Newt Gingrich proposed surety bonds as alternative to mandated health insurance

by on February 1, 2012

photo by Gage Skidmore

Yesterday an audio recording in which Newt Gingrich vocalizes his support for mandated health insurance went viral. The recording is stirring up controversy in both parties as Gingrich has frequently denounced “Obamacare” during the past few months of his presidential campaign.

The recording is from a May 2009 Center for Health Transformation conference call Gingrich hosted. At the time, the health care reform act had just been introduced to Congress.

In advocating for a degree of choice in the program, Gingrich proposed that individuals be allowed to post a bond as a way to opt out of purchasing federally mandated health insurance.

“We believe that there should be a must-carry — that is, everybody should have health insurance. Or, if you’re an absolute libertarian, we would allow you to post a bond. But we would not allow people to be free-riders failing to insure themselves and then showing  up at the emergency room with no means of payment.”

Gingrich also expressed similar sentiments as recently as May 2011 in an appearance on “Meet the Press.” On the show Gingrich said, “I’ve said consistently that we ought to have some requirement that you either have health insurance, or you post a bond, or in some way you indicate you’re going to be held accountable.”

Gingrich’s initial support for universal health care did vary from President Barack Obama’s plan in that it included options, which is where his suggestion for individual surety bonds comes in. But could a surety bond option reasonably substitute required health insurance policies? Not likely.

First of all, surety providers do not underwrite bonds in the same way insurance companies write health insurance policies. Insurance companies expect a reasonable number of claims to be made whereas surety providers only write bonds for principals who are highly unlikely to ever have a claim made against them. As such, surety providers would likely screen applicants for pre-existing conditions and other risky health factors. Insurance companies won’t be able to do so once the health care reform goes into full effect, but that doesn’t mean it would apply to surety providers.

Furthermore, according to HotAir.com, “In 2008, put the price of that [health care] bond at $100,000 – $150,000 — far out of the reach of most Americans.” Applicants who have a credit score of 700 or higher typically pay premiums calculated at 1 to 5% of the total bond amount. This would mean applicants who qualify for the standard market would pay $1,000 to $5,000 for a $100,000 bond or $1,500 to $7,500 for a $150,000 bond.

Those with credit scores below 700 could pay rates up to 20%, which would mean $20,000 to $25,000 premiums. As such, surety bond premiums would be nearly impossible for most Americans to afford. Not to mention the fact that surety bonds typically aren’t one-time purchases as each bond that’s issued is only valid for a certain duration. When the bond expires, the principal would be forced to purchase a new bond and pay the premium again.

Although Gingrich’s idea to offer bonding as an alternative to mandated health insurance policies might have, theoretically, given Americans a choice, it was quite misguided. Realistically it would have done nothing more than back individuals into a corner where purchasing an insurance policy would be the only real choice.

Of course, Gingrich currently continues to denounce “Obamacare” and claims he will overturn it if elected president, which is a far cry from where he stood on the issue less than a year ago.

 

 

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Georgia auto dealer bonds to expire March 31

by Danielle on January 31, 2012

Georgia auto dealer bonds expire statewide on March 31. Only Georgia auto dealers who sell used vehicles must file a $35,000 surety bond as a part of the state’s used auto dealer licensing process.

Qualified applicants who work with SuretyBonds.com could pay just $550 for a two-year, $35,000 Georgia auto dealer bond. To speak with a surety specialist about your Georgia surety bond, call 1 (800) 308-4358 Monday through Friday between 8 a.m. and 7 p.m. CST.

Auto dealers who are looking for lower rates might also be interested in contacting a SuretyBonds.com specialist. As brokers, they shop every bond application around with various underwriters to find some of the industry’s lowest rates. SuretyBonds.com can bond 99% of applicants regardless of their qualifying credentials.

The Georgia auto dealer bond requirement helps regulate the the state’s auto industry and also protects its consumers. The legal language found on the bond form provides a financial guarantee that auto dealers will comply with

“the conditions of any written contract or written warranty by such dealer or his agent, made in connection with the sale or exchange of any motor vehicle and shall pay all loss, damages, and expenses that may be sustained by any purchasers of any used motor vehicle and their vendees or successors in title by reason of any fraudulent misrepresentation as to liens against or titles to any used motor vehicle then the bond is to be void, otherwise it is to remain of full force and effect.”

This language essentially holds auto dealers accountable for financial losses consumers might incur when dealers misrepresent merchandise or use fraudulent sales tactics.

The state’s auto dealer bond form expires on even-numbered years. Failing to get a new bond issued before March 31 could result in a lapse of surety bond coverage.

Dealers will submit their Georgia auto dealer bonds to

Georgia State Board of Registration of Used Motor Vehicle Dealers & Used Motor Vehicle Parts Dealers
Used Motor Vehicle Dealers Division
P.O. Box 13446
Macon, GA 31208

The Georgia auto dealer licensing department can be reached at (404) 968-3880.

 

 

 

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What the 2012 State of the Union address could mean for the surety industry

by Danielle on January 30, 2012

 

 

 

If you watched President Barack Obama’s State of the Union address on January 24, you probably remember a few key talking points about his stance on taxation, job creation and education, among other initiatives. What you might not have realized, though, is how some of his suggested overhauls could affect the way government agencies across the nation use surety bonds.

Obama briefly called out the mortgage lending industry for its corrupt lending practices of late. He then declared that Americans must hold lenders to higher standards in the future.

“We’ve all paid the price for lenders who sold mortgages to people who couldn’t afford them, and buyers who knew they couldn’t afford them. That’s why we need smart regulations to prevent irresponsible behavior. Rules to prevent financial fraud, or toxic dumping, or faulty medical devices, don’t destroy the free market. They make the free market work better.”

Surety bond requirements are commonly used to regulate professionals who work in finance. In short, the use of surety bonds holds professionals to higher industry standards. For example, surety bond requirements are enforced in the mortgage industry to curb instances of fraud and other unethical lending practices. The financial guarantee provide by mortgage bonds can protect consumers from lenders who might

  • deliberately approve borrowers for loans they won’t be able to repay
  • encourage buyers to use fraud when applying for mortgages
  • pressure buyers into certain loan products, including high-risk loans or loans with higher interest rates
  • intentionally target vulnerable or at-risk buyers and suggest cash-out refinances

Mortgage professionals typically have to file a surety bond before they can get their industry licenses. If their financial credentials or past work records disqualify them from a bond as required, they will not be permitted to work in the industry. As such, the surety application process keeps financially unstable or otherwise unqualified individuals from gaining a position through which they might take advantage of consumers.

A number of licensing agencies have discovered just how useful surety bonds requirements can be when screening those looking for jobs in the finance industry. As such, a number of new surety bond requirements have been established during the past few years. These new bonding requirements keep unqualified individuals out of the markets that have recently been known to take advantage of consumers.

Within the past two years, state governments in 10 states have established new surety bond requirements for appraisal management companies. These new appraisal management bonds provide a financial guarantee that appraisal management companies will fulfill their tasks according to law. If the trend of further regulating unruly financial professions continues — as Obama advocates — appraisal management companies across the country might find themselves struggling to get licensed.

Surety bond regulations are also being used to prevent a second robo-signing crisis, which resulted in the mass production of false and forged mortgages across the country. To combat the potential for such a problem in the future, Alabama recently increased its required surety bond amount for notaries from $10,000 to $25,000. The $25,000 notary bond amount is currently the highest in the nation.

The need to protect consumers from unneeded financial loss in the current unstable economy makes one thing certain: the government certainly values the financial security that surety bonds provide. If Obama’s call for stronger regulation is answered, government agencies will begin revising existing surety bond requirements while also developing new ones.

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Pennsylvania reviews coal mine reclamation surety bond requirements

by Danielle on January 20, 2012

 

 

 

Surety bond requirements intended to protect environments near Pennsylvania coal mines have been producing the very problems they attempt to prevent.

Because coal mine operators in Pennsylvania often have trouble funding the expensive surety bonds required for mine reclamation, they can’t get approved to work on reclaimed sites. As a result, more than 100 abandoned mine discharge sites can be found across the state.

Before surface mining can begin on an existing site, the mine operator must file a Pennsylvania surety bond with the Department of Environmental Protection. The department determines an individual bond amount based on the mine operator’s estimated cost of fulfilling the project. The bond amount must cover the full project amount in case it should be left unfinished, which means the surety bond costs owners pay can be substantial.

The bonds provide a financial guarantee that coal mining sites will be properly reclaimed when the project is finished. However, when mine site operators cannot get the bonds required for mine reclamations, the sites cannot be reclaimed, and taxpayers are left footing the bill on unclaimed mining sites.

To counter the problem, lawmakers in Pennsylvania are considering legislation that would make the required surety bonds more accessible to mine operators. According to the Republican Herald out of Pennsylvania, “Part of House Bill 1813 is also a permanent Pennsylvania Re-Mining Financial Guarantees program that provides affordable bonding coverage as an incentive to encourage operators to re-enter and re-mine abandoned mines sites around the state.”

Simply put, passage of Pennsylvania House Bill 1813 would make it easier for the state’s mine operators to get the surety bonds they need.

On January 11, the Pennsylvania House passed the bill by a vote of 193-1. It currently awaits consideration in the Senate.

 

 

 

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Alabama implements 150% notary bond amount increase

by Danielle on January 14, 2012

 

 

 

Before beginning their commissions, new and renewing notaries in Alabama must now file much larger surety bonds than previously required. The change went into effect January 1.

In 2011, Alabama increased the required notary bond amount from $10,000 to $25,000, which is currently the nation’s highest notary bond amount. The reasoning behind the significant increase is to cut down instances of notary misconduct as a part of America’s recent”robo-signing” crisis.

Notary bonds do not protect notaries; rather, they protect consumers from notaries who might commit fraud or other errors. If a notary should make a mistake that’s against the bond’s terms, a claim can be filed against the bond so that consumers have access to financial reparation.

Surety companies have traditionally issued notary bonds quickly and easily without credit checks. With the significant increase in the bond amount, some surety providers review notary bond applicants more closely.

 

 

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With surety bonds, three destination resort casinos could open in Florida

by Danielle on January 13, 2012

 

 

 

The Florida Legislature doesn’t want to take any risks when it comes to the possibility of licensing new destination resort casinos.

The Seminole Tribe of Florida currently maintains exclusive casino gaming rights in the state. However, passage of Senate Bill 710 would allow up to three unaffiliated operators to build destination resort casinos.

One part of Senate Bill 710 would require casino operators to file a surety bond with the state before being approved for a destination resort license.

The bond would provide a legal guarantee that operators

  • make all required payments to the Chief Financial Officer
  • keep the licensee’s books and records
  • make reports as provided
  • conduct limited gaming activities according to law

The bill would also dissolve the Division of Parimutuel Wagering and establish a new Department of Gaming Control in its place. This new department would set the bond’s penal sum based on a casino’s total annual license fees and estimated taxes.

In lieu of a bond, the operator may deposit another means of financial security, including

  • a savings certificate
  • a certificate of deposit
  • an investment certificate
  • a letter of credit from a bank, savings bank, credit union or savings and loan association.

The bill also contains a number of other stipulations that would further regulate new destination resort casinos. According to Florida Today,  “The gambling bill likely will be one of the most heavily lobbied issues of the 2012 session.”

On Monday, the Senate Regulated Industries Committee passed the bill, which was introduced to the Senate on Tuesday. The bill could be discussed in the House Business and Consumer Affairs Committee early next week.

 

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