Coastal properties caught in `double-whammy`

Transcription

Forget
the fees
13
Maryland
District
of Columbia
Motorists don’t like when
municipalities charge for
ambulance services tied to
vehicle crashes.
Required reading for successful insurance and financial service professionals
Volume 14, Issue 5 | June 2011
Changing IWIF’s
response
Court backs Allstate’s ditching of coastal
policies, sparking State Farm’s move to follow
Automatic enrollment appears to be sparking
jump in employer-sponsored retirement plans
By Jaime L. Brockway
Gov. Martin
O’Malley signs bills
changing how IWIF
must respond to
state budgetary changes.
Page 6
2
Teeth removed
An appeal over
covering military
dental insurance
ends in favor of
MetLife.
Page 14
3
The two largest carriers of
homeowners’ insurance in
Maryland are seeking to stop
writing policies in the coastal
areas of the state in what an
industry lobbyist calls a “double-whammy.”
A Maryland appeals court
Bryson Popham
ended a four-year battle in
May by deciding that Northbrook, Ill.-based Allstate was within its rights to stop writing new
property insurance policies in catastrophe-
prone areas of the state.
In November 2010, State Farm Insurance submitted a filing to the Maryland Insurance Administration (MIA), indicating its intent to not
renew property lines of business located on
Maryland’s barrier islands.
Coastal insurance coverage has been a major
concern in the state since Tropical Storm Isabel in
2003, when a three-day storm caused massive
coastal flooding. Hurricane IsSee “Coastal” on p 4
// Court’s inaction means former
CareFirst CEO can claim $18M
Maryland Court of Appeals refuses to get into
dispute, freeing Maryland insurer to pay William
L. Jews his full severance. Page 11
Hyped for hybrids
Everywhere.
Women bought the majority of new life insurance
policies including long-term care benefits. Page 9
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The number of employees participating in
their employer-sponsored defined contribution
(DC) plans is at a record high, according to a
new report.
Aon Hewitt’s analysis of DC saving and investing behaviors of more than 3 million employees across 120 large companies shows that
75.8% of eligible employees participated in their
company’s defined contribution plan in 2010 —
the highest level since Aon Hewitt began tracking this data in 2002. One year prior, the participation rate was 73.7%, and in See “DC Plans” on p 8
Teacher, we want
to study more!
The insurance agent
licensing exams given
by states should be:
Public Service Commissioner Goldsmith
named Maryland insurance commissioner
O’Malley elects not to appoint acting
Commissioner Sammis to MIA’s top post
By Bob Graham
Subscription information
available online at:
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By Bob Graham
Therese Goldsmith, a lawyer who has served
on the Maryland Public Service Commission for
the last two years, became acting Maryland’s insurance commissioner, effective June 13.
Goldsmith, whose law practice involved
white-collar investigations of health care fraud
and abuse and other areas, will
replace Beth Sammis, who had
served as acting insurance
commissioner since January
2010, when former Insurance
Commissioner Ralph S. Tyler
resigned to take a federal post.
Sammis will remain at the
Therese
Goldsmith
Maryland Insurance Administration, returning to a deputy See “Appointee” on p 11
Made
easier
Nationwide agents
sue to protection
their rights as
independent
contractors.
Page 4
1
Defined-contribution
plans claim one-year
enrollment record
Kept
the same
Protective action
Coastal properties caught in
‘double-whammy’ of insurers
More
difficult
Inside
50 % 30 % 20 %
Source: IFAwebnews.com poll, May 2-16, 2011.
Matt Finn, Guardian’s top
wholesaler for brokerage
disability insurance in 2010!
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New commissioners lack real-world
experience selling, serving insurance
//AgentSuccess
// SALES
3 steps to sharpen the competitive
saw to win more loyal customers
In today’s highly competitive business climate, most successful companies are finding new and
creative ways to win business. By building customer-centric business plans and increasing their
commitment to company-wide execution, they’ve managed to succeed in a turbulent economy.
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// SALES
3 maxims to guarantee
successful negotiations
Sometimes, in order to be persuasive, business people tend to argue and try to prove others
wrong, which is the exact opposite of what you should do. This usually doesn’t work very
well, and then you just have a battle on your hands that isn’t needed.
// Top online stories
1 Insurance agents sue to protect
|
their independent contractor rights
2 Ex-convict allegedly kills insurance
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agent three months after release
3 Insurance agent licensing exams
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should be more difficult, poll finds
“At the same time our federal
government has claimed that
Medicare’s financial condition has
improved because of Obamacare, we
are also being told by the trustees
that the Medicare Part A Trust fund
will go broke five years earlier than
last year’s projection.”
- Ross Schriftman
blog post about Medicare's apparent
demise date
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The publisher assumes no liability for errors or omissions.
The insurance commissioners in Maryland, Pennsylvania, Virginia and Washington, D.C., have all changed since December 2010.
More recently, West Virginia’s insurance commissioner, Jane Cline,
said she would be leaving, and New Jersey’s insurance commissioner, Tom Considine, was appointed less than 18 months ago. The
commissioner with the longest tenure in the region is Delaware’s
Bob Graham
Executive Editor
Karen Weldin Stewart, elected in 2008.
The turnover in the region might mark the most in U.S. insurance
regulatory history. (I pray no one is keeping those statistics.)
With new commissioners often come new initiatives or approaches to regulation. The
shifting of priorities takes time, as the new commissioners figure out their footing,
build new alliances with their underlings and obtain guidance from a host of other
sources, including their bosses, lobbyists, insurers, agents, citizen watchdog groups
and, of course, the National Association of Insurance Commissioners.
While it’s anyone’s guess what each commissioner might prioritize, key aspects of their
bios might yield an inkling.
For instance, three of the four commissioners appointed have strong industry ties, although none to the agent community.
In Virginia, the State Corporation Commission, which oversees insurance regulation
for the state, appointed Jacqueline Cunningham as deputy commissioner in the SCC’s
Bureau of Insurance, where she oversaw life and health insurance regulation, to replace
long-serving commissioner Al Gross.
In Pennsylvania, Gov. Tom Corbett appointed Michael Consedine, a lawyer at Saul Ewing whose clients included Capital Blue Cross in its fight over the aborted merger of Independence Blue Cross and Highmark. Corbett, a former counsel to the Pennsylvania
Insurance Department, took over for Joel Ario.
With federal health reform changing almost every facet of the health insurance industry, there’s no time for a new commissioner to get schooled up on that area. Better
they figure out life insurance and property-casualty insurance on the job, since the spotlight isn’t shining as brightly on them.
In Washington, D.C., Mayor Vincent C. Gray named Bill White, a former consultant
with Prism Strategies, whose work included a stint in 2003-2004 with the Captive Insurance Division of the D.C. Department of Insurance, Securities and Banking. The District has been attempting to boost its appeal to captive insurers.
While other leaders focused on health insurance expertise, Maryland Gov. Martin
O’Malley pushed aside his acting commissioner, Beth Sammis, a former lobbyist and
health insurance broker, and instead chose Therese Goldsmith, whom he appointed to
the powerful Maryland Public Service Commission in 2009. O’Malley likes his insurance
commissioners to have close ties. Before Sammis, Ralph S. Tyler, who was city solicitor
and close political confidante of then-Baltimore Mayor O’Malley, led a search for a new
commissioner to replace R. Steven Orr – only to take the job himself.
None of these new commissioner appointees have been insurance agents or are
likely to fully understand that part of the regulatory landscape anytime soon, meaning
agents and brokers might be in for some challenging times over the next year or so.
Bob Graham, Executive Editor
|
IFAwebnews.com
July 2011
// LETTER TO THE EDITOR
Plan to lower exam
requirements is ‘red flag’
Editor:
An enormous insurance company was
able to get only 20% of its recruits to pass
a basic, almost simple, state licensing
exam to sell life and health products.
(“Life insurer asks states to ease insurance agent licensing exams,” June 2010
edition.) This exam is hardly a hurdle. It
begs the question, who are they recruiting? Instead of seeking more qualified
people, they asked that the standards be
lowered to hire literally hundreds of thousands more agents. Shouldn’t that be a
red flag to the public about this company,
a company with a history of red flags?
Aren’t our profession’s standards already too weak? Is being free of a criminal
record too high a hurdle? Consider the
other article you published on the very
same page of your June 2011 newsletter:
“independent insurance agents rank in
the middle of the pack” in the minds of
consumers. Does mediocrity suggest lowering our standards further? Should we
allow just anyone who can sign their
name to sell insurance products? In the 15
years that I have been selling insurance,
the increased number of disclosures and
greater level of regulation implies that we
license only those with the intelligence
to grasp ever-greater complexities. It is
not a matter of a carrier asserting that
they will adequately train their recruits
after they become licensed. Shouldn’t we
aspire to only have agents in our profession who already have the capacity to discern right from wrong, and be wellgrounded in application of ethics and
market conduct and do the right thing
for their clients, before they become indoctrinated in the ways of their carrier?
There are already too many bad apples
selling life insurance in ways that do not
benefit their clients, already too many
people who dream up schemes and concoctions that ultimately harm the public,
and already too many people who give
this profession an ethical black eye. Why
doesn’t the entrance exam for selling life
and health products approximate the difficulty of the bar exam, the CPA exam,
the CFP exam or other credentialing
tests? If anything, state licensing exams
needs to be made harder, not easier.
Dave Saltzman
Dave Saltzman Insurance
Princeton, N.J.
Maryland / Washington D.C.
IMC
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Over Thirty Carriers, Including:
|
IFAwebnews.com
July 2011
|
3
Coastal: Insurers eye ditching policies
From page 1
abel, which had been downgraded to a tropical storm when it reached Maryland, wound
a path up the East Coast, before causing
what would be about $4 billion in overall
damage and 16 deaths in seven states.
Concern only increased after Hurricane
Katrina in 2005, even though its effects
were minor in Maryland.
Catastrophe coverage too risky
State Farm, based in Bloomington, Ill.,
has not written new homeowner’s policies
on the barrier island of Ocean City for several years, according to Karen Barrow, director of public affairs at the MIA. But the
company has renewed homeowner’s policies for Ocean City properties sold prior to
its change in underwriting standards.
Barrow said the MIA has retained a consultant to assist in reviewing the appropriateness of this filing under Maryland law.
About 1,700 people will lose their State
Farm homeowners’ policies of the filing is
approved, according to Bryson F. Popham,
a partner at the Annapolis, Md. lobbying
firm Popham & Andryszak.
In December 2006, Allstate Insurance
THE
told the MIA that it wanted to cease writing
new property insurance policies in the
“catastrophe-prone” coastal areas of the
state, including Ocean City and Worcester
County, because of the high number of
losses on claims after Hurricanes Katrina
and Rita, according to MIA’s appeal.
The MIA deemed the discontinuation
valid, until 2007, when the Maryland General Assembly created the People’s Insurance Counsel, part of the Maryland Attorney General’s Office, to protect consumers’
interests of consumers in insurance issues.
The division filed a challenge against
Allstate and the other major carriers, saying the decision to stop issuing policies in
hurricane-prone areas, which includes
most of the state, was discriminatory.
The Court of Special Appeals ruled in favor of Allstate, agreeing that the company’s
decision was based on business fundamentals and was not discriminatory
against residents in coastal areas of Maryland. The court dismissed the PIC’s argument that Allstate’s refusal to write new
homeowner policies in hurricane-prone
areas was the same as dropping the driver’s
policy because of accidents or tickets.
State Farm, Allstate did not comment. IFA
MIGHT OF MANY
INSURANCE AGENCIES
BECOMES
THE POWER OF ONE.
Insurance agents sue to protect
their independent contractor rights
Dispute based on allegations Nationwide
overworking, underpaying its workers
An association of 54 insurance agents is
suing a Columbus, Ohio-based insurance
company for allegedly forcing them to submit to changes in the insurer-agent relationship that exert more control over them.
The Nationwide Insurance Independent
Contractors Association, representing Na-
updating information where appropriate.”
Agents who sign the addendum would
have better commission rates on certain
products and services than agents who do
not sign; would have a lower servicing fee;
and other benefits, although they would
have to forfeit any further DCIC (retirement)
benefits, according to the report. Agents who
refuse to sign can continue to accumulate
DCIC benefits, but would not have access to
better rates and other benefits.
Insurer wants agents to sign contract
removing their rights, according to suit.
tionwide agents from across the U.S., filed
the suit in U.S. District Court in Philadelphia last week, in part because Nationwide
is seeking exclusive control over policyholder information obtained by agents.
Nationwide Mutual Insurance Co. created
the 2010 Agent Choice Addendum, which
allegedly “impinges” on agents’ contractual
right to operate as independent contractors,
the association argues in its suit, according
to a Courthouse News Service report.
“There is no legitimate business purpose for Nationwide’s assertion that it
should have exclusive ownership and use
of the policyholder information,” the suit
suggests. “This is information generated
in the ordinary course of business that
originates with, and is developed by, the
agent. Nationwide is aware of the information only because the agent has transmitted the necessary information to Nationwide in the form of an application for
an insurance policy and then transmitted
The servicing fee would support a centralized policyholder servicing facility to be
operated by Nationwide, which breaks
agents’ contracts with the carrier that give
agents independent judgment in relation to
policyholders, the agents allege in the suit.
The addendum also would discriminate in favor of larger agents, since
agents with smaller sales volumes would
follow requirements not demanded of
agents with larger sales volumes, the association said.
Nationwide does not have a contractual
relationship with the association and doesn’t recognize it as a representation of its
agency force, according to Elizabeth Giannetti, a Nationwide spokeswoman.
“We’re committed to paying competitive compensation to our agents and recent changes that were made were in the
best interests of our customers and will
help keep Nationwide pricing competitive
in the market,” Giannetti told IFA. IFA
// PROPERTY-CASUALTY
Growth in all regional offices spurs Eastern Insurance earnings
Potomac Insurance Network
2360 Boston Street, Baltimore, MD 21224
(443) 692-4000
www.pinsiaa.com • [email protected]
WHY I JOINED PIN
“Joining PIN has provided the expertise, market
access and the support needed for growth and
profitability of our Agency.”
– Melissa Kushner
President, Anchor Insurance
Services, Inc., Mt. Rainer, MD
Eastern Insurance Holdings reported
net income of $1.9 million for the three
month period ending March 31, according
to its latest financial statement.
The net income for the Lancaster, Pa.based regional insurer, which recently
opened a Richmond, Va., satellite office
and added appointments in New Jersey,
as well as Kentucky and Michigan, was
about double its $945,000 in net income
reported for the same period in 2010.
Michael L. Boguski, president and CEO of
the company, said he was “pleased” to report the first-quarter numbers, saying the
company’s combined ratio in the workers’
compensation segment was 92.2% for the
|
IFAwebnews.com
three month period earlier this year. The
consolidated combined ratio was 97.8%.
“Our favorable results were driven by
solid growth in workers’ compensation insurance direct written premiums, positive
audit premium, strong premium renewal
retention results and renewal rate increases in each of the three months for the
first quarter of 2011,” Boguski said.
During the first quarter, workers’ compensation direct written premium increased 19.8%, driven by solid growth in all
of its workers’ compensation products at
all of its regional offices.
Eastern owns and operates several regional insurance companies. IFA
July 2011
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IFAwebnews.com
July 2011
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5
Maryland governor signs laws altering
priority property-casualty regulations
associationnews
One bill exempts IWIF from state budgetcutting actions, another tackles NARAB
NAIFA group meets with
Maryland lawmakers
The National Association of Insurance & Financial Advisors-Carroll/Howard chapter met with Maryland state legislators at a general membership meeting for
a Maryland legislative update. Pictured from left to right are: Rodger Bayne, moderator; Roger
Diehl, president of NAIFA-Carroll/Howard; state Sens. Joe Getty and David Brinkley; and state
Dels. Susan Krebs, Donald Elliott and Justin Ready.
For more photos of attendees, go to the Photo Gallery page at IFAwebnews.com.
Send photos of your company events and happenings: [email protected]
Gov. Martin O’Malley signed into law
various property-casualty insurance bills
addressing misuse of certificates of insurance, compensation and compliance with
past and future regulations.
The Injured Workers’ Insurance Fund
(IWIF)—Employee Compensation (HB
598), in effect July 1, says the employees of
the IWIF are not affected by state budget
actions, including mandatory furloughs
for state employees, a victory for the quasistate agency and workers’ compensation
insurer of last resort in Maryland.
“This bill would exempt IWIF from state
imposed pay cuts,” Dennis Carroll, IWIF
executive vice president and general counsel, told IFA. “We feel the bill is important
because as a competitive insurer, IWIF is
required to compete with the private industry for claims adjusters, loss control
folks, other insurance professionals, and
we felt that having the pay restriction imposed by the state would interfere with our
ability to attract the kind of professionals
we need to be successful in a competitive
environment.”
Another bill (HB 959/SB 694) meets the
July 21, 2011, deadline to bring Maryland
into compliance with the Nonadmitted and
Reinsurance Reform Act of 2010, including
provisions on diligent search and eligibility
requirements for non-admitted insurers.
The surplus lines bill leaves the decision
of whether Maryland will join other states in
a compact for premium tax collection and
allocation with the insurance commissioner, according to Kari Kissinger of the
Insurance Agents and Brokers.
HB 982/SB 656 makes it unlawful for a
policyholder to provide, or for a person to
require an insurer or producer to prepare
or issue, a certificate of insurance that contains false or misleading information.
Stopping modification of certificates of
insurance is going to be a “two-step
process,” said Bryson F. Popham, an industry lobbyist, because a provision requiring certificates forms to be filed with
the MIA, did not pass, according to
Popham. IFA
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Ethics
|
IFAwebnews.com
July 2011
NewProducts
For more go to IFAwebnews.com/Products
Insurer launches new survivor
purchase option with life policies
American Life United Insurance Co. (AUL), a
OneAmerica company based in Indianapolis,
Ind., released a new survivor purchase
option on a whole life insurance policy.
Life
Insurance
AUL’s survivor purchase option is different
from most survivorship insurance.
The insurer in a statement said the new policy
gives the surviving policy beneficiary (surviving
spouse) the option to receive a cash death
benefit or apply part or all of the death benefit
toward the purchase of insurance on the
insured beneficiary (e.g. surviving spouse).
The death benefit from this new policy could
then be used to fund any anticipated estate
tax needs upon the death of the second
spouse.
CE credit to accountants and CPAs who
attend the CEPA program.
The Certified Financial Planning Board said
Certified Financial Planners (CFPs) may
receive up to 17 hours of CE credit by
attending the CEPA program.
The International Association of Business
Brokers said that Certified Business Intermediaries (CBIs) may receive up to 10 hours of
CE credit by attending the CEPA program.
The Alliance of Merger and Acquisition Advisors said it will grant 24 hours of CE credit
for Certified Merger and Acquisition Advisors who attend the CEPA program.
The insurer said the underwriting and cost of
the new policy will be based on the insured
beneficiary’s health at the time the initial
policy was purchased.
The survivor purchase option is available on
AUL’s Legacy, Legacy 121 and Liberty
Select whole life policies.
The discount applies to vehicles fewer than
three years old, with the level of discount
based on the car’s model year.
Home care insurance solution
for chronically ill debuts
Carrier offers policies for
physicians assistants
Humana, based in Tampa,
Fla., launched Humana
HomeCare Solutions, a fully integrated care
management “concierge” service for all
consumers, at Max-Wellness’ four retail
locations in Sarasota and Naples, Fla., and in
Cleveland, as well as online at www.maxwellness.com.
NIP Programs, based in
Woodbridge, N.J., introduced
MedEdge, a customized and affordable professional liability coverage for physician
assistants.
Additional Humana in-store sites will be
added later this year as Max-Wellness
expands to new locations.
Humana HomeCare Solutions offers a
Humana Cares Manager (HCM) who works
one-on-one with clients, as well as their
caregivers, to help manage chronic conditions and achieve a better level of quality of
life and independence.
Program offers CE credits
accepted by four groups
The Exit Planning Institute
announced that its Certified
Exit Planning Advisor Program (CEPA) now
qualifies for continuing professional education (CE) credits with four professional
associations.
PropertyCasualty
The National Association of State Boards of
Accountancy said it will grant 32.5 hours of
// ASSOCIATION NEWS
Md., Pa. agencies add names
to Iroquois Group network
Insurance Society of Baltimore
offering roster of fall courses
Several insurance agencies recently
joined The Iroquois Group, according to
the network of property-casualty insurance agencies.
In Maryland, Business Insurance Associates, operated by principal Edward
Coogan, joined The Iroquois Group. The
Davidsonville, Md., agency started in
2000 as an employee benefits agency. It
recently partnered with Coogan, a 14year veteran, to expand into propertycasualty insurance.
In Pennsylvania, Spodek Insurance
Agency of Pittsburgh, and its agency principal, Saul Spodek, joined the network. IFA
The Insurance Society of Baltimore is
accepting registrations for classes beginning in August and September.
The classes include the Chartered
Property Casualty Underwriter (CPCU)
program, General Insurance (INS), and
several designation programs from the
American Institute for Chartered Property and Casualty Underwriters.
For more information, visit the ISB’s website www.isob.org or call at 410-420-6633. IFA
Discounted coverage for
new cars offered by insurer
Travelers, based in Hartford,
Conn., announced its New
Car Discount. The auto insurer said in a
statement that its new policy discount provides savings of up to 10% on auto collision
coverage for new vehicles.
Health
Insurance
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“Reforming Health Care One Client at a Time”
Brokerage opens new website
with more broker resources
BenefitMall, a national broker
services company, launched
a new website focused on giving brokers
additional resources.
Health
Insurance
The Dallas-based broker said the site at
www.benefitmall.com features a new
homepage, offering brokers immediate
access to tools for day-to-day activities and
region-specific events, as well as updated
information from carriers and information
about legislative and regulatory actions
affecting them, company officials said.
|
IFAwebnews.com
July 2011
|
7
DC Plans: Auto-enrollment fuels increase
From page 1
2005 the rate of enrollment was 67.2%.
The rapid adoption of automatic enrollment is largely responsible for the increase, according to Aon Hewitt, global human resources outsourcing and consulting company.
Three-in-five employers automatically enrolled employees into their defined contribution plans in 2010, up from 24% in 2006.
For employees who were subject to automatic enrollment, Aon Hewitt’s analysis
found that 85.3% participated in their DC
plan, an increase of 18% from those that were
not subject to automatic enrollment.
Exactly 85% of employers offering automatic
enrollment provide it only to new hires.
Aon Hewitt’s analysis also found that
tax contributions to DC plans were unchanged from 2009 at 7.3% of pay, but are
still down slightly from pre-recession levels in 2007 (7.7%).
Exactly 29.4% of plan participants contributed below the company match
threshold, up slightly from 28.2% in 2009.
The report said 41% of participants who
were automatically enrolled are not saving
enough to receive the full match from their
employers, compared to only 25% of partici-
pants who proactively enrolled. Cumulatively,
workers on average saved 10.4% of pay, including 3.8% from employer contributions.
Other findings included that:
The average employee’s total plan balance was $76,020 at the end of 2010, while
the median balance was $24,680.
The three largest asset class exposures
(equally weighted) were premixed portfolios (33.3%), large U.S. equity (14.2%) and
GIC/stable value funds (13.6%).
The average worker’s overall exposure
to equities rose 67.4% in 2010, up from
66.9% in 2009.
The median rate of return earned by employees in 2010 was 13.5%, down from 24.3%
in 2009. The median, annualized, three-year
rate of return earned (from 2008-2010) was
just 1.7%, illustrating the dramatic impact
losses in 2008 had on participant results.
When available, 60.1% of workers invested at least partially in premixed portfolios, mainly driven by the popularity of target-date funds. Among those using
premixed portfolios, just under half (46%)
were fully invested in a single portfolio.
Despite strong market returns in 2009,
only 14.2% of employees made any sort
of fund transfer in 2010. IFA
LEGALBRIEFS
News from the federal and state courts.
Manager allegedly discriminated against two workers
Life
Insurance
A Bankers Life and Casualty office manager fired two U.S. citizens, allegedly
because of their Palestinian descent and Muslim religion.
Daniel Colvis, office manager of Bankers’ Chesterfield, Mo.-based office, allegedly subjected
two employees, Ali Badran and Warrad Warrad, to slurs about their race, religion and ethnicity, and eventually fired them.
Badran and Warrad said in their complaint that Colvis fired them even though they had a better sales history than their Caucasian counterparts. They said Colvis harassed women and
African-American employees as well.
Badran and Warrad seek damages for lost income, suffering and humiliation.
They are represented by James Hacking III of Webster Groves, Mo.
Maine court upholds regulator’s ruling on premium hikes
Health
Insurance
The Maine Supreme Court has upheld a state insurance department decision
reducing a health insurance rate increase proposed by Anthem.
Maine Superintendent of Insurance Mila Kofman reduced Anthem’s proposed 2009 rate
increase from an average 18.5% to 10.9%, saving more than 12,000 individual policyholders
a total of $5.4 million on a year’s premium.
Maine requires prior approval of health insurance rates for all individual health insurance policies.
Maine’s insurance regulators found that Anthem’s projected claims trend was too high, and
that the company’s overall financial strength merited no profit margin or contribution to surplus in 2009. The company argued that “break-even” profit for the year was inadequate, a
claim that was rejected by the court.
Florida sting nabs alleged ring involving staged crashes
Arrest warrants were issued for 53 people in Florida, including clinic owners,
managers and employees, after a five-month undercover sting targeting fraudulent insurance claims being filed after staged vehicle crashes in Hillsborough County, Fla.
PropertyCasualty
MA IBC
Hillsborough County State’s Attorney Office and the Florida Department of Financial Services said
“Operation No Pain No Gain” also led to searches at four medical clinics in Hillsborough County.
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Charges include conspiracy to commit racketeering influenced corrupt organization (RICO), a
first-degree felony, to filing false and fraudulent insurance claims.
Detectives also were able to identify the alleged recruiters and coordinators who would
solicit individuals to conduct staged crashes. The alleged participants would be directed to a
particular medical clinic to sign blank medical forms. At the clinics, crash participants would
be coached on how to describe their injuries or pain to physicians.
Lawyer admits role in scheme involving AIDS patients
Life
Insurance
A lawyer in Florida has admitted to conspiring to fraudulently sell life insurance policies held in the name of AIDS patients.
Michael McNerney, 62, a lawyer based in Fort Lauderdale, Fla., pleaded guilty to mail and
wire fraud conspiracy in federal court in Miami, according to the Miami Herald. Sentencing is
scheduled for Aug. 26.
He admitted to providing “legal cover” to help Mutual Benefits Corp. executives entice
investors all over the world to buy life settlement policies from AIDS patients by providing
misleading information about the life expectancy of the AIDS patients and the risk level of
the investment. The scheme ran from 1995 to 2004, according to prosecutors.
McNerney agreed to cooperate with prosecutors in what they have labeled as one of the
biggest fraud cases in state history. Prosecutors continue to prosecute two top executives
of Mutual Benefits Corp, Joel Steiner and his brother Steven Steiner. Another lawyer
charged in the case, Anthony Livoti, is awaiting trial.
For the latest Legal news go to IFAwebnews.com/Record
|
IFAwebnews.com
July 2011
Insurance providers need to step
up their game, consumers say
More tailored communications, in person
and by other means, would help clients
The insurance industry scored among
the lowest sectors in a customer satisfaction survey of service providers, with customers saying they want more personalized attention.
“Consumers are demanding tailored
and personal communications from those
companies with which they do business,”
John McGee, president and COO of Thunderhead, a customer engagement company, said in a statement. “Firms need to
invest in the tools that will allow them to
not only be compliant with expanding regulations, but also deliver the right mes-
Providers need to have better awareness
of consumer’s account issues, activity.
About 50% of insurance customers who
responded to the survey agreed that their
perception of their insurance providers
would improve with more tailored communications, according to the survey by YouGov.
The survey found 51% of respondents
agreed that the communications they receive
from service providers are not personalized.
About two-thirds (66%) of respondents
do not feel their communications needs
are being met by their service providers;
50% of respondents agreed that their service providers communicate without regard
to the customer’s preferences.
sage through the right channels.”
The survey found 52% of consumers
polled would have a better opinion of their
service providers if those providers were
more aware of the matters and activity on
consumers’ accounts.
“These survey results are delivering a
powerful message, and they demonstrate
the importance and value of interacting
with your customers in a personalized
way,” McGee said.
The survey of 6,000 consumers in the
U.S. included insurance, banking, landlines, mobile, gas and cable sectors. IFA
// CRIMINAL CASE
Disc jockey, politician linked to insurance fraud scheme
A Rhode Island radio personality and a a
former town council president are expected to admit this week to their roles in
an insurance fraud scheme involving damage to a home and pool.
The radio personality, Lori Sergiacomi,
whose on-air name is Tanya Cruise, and
Robert Ricci, a former North Providence
town council president are expected to enter their guilty pleas in federal court in
Providence this week, according to a
Boston Globe report.
In a five-count indictment issues last
fall, the two, along with former North Providence Councilman John Zambarano and
an unlicensed insurance adjuster, Vincent
DiPaolo, conspired to damage Sergia-
comi’s home and pool, then submitted
false insurance claims, leading to payment
of about $40,000 by an insurance company.
Earlier, Zambarano received a six-year
sentence for his role in the insurance fraud
and separate corruption charges.
Officials say Ricci was not in office when
the incident occurred.
The federal grand jury indictment alleges that the four conspired to file the insurance claim last April after Sergiacomi's
home suffered water damage in the floods
that struck Rhode Island.
Zambarano, Ricci and DiPaolo are accused of causing damage to the roof and
interior of Sergiacomi's house. IFA
// LIFE INSURANCE
Women, especially older ones, buying into life-LTC policy hybrids
As sales of life insurance policies offering
long-term care benefits rose 79% last year,
women accounted for about 60% of sales.
Women between the ages of 55 and 64
bought more than one-third (34%) of the
policies sold in 2010, according to research
from the American Association for LongTerm Care Insurance, which put out its 2011
Long-Term Care Insurance Sourcebook.
“Linked life insurance policies that offer
long-term care benefits experienced significant growth in 2010,” said Jesse Slome,
AALTCI’s executive director, in a statement.
He added that insurance and financial
planners are carving out a “definite and
very defined niche among consumers.”
Nearly 40% of buyers were between ages
65 and 74.
Male purchasers tended to be slightly
older, Slome said, noting that the single
premium face amount of more two-thirds
of new policies purchased in 2010 exceeded
$100,000. About a quarter of buyers opted
for a face amount greater than $200,000. IFA
Focused.
…on helping our agents grow.
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PUKLWLUKLU[HNLU[Z:V^L»YLHS^H`ZMVJ\ZLKVUOLSWPUNV\YHNLU[Z
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X\V[PUN-YVTH[[YHJ[P]LJVTTTPZPVUHUKWYVÄ[ZOHYPUNWYVNYHTZ[V
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-PUKV\[MVY`V\YZLSMÔ`V\YHNLU[ZJOVVZL7LUU5H[PVUHS0UZ\YHUJL
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;OLUNP]L\ZHJHSS_
// HEALTH INSURANCE
Calif. Blues pledges to limit annual profits to 2% of its revenue
Blue Shield of California pledged to limit
its annual net income to no more than 2%
of revenue, a move the company said was
“bold.”
Blue Shield of California Chairman and
CEO Bruce Bodaken said the commitment will apply retroactively to income
earned in 2010.
Last year, the company's net income
exceeded the 2% target by $180 million.
Bodaken said the extra money would
be returned to Blue Shield’s customers and
the community.
“The action we’re taking today is rooted
in our longstanding commitment to universal coverage,” Bodaken said. “We know
now that expanding access to coverage is
not enough. ”IFA
Business • Auto • Home • Surety
|
IFAwebnews.com
July 2011
|
9
PeopleNews
Filed Under:
Success.
Rob Klingensmith
******************************
“Every year we spend days going
through our marketing budget,
measuring the ROI on each and every
advertising dollar we spend.One thing
has proven clear to us at Guardian
Disability Insurance Brokerage,
Insurance & Financial Advisor is read
by more insurance agents and financial
planners in the Mid-Atlantic region
than any other publication. IFA has
been a big reason for the
success of our agency over
the past decade.”
Harvey Tegeler
Interstate Financial Services, based in
Westminster, Md., announced that its owners, Brenda Myers and Harvey Tegeler,
received the 2010 Allianz Life Masters Club
Gold Award for outstanding business conducted through Allianz Life.
Don Fentress of Atlantic/Smith, Cropper
& Deeley, based in Willards, Md., was
named Top Insurance Producer for April.
Barrie Baker was hired as medical director
for HealthAmerica’s Medicaid program in
Pennsylvania (CoventryCares) and its sister
Medicaid program in Maryland (Diamond
Plan). Prior to HealthAmerica, Baker served
as medical director for Keystone Mercy
Health Plan in Philadelphia, Pa.
Michael Hayes joined Hunt Valley, Md.-based
All Risks’ National Specialty Programs unit
heading the nationwide Temporary Staffing
Workers’ Compensation Program.
Guardian DI
Brokerage
Rockville, Md.
*************************
Brenda Myers
The Washington Group, a general agency
of MassMutual, headquartered in Bethesda,
Md., added two financial service professionals: Rob Klingensmith as a senior vice
president and Christie Judith as the new
director of development.
Robert S. Klinger, president of Germantown,
Md.-based Klinger & Associates, was
awarded the certified Professional Insurance
Agent (CPIA) designation by the American
Insurance Marketing and Sales Society.
Steve Crawford
Send Your News!
The easiest way to submit events is online:
IFAwebnews.com/submit-news/
Rutherfoord shuffles its leadership,
names Stanchina its new president
INSURANCE & FINANCIAL ADVISOR
publishes three print editions, mailed free of
charge and read by more than 90,000 retail
insurance and financial service professionals
in Maryland, Washington D.C., Virginia,
Pennsylvania, Delaware and New Jersey.
Additionally, our website, IFAwebnews.com,
is viewed by thousands of agents both regionally
and nationally every day.
Let us create a file for you.
********************
Call:
877-IFA-5001
IFAwebnews.com | [email protected]
Christie Judith
Rutherfoord, a Richmond, Va.-based risk
management and insurance brokerage
firms, has promoted John C. Stanchina to
company president.
The company also formed a president’s
council, which Stanchina
will chair.
Stanchina is responsible for sales and operations throughout Rutherfoord,
along
with
providing oversight of the
Richmond, Va., and Pe- John C.
Stanchina
tersburg, Va., divisions.
A former employee of Fidelity & Deposit
Co. of Maryland, he joined Rutherfoord in
1994, establishing and managing Richmond’s surety bond operations. John was
appointed division manager of Rutherfoord’s Richmond office in 2004 and president of the Richmond division in 2009.
Meanwhile, John H. Parrott Jr. was promoted to executive vice president of sales
|
IFAwebnews.com
and Kimberly A.C. Enochs was promoted
to executive vice president of operations.
Both will serve as vice chairs of the president’s council.
Rutherfoord’s top three executives,
Thomas D. Rutherfoord Jr., chairman;
Thomas R. Brown, vice chairman; and Shad
Steadman, who have led the firm over the
last 30 years, will continue to mentor the
agency’s newly appointed leaders.
“During strategic planning, we identified the need to implement a leadership
structure for the future,” said Chairman
Rutherfoord in a statement. “Shad Steadman, Tom Brown and I can now bring
greater focus to the future direction and
growth of the company.”
Also, Bob Bamberger’s role as executive
vice president was expanded to include
oversight of Rutherfoord’s growth in Pennsylvania and liaison responsibilities with
Trion, a benefits agency headquartered in
Philadelphia, part of M&M Agency. IFA
July 2011
Appointee: PSC member gets O’Malley nod
At the law firm, Goldsmith was part of its
white-collar litigation practice group concentrating in government investigations,
commissioner role.
Goldsmith’s appointment comes at an health care fraud and abuse, claims
important juncture for the industry, as ev- brought by the government or private
whistleblowers under the federal and state
ident in responses to her selection.
“Ms. Goldsmith’s appointment comes at False Claims Acts, and issues arising under
the HIPAA and state privacy
a critical time for the state’s
laws. She had served as an
insurance industry,” Kip
// IFA_FAST FACT
associate for the same diviWhite, chairman of the Insion since 2001.
surance Agents & Brokers of
The MIA kingdom
Maryland, told IFA. “We’re
Prior to joining Hogan &
Maryland’s insurance comlooking forward to working
Hartson, Ms. Goldsmith
missioner has regulatory
with her on health care reworked as an associate at
authority over Maryland’s
form, certificates of insurVenable, Baetjer and Howard,
$26 billion insurance indusance, surplus lines and other
another Maryland law firm,
try and an annual budget of
key issues for our members.”
where she concentrated on
more than $27 million.
federal and state regulatory
Bryson Popham, an incompliance, fraud and abuse
surance industry lobbyist,
investigations, provider reimbursement apechoed White’s comments.
“With all of the studies required under peals, rate review matters, medical staff peer
insurance legislation that passed this year, review proceedings, licensure board discialong with the administration’s review of plinary actions, patient care issues and corhomeowner’s insurance availability in porate transactions.
coastal areas, not to
Tyler appointed Sammis, a former
mention the implemenvice president of government affairs for
tation of health care reUnitedHealthcare and Mid-Atlantic
form and the CommisMedical Services Inc. (MASI), which was
sioner’s position on the
bought by UHC, as deputy commisboard of the new Health
sioner in 2007.
Benefit Exchange, she
Sammis’ appointment as insurance comwill certainly have a full
missioner was in an acting capacity only. IFA
Kip White
plate of issues as she enters office,” Popham told IFA. “I think that // IFAWEBNEWS.COM POLL
Maryland has been well served during the Most say NFIP needs five more
tenure of Commissioner Sammis.”
Gov. Martin O’Malley made the ap- years, 15% say it should end
pointment six days before the five-year The National Flood Insurance Program
term being completed by Sammis was set (NFIP), which is set to expire Sept. 30,
to end. Maryland law requires the gover- should be extended for five years, accordnor to appoint a commissioner by June 1 of ing to the latest IFAwebnews.com poll.
the year following a presidential election.
Nearly four-in-five poll participants
“We are confident that her extensive (79%) said the program deserves a five-year
expertise and commitment to public extension, while 15% of participants said
service will protect the progress we’re the program should be allowed to vanish.
making for consumers and effectively
The program provides federal insurance
regulate Maryland’s insurance industry,” coverage for more than 5 million properO’Malley said in a statement.
ties deemed to be in flood zones.
In the poll, 3% of participants said the
Goldsmith, whose appointment must
be confirmed by the Maryland Senate, will program warrants a one-year extension,
take over for Sammis on the board of the while another 3% suggested it should be
state’s health benefit exchange. Under fed- extended for two years.
For two years, the NFIP has earned brief
eral health reform, the exchange must be
in place by January 2014 to provide indi- extensions, while twice Congress permitviduals and small-business owners a place ted the program’s funding to expire, leavto shop for insurance coverage, buy poli- ing homeowners trying to sell their homes
or people suffering flood losses to fear a
cies and obtain federal subsidies.
O’Malley had appointed Goldsmith, a lack of coverage. But when lapses did ocformer partner with Hogan & Hartson law cur, Congress renewed the program
firm, to serve on the public service com- retroactively. A bill before Congress would
provide another five-year extension. IFA
mission in 2009.
From page 1
// FINAL ANSWER
Former CareFirst CEO finally claims $18 million of severance
Maryland court refuses to hear appeal
of insurer’s decision to make payout
William L. Jews, a former CEO of CareFirst, can now claim all $18 million of his
severance, five years after he left his position leading Maryland’s largest health insurer and three years after the payment
was challenged by state officials.
On May 23, the Maryland Court of Appeals, the state’s highest court, declined to
hear an appeal of a lower court ruling in
the case, effectively ending the challenge.
The state had challenged a lower court
ruling favoring Jews. In the November 2009
ruling, Maryland Circuit Court Judge Timothy J. Martin said Jews, who ran the Ow-
ings Mills, Md.-based insurer from 1993 to
2006, was entitled to all of his post-employment compensation negotiated with
the company. CareFirst operates in Maryland, Northern Virginia and the District.
In 2008, then-Maryland Insurance
Commissioner Ralph S. Tyler cut Jews’ severance package in half, citing a 2003 law
that limits the amount of compensation a
nonprofit health plan can pay its executives. Tyler, who left as head of the Maryland Insurance Administration in 2010 to
take a federal position, cited the law’s language, saying executives are entitled to
“fair and reasonable” compensation “for
work actually performed for the benefit
of” the company. IFA
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High Value Property
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mergers • acquisitions • partnerships
Pa. carrier hires software co.
for streamlined system
Penn Mutual Life Insurance
Co., headquartered in Horsham, Pa., selected Thunderhead, a business
software company, for its platform that
streamlines workflow processes and delivers
a consistent client and producer experience.
Mutual
Insurer
With ThunderheadNOW, Penn Mutual will
be able to better streamline its communications process and improve workflows
across multiple teams.
The platform initially is being deployed by
Penn Mutual to produce policies. The system will eventually be rolled out to produce
a variety of producer and client statements
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Insurer, media company align
on Medicare supplement
Humana, based in Louisville,
Ky., and Reader’s Digest
(RDA) announced an alliance they say will
enhance seniors’ health insurance and wellbeing through a suite of Medicare products.
Health
Insurance
The Medicare supplement is expected to
eventually be offered in all 50 states, Puerto
Rico and Washington, D.C. The plans
include dental and vision coverage, and
includes discounts and customized, simple
health insurance and well-being content.
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The products are expected to be available
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Humana and RDA said they will promote the
co-branded products across the range of
Reader’s Digest print and digital channels.
Reader’s Digest said it will introduce a brand
new guide to Medicare decision-making and
senior health debuting on newsstands and
online in September 2011.
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U.S. Treasury sells majority
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American International Group
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The shares were sold at $29 apiece, the lowend of the insurer’s expected $29 to $30
range, according to Bloomberg Business
AIG didn’t receive any proceeds from the
sale of the government’s shares, Bloomberg
Business Week reported. The Treasury cannot launch another offering until September.
The government said that its stake in AIG
dropped from 92% to 77% with the stock sale.
The offering gave the underwriters an option
to buy as many as 45 million additional
shares owned by the government.
The shares have lost almost half their value
since they hit a 52-week high of $52.67 Jan. 7.
Navy insurer adapts company’s
new management system
Navy Mutual Aid Association
selected Accenture, a global
management consulting, technology services and outsourcing company, to license
and implement its life insurance policy
administration application to replace the
insurer’s current system.
Life
Insurance
The Accenture Life Insurance Platform will
be used to support all of Arlington, Va.-based
Navy Mutual’s policy administration and new
business function. The software platform
will be implemented to help Navy Mutual
lower its operating costs and drive U.S.
growth by reducing the time it takes to create and launch new products and services.
Carrier sponsors baseball ‘safe
calls,’ winning runs program
New York Life Insurance Co.
launched its television sponsorship with seven new Major League
Baseball teams that connects “safe calls”
with the insurer.
Life
Insurance
The seven teams include Chicago Cubs,
Chicago White Sox, Milwaukee Brewers, St.
Louis Cardinals, Cincinnati Reds, Texas
Rangers and the Colorado Rockies.
The Boston Red Sox, Philadelphia Phillies,
and San Francisco Giants are part of the
sponsorship for a second season as well.
The sponsorship includes New York Life’s
Safe and Secure feature, which is triggered
when a player slides safely at second base,
third base or home plate. The feature
includes New York Life’s logo and also will
be read by the announcer. A bonus occurs
when a game ends either with a game-winning run in the ninth inning, or in extra
innings by the home team. The sponsorship
includes 100 games for the 10 teams.
For the latest deals go to IFAwebnews.com
* R a t in g a s o f D e ce m b e r 16, 2009. Fo r t h e la t e st r a t in g , a cce ss www.a m b e st .co m .
Week, but above the $28.73 the government
said it needed to recoup its investment.
|
IFAwebnews.com
July 2011
Motorists oppose local government
fees after ambulance crash response
Even though fee is passed along to
insurers, 68% of consumer dislike levy
The majority of adults would prefer their
local governments not charge accident response fees to motorists involved in traffic
accidents, according to a new survey.
Exactly 68% of survey participants object
to the fees, which typically are passed on to
insurance companies for payment, except
in cases when the motorist is uninsured, ac-
ance companies to pay accident response
fees could lead to higher auto insurance
costs, 69% of survey respondents disagreed with the idea of local governments
charging accident response fees.
“Efforts to fund emergency response
services through accident response fees
stand in direct conflict with the fundamental notion that certain government services
should be paid for by all taxpayers — not
just those who are unlucky enough to actu-
A total of 12 states have enacted laws
prohibiting the fees; others debating action.
cording to the Insurance Research Council
(IRC), a nonprofit education and research
arm of the American Institute for CPCU, a
property-casualty insurance trade group.
A total of 12 states have enacted laws
prohibiting the fees, and several others are
debating the measure.
A number of jurisdictions in the U.S.
have approved the fees as a means of generating additional revenue at a time when
their budgets are hurting.
When reminded that requiring insur-
Gallagher buys investment advisor
with offices in D.C. and New Jersey
Arthur J. Gallagher & Co. has bought a
national institutional investment advisory
firm, based in Washington, D.C., with an
office in Newark, N.J.
Originally founded in 1986, Independent Fiduciary Services (IFS) is an institutional investment advisory firm providing
ongoing and project-based investment
consulting as well as fiduciary decisionmaking services to the firm’s pension, welfare and other institutional investor clients
throughout the U.S.
Financial terms of the deal were not disclosed.
IFS’ clients span ERISA funds, including
both Taft-Hartley and corporate plans, as
ally need the services,” said Elizabeth
Sprinkel, senior vice president of the IRC.
In looking at different demographic
groups and opinions regarding accident
response fees, the IRC found only one
group, individuals between 18 and 24 years
of age, whose members were more likely to
agree than disagree with the imposition of
accident response fees. For all other age,
education and income groups, more respondents disagreed than agreed with the
idea of accident response fees. IFA
Coventry Health Care
Superior Service and
Quality Product Offerings
Variable annuities set stage for
16% increase in overall annuity sales
LIMRA researchers say fixed annuity sales
rose 5% over last year, hitting $20.2 billion
Annuity sales increased 16% in the first
quarter, reaching $60 billion, with variable
annuity sales leading the way with a 24% increase in sales over the same period last year.
Fixed annuities showed a 5% increase
over first-quarter 2010, reaching $20.2 billion, according to LIMRA’s first quarter
2011 Annuity Sales Survey. The fixed-annuity growth was a result of fixed–rate deferred products, which were up 10%, compared to the prior year.
Sixteen of the top 20 variable annuity
companies saw sales increases from the
prior year, setting a “good pace” for the
year, according to LIMRA officials. The topthree companies saw record sales for a second straight quarter.
Money back in market
“Strong VA sales, which recorded $39.8
billion in the first quarter, were the main
driver of the overall annuity growth,” said
Joseph Montminy, LIMRA assistant vice
president, annuity research. “They benefited from the positive equity market trend
and consumers putting money back into
the market.”
Book-value sales recovered in the first
quarter, growing 10% year-over-year and 32%
from the prior quarter. Interest rate spreads
improved, making fixed annuities more attractive compared to comparable investment
products, like CDs, officials said.
Market-Value Adjusted (MVA) sales also
increased, up 8% in the first quarter.
Indexed annuities remained steady in
the first quarter, rising 1% from the prior
year. After reaching record levels in the $8
to $9 billion range for most of 2010, indexed annuities settled back to the $7 billion level in the first quarter. IFA
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Announcement: Individual and family products now
available for Maryland & Delaware!
CoventryOne offers:
• Multiple products offerings
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At your pace, at your desk.
well as public pension plans and other institutional investors.
Francis Lilly, Samuel Halpern and their
staff will continue to operate from their
current Washington, D.C., and Newark,
N.J., locations, under the direction of
Michael J. DiCenso, president of GBS Investment Consulting, a division of Itasca,
Ill.-based Arthur J. Gallagher & Co.’s employee benefit consulting and insurance
brokerage operations.
J. Patrick Gallagher Jr., president, chairman and CEO, said IFS’s “visibility and distinctive services in the industry supports
business development which is evidenced
by their years of consistent growth.” IFA
|
IFAwebnews.com
For Details Contact
Maryland
MaryBeth Bendel
410-910-7159 • [email protected]
Bob Darretta
Delaware
Dina Hughes
800-727-9951 x1144
[email protected]
Log onto: www.chcde.com
July 2011
|
13
On the Hill
Tricare rejects bidder’s appeal, sticks
with MetLife for its dental coverage
United Concordia gets dropped after 15
years as carrier for military community
The U.S. Government Accountability Office (GAO) upheld a decision to award a
$3.1 billion Tricare dental plan contract to a
different insurer, its first change in 15 years.
Tricare Management Activity agency at
the U.S. Department of Defense decided to
give New York, N.Y.-based Metropolitan
Life Insurance Co. a $3.1 billion dental plan
contract rather than United Concordia
Cos., based in Harrisburg, Pa.
Tricare managers decided that the
MetLife provider network suited the military insurance program better than United
Concordia’s network, the Pittsburgh Post
Gazette reported.
United Concordia, a division of Pittsburgh, Pa.-based Highmark, was the Tricare dental program provider for 15 years.
The division offered a fixed-price bid of
$3.23 billion covering the next five years,
while MetLife’s bid was $3.09 billion, the
newspaper reported.
United Concordia challenged decision
by arguing that it deserved bonus points for
being the “incumbent contractor” because
a “change in contractors may require beneficiaries to change [dental care]
providers,” according to the Pittsburgh Post
Gazette. The GAO denied the protest. IFA
News From The Nation’s Capitol
Health reform legal challenger
gets health insurance, putting
suit’s status in question
A federal appeals panel is reevaluating a
conservative legal center’s case against the
individual mandate under the health care
reform after one of the key plaintiffs bought
health insurance.
Jann DeMars, one of the several plaintiffs
with the Thomas More Law Center, told the
Sixth Circuit Court of Appeals that she
obtained insurance for her child in October
2010 after arguing that the insurance mandate was too much of a financial burden,
according to Politico.
The three-judge panel must decide whether
the group has the right to bring the suit and
whether there are merits to the case.
The Thomas More Law Center’s lawyer
argued that its other plaintiffs still have a
right to bring the suit.
The government argued that if the Sixth Circuit rules the case no longer has standing, it
should throw it out or at the very least send
it back to the lower court.
Conservative groups argue
for two exemptions from
health reform’s provisions
Some conservative groups sent a letter urging state governors and insurance
commissioners to seek waivers from the
Obama administration for two major health
reform provisions.
Let Freedom Ring, Grover Norquist’s Americans for Tax Reform and other groups seek
exemptions, the so-called mini-med waivers,
from the law’s annual benefit limit, and to
opt out of the medical loss ratio (MLR)
requirements, which regulate how much
insurers must spend on providing care.
The letter said four states are among the
1,300-plus groups that received mini-med
waivers, according to Politico. The Patient
Protection and Affordable Care Act
requires that all plans cover beneficiaries
up to at least $750,000 in 2011. Yet the
Obama administration waived this requirement for one year for an increasing
number of businesses, unions and insurers, Politico reported.
The conservative groups said in the letter
that the “well-intentioned” annual limit provision will hurt individuals that have low-value
health plans, the newspaper reported.
The groups argued that the MLR require-
|
IFAwebnews.com
ment for insurers to spend at least 80% of
premiums on providing care will force insurers out of the marketplace, according to the
newspaper. The Health and Human Services
Department awarded three state waivers for
MLR requirements, and nine other states
and Guam have applied.
U.S. House weighs new call
to put an end to health
insurers’ antitrust exemption
Two Democrats, Oregon Rep. Peter DeFazio
and New York Rep. Louise Slaughter, introduced a bill to kill the antitrust exemption for
health insurers, which would open the door
to the U.S. Justice Department investigating
and prosecuting any anti-competitive practices employed by health plans.
DeFazio says ending the exemption would
halt insurers’ artificially inflating premiums,
according to an OregonLive.com report.
A similar bill last year passed in the House in
February 2010 by a 406-19 vote.
In Oregon, Regence BlueCross BlueShield
of Oregon, the state’s largest health insurer,
plans to raise premiums by more than 22%
for 59,000 of its customers to offset
increases in medical services and prescription drug costs, according to the report. A
public hearing on the proposal, which would
take effect Aug. 1, was held in June.
Business groups, fresh from
1099 repeal win, battling
second tax on health policies
About 25 business groups joined forces in
an effort to repeal health care reform’s tax
on health insurance companies.
The tax starts at $8 billion a year in 2014,
and will rise to $14.3 billion in 2018. It was
included as a way to help pay for health care
reform, just like the repealed 1099 provision,
which would have required businesses to
file 1099 forms with the Internal Revenue
Service for expenditures more than $600.
Business groups say insurers will pass the
cost of this health insurance tax to their customers, which small businesses can’t afford,
Stop the Health Insurance Tax (HIT) Coalition
said in the Phoenix Business Journal.
“This new tax will be almost entirely be
passed from insurers to small businesses
and their employees, raising health care
costs and increasing economic uncertainty
for this vital sector,” Dan Danner, president
of the National Federation of Independent
Business, another coalition member.
July 2011
Health Care Reform
IFAwebnews.com/HealthReform
Health laws passed in Md. to kick-start
state’s health care reform compliance
Collection of bills regarding health
coverage receive O’Malley’s approval
Maryland Gov. Martin O’Malley
signed several health insurance bills into
law, many of which acclimate the state’s
legislation to the provisions of the health
care reform law.
The state had pass laws to prepare for
implementing a health insurance exchange, among other things, as mandated
under the Patient Protection and Affordable Care Act (PPACA).
HB 166/SB 182, effective June 1, established the provisions of the state’s health
exchange, which must be in place under
federal health reform by Jan. 1, 2014.
Under a compromise reached among
legislators and other stakeholders, including insurance agents, according to Kari Kissinger,
government affairs director for Insurance Agents
and Brokers (IA&B), the
exchange will be a public-private hybrid.
The health exchange
Keri Kissinger
bill accomplished several
insurance industry objectives, according to Bryson F. Popham, partner with Popham & Andryszak, but “perhaps most important” is one of the purposes
of the bill. The language approved by legislators says the exchange will supplement
the health insurance market outside the exchange.
“That’s important so we don’t have one
distribution channel cannibalizing another, and I think that’s a mark of good
faith that the administration has shown in
improving the bill,” Popham told IFA. “I’m
pleased to say that in Maryland, we have
forged a constructive and effective working
relationship with the administration.”
Most of the other “weightier policy decisions” were left for next session, Kissinger
said. Several studies are scheduled to be
conducted over the summer, after which
the General Assembly will reconvene for
further decisions, according to Popham.
O’Malley also signed HB 170/SB 183, effective July 1, which Bryson said is a “routine bill conforming Maryland law to the
provisions of the PPACA.”
HB 156 extends to Dec. 31, 2013, the termination date of specified provisions of law
relating to health insurance policies for selfemployed individuals in the small group insurance market. It takes effect July 1.
This bill is a “temporary fix” until the
PPACA is enacted, Popham said.
Another bill (HB 1178/SB 850), effective
Oct. 1, allows licensed producers to discuss public health insurance options with
their clients at the time of enrollment. IFA
O’Malley’s executive orders usher in health reform
Gov. Martin O’Malley signed several executive orders related to the implementation of federal health reform and appointed
a staff member to oversee a new state office.
That state office, the Governor’s Office
of Health Care Reform (OHCR), was created through O’Malley’s signature on one
of the executive orders.
O’Malley also appointed Carolyn Quattrocki, a lawyer and deputy legislative officer for the governor for the last five years,
as executive director of the OHCR.
She previously served as a special assistant to former Maryland Attorney Gen-
Group, correcting feds’ ‘mistake’, files papers opposing reform
The Heritage Foundation, correcting
what it described as a mistake it made 21
years ago, has filed a friend of court brief
opposing the federal health reform law.
The amicus brief, filed with the 11th Circuit U.S. Court of Appeals, is the first of its
kind by the organization, according to a
statement.
“We had no other choice,” an email
from the group explained. “In its merits
brief before the appeals court, the U.S.
Choice Dental Plans:
More Flexibility At A Lower Cost!
ident at AcademyHealth and director of the
Robert Wood Johnson Foundation’s State
Coverage Initiatives program; and Thomas
Saquella, former president of the Maryland
Retailers Association.
The remaining three board members
are the secretary of the Maryland Department of Health & Mental Hygiene, the
commissioner of the Maryland Insurance
Administration, and the executive director
of the Maryland Health Care Commission.
Maryland Health Secretary Josh Sharfstein was appointed to serve as the initial
chair of the board. In the coming months,
Maryland’s exchange board will establish
advisory committees, adopt procurement
guidelines, conduct a search and select an
executive director, and undertake a series of
studies required by its enabling legislation
signed in to law by the governor last
month. IFA
government quoted a 21-year-old statement by a Heritage Foundation policy expert supporting an individual mandate for
health insurance, when Heritage’s view today is to the contrary.”
The Obama Administration used the
statement in its appeal of U.S. District
Judge Roger Vinson’s ruling, declaring unconstitutional the individual mandate in
the Patient Protection and Affordable
Care Act. IFA
Choice Access PPO
Rates Reduced by 10%!
Members appointed to Maryland Health Benefits Exchange board
Gov. Martin O’Malley appointed nine
members to oversee Maryland’s health
benefit exchange.
The exchange, required under federal
health reform to be in place by January
2014, will provide individuals and smallbusiness owners with a one-stop shop for
comparing insurance products, buying
coverage and obtaining federal subsidies.
O’Malley signed legislation providing the
framework for the exchange in April.
Appointees include Georges Benjamin, a
doctor and executive director of the American Public Health Association; Lisa Dubay,
Urban Institute senior fellow; Darrell
Gaskin, an associate professor and health
economist at the Johns Hopkins Bloomberg
School of Public Health; Jennifer Goldberg,
a lawyer and assistant director of advocacy
for Health Care at the Maryland Legal Aid
Bureau; Enrique Martinez-Vidal, vice pres-
eral J. Joseph Curran Jr., where she worked
on a range of health, child welfare, criminal justice and other policy issues.
Creating the OHCR was one of 16 recommendations made by the HCRCC in its final
report released in January. The OHCR will
have primary responsibility for coordinating
health care reform across state agencies, commissions and boards, including the Health
Benefit Exchange, to ensure reform’s effective implementation in Maryland.
The office also will be responsible for
staffing the HCRCC, and creating a outreach and education strategies.office. IFA
New Choice Plan features include:
• 10% lower Access PPO rates effective July 1
• Two-year rate guarantees
• Orthodontia coverage now available on the Access PPO
(already included in the Select Plan)
Choice Plans:
• Require only two to enroll for groups of 5 to 400
• Provide typical premium savings of 35% over offering
a stand-alone Access PPO1
• Shelf rates – no custom underwriting
Contact your Dominion Sales Executive or our Group Service
Center at 877-559-9624 or [email protected]. You can
also visit our Producer Portal at DominionDental.com/ifa.
We Work For Your Benefit.
1
Follow Us
Dominion Dental Services, Inc. based on premium and enrollment data, 2010.
This communication is not intended for presentation, distribution,
or dissemination to the public, and is for internal use by sales agents/brokers ONLY.
|
IFAwebnews.com
July 2011
|
15
Insurance company seeks $750,000
after FBI agent crashes Ferrari F50
Federal government refuses to pay for
incident where car slides into tree, bushes
A hearing is scheduled for June 13 in Detroit in a case pitting an insurance company against the U.S. Department of Justice over the destruction of a 1995 Ferrari
F50 worth $750,000.
the Justice Department as part of an investigation. The car was impounded in
Lexington, Ky.
In May 2009, FBI agent Fred Kingston invited J. Hamilton Thompson, an assistant U.S.
attorney, for a “short ride” in the Italian car,
according to press reports. With Kingston
driving and Thompson as a passenger, prob-
Luxury vehicle was one of just 349 made, of
which only 50 were sold in the United States.
The FBI is refusing to pay for the vehicle’s loss after one of its agents crashed the
F50 supercar, one of 50 sold in the U.S.
and one of just 349 manufactured in total,
according to a Washington Post report.
The insurance company, Motors Insurance, wants more information about the
crash, as well as $750,000 as compensation for its loss of the V12-powered model
from Maranello.
After paying the dealer to cover the theft,
Motors Insurance took title of the car.
Five years after the theft, the car was recovered in Kentucky and turned over to
lems occurred, according to an email prepared by Thompson the day of the ride.
“Just a few seconds after we left the parking lot, we went around a curve and the rear
of the car began sliding,” Thompson said in
the email. “The agent tried to regain control
but the car fishtailed and slid sideways up
onto the curb. The vehicle came to rest
against a row of bushes and a small tree.”
Motors Insurance deemed it a total loss.
But the FBI is refusing to pay, saying it
isn’t responsible for the loss because it was
in the hands of a law enforcement officer.
A court will determine the outcome. IFA
FPIC investors open probe
questioning sale price
Investors in FPIC Insurance Group, a
national medical professional liability
insurer, are questioning whether the
company’s sale to The Doctors Co. is
good enough.
The investors initiated an investigation into whether the $362 million acquisition is unfair to FPIC stockholders
and whether certain directors and officers breached their fiduciary duties, according to a statement from the Shareholders Foundation, a professional
portfolio monitoring service and an investor advocacy group.
On May 24, before the market opened,
FPIC Insurance Group and The Doctors
Co. announced the deal. FPIC Insurance
Group said the $42 per share price represents a premium of about 31% over
the $32.10 per share closing price of FPIC
May 23, the last trading day prior to the
announcement. But once the deal was
announced, shares of FPIC Insurance
Group jumped from $32.36, then $41.50.
The group says that as recently as April
1, FPIC Insurance Group shares reached
$39.40, leaving FPIC investors with “only
a meager premium,” according to the
statement.
The group said it is monitoring whether
the FPIC Insurance Group’s board of directors “undertook an adequate and fair
sales process to obtain fair and maximized
consideration for all shareholders” of FPIC
Insurance Group and breached their fiduciary duties to FPIC Insurance Group
(FPIC) shareholder by failing to adequately
shop the company before entering into
the transaction.
The investigation also is exploring
whether the Doctors Co. would underpay
for the shares, thus unlawfully harming
FPIC stockholders.
A potential securities class action lawsuit would seek to maximize the amount
of money and information FPIC shareholders would receive in a buyout. IFA
// PROPERTY-CASUALTY
Calif-based brokerage joins
global network to pump sales
Heffernan Insurance Brokers, a large
independent brokerage firm based in San
Francisco, became part of German-based
UNISONBrokers, a global broker network, to help facilitate its placement and
servicing of insurance business in foreign countries. IFA
For the Record
// ACQUISITION
|
IFAwebnews.com
Maryland Agent
& Carrier Actions
The following summaries are based on
information obtained from the Maryland
Insurance Administration.
■
Group Hospitalization and Medical
Services Group
Owings Mills, Md.
Action: Paid a $75,000 fine
Synopsis: A market conduct examination found numerous violations of state laws and regulations. Another $50,000 of the fine was stayed, pending the
insurer’s compliance with all requirements imposed
by the MIA within 90 days.
No. MIA-2011-05-003
■
Markel Insurance Co.
Glen Allen, Va.
Action: Paid an $8,000 fine
Synopsis: A market conduct examination found
the insurer failed to properly comply with requirements regarding filing an Out-of-State Association
Contract Report.
No. MIA-2011-04-005
// UPDATES
Va. benefits provider attempts
to become more ‘attractive’
A dental and vision benefits provider
headquartered in Alexandria,Va., dropped
rates on its group PPO plans and announced its presence in the social media
community to make itself more attractive.
Dominion Dental Services dropped
third quarter rates by 10% on its Choice
Access PPO plans to increase competitiveness for its dual option plan packages for groups of five and more.
The benefits provider also enhanced its
Choice Plans to include a two-year rate
guarantee to both the Select (same as a
DHMO) and Access PPO plans, and orthodontia coverage for the Access PPO plans.
Select Plans include orthodontia coverage for both children and adults.
Dominion’s Choice Plans provide off-theshelf dental benefit packages for employer
groups ranging from five to 400 employees.
“Over the past three years we have
added off-the-shelf options with modified annual maximum limits and coverage levels and they have been top sellers
for our small-to-mid size group market,”
said Mike Davis, Dominion’s COO, in a
statement. “The new enhancements provide even more options that are quotable
on the fly and simple to install.”
The benefits provider also created
pages on Facebook, LinkedIn and Twitter.
Dominion Dental Services, incorporated in 1996, provides services to the
Mid-Atlantic region. IFA
July 2011
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July 2011
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Md. lawyer admits to his role
by fabricating treatments in
bicycle accident fraud
A lawyer pleaded guilty to his role in an
insurance fraud scheme based on him
receiving fabricated treatments by a chiropractor.
Amir Ryan Lahuti, 45, of Bethesda, Md.,
admitted in federal court that he was
guilty of conspiracy to commit mail fraud,
according to Neil H. MacBride, U.S. attorney for the Eastern District of Virginia.
The plea was accepted by U.S. District
Judge Anthony Trenga.
Lahuti faces a maximum penalty of 20 years
in prison when he is sentenced on Aug. 5.
Lahuti, a lawyer licensed to practice in
Maryland and Washington, D.C., owns
and operates the Law Offices of Ryan
Lahuti, and has offices in Silver Spring
and Langley Park, Md.
Court records indicate Lahuti had an
ongoing business relationship with chiropractor Jason Carle, wherein the two
would refer clients to one another. In May
2009, Lahuti was involved in an accident
during which he was reportedly hit by a
vehicle while riding his bicycle. Lahuti
subsequently contacted Carle and asked
Carle to create a patient file for him to
document purported treatment related to
the bike accident that Lahuti could use to
submit a fraudulent insurance claim.
Carle never examined Lahuti or treated
him for any injuries sustained in the accident, but fabricated patient files to document over $7,000 in treatment that he purportedly provided to Lahuti on 32
different occasions between May and August 2009. Carle also created documentation that falsely stated that Lahuti was totally incapacitated and out of work for two
weeks after the date of the accident.
Lahuti used the false documents allegedly created by Carle to file a fraudulent bodily injury insurance claim with
GEICO in November 2009.
Sentencing is set for July 29. IFA
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[email protected] • www.smartchoiceagents.com
|
IFAwebnews.com
In Memoriam
■
Hilary M. Taylor Jr., 82, of Salisbury, Md.;
former district manager for Beneficial Life
Insurance Co.
■
Charles Thomas White, 78, of Laytonsville,
Md.; former employee of Peoples Life
Insurance Co., Acacia Life Insurance Co. and
retired from Baltimore Life Insurance Co.
July 2011
Rutherfoord shuffles its leadership,
names Stanchina as its president
Leader is former president of Richmond,
Va., division, who started surety bond unit
Rutherfoord, a Richmond, Va.-based
risk management and insurance brokerage firms, has promoted
John C. Stanchina to
company president.
The company also
formed a president’s
council, which Stanchina
will chair.
Stanchina is responsi- John C.
ble for sales and opera- Stanchina
tions throughout Rutherfoord, along with
providing oversight of the Richmond, Va.,
and Petersburg, Va., divisions.
A former employee of Fidelity & Deposit
Co. of Maryland, Stanchina joined Rutherfoord in 1994, establishing and managing
Richmond’s surety bond operations.
Stanchina was appointed division manager of Rutherfoord’s Richmond office in
2004 and president of the Richmond division in 2009.
Meanwhile, John H. Parrott Jr. was promoted to executive vice president of sales and
Kimberly A.C. Enochs was promoted to executive vice president of operations. Both will
serve as vice chairs of the president’s council.
Rutherfoord’s top three executives,
Thomas D. Rutherfoord Jr., chairman;
Thomas R. Brown, vice chairman; and
Shad Steadman, who have led the firm
over the last 30 years, will continue to
mentor the agency’s newly appointed
leaders.
“During strategic planning, we identified the need to implement a leadership
structure for the future,” said Chairman
Rutherfoord in a statement. “Shad Steadman, Tom Brown and I can now bring
greater focus to the future direction and
growth of the company.”
He described the company as “Marsh &
McLennan Agency’s lead brokerage firm
in the Southeast, mid-Atlantic and the District of Columbia.”
Also, Bob Bamberger’s role as executive
vice president was expanded to include
oversight of Rutherfoord’s growth in Pennsylvania and liaison responsibilities with
Trion, a benefits agency based in Philadelphia that is part of Marsh & McLennan
Agency’s network of firms, to which
Rutherfoord belongs.
Bamberger also will serve on the president’s council.
Doug Russell, senior vice president, will
lead carrier relations along with his ongoing management of the Hampton Roads,
Va., and Mobile, Ala., divisions.
Founded in 1916, Rutherfoord has
grown from its Virginia roots to one of the
largest risk management and insurance
brokerage firms in the United States, with
offices from Philadelphia to the Gulf Coast
region, and client operations in all 50
states and more than 80 countries.
Rutherfoord became a Marsh & McLen-
Insurance Industry
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Bringing Payroll & Benefits Together
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// IN CONGRESS
Pa. senators raise issues about IRS handling of life settlements
Two senators from Pennsylvania are raising concerns about the federal tax treatment for life insurance policy sales and
purchases.
Sens. Bob Casey Jr.
and Pat Toomey sent the
letter to Timothy Geithner, the secretary of the
U.S. Treasury, criticizing
two Internal Revenue
Service rulings affecting
life settlements, accord- Bob Casey Jr.
ing to the Life Insurance
Settlement Association. LISA held its annual spring conference in Washington,
D.C., where Casey, the keynote speaker,
read portions of the letter to attendees.
Two years ago, the IRS issued Revenue
Ruling 2009-13 and 2009-14 related to life
settlements, which were intended to guide
taxpayers who sell or purchase life insurance
policies in calculating their tax exposure in
such transactions. The Casey/Toomey letter
questions whether “the revenue rulings,
rather than providing clear guidance, may
have created confusion in the marketplace.”
Reading from the letter, Casey told that
audience that “Revenue Ruling 2009-13
imposes a different standard on the sale of
a life insurance policy to a third party than
what is imposed on a sale to the issuer in
the form of a surrender,” and “as a result, a
policy owner would face the same tax consequences upon surrender but different
tax consequences upon a sale.”
The senators said Revenue Ruling 200914 “imposes disparate tax consequences
on owners of policies purchased in life settlements” that may “lead to inefficiencies
in the life settlement market.” IFA
Group Insurance Administrators, Brokers &
Consultants Specializing in Healthcare
KTBSPayroll is a Division of Kelly & Associates Financial Services, an Affiliate of Kelly & Associates Insurance Group, Inc
|
IFAwebnews.com
July 2011
|
19
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Coastal properties caught in `double-whammy`

Transcription

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