bleachers.

Durrett also said engineering work is under way for a marina at Fairgrounds Park and the layout of the park is likely to change.

The tornado also wrecked the adjacent Wilma Rudolph Pavilion and the city is working on an insurance settlement for it.

Q: I have a three-year employment contract and have just secured my first mortgage for a new villa in Dubai. However should the contract not be renewed how would I manage to make my mortgage payments till I find another suitable position? 

A: Payments towards a mortgage are usually the highest expenditure from your salary each month – mortgage payments are your most important payment as everyone needs somewhere to live.

As you are on a fixed term contract with no guaranteed work following that, you should consider an insurance policy to protect you for any unforeseen circumstances which would mean you may not be able to make regular payments.

There are two types of debts – unsecured and secured debts. The essential difference between unsecured and secured debts is that with unsecured debts there is no physical property or product directly attached to the debt, and thus the interest rate is higher due to the greater risk to the lender. Familiar examples of unsecured debts include personal loans and credit card bills.

Your mortgage is a secured debt. That means that your villa can be repossessed if you fail to make regular payments.

Housing and car loans fall under the category for secured debts which means that the house doesn’t become yours till all the mortgage payments have been made and it could ultimately be taken off you by your lender if you miss payments.

You must always prepare for the possibility of unexpectedly missing out on payments due to unforeseen circumstances – savings may not be enough to assist in making mortgage payments if you are suddenly unemployed.

There have been many instances where property was retained by the owner due to mortgage payment insurance covers.

As the UAE mortgage market matures, local and international insurance firms are beginning to offer several types of mortgage payment protection schemes, and according to recent data, 71 per cent of first-time buyers in the UAE are now opting to use mortgages to finance their property purchase.

Such schemes offer short-term coverage of mortgage payments when you are unexpectedly out of employment. The benefits also include assistance when home owners have been displaced due to sudden illness or an unfortunate accident.

It is important to understand that mortgage payment protection does not cover the entire repayment of your mortgage loan.

The length of the mortgage payment insurance depends on the plan you’ve signed up for – the usual short-term period for payment support extends from 12 to 24 months.

You can find different mortgage payment insurance packages from your mortgage company or through insurance institutions that offer this category of insurance cover.

These packages can differ based on the duration of the assistance period, terms of applicability and the cover of other mortgage-related payments such as premiums for endowment policies and household insurance.

Since it is the first time you are looking for mortgage protection, it is always advisable to visit an independent financial advisor who can discuss with you the different insurance plans available and help you recognise what scheme would suit your needs best.

You will also need to be advised on when your mortgage cover is applicable and decide the duration for your payment assistance period.

Michael Walton is a Director of General Insurance at Nexus, the region’s leading financial advisor. The opinions expressed above are the writer’s and don’t necessarily represent the views of Gulf News.

North Dakotans who have incomes twice as high as federal poverty guidelines should be eligible for government health insurance for their children, the Democratic candidate for insurance commissioner says.

Jasper Schneider, who is a state representative from Fargo, said Tuesday that the change would add 3,300 children to the Children’s Health Insurance Program, which is financed by the state and federal government. North Dakota’s share comes to about 25 percent.

Schneider estimated the expansion would cost North Dakota taxpayers about $3 million, which he said was easy to justify given a state budget surplus that is expected to exceed $700 million by June 2009.

“As much as we love to brag about our huge surplus, in my mind it is almost irresponsible government,” Schneider said. “It’s the taxpayers’ dollars, and it’s not doing anybody any good to leave that money sitting in Bismarck, while at the same time we’re turning down 3,300 kids and their families, and saying, ‘Sorry, we can’t help.’ We can do better than that.”

In June, there were 4,119 children enrolled in the program, the Department of Human Services said. It offers coverage for immunizations, dental work, eye exams, health checkups and prescription medications, among other services.

Schneider is running against Republican Adam Hamm for North Dakota insurance commissioner. Hamm is seeking his first elected term after he was appointed last year to succeed Jim Poolman, who resigned.

Hamm said Monday that he supported making more children eligible for the program, but said the state’s initial focus should be on making sure children who are already eligible are getting health coverage. Low-income families who have children 18 years old are younger may qualify.

“To me, there can be a healthy and vigorous debate … about what is a reasonable expansion of the program, but I think all parties can agree that we need to immediately focus on trying to get as many kids that are currently eligible signed up,” Hamm said.

The program’s income limits are pegged to federal poverty guidelines. At present, families with incomes up to 140 percent of the federal poverty level may be eligible to have their children insured.

That percentage is rising to 150 percent on Oct. 1. Some expenses, including Social Security, Medicare and state income and federal tax withholdings, are not counted toward the limit.

Schneider’s proposal would make families with children eligible for coverage if their incomes were 200 percent or less of the federal poverty level.

Under Schneider’s terms, a family of four would be eligible for government insurance coverage for children if the family’s income was $42,400 or less, a 43 percent increase from the current limit of $29,676.

The ceiling would rise to $49,600 for a family of five, and $56,800 for a family of six. The current limits are $34,716 and $39,756.

Schneider said his proposed North Dakota expansion of children’s health insurance eligibility will depend on whether the federal government continues state subsidies of the program, which are now scheduled to end in March.

President Bush and Congress have been feuding about proposals to expand the Children’s Health Insurance Program. Last October, the president vetoed legislation that he said would have extended its benefits to middle-class families and encouraged them to drop private insurance coverage.

Maggie Anderson, the Medicaid director for the state Department of Human Services, said the state expects to spend $3.2 million on the Children’s Health Insurance Program during the next federal budget year, which begins Oct. 1. The federal government is expected to pay $9.2 million.

Schneider’s proposal also includes the establishment of an advisory board, headed by the state insurance commissioner, that would monitor the children’s insurance program and suggest ways to improve it and encourage enrollment.

The board would include two state legislators, representatives of North Dakota’s three members of Congress, a representative from Blue Cross Blue Shield of North Dakota, and two members of a nonprofit advocacy group, chosen by the insurance commissioner.

Blue Cross Blue Shield, which is based in Fargo, is North Dakota’s largest health insurance company.