Archive for May, 2015

Rising Insurance Deductibles Contribute to Increase in Rates of Underinsured People

Thursday, May 21st, 2015
Inadequate Medical Insurance

Covered, But Still at Risk

A new report of the Commonwealth Fund finds that last year, 31 million Americans with health insurance had inadequate coverage or were underinsured. People are considered underinsured if they have had health insurance for a full year, but have high deductibles or out-of-pocket expenses relative to their income. The report found that the consequences of being underinsured are significant. Half (51%) of those who were underinsured had problems paying medical bills or were paying down medical debt over time. More than one-third (38%) were struggling to pay or could not pay their medical bills and one-third (34%) had long-term medical debt. More than one-fifth (23%) were contacted by a collections agency concerning unpaid medical bills or said that had to make lifestyle changes in order to pay their medical bills (22%). Following on the JP Morgan Chase study, cited in a recent blog entry, about the difficulties people are having with volatile income and unpredictable expenses, this study provides insight into the financial stress many Americans are suffering. Is there a way you can reduce the burden on your employees, such as through the use of tax-advantaged Health Savings Accounts? High deductibles and co-payments may discourage over-utilization, but it is counter-productive to have people deferring necessary care because of the out-of-pocket costs only to have a more serious, and more expensive medical problem later.  In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses, I recommended that small business consider reducing their commercial insurance premiums by selecting higher deductibles (and saving and budgeting for those deductibles). But for medical insurance, I favor the opposite approach.

JP Morgan Bank Study Reports Extreme Volatility in Income and Spending

Wednesday, May 20th, 2015

Today, the JP Morgan Chase Institute released a study titled Weathering Volatility: Big Data on the Ups and Downs of U.S. Individuals from which the key finding can be summarized as (from page 5 of the study):

The typical household did not have a sufficient financial buffer to weather the degree of income and consumption volatility observed in our data. The typical household did not maintain enough liquid savings that could be accessed immediately in the event of a large, unexpected expense sustained at the same time as a loss in income. While many in the field of consumer finance have long advised that consumers maintain an emergency fund, our research into income and consumption volatility shows that a financial buffer is a more important consideration for individuals across the entire income spectrum than is generally understood. We find that not only was volatility high for income and consumption, but also changes in income and consumption did not move in tandem. This creates the risk that people might experience a negative swing in income at the same time that they incur a large, potentially unexpected, expense.

The study found that income and expenses for individual bank consumers fluctuated among all groups across the income spectrum: the relatively affluent and the less comfortable alike. While this finding is not unexpected, what is unusual is the size and scope of the data collection efforts of the JP Morgan Chase team to conduct their analysis and reach their conclusions. They considered a sample of 2.5 million out of a total of 27 million account holders of JP Morgan Chase Bank on which they analyzed 135 million financial transactions, over a 27 month period across all of the Bank’s consumer products (checking accounts, savings accounts, credit card accounts,  home equity accounts, mortgage and automobile loans) and obtained corresponding account information from the credit bureaux.

I was particularly interested in the study’s statement concerning the risk that people may experience a drop in income at the same time they incur a large, unexpected expense. Of course, this is exactly what happens to small business owners when disaster strikes: they experience large expenses (uninsured losses, insurance deductibles, etc.) even as their income fluctuates until the business can recover its earnings capacity and/or customers return to the disaster zone and normal economic activity resumes. Clearly small business owners need larger reserves of savings to cushion these shocks. But often we are seeing the opposite result: dwindling savings as small businesses are covering expenses from their own reserves as capital access is constrained. Indeed, I had reported in an earlier blog post that the small business development centers in New Orleans had shared with me that the local businesses they serve lacked sufficient funds to cover the costs they would incur should an evacuation be ordered – a particularly alarming finding in hurricane season.

The study concludes with a recommendation for greater innovation to make tools and financial products available to cushion the financial shocks resulting from fluctuations in income and expenses. I don’t agree entirely with that finding. The fact is we have such products available, but the large segment of the U.S. population that lacks basic bank accounts shows there is a problem with access. Similarly, many small business owners lack adequate insurance to cover their losses. Perhaps the focus should be not on financial innovation but on expanding financial literacy to inform people of financial solutions currently available to them.

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Tuesday, May 19th, 2015

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Postcards from the Past

Monday, May 18th, 2015
Coco With Her Toys

Coco At Play

As I am making my summer vacation plans, I happened upon a television commercial for Home Away, a vacation rental service. Actually, it was two commercials: one tells the story of Emma, a little girl who cannot enjoy her family vacation as her dog was left behind. The other tells the story of Biscuit, Emma’s dog who goes to great lengths to be reunited with her on vacation. It is a cute story and illustrates the dilemma that vacationing adults experience, too: it is hard to enjoy your vacation when you are worried about your pet. And the commercial really resonated with me, bringing back my favorite childhood vacation memory.

I didn’t actually go anywhere, I stayed home and someone joined us, a girl named Margot, who lived in the Bronx and spent two weeks with us as part of the Fresh Air Fund program. It was a great stay-cation for me, as I not only made a new friend, but my parents went all out for us, as we went to the beaches, to the amusement park and to Gray’s Ice Cream, played badminton in the backyard and Monopoly and other board games inside at night, and all the fun activities that define summer. But, for Margo, she most enjoyed playing fetch with our family dog, as her family did not have a pet. Now that I have one – actually, two, it is a consideration in vacation planning. It is just more fun when they are around.

So I am planning a week at the home of a friend with a swimming pool. Coco (shown here, as she usually is, with a ball in her mouth and another toy close by) and Henry will be on vacation with me, too. But for those times when you cannot take the pets with you, or you are on a business trip, advance planning for the pet sitter will let you rest easy that your pets are well cared for and you can enjoy some long overdue R&R – another example of how preparing for a disruption (like if someone else is unexpectedly called upon to care for your pet) makes everyday life run more smoothly.

Guest Blogger, Alejandro Witschi

Sunday, May 17th, 2015
Back to School

Help From My Alma Mater

On May 17, the Brandeis International Business School honored 244 graduates at its 21st annual diploma ceremony. One of them was Alejandro Witschi, who was a graduate student intern at Prisere LLC last summer. UNISDR’s Regional Office in the Americas published a paper developed by Prisere LLC, to which Alejandro had contributed. We invited Alejandro to contribute a guest blog about his experience, which follows below. We wish him every success as he embarks on his career.


When I started searching for internships for the summer of 2014, I was looking for something in my field of expertise, banking and risk management. But in a pleasant turn of events I met Donna Childs; she was in need of a graduate student to support one of Prisere’s projects for the United Nations Office for Disaster Risk Reduction. After an interview, we decided to combine forces for this project, and maybe my background was not the usual for a job of this magnitude, but I had a strong personal attraction to this project.

My interest in contributing to this project relates to a disaster that occurred in my country and my personal feelings. A disaster struck Vargas State in Venezuela on 15 December 1999, when torrential rains and debris flows destroyed thousands of homes, and led to the complete collapse of the state’s infrastructure. The exact number of casualties was difficult to establish due to the lack of reliable census data in the state, but it is estimated that between 10,000 and 30,000 people were killed. My other reason for interest in this project relates to the recent loss of my uncle, a former UN official and former Delegate of the Red Cross International Committee, who helped people around the world for almost 30 years. This motivated my interest in helping people as well, as my uncle did, precisely contributing to dissemination of best practices in disaster risk reduction communications in the Caribbean region.

At the beginning of the project, I reviewed the literature related to the United Nations work for disaster risk reduction in the context of the social and economic developments in the Caribbean region. Then I began to research regional best practices in disaster risk reduction. The process included gathering information from senior government officials in the Caribbean countries, each charged with responsibility for disaster risk reduction, emergency management or humanitarian response. I also interviewed leaders of NGO’s, including the Red Cross, in the Caribbean region. The experience was amazing because all of the participants in the project openly shared their experiences and this is reflected in a final report that I hope contributes to a safer, more resilient Caribbean region.

Securing Your Mobile Devices

Saturday, May 16th, 2015
Mobile Phones Are At Risk, Too

Mobile Phones Are At Risk, Too

As we prepare for the summer vacation season, we will be making greater use of our mobile devices to stay in touch with the office. However, even when we are in a relaxed environment, we must be as vigilant with IT security as we would be if we were at our desktop computers at our regular place of work. Mobile devices – smart phones, tablets and laptops – contain valuable data that can be compromised if we are not careful. The following are five suggestions to secure the data contained on your mobile telephone or tablet:

  1. Enable remote data wipe. This feature allows you to erase all of the data on your device should it be lost or stolen. The remote data wipe restores the device to its original state by performing a “factory reset” and removing all of the information you have stored on it. The Apple iCloud service offers this protection to iPhone and iPad users. There is a comparable Android solution within Google apps.
  2. Update the software on your device. We are conditioned to install the security software updates on our desktop computers, but often we postpone doing so for our mobile devices. Take a few minutes to verify that the software on your mobile device is up-to-date. Hackers will often exploit known threats to gain access to mobile devices. The software updates correct the vulnerabilities caused by known threats, so it is important to stay up-to-date.
  3. Exercise caution when using “Free Public Wi-Fi or Hotspots”. These services are very convenient when you are checking messages at the local coffee shop, but they are not secure. A hacker could hang out all day in a free public wi-fi area in the hope of capturing confidential information from customers checking their bank accounts online, for example. The safer alternative is to use a 4G cellular hotspot. Hotspots are built into the current models of mobile telephones.
  4. Turn off your Wi-Fi and Bluetooth when you are not using these services. This will not only help to thwart the hackers, it will extend your battery life.
  5. Protect your mobile device with a password. A password for logging into your mobile device will make it more difficult for someone to gain unauthorized access to your confidential information. I change my password each month as an added precaution.

Once you have updated the passcode protection and software on your own devices, be sure to share these suggestions with your employees to help keep your business safe.

Stopping Robocall Abuse

Friday, May 15th, 2015
Technology to Fight Robocalls

Technology to Fight Robocalls

Robocalls are not just annoying; they lower our productivity. But solutions are available to reduce the intrusions robocalls make to our work lives.

Robocalls are auto-dialed, pre-recorded marketing messages made to landline and mobile telephones or unsolicited text messages sent to wireless numbers. Certain auto-dialed messages, such as emergency weather alerts or calls to landline phones made to raise funds for non-profit organizations, are permitted by law. But unsolicited, auto-dialed marketing calls are not. Regulatory agencies appear overwhelmed to fight robocall abuse; each month, more than 150,000 people complain to the Federal Trade Commission and to the Federal Communications Commission about robocalls, far more than the reported violations of the government’s Do Not Call Registry made by live telemarketing solicitations. Voice Over Internet Protocol (VoIP) technology enables robocallers to escape detection by using spoofed, or phony, telephone numbers, making it near impossible to trace the calls. So the Federal Trade Commission decided to fight fire with fire by offering a $50,000 prize to the most promising technology to fight robocalls.

One of the prize winners was Aaron Foss, founder of Nomoboro, a call-blocking technology. Foss estimates that 35 per cent of all calls placed to telephones in the United States are robocalls. Even if you are savvy enough not to fall for the fraudulent scams of the robocallers (who often seek information such as your social security or credit card numbers), you are still being robbed if you receive a robocall. If the call or text message comes to your wireless device, the minutes or text count against what you have paid for on your monthly plan. But the biggest loss is that of time and productivity. Both the Wall Street Journal and the New York Times reported (in contexts other than robocalls) the cost of frequent interruptions, such as

  • Increased frequency of errors made when performing tasks. Even an interruption as short as 2.8 seconds is sufficient to double the error rate made when a person is performing work.
  • Lost productivity. It takes, on average, 25 minutes, to resume a task after being interrupted.
  • Increased rates of stress and illness. Losing one’s concentration from frequent interruptions correlates with higher stress-related ailments, such as fatigue and headaches.

At home, you can screen calls from unknown numbers with your answering machine or voice mail, but that is not a viable option for small business owners who must be responsive to potential customer inquiries. Nomorobo, one of the winners of the FTC’s challenge award, may be able to help. It is a free service that intercepts all calls after the first ring and compares the caller’s number with its database of known robocallers. If the call appears to be legitimate, it goes through and the phone continues to ring normally. If not, the call is blocked. The number of false positives (that is, calls that should have gone through but were mistakenly blocked) is reported to be negligible. If you have the experience of losing a legitimate call, you simply add the caller’s telephone number to your wanted-call list so the call will go through next time.

The FTC advises that you should not answer a robocaller as that only invites more abuse. Typically, the robocall recording will ask you to press “1” to accept their marketing offer and speak with a live agent or “2” to be removed from their calling list. Pressing any number confirms to the robocallers that it has successfully identified a live telephone account (the numbers to which they place calls are often randomly generated, so unless someone answers, the call software doesn’t know it found a target) and you will only receive more calls, even if you asked to be removed from the call list. I am trying out Nomorobo to see how it works for my business. According to its website, Nomorobo claims to have blocked nearly 33 million harassing robocalls. Anything that stops unwanted interruptions is like found money and this service is free.

May is National Pet Month

Thursday, May 14th, 2015
Coco and Henry

Coco and Henry

National Pet Month is a celebration of the benefits pets bring to our lives. In the United States, National Pet Month is observed in May; in the United Kingdom, it is observed during the month of April. National Pet Month is a time to promote the benefits of pet ownership, support pet adoptions, and raise awareness of the contributions made by working companion animals. During the month, many retailers offer sales on pet-related items, from dog food to toys.

Out of curiosity, I checked the “pet calendar” and found a number of days designated to various pet causes, from the seemingly silly (January 14 is designated “National Dress-Up Your Pet Day”) to the serious (February is “Spay/Neuter Awareness Month”). But for every month, there are certain tasks we need to do to ensure the safety of our pets in the event of a disaster. In addition to keeping “Go Kits” or “Emergency Packs” for each human member of the household and small business, we need to do the same for our pets. The “Go Kit” is the pack of supplies that we take with us in the event of an evacuation. It is a good practice to refresh the Go Kits monthly:

  • To ensure that the food set aside for emergency use stays fresh, each month, I take the food out of the “Go Kit” and use it while it is still safe and tasty to eat and replace it with new food provisions for take-away.
  • I verify that all of the medical records and vaccine information is current. I keep a record of this information in my smart phone, so if I have to check into a hotel with the dogs, I can prove that they are current on rabies and other vaccinations. I always update their electronic records after every visit to the veterinarian. But I also check it as a precaution when I refresh their “Go Kit” food.
  • I check that contact information for all of the pet caregivers is current in my smart phone, should I have to evacuate. My veterinarian recently married and moved out of state, so I just updated my records for the new vet who is assuming his practice responsibilities. This ensures that I have the current contact information available to anyone who presses the “ICE” button (“In Case of Emergency”) on my smart phone.
  • Of course, I perform the same “refresh” tasks for the Pet Go Kits as for the human ones, including replacing the bottled water each month and checking the batteries in the flashlights.

So I see National Pet Month as the opportunity to stock up on non-perishable items at discounted prices for the “Go Kit” for my cocker spaniels, Coco and Henry. But, as a pet parent, I celebrate them every month.

Guest Blog from Serbia on the One-Year Anniversary of Cyclone Tamara

Wednesday, May 13th, 2015

Today is the first anniversary of the worst natural disaster ever to strike Serbia: on May 13, 2014, Cyclone Tamara struck southeastern Europe, delivering three months’ of rainfall within several days. The continuous heavy rainfall caused severe flooding in Serbia and neighboring Bosnia and Herzegovina and Croatia. The high-level political commitment to disaster recovery carried over into regional initiatives. As Serbia prepared to accept the chairmanship of of the Organization of Security and Cooperation in Europe in 2015, it pledged to continue the emphasis the previous chair, Switzerland, had placed on disaster risk reduction. In connection with advising on that transition, I developed a policy paper for the United Nations Office for Disaster Risk Reduction on the OSCE’s policies and programs on disaster risk reduction. I also have a personal connection to the Serbia floods as well, the very talented web developer Djurica Bogosavljev who is doing graphic design work for one of Prisere’s most important projects. He has kindly contributed this blog to share the experience from Serbia:

Serbia Floods

Sremska Mitrovica, Before and After the Disaster

On May 13, 2014, Cyclone Tamara spread across a large geographical area in Central and South-Eastern Europe. The storm mass reached a density of up to 100 kilometers through the entire troposphere.  The warm air from the south and the east created extreme humidity and near 100 per cent saturation of air mass. Conditions in the Balkan Peninsula were particularly conducive to this low-pressure storm. The cyclones centered over Serbia and Bosnia and Herzegovina where, over the course of two days, between the 13th and 15th of May, Serbia received the highest recorded rainfall since data collection began 120 years ago.  On May 16, 2014, the cyclones began to weaken.

Town Obrenovac was hardest hit, flooding 90 per cent of the village. The next hardest hit site was the Nikola Tesla thermal power plant, the largest power plant in Serbia, that provides nearly 50 per cent electricity to the country. Fortunately, careful management kept the power plant safe and online. Kostolac, which provides 11 per cent of Serbia’s electricity, was threatened by the overflow of the River Mlave. Sand bag fortifications were broken, but the water did not break through the last line of defense.

The flood wave on the River Sava near the town of Sabac reached a height of of 6.6 meters, the highest level of the river in the city since recordkeeping began. By the 16th of May, 7,618 people were evacuated, 20 people were injured and three people had died.  In total, over 24,000 people in Serbia were evacuated as a result of several days of heavy rains. Serbian Prime Minister Aleksandar Vucic described the flooding as “the worst natural disaster that has ever befallen Serbia”. The damage to the country caused by the floods exceeded 1.7 billion Euros. Water damaged all public facilities. Physical damage to the private sector exceeded that of the public sector by 500 million Euros, including the destruction of  3,500 cars and 7,000 houses. The agricultural sector was impacted, as 1,000 hectares of arable land with crops that had already been sown were completely flooded.

After the disaster, a number of dignitaries visited Obrenovac to assess the damage and begin the process of relief, including local representatives of the European Union, other non-EU countries, the United States, Russia, and representatives of international businesses. The European Union was the largest direct donor to the relief effort, followed by generous contributions from Serbian athletes, principally  the foundations of Dejan Stankovic, Ana and Vlade Divac, Novak Djokovic. Immediately after winning his tournament in Rome, Novak Djokovic donated his prize winnings of more  than 500,000 Euros donated to help flood victims. He also called upon the international media to continue news coverage of the Balkan floods to ensure that the victims received attention and support.


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Tuesday, May 12th, 2015