INSCOR, Inc.'s Tailored Plans Could Solve America's Underfunded Liabilities Problem

  Seven weeks ago today, Detroit became the largest U.S. city to file for bankruptcy, and in the process, became the 8th city, town or county to join the growing ranks of bankrupt government entities since 2010. This list will likely continue to grow given the underfunded liabilities many government entities face in their futures. INSCOR, Inc. (PINKSHEETS: IOGA) executives knew this storm was brewing when they specifically tailored one of the company's insurance products to address what is now an epidemic in the U.S. -- broken promises to employees.

Government entities hired employees years ago by winning them over in the recruitment process with promises of employee retiree benefits like pension plans, healthcare, dental, prescriptions, life insurance and other post employment benefits. But, for years they made these promises without actually putting money aside to pay for them, and accounting rules allowed them to get away with.

However, as cities are finding out now, they didn't really get away with it. In addition to the obvious problems of having the piper come-a-calling, accounting rules were changed (GASB45) by the Governmental Accounting Standards Board, and now budgets nationwide are bursting at the seams.

Needless to say as these entities now have to pay for and account for these future costs, a panic has set in because up until now these were costs that were accounted for on a pay-as-you-go basis. That panic is justified because municipalities are increasingly confronted with how to pay for these massive promises.

The Pew Center for the States, in Washington, estimated states' public pension plans across the U.S. were underfunded by a whopping $1.4 trillion in 2010, and as one can only imagine that number is likely very conservative today.

INSCOR designed what it calls a Financed Insurance Trust (FIT) plan for Other Post-Employment Benefits (OPEB) -- meaning the employee benefits covered in the plan are all those promised benefits after retirement other than pension plans.

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