ON DEPOSIT INSURANCEFederal Reserve Board Chairman Alan Greenspan cautioned Congress Thursday to think twice before scaling back the $100,000 limit on insurance for bank and savings institution deposits.
Mr. Greenspan, in testimony prepared for the Senate Banking Committee, did not flatly oppose a reduction, but he warned that lowering the limit would involve "significant transition costs."
He acknowledged the need for change in the wake of the S&L crisis. The federal deposit insurance allowed thrift owners to gamble on investments, knowing they would reap the profits if they succeeded but taxpayers would pick up most of the loss if they failed.
If Congress lowers the current $100,000-per-deposit insurance limit, the Federal Reserve recommends "a meaningful transition period," he said.
PA. BLUE SHIELD WINS
RATE HIKE APPROVAL
HARRISBURG, Pa. - Pennsylvania Blue Shield, the state's largest health insurer, received approval from the Insurance Department for a $6.6 million annual rate increase effective July 1.
Amy K. Dugan, spokeswoman for the regulator, said the rate boost amounts to seven-tenth of 1 percent for Blue Shield subscribers and is linked to the state's new automobile insurance rate rollback law, which also became effective July 1.
Ms. Dugan said a section of the rate-reduction law reduced from $10,000 to $5,000 the amount of mandatory first-party auto-accident medical expense coverage, and motorists who insure at the lower mandatory level would depend on their health insurance to cover auto-accident medical costs in excess of their $5,000 auto policy coverage.
The Insurance Department agreed with Blue Shield that the change would mean more claims for the health insurer, and approved the Blue's request for the rate increase.
CALIF. AGENTS CHARGED
IN MEDICARE SCAM
SAN FRANCISCO - Two insurance agents have been arrested on multiple counts of grand theft stemming from sales of Medicare supplement policies to the elderly, according to the California Department of Insurance.
Eric P. Jacobs of Burbank, Calif., and Mitchell S. Horowitz of Northridge, Calif., were arrested following an extensive investigation conducted by the insurance department and the Los Angeles Police Department.
The investigation revealed that Mr. Jacobs and Mr. Horowitz overcharged their elderly customers for the Medicare policies and persuaded them to invest in a bogus company called "Senior Concepts," according to the department.
LOMAS FINANCIAL TO SELL
THREE INSURANCE UNITS
DALLAS - Lomas Financial Corp. plans to sell its three life insurance companies to an Indiana insurance company for $140 million in cash and $25 million in securities.
The deal must be approved by the U.S. Bankruptcy Court, which is overseeing Lomas under Chapter 11.
The companies involved are Jefferson National Life Insurance Co. of Indianapolis; Union Life Insurance Co. of Little Rock, Ark.; and First Continental Life & Accident Co., Salt Lake City.
The companies would be sold to Conseco Capital Partners Limited Partnership, formed by Conseco Inc., a life insurance and annuity company based in Carmel, Ind.
SAI Group Accepts
Dutch Merger Offer
CHERRY HILL, N.J. - SAI Group Inc., a direct insurance marketing company and European consultant, has accepted an offer from Dutch insurer Verzekeringe Beheer NV, to acquire all of SAI's outstanding shares for 6.25 cents per share and merge the company into a wholly owned subsidiary of Proteq.
Proteq is an affiliate of Hooge Huys Verzekeringen NV.
A special meeting of shareholders is scheduled for Sept. 13, for a vote on the proposed merger, according to a statement by SAI Group.