Technology Could Hit Your Insurance Costs

We have all grown up believing that technology is the tool that has improved the quality of life and that it will continue to do so. While there can be no argument about the way our lives have changed, usually for the better, because of the new technologies we see appearing almost every day, there is a small downside to this.

There are still some activities and tasks that need us to be physically present at a specific location. And that means dragging oneself away from the computer. Or does it? Tablets and smart phone give us access to the internet and basic computing abilities and they travel with us wherever we go. But to use them means stopping what we are doing and focusing attention on the device. Soon even that will be a thing of the past. Google Glasses will soon be available to everyone. What’s so great about this? It’s simply that with these glasses project a thumbnail sized image onto one of the lenses of the spectacles. This will provide the wearer with computer and internet access literally on the go.

The Good

There are obvious advantages to Google Glasses. They can be worn like a normal pair of spectacles. No extra equipment like a tablet needs to be carried around. Since no hands are required to hold them, other activities can continue more or less uninterrupted. And access to the internet 24/7 (or as long as the glasses are worn) opens up a whole new world of information and work and pleasure opportunities.

The Bad

Will Google Glasses take users into another cyber dimension? Will they become androids, semi-permanently linked to the internet? Will real world and real time activities suffer? Will direct person to person interaction slowly become a thing of the past? And how safe are the glasses in terms of distraction resulting in accident or injury? There are questions that will only be answered when they come into widespread use, but the danger of having almost continuous web access is apparent to everyone. All technological progress has had its downside and mankind has adapted to maximize the benefit and minimize the negatives. It should happen this time too.

The Ugly

The Good and the Bad are issues we will need to deal with in the next few years. But there is an Ugly that is making its face known today. And that is the effect that technology can have on insurance rates. In many cases gadgets like anti-theft devices can result in reduced insurance premiums. But the opposite can also be true.

Take for example the case of a woman in California who was recently given a ticket for wearing Google Glasses while driving. The lady was pulled over for speeding and the police officer noticed that she was wearing Google Glasses and tacked on a citation normally given to drivers who are distracted by watching a video screen while driving. While the lady has pleaded not guilty to both the charges, if she is found guilty, the effect on her insurance rates could be huge. Such tickets do affect your insurance rates.

An increase of a few hundred dollars a years on her auto insurance premiums could negate any benefits that the Google Glasses offer her. We at Allied Brokers just fought and won a ticket that would have raised the rates by $500 a year.

Insurance Costs Rise Faster Than Wages

Employer sponsored health insurance is the most common type of health coverage in the country. It is something that every employee wants and the contribution towards this coverage, deducted from the worker’s wages, is in most cases seen as a reasonable cost in view of the possible benefits. With health costs still beyond the means of a large part of the population, the need for employer sponsored covered can only grow.

But the cost of this insurance is, in terms of its effect on incomes, is increasing.

Almost Flat Wages

In 2011 the costs of family health insurance coverage increased by 9% and that of individual coverage by 8%. Against this, the rise in the current year over 2012 has been 4% for family coverage and 5% for single coverage. So while the lower increases are good news, the fact that wages have gone up by only 1.8% shows that the cost, to the employee, has gone up. Today, employer sponsored family insurance costs top $16,000.

On top of this, many employers are modifying the health insurance policies to include a higher deductible. This means that the insured will have to pay more for medical tests and treatments before the coverage kicks in. Add this to the growing cost of coverage and the low wage increase and employees are paying significantly more from their own pockets for health insurance.

The more moderate increases in health insurance costs since the end of the recession are the only silver lining in this situation. The Kaiser Family Foundation, a non-profit that has studied the issue sums up the situation it in this way – coverage costs are going up, cost sharing is going up and wages are almost flat. The implications for the family budget are clear. The only positive is that inflation remains low.

It’s Not The Same For All 

Generally speaking the employer covers most of the health insurance costs of an employee, but the actual change in costs and its effect is often felt directly by the employee. There are some lucky workers whose employers absorb health insurance cost increases so the employee contribution remains static. Insurance rates also depend on the type of coverage, the area lived in and the size of the employer. Those working for smaller companies tend to suffer the most from insurance cost increases as the employers do not have the same negotiating leverage as large companies do.

Little Hope Of Relief 

According to America’s Health Insurance Plans (AHIP), the national trade association representing the health insurance industry, more than one sixth of the U.S. economy is directed towards health care spending, but the value received in not anywhere near the $2.7 trillion that is being spent. Up to 30% of this amount -$800 billion – is wasted or used in inefficient or redundant ways. While a great deal of discussion has taken place on the issue, concrete long terms steps to bring the situation under control, Obamacare notwithstanding, are yet to emerge. In other words, the hopes for any short term relief on rising health care costs are slim.

Contact Insurance by Allied Brokers and have your questions answered about how to keep your insurance cost in check.