Ex-AIG CEO Hank Greenberg launches new insurer

Maurice “Hank” Greenberg, one-time CEO of American International Group and one of the insurer’s largest shareholders, is reuniting with some of his former colleagues for a new insurance venture.

Greenberg’s firm, C.V. Starr & Company, has launched Iron-Starr Agency Limited, a joint venture with Ironshore Inc. Iron-Starr Excess will act as a specialty lines insurance and reinsurance managing general agency, domiciled in Bermuda, according to an announcement from C.V. Starr.

Initially, Iron-Starr Excess will focus on the production of excess financial and commercial lines insurance and reinsurance products through U.S. insurers, Bermuda or other offshore carriers, including catastrophic excess casualty insurance for Fortune 2000 and other clients. It will issue policy limits up to $75 million.

“There are significant opportunities in this market, and C.V. Starr together with Ironshore has the team to get the job done,” Greenberg said in a statement.

Kevin Kelley, Ironshore’s CEO who used to work under Greenberg at AIG’s Lexington Insurance subsidiary, said in a prepared statement that the partnership allows his company to enter the excess casualty market “with additional backing and support to offer larger limits, consistent with the needs of these clients.”

“We look forward to developing a long-standing relationship with C. V. Starr and are excited about this new venture,” he said. “This arrangement will assure customers that during these challenging times, they have a syndicated alternative that understands their needs and has the experience to be a long-term solution.”

Ironshore also features six former AIG employees as its executives.

Greenberg has been a frequent critic of the $150 billion federal bailout of AIG, the company he left in 2005 amid money mismanagement claims by former New York Attorney General Eliot Spitzer.

In November, Greenberg told IFAwebnews.com that while the impact of the relief funding will take years to realize, he believes AIG will be minimized to a worldwide property-casualty company with “some modest life remaining assets, but it is hard to tell.”

Greenberg has also been skeptical of the government’s 79.9% ownership role in the insurer, as it could hurt raising capital in the future.

C.V. Starr is an independently owned holding company with insurance agencies and a portfolio of global investments. Through its insurance operations, C.V. Starr writes specialty lines covering aviation, marine, energy, excess casualty and property, accident and health, including risks with international exposures.

Madoff torts likely to plump up some insurance prices

Frenzy of litigation could strain liability lines already stretched thin by subprime mess; ‘lot of links in the chain’

Madoff’s alleged $50 billion fraud is likely to produce substantial insured losses and put additional pressure on the industry’s already battered professional liability lines, observers say. 

Aon Benfield estimates the direct insured losses resulting from the investment fraud at $760 million to $3.8 billion, with a best estimate of $1.8 billion, according to a preliminary analysis released recently by the Chicago-based reinsurance brokerage. 

Suits against money management firms that sent investors to Bernard L. Madoff Investments Securities have mounted since last month, when federal prosecutors charged the Wall Street fund manager with running a massive Ponzi scheme. 

Claims are being directed at financial institutions, investment funds and money managers who dealt with Mr. Madoff; some lawsuits extend to include parent companies, accounting firms and auditors tied to the investments, said Kevin LaCroix, a partner with executive liability intermediary OakBridge Insurance Services in Beachwood, Ohio. 

For example, a suit against investment adviser Ascot Partners—which invested nearly $1.8 billion in assets with Mr. Madoff—also named Ascot’s auditor, BDO Seidman. 

“Basically, anyone who stood in between the investor and Madoff” could be targeted, Mr. LaCroix said. “There are a lot of links in the chain” and “burned investors will be examining all the relationships as they try to recover their losses.” 

The size and scope of this scheme “will add up to a lot of liability somewhere” said Greg Flood, the New York-based president of IronPro, a professional liability division of Bermuda-based Ironshore Insurance. “Industry-wide claims costs between $1 billion and $2 billion would be very easy to imagine,” he said. Mr. Flood said he was not aware of any Madoff-related exposure at Ironshore. 

Lawsuits are likely to focus on the due diligence performed by the institutions that invested clients’ money with Mr. Madoff. Other allegations could include negligence, mismanagement and breach of fiduciary duty, legal experts say. 

New York-based Fairfield Greenwich Group, a large institutional investor in Madoff funds, faces a $7.5 billion suit by investors. In the suit, plaintiffs argued the hedge fund managers collected millions of dollars in fees while failing to carry out due diligence that would have uncovered the fraud. 

Claimants primarily will call upon firms’ errors and omissions and directors and officers liability policies, but other types of coverage also may be sought to pay for the losses, including crime insurance and fidelity bonds, observers say. 

Subprime loan-related claims already have generated an estimated $3.5 billion worth of D&O claims for financial institutions and pushed up prices for liability coverage for financial institutions by as much as 100%, according to market experts. 

D&O rates for financial institutions have risen for the past five quarters year over year and, given the Madoff impact, “we expect that trend may continue,” said Michael O’Connell, New York-based managing director of the financial institutions practice for Aon Risk Services, a unit of Aon Corp. 

“It’s certainly something the E&O and D&O lines are bracing for,” said Michael White, senior vice president and financial institutions industry leader for the executive risks practice for Willis HRH in New York. He noted that recent renewal negotiations for financial institution coverage have featured a heightened interest by underwriters in clients’ potential exposure to Mr. Madoff. Industry observers also say they would not be surprised to see insurers writing Madoff exclusions into policies. 

Among the leading providers of financial institution insurance generally are American International Group, Chubb Corp., ACE Ltd. and XL Capital are likely to face the highest claims, observers say. AIG and ACE declined to comment, while Chubb and XL did not respond to requests for comment. 

The final cost to insurers may depend on the amount of coverage the institutions bought, but losses could be restricted because money management firms typically cannot purchase high limits, observers say. 

“Most of the firms would not have adequate limits of coverage to indemnify the people who would sue,” said Marshall Gilinksy, a shareholder in the New York office of Anderson Kill & Olick. He noted that typical E&O policy limits for financial advisory firms might be about $15 million to $20 million and available up to $30 million. Limits for financial institutions are more difficult to generalize, he said. 

“It would not be unusual for a money management firm to have limits of $10 million” for E&O liability, Mr. LaCroix said. 

Defense costs, which are expected to be “significant,” are likely to erode policy limits because liability coverage typically includes defense costs inside limits, legal experts say. 

Insurers also may be looking closely to see whether the allegations raised trigger coverage exclusions, particularly those around conduct resulting in personal profit or gain, said Mr. LaCroix. 

But Willis’ Mr. White said he thinks “it’s going to be difficult (for the carriers) to try to deny coverage” broadly due to the nature of the investors’ claims.

Cheap Car Insurance Policy Options in 42 States

Phoenix Arizona, January 21, 2009  Serenity Insurance Group  announced today that they have been appointed with Safeco Insurance to provide Homeowner’s Insurance, Renter’s Insurance, Umbrella Policies, ATV Insurance and RV Insurance in 42 States. Serenity Group has the ability to provide car insurance coverage in 47 states from several different companies and they currently provide auto insurance quotes for high risk requiring a Form SR22 and for preferred drivers requiring cheap car insurance and motorcycle insurance.

Serenity’s agents are bilingual and Serenity has a large customer service staff to assist customers . Serenity has provided insurance for tens of thousands of customers throughout the Unites States. Cheap car insurance has become one of Serenity’s specialties and their agents are becoming known throughout the industry as the experts in finding the companies who can provide the least expensive rates.

Innovation is also one of Serenity’s attributes. Serenity can quote and complete a purchase for auto insurance in less than 7 minutes. All transactions can be completed via the internet, with the help of agents to secure the least expensive and best insurance scenario for the customer. For over fifteen years Serenity Insurance has provided cheap auto insurance, SR-22 insurance and high risk auto insurance in 47 states.

Rather than going from company to company and getting a quote from each of them, Serenity’s experienced agents rate customers with all of the companies they represent to find the best rate and situation for that person. Serenity has extensive experience finding cheap car insurance rates for all customers and SR22 insurance is not their only business. Serenity can offer complete insurance packages for the homeowner, renter, motorcycle or ATV rider, Recreational vehicle owner,or an umbrella policy.

About Serenity Insurance Group

Serenity Insurance began as a unique insurance agency primarily focused on serving the specialized insurance needs for drivers with alcohol related offenses. Mr. Thomas A. Black, the founder and CEO of Serenity Insurance has over 30 years experience in the insurance business. Mr. Black believes that when people make a serious mistake and get an alcohol related offense they need an insurance agency that understands what is involved from society’s point of view as well as from the offenders point of view. Serenity Insurance helps people get back on their feet by acting as a resource for answers related to SR-22 insurance and providing affordable insurance. Serenity now serves 47 states and is committed to treating all people with dignity and respect while maintaining complete confidentiality.

Serenity works very closely with Alcohol Treatment Centers supporting their efforts to get offenders back on their feet as contributing members of society as quickly as possible. Serenity stands firmly committed to providing caring confidential service combined with affordable insurance for people requiring an SR22 filing.

Former AIG Execs Creates U.S. P/C Operation

Ironshore Inc. has appointed Steven England as executive vice president responsible for running its newly created U.S. Property/ Casualty underwriting operations based in St. Louis, Missouri.

The new unit, Ironshore National Branch, will act as a U.S. underwriting office for certain of Ironshore’s property/ casualty operations. Ironshore National Branch will build out a national distribution platform for Ironshore products utilizing primarily a wholesale brokerage distribution strategy.

Jordan Gantz and Jim Dowdy have also joined the group and both report to Steve England.

England was most recently president of AIG Landmark, where he managed the start up of an agribusiness practice. Prior to heading up AIG Landmark, he was regional vice president for AIG’s Commercial Insurance Group in Houston, Texas. he will report to Shaun Kelly, CEO of Ironshore’s U.S Operations.

Gantz has been in the insurance industry for 23 years. Prior to joining Ironshore, he was most recently senior vice president for AIG Landmark where he managed the casualty start-up of the agribusiness practice. Before joining AIG Landmark, he was the chief underwriting officer in Bermuda for Allied World Assurance Co.

Dowdy has 27 years’ experience in the insurance industry. Most recently, he was senior vice president for AIG Landmark where he managed the property start-up of the agribusiness practice. Prior to AIG Landmark, Dowdy was zonal property manager for Lexington Insurance Co.’s Northeast Zone.

Siemens upbeat on bribery insurance payout -report

FRANKFURT – Siemens (SIEGn.DE) is optimistic it will get a payout from 250 million euros ($331.4 million) of insurance cover it took out for damages caused by senior company officials, a German newspaper reported on Sunday.

The Sueddeutsche Zeitung cited company sources at the German engineering group as saying an insurance consortium led by Allianz (ALVG.DE) was prepared to pay, though not the full amount, and that talks were under way to determine the exact sum.

Siemens and Allianz declined comment on the report.

Siemens years ago took out the policy covering actions by top executives and supervisory board members.

It now wants it to cover some of the nearly 2 billion euros in costs it incurred from a bribery scandal that cost the jobs of former Chief Executive Klaus Kleinfeld and ex-CEO and former supervisory board Chairman Heinrich von Pierer.

Von Pierer and Kleinfeld, who resigned from their posts in 2007, have not been accused of crimes and both have denied any wrongdoing.

Siemens last month agreed to pay more than $1.3 billion to settle corruption probes in the United States and Germany, ending two years of uproar that rocked the company. Siemens is also seeking compensation from former officials in the case.

Ironshore Hires Another Top AIG Executive

AIG Environmental executives (from left): John O’Brien, Executive Vice President; Joseph Boren, Chairman/CEO; and Peter Gilbertson, Director of Marketing.

Ironshore recruits another AIG executive to head excess liability unit

Ironshore Inc. has expanded its management team with the appointment of former American International Group (AIG) Cat Excess Liability president Geoff Smith as worldwide head of its newly-launched excess liability facility. Mr. Smith is the latest in a line of recent recruitments from AIG.

In his new role, Mr. Smith, who will work out of New York and report to Shaun Kelly, CEO of Ironshore’s US operations, and Keven Kelley, CEO of Ironshore, who in turn both joined the company from New York-based American International Group’s (AIG) Lexington Co. last month, will provide global strategic direction and consistency across all of Ironshore’s platforms writing the liability product set.

A new unit will be established to write catastrophic excess casualty insurance for Ironshore Bermuda, targeting Fortune 2000 and other clients purchasing cat excess coverages.

Mr. Smith has 24 years of liability underwriting experience in the re/insurance market, working at AIG since December 2000 and serving as vice-president at General Reinsurance Corp. in the National Account from February 1998 to December 2000.

“Hiring Geoff is a big win for Ironshore as we expand into the cat excess liability arena,’ said Mr. Kelly. “He brings a wealth of expertise in underwriting and managing excess liability portfolios.

“The launch of this cat excess liability unit will further add to Ironshore’s product and geographic diversification.”

Recession compounds woes as millions lose jobs, insurance

Struggling states slashing health care for poor

WASHINGTON — Even as President-elect Barack Obama plans an ambitious push to expand health coverage nationwide, states around the country are slashing health services to their poorest residents amid the economic downturn.

The cutbacks in public assistance come as millions of Americans are losing their jobs and health insurance.

In many cases, the cuts are so deep that even the huge federal rescue package being assembled on Capitol Hill may not be enough to restore services being eliminated in the burgeoning crisis, health officials warn.

On top of that, the faltering economy has all but killed trailblazing campaigns from California to Connecticut to expand coverage for the working poor—once seen as hopeful signs for national health-care reform.

In California, whose problems dwarf those in other states, nearly 500,000 poor people may soon lose access to free care as the state seeks to slash more than $1 billion from its budget for health care and social services.

South Carolina has cut treatment for low-income women under 40 with breast or cervical cancer and stopped providing nutritional supplements to people suffering kidney failure.

In southern Nevada, cancer patients without health coverage no longer have a place to get chemotherapy after the state’s largest public hospital stopped providing outpatient oncology services.

Although Illinois is feeling a financial crunch, a top official says it is not contemplating cutbacks in services to people enrolled in Medicaid, the primary federally funded health program for the poor administered by the states.

Instead, Illinois hopes to wring more efficiencies from Medicaid by reviewing pharmacy outlays, strengthening disease management and tightening medical oversight, according to Theresa Eagleson, administrator of the division of medical programs at the Illinois Department of Healthcare and Family Services.

Eagleson said the state was seeing “a bit of an uptick” in people applying for Medicaid, above the 3 percent increase in enrollment projected for this fiscal year.

Because most of the increase consists of families and children, who are much less expensive to cover than seniors and people with disabilities, costs are not excessive and “our budget is fairly in line with what we projected,” Eagleson said.

Still, Illinois’ cash crunch is hurting hospitals, nursing homes and doctors across the state. Although the state was able to settle $800 million in Medicaid claims recently with new short-term borrowing, $1 billion in medical bills from providers remain outstanding, Eagleson said.

Anecdotal reports indicate that providers are closing shop or reducing access for Medicaid patients facing financial difficulties. About 1.4 million Illinoisans depend on Medicaid.

The Democratic-controlled House began offering some help Wednesday, passing a bill to extend federally funded health insurance to 4 million more children.

The legislation—expected to be signed by Obama—would commit about $33 billion over the next 4 1/2 years to the popular State Children’s Health Insurance Program.

The 12-year-old program now covers 7 million children from families just above the poverty line that earn too much to qualify for Medicaid.

Congress also is at work on a stimulus package that could include as much as $100 billion to assist Medicaid.

Lawmakers plan additional assistance to help Americans keep their health insurance if they lose their jobs.

But even some congressional leaders concede the help will be insufficient.

“Let’s be honest,” said Assistant Senate Majority Leader Dick Durbin (D-Ill.), a close Obama ally. “We won’t be able to save every soul here.”

At least 44 states are facing budget shortfalls over the next two years totaling more than $350 billion, according to a recent survey by the Center on Budget and Policy Priorities, a liberal think tank.

In the last recession — which was mild compared to what many economists say is happening now—more than 1 million people lost health coverage as 34 states cut eligibility for public health programs, the center found.

Without the flexibility to run deficits like the federal government, state officials have been scrambling for months to cut aid to schools, universities and, increasingly, residents who rely on the state for medical care.

Nationwide, roughly 60 million low-income people use Medicaid to get some form of health care, including basic physician services, prescription drugs, X-rays, dental care and even hospice care. But some of those services are now in jeopardy.

Tribune reporter Judith Graham contributed to this report. 

Ironshore Inc – Madoff May Cost Insurers $1 Billion to Cover Funds

Bernard Madoff, president and founder of Bernard L. Mandoff Investment Securities LLC, right, walks out of Manhattan federal court in New York, Jan. 5, 2009. Photographer: Jin Lee/Bloomberg News

Bernard Madoff’s alleged Ponzi scheme may cost insurers who cover financial institutions more than $1 billion as they pay legal costs for investment managers who gave client money to Madoff, an industry executive said.

Insurers who sell such coverage never expected, or charged their clients, for the possibility of investor losses in such a massive fraud, said Greg Flood, the president of the management liability practice at Ironshore Inc., the Bermuda-based insurer.

“This isn’t supposed to happen in America,” Flood said. “There will be extraordinary losses paid for this year.” About $1 billion in claims costs industrywide “wouldn’t be too difficult to imagine.”

The final cost to insurers will depend on how many of the hedge funds and banks that directed money to Madoff had insurance, and the results of legal proceedings. Insurers of executives and corporate boards, a group that includes Zurich- based Ace Ltd.,XL Holdings Ltd., Chubb Corp. and American International Group Inc., already face a raft of claims after the collapse of the subprime mortgage market.

As Madoff cases go to court, expenses will accumulate because insurers selling “errors and omissions coverage” typically have an obligation to advance payment for defense, said Matthew Schlesinger, a partner at Reed Smith LLP in Washington.

Legal Fees

“Defense costs for funds facing Madoff-related suits could be high,” said Schlesinger, who specializes in recovering money from insurers. The cases “may turn on what funds knew about Madoff and whether or not funds managed investments appropriately.”

Before his arrest on a charge of securities fraud on Dec. 11, Madoff confessed to his sons that his “giant Ponzi scheme” may have cost clients as much as $50 billion, according to an FBI complaint. Some of those investors include so-called funds-of- funds, which invest customer money in a variety of hedge funds.

A total of $1 billion in claims from Madoff litigation “feels a little low to me,” said Lauri Floresca, senior managing director at Nasdaq OMX Group Inc.’s Carpenter Moore insurance brokerage. “The big unknown is how many companies will end up having insurance.”

Securities-fraud class-action lawsuits rose last year to the highest level since 2004. That may push insurer liability costs tied to subprime suits over $4.5 billion, according to Floresca.

Substantial Reserves

Chubb was spending more on professional liability claims and expenses in most of 2008 than the company collected in premiums for the coverage, Chief Executive Officer John Finnegan said in an Oct. 23 conference call.

“It is an evolving situation, and obviously it has not been evolving favorably recently,” Finnegan said. “But we are reserving pretty substantially for that class of business.”

Ace advanced 25 cents to $49.75 at 4:15 p.m. in New York Stock Exchange composite trading. Warren, New Jersey-based Chubb fell $1.18, or 2.5 percent, to $45.25, while Bermuda-based XL slipped 3 cents to $4.30. New York-based AIG dropped 3 cents to $1.62.

Hedge funds and unregulated investment vehicles catering to the wealthy, which made up a portion of Madoff’s investors, often don’t buy coverage, said Frank Vento, head of investment management practice at Marsh & McLennan Cos.’s flagship brokerage unit. New York-based Marsh & McLennan, the second-biggest insurance broker, hasn’t noticed an increase in claims stemming from Madoff, said Vento, of Marsh Inc.

“I think it’s too early to tell,” Vento said. Registered mutual funds and their advisers pay about $250 million for errors and omissions insurance each year, Vento said.

AIG’s Christina Pretto, Ace’s Stephen Wasdick and Chubb’s Mark Greenberg declined to comment. XL spokeswoman Carol Parker Trott didn’t return a call.

Health Insurance Reform

A Fresh Call For Health Insurance Reform

By ARIELLE LEVIN BECKER

It wasn’t that Debbie Hunsinger didn’t know about the lump in her breast. She did. And it wasn’t that she didn’t care about her health. Back when she had health insurance, she never missed a physical.

But a divorce left her without health coverage, and although she owned a deli in South Meriden, Hunsinger couldn’t afford health insurance. She couldn’t afford to see a doctor, either, so she decided not to deal with the lump. At the time, it was pretty small.

But by the time she finally got it checked out, about six months later at a free screening, it wasn’t small. 

And the cancer had spread to her lymph nodes and right arm.

If the cancer had been caught earlier, if she hadn’t been one of the more than 300,000 people in Connecticut without health insurance, Hunsinger, 47, figures she might be healthy and back at work by now. Instead, she’s facing dozens more rounds of chemotherapy and radiation and an uncertain prognosis.

Hunsinger thinks something must change. “I would hate to have anybody have to go through this just because they don’t have health insurance,” she said.

Her struggle is one of the reasons advocates say that it is finally time to make broad changes — an effort that will get a jump-start today in Hartford when the Universal Health Care Foundation of Connecticut unveils its proposal calling for major changes in the health system and a plan that the group says could insure 98 percent of state residents by 2014.

It is the first of many proposals — both state and federal — expected to be aired in what many people say is the year for health reform. 

State legislators expect to address the issue in the current session, and the topic is expected to be a top priority for President-elect Barack Obama. Already, members of Obama’s health care advisory team have been gathering input through meetings on health care reform, including one at the UConn Health Center last week.

It won’t be an easy year, though. The prospect of new state spending or major federal reform might face tough obstacles as state legislators grapple with a projected $6 billion biennial budget gap and the Obama administration confronts an economy in shambles.

But advocates for reform say that the economic crisis and growing unemployment, with more Americans at risk of losing their health insurance, makes this precisely the time to tackle health reform.

“Fixing health care is about fixing the economy, that’s sort of the bottom line,” said Juan A. Figueroa, president of the Universal Health Care Foundation.

Figueroa said that the foundation’s plan would put Connecticut in a strong position as the federal government addresses health reform, allowing the state to shape the national debate and be ready to tap into any resources that the federal government makes available for health reform.

The proposal calls for a new health program, called SustiNet after the Latin word for “sustains,” that would extend health insurance to anyone who wants it while emphasizing preventive care and other changes.

The plan, which would begin enrollment in 2011, would create a gigantic health insurance pool by combining the existing pool of state employees and retirees with people now covered under state assistance programs.

The pool would also be open to the public, starting with those without access to employer-sponsored insurance, those whose employer-sponsored insurance is inadequate or unaffordable, and employees of small businesses, nonprofit groups and municipalities. 

Ultimately, any employer in the state could use the state’s pool instead of their own insurance. Employers who wish to participate would pay in as they would any other health insurance plan.

Mid-size and large employers would not, however, be able to simply drop coverage and allow the state to pay the cost of their employees’ care. Employers with payrolls above $318,000 that do not offer insurance or provide adequate coverage to their employees would be required to help pay the cost of the program.

The plan is for the pool to compete with, not replace, private insurance plans. The proposal would not require everyone to be covered, but would automatically enroll people without insurance unless they opt out of the plan.

The foundation believes that the size of the pool will lead to lower costs — a critical element of the plan. According to the foundation, the plan would save individuals and employers $1.7 billion by 2014, although it would require the state to spend an additional $950 million in 2014, the year that the plan is expected to be fully operating. 

That figure includes the cost of subsidizing coverage for previously uninsured people and increasing the notoriously low payments that doctors receive for seeing HUSKY and Medicaid patients.

The concept of expanding the state’s employee insurance pool isn’t entirely new. A proposal last year to open that pool to municipalities and small businesses passed the General Assembly, with strong support from Democratic leadership. But Gov. M. Jodi Rell vetoed the bill. 

Figueroa said that the foundation’s proposal offers a far more comprehensive approach and that he hopes Rell and other state officials will be supportive.

“This is a time not to be weak-kneed about these issues,” he said. “This is a time to exercise strong leadership.”

The foundation’s figures for 2014 are based on several assumptions, including:

•$570 million in premiums paid by individuals covered by the plan; premiums would be charged on a sliding scale, based on people’s ability to pay.

•$80 million in “shared responsibility payments” from employers with payrolls over $318,000 that don’t provide insurance coverage to their employees.

•$240 million in revenue from companies whose employees join SustiNet because their company-sponsored plan is inadequate.

•An additional $800 million in federal funding by expanding the federally subsidized HUSKY program.

Health Care for the Unemployed

Paying For Health Care is Difficult for the Unemployed

With California unemployment rates at an all-time high, people are facing a double whammy — losing their job and their health care.  A new report finds it will take a big bite out of your unemployment check to keep your health insurance.  Kelley Weiss reports.

The report is by the consumer advocacy group Families USA. It shows most laid-off workers have to spend about three-quarters of their unemployment benefits to keep their health care insurance. That’s if they opt to get COBRA insurance. It’s a plan that lets you keep your health benefits for the short-term. But there’s a catch. Since your employer is no longer chipping in, you have to pay the whole cost.  In California the report says COBRA insurance for a family, on average, is about $1,000 a month.

Betsy Imholtz is with the Consumers Union West Coast office.  She says whether to pay for COBRA is a tough decision.

Imholtz: “Once they see the price and the cost there is invariably sticker shock, it’s a huge amount of money, so people are really scrambling.”

Imholtz says if people are priced out, they’ll go without health care. She says even if COBRA plans are expensive, it’s probably the best option laid-off worker have.