Pennsylvania | New Jersey | Delaware

Transcription

Rx for savings 2
Southeastern
Pennsylvania
Lower retail
prescription costs
mean shrinking
U.S. health care
spending.
New Jersey
Delaware
Required reading for successful insurance and financial service professionals
Volume 3, Issue 8 |
Counting More Clients
Lancaster, Pa.-based
Horst Insurance
is purchasing
InsuranceMasters,
adding 2,300 more
policyholders.
Page 12
2
Ario: Aligning enforcement, consumer functions
seeks to better address fraud and misconduct
PAHU president welcomes Highmark’s
efforts to reach uninsured state residents
By Keith L. Martin
Insurance Commissioner
Joel Ario has a simple message
to agents and brokers following a reorganization of his department geared toward protecting consumers.
“Rogue agents beware. We’re
more likely to get you now,” Joel Ario
Ario told Insurance & Financial Advisor in light of changes in his agency,
most notably aligning the bureaus of consumer
services, licensing and enforcement, market
conduct and fraud under one Office of Market
Regulation.
“The fundamental reason for this is consumer protection and getting to the real problems consumers are having,” Ario said. “We can
better review complaints and work with enforcement and market conduct to focus on the
biggest consumer and agent problems.”
Deputy Commissioner Ron Gallagher heads
the market regulation office and said he sees
the biggest benefit as having all the bureaus together under one umbrella so regulators can
share information more quickly and in turn react when things happen in the
See “Rogue” on p12
Consolidation Conundrum
The impact of the
proposed IBC/Highmark merger will
come whether approved
or not, expert says; plus competitors weigh in on what a merger
Page 17
means for them.
Cutbacks :: page 19
3
Departments
CALENDAR
LEGAL BRIEFS
NEW PRODUCTS
9
8
4, 15
PEOPLE
10
RECORD/FINES
19
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Aetna, CIGNA slash
jobs in Pa., elsewhere
Penn Treaty seized
by Pa. after missing
surplus deadline
Shrinking budgets
at home mean more
policy shifting
Allentown LTC insurer’s struggles lead
regulators to implement rehabilitation plan
Survey indicates 60% of individuals made,
considered policy changes to cut costs
By Keith L. Martin
By Keith L. Martin
The Pennsylvania Insurance Department
has taken control of Allentown, Pa.-based Penn
Treaty Network America Insurance and its subsidiary, American Network Insurance Co.
A Pennsylvania Court has approved the petition of Insurance Commissioner Joel Ario for a
rehabilitation order.
The Penn Treaty rehabilitaSee “Penn” on p7
With the economy prompting consumers
to look for deals, some agents say the practice
has found its way into the market for homeowner’s insurance.
Exactly 24% of homeowners surveyed, representing about 39 million of all U.S. homeowners,
said they have made changes to their coverage
in response to financial conSee “Rates” on p6
By Bob Graham
Highmark Inc., the large
Pennsylvania health insurer
poised to merge with Independence Blue Cross, is opening a retail health insurance
sales location in Mechanicsburg, Pa., to sell directly to consumers who it says are not be- Stewart T. Anmuth
ing served.
The retail store, set to open in this quarter,
will be the first in the state, and one of several in
the U.S.
The store, Highmark Direct, will target people
who cannot get coverage through their employer, seniors who are looking to supplement
existing health insurance, and small business
owners who want to provide health insurance to
employees, according to the
See “Store” on p16
You go, girl!
Who do women seek out
for financial advice?
Spouse
24%
Parents
16%
Friends
13%
Insurance
Agent
12%
Accountant
7%
Source: State Farm
Insurance & Financial Advisor
10600 York Rd. Suite 203, Hunt Valley, MD 21030
1
Health carrier goes
direct to consumers
with retail store
DATED MATERIAL
Counting on Computers
Three excess and
surplus groups are
promoting greater
technology use
among agents, carriers and
general agents.
Page 5
Pa. regulators reorganize to
better battle ‘rogue’ agents
Change Service Requested
Three must-see articles from
the inside pages this month
include a drive to increase the
use of technology, an acquisition by a local insurer and the
impacts of a proposed
IBC/Highmark merger.
Please deliver by February 3, 2009
Three to ”C”
February 2009
PRSRT STD
U.S. POSTAGE
PAID
PHILA PA
PERMIT NO. 6438
U.S. health-care spending slowed on
lower prescription costs in 2007
U.S spending on health care grew in 2007
by the lowest rate since 1998, slowed by the
smallest increase in retail prescription drug
expenditures in four decades.
The overall cost of health care in the U.S.
– including doctor visits, prescriptions, hospital construction and all other related expenses – increased by 6.1% in 2007, to $2.24
trillion, according to a new government report in the journal Health Affairs.
The report comes as Congress and President Barack Obama consider ways to bolster the economy and provide more options
for coverage to uninsured Americans.
Health-care spending per American was
$7,421, the equivalent of 16.2% of the gross
domestic product. One year earlier, the
spending was 16% of the gross domestic
product.
In 2007, Americans paid a total of $228
billion for prescription medications, a 4.9%
rise from the previous year, the report said.
Researchers said the increased number
of generic drug alternatives helped hold
down prescription medication costs.
Generic alternatives to high blood-pressure
medicine Norvasc, and cholesterol-lowering prescriptions Pravachol and Zocor hit
pharmacists’ shelves in 2006 and 2007, and
most managed care plans encourage their
policyholders to choose them by offering
lower co-payment rates. IFA
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IFAInsights
// Editor’sNote
Buzzing about consumers
The buzzword among state insurance
regulators these days is “consumer,” best
spoken before the words “protection” or
“interests.” One wonders if the National
Association of Insurance Commissioners is
keeping a tally of how often each member
commissioner utters these important words.
If a tally is being kept, add one for Maryland Insurance Commissioner Ralph S.
Tyler – who invoked it repeatedly when he
was appointed in 2007– and invoked it in
November when he battled nine premium
finance companies over how they calculate
interest charges. Give one to former
Delaware Insurance Commissioner Matt
Denn, who invoked it in December when
spanking Delaware Blue Cross Blue Shield
with a $150,000 fine for mistakenly disclosing the private medical information of
3,800 members.
And in Pennsylvania, Insurance Commissioner Joel Ario might deserve two tick
Products Liability
• Manufacturing and
Non Manufacturing
• Discontinued Products /
Completed Operations
Umbrellas / Excess Liability
Inland Marine
• Builders Risk
• Contractors Equipment
• Special Floaters
• Medical/Scientific Equipment
Most read onine stories
|
1 Delaware insurance commissioner
fines Blue Cross $150,000 for
privacy violations
|
2 AIG sells HSB Group to Munich Re
Group for $742 million
|
3 ‘Hybrid’ health insurance approach
could eliminate private insurers
Tony Ondrusek
Rick Sullivan – [email protected]
Rita Hanebury – [email protected]
Publisher
[email protected]
(610) 260-1499 FAX (610)828-8257
Bob Graham
WWW.CTUNDERWRITERS-PA.COM
Executive Editor
[email protected]
600 West Germantown Pike, Suite 400
Plymouth Meeting, PA 19462-11046
Put M.I.C.K.® to work for you!
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Multiple Insurance Calculator Kit
Advertising Sales Director
[email protected]
2 | Southeastern Pennsylvania / New Jersey / Delaware
Bob Graham
Executive Editor
// OnlineDigest
No Account is too small or too BIG!
Contact us:
marks for reorganizing his department to
put consumer protection and enforcement
staff under one leader, which he says should
help his staff better combat “rogue” agents
committing crimes against consumers.
The tally is important to the NAIC and its
members as they work to bolster the argument – which we support – that state insurance department provide far better insurance regulation than federal authorities.
Lost in the public relations effort is how
agents and carriers’ concerns fit into this
consumer-first approach. Successful insurance regulation at any level requires a balance among consumer, carrier and agent
interests. Losing that balance at the state
level will make it more of what is feared if
insurance regulation is federalized.
That’s my take,
|
IFAwebnews.com
“This action actually invites
and incents companies to do
ANYTHING to undercut
competition to get business,
and if (or WHEN) the
business turns bad, simply
walk away from it.”
- Frank Lazarus
responding to “Pa. commissioner
turns blind eye to LTC insurer’s
irresponsible actions”
10600 York Rd., Suite 203
Hunt Valley, MD 21030
phone: 215-227-2024 fax: 410-667-7977
Localized
Contacts
placed here.
[email protected] [email protected]
Insurance & Financial Advisor SOUTHEAST PA-NJ-DE is published by
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February 2009
Leading the Way
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Services not available in all states. Call for state approval and availability. ©2008 Life Settlement Providers, LLC.
Southeastern Pennsylvania / New Jersey / Delaware
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IFAwebnews.com
February 2009
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3
New SEC Rule 151 is wrong
Letter to the editor
Editor:
I am writing to you about the recent position taken by the SEC regarding Rule
151A that has now been adopted. This rule requires sellers of fixed indexed annuities to hold a securities license and to put all such sales through a brokerdealer. While the rule will only go into effect in 2011, it is wrong!
The feds just can’t get it right. The country is currently suffering through one
of the worst economic crises in history caused to a great extent because of the
lack of supervision and oversight of the mortgage and securities markets. On the
other hand, they now insist on the over-regulation of the most regulated industry out there, the life insurance and annuity business. Each state has its own
insurance regulatory body that watches very carefully which products are sold,
how they are described and the risks involved. Indeed, in New Jersey we almost
have to get on our knees and beg for new products to get through the review
process, because of the strictness of the insurance department’s oversight
process. The SEC’s action will only create another layer of bureaucracy that will
not add any additional protection to the public.
Most ridiculously, the SEC has taken the position that an annuity product is
a security. We all know that a security involves risk of loss in the securities
markets. An owner of an indexed annuity has no money invested in the stock
market and cannot suffer a market loss. NAIFA has been opposed to Rule
151A, and I hope that the leading carriers offering EIA’s will challenge this ruling to the fullest extent possible. Remember, “Once the camel’s nose gets under the tent....”
Melvin Chilewich, President
New Jersey Association of Insurance and Financial Advisors
NEWPRODUCTS
Insurance & Financial Advisor | IFAwebnews.com
Insurer has new employment practices liability option
Property/
Casualty
OneBeacon Professional Partners has new employment practices liability
insurance for both large and small professional firms.
The coverage offers a number of specialized features, including broad definitions of discrimination, harassment, retaliation, workplace torts and wrongful termination; protection
for harassment or discrimination claims by third parties; and choice of counsel for qualified firms, the company said. Full prior acts coverage is available, as is worldwide
coverage.
New Accumulation VUL product available
John Hancock Life Insurance unveiled its new Accumulation VUL product, a
variable universal life policy that offers cash value and retirement income
potential to pre-retirees.
Life
Insurance
The policy is ideal for a variety of applications, including supplemental retirement income,
bonus plans, deferred compensation plans and supplemental executive retirement plans,
company officials said.
The new Accumulation VUL is priced and designed using the 2001 CSO mortality table,
which allows for an extension of the benefit period to age 121.
Policyholders may choose from many underlying investment accounts that represent
nearly every major asset class and investment style, or may choose the company’s
Lifestyle Portfolios option. With either option, policyholders obtain tax-deferred growth of
policy values and tax-favored treatment of policy withdrawals, the company said.
The policy also offers a 20-year No-Lapse guarantee, no policy charges after age 100 and
zero net-cost loans.
Wait-period choices added to dental plan
Two new options that add flexibility to Assurant Employee Benefits’ Freedom Preferred voluntary dental plan by shortening or eliminating waiting
periods are now available for quoting, company officials said.
Health
Insurance
Employer groups with plan participation levels of 50% or more may now select zero or
six-month waiting periods for their basic and major dental services.
Agents First
The new options enable insured employees who enroll on a timely basis (during initial
open enrollment) the ability to receive basic and major services more quickly than before,
company officials said.
95 % of our business is written
through independent agents like
Joe, thank you!
The Freedom Preferred options of 12- or 24-month waiting periods for basic and major
services also remain available. No waiting period exists for preventive services covered
under an Assurant Employee Benefits voluntary dental plan. The new options are not
currently available in all states.
Joseph Lapetina
A Top Producer in PA.
• Better rates & benefits for PA
• 3 yr. rate guarantee & decreasing
deductible (20% per year)
• LEGS- Free exclusive real-time leads
(telemarketed too!)
Pollution coverage for contractors expanded
• Annualized Commissions
paid weekly
• 100% Electronic sales
experience(Why drive anywhere?)
• Free supported web page & sales
links for all agents
Exton, Pa.-based XL Insurance is offering several program enhancements to
its pollution coverages for contractors, extending environmental coverage
for all aspects of a contractor’s operations, both on and off the jobsite.
Property/
Casualty
The enhancements, available through a group of endorsements, are designed to extend
contractor’s pollution coverage for waste disposal, owned locations, emergency
response, installations and natural resource damages, the company said.
The XL Insurance Contractor’s Pollution Liability Construction endorsements include
emergency cleanup costs up to $500,000 for a period of seven days without pre-notification; coverage against sudden and accidental pollution that originates and migrates from
owned locations such as offices and equipment yards; and disposal of construction and
demolition debris at non-owned disposal sites.
Call Regional Sales Office
Toll free 1.800.215.TIME(8463)
Greg Loerzel, [email protected]
Lura Bare, [email protected]
For the latest New Products go to IFAwebnews.com.
Products Underwritten by Time Insurance Company.
|
IFAwebnews.com
February 2009
Excess & surplus stakeholders align to boost technology use
Groups collaborate to streamline
operations among agents and MGAs
By Bob Graham
Several influential groups within the
excess and surplus lines industry are working to boost technology use among agents,
efficiency,” Jeff Yates, executive director of
the Big I’s Agents Council for Technology,
told Insurance & Financial Advisor.
Yates said the initiative, which involves
about 100 people, builds on the successful
integration of real-time quoting capabilities
and other improvements in the standard
Improvements to enable agents to focus on
more sales which translates to more money.
carriers and general agents over the next 12
to 18 months.
The Agents Council for Technology of the
Independent Agents & Brokers of America,
the American Association of Managing General Agents and the National Association of
Professional Surplus Lines Offices recently
began a joint initiative to improve the efficiencies for retail agents interacting with
managing general agents and wholesale
brokers in the E&S market. The groups also
hope to promote the electronic exchange
of data among those parties.
“For E&S to compete on the same footing as the standard market they need more
lines market.
The project has three prongs, each being
tackled by a subcommittee.
Three prongs of project
One group is working to improve the retail agent interface so that the supplemental
applications of E&S carriers are streamlined.
The group also plans to migrate as many
ACORD standards, those used for standard
lines, to applications, thus eliminating the
redundancy when filing applications.
A second group is working on the general
agent interface to both concentrate data
transmission streams and automate the flow
of data to general agents. Yates said the goal
would be better use of real-time transaction
methods, similar to those being used, Applied’s Transformation Station and AMS'
Transact Now, in the retail marketplace.
A third group is hoping to develop best
practices for the Web sites of managing general agents, including expansion of online
applications and policy issuance, as well as
better integration of information from MGA
sites to agent management systems.
Driving the need for change are several
factors. The success of greater technology
use within the standard market is obvious; about 90% of personal lines and 50%
of commercial lines data can be downloaded, Yates said.
The need to both entice younger people
to join agencies and to make agencies more
efficient – to better face job cuts likely with
the failing economy and to boost an
agency’s appeal for sale as its owner nears
retirement – are pushing much of the effort,
Yates said.
“These improvements will enable agents
to focus on more sales, which means they
can make more money,” he said.
Yates said the group working on the
changes is made up of “a lot of GAs, lots of
retail agents and a few E&S carriers. We
need more E&S carriers.”
Participants in the sub-committees meet
regularly electronically and by phone, while
the large group is expected to gather for an
update at the March 15 meeting of the
American Association of Managing General Agents in San Diego, Calif. IFA
// HEALTH INSURANCE
Report: COBRA costs claim 84%
of unemployment benefits
COBRA costs consume almost 84% of average unemployment benefits, according
to a new study. On average, national unemployment benefits provide $1,278, while
COBRA monthly premium payments for
family coverage average about $1,069, according to a report from Families USA.
COBRA family coverage premiums in 41
states, including Delaware and Pennsylvania, consume more than 75% of average
unemployment insurance benefits. IFA
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IFAwebnews.com
February 2009
|
5
Rates: Homeowners seeking bargains
From page 1
cerns, according to a national study released
by Trusted Choice and the Independent Insurance Agents & Brokers of America. Furthermore, 60% have either made or considered changes, blaming the
current economic situation.
In the mid-Atlantic, insurance agents say customer behavior is fluid.
Kathleen Glattly, president of Factoryville, Pa.based DGK Insurance, has Kathleen Glattly
seen the results of the
study mirrored closely among her clientele
looking for guidance.
“They are asking ‘What can we do? What
can we do to trim costs?’” Glattly said. “So
we look to see where they are at, look at their
deductibles and get them a quote from our
five carriers to save them money where we
can. Most often, we are able to provide better coverage at less cost.”
As an independent agency for 1,200 policyholders and multiple carriers, DGK’s
clients were not the only one changing policies to save money. Last year, 50% of the
company’s insurance staff, including Glattly, made changes to their auto and home
policies to cut costs, taking advantage of
new packages and products.
In College Park, Md., Mike McCartin, a prin-
cipal with Joseph McCartin Insurance, says
80% of his clientele have auto coverage attached to their home policies, so they aren’t
shopping around as much. They are already
getting a package rate, so by splitting up
coverage between two different companies,
Pennsylvania agent says policy shifting caused
by economy and soft P-C market.
they’ll spend more.
The agency has 3,800 policyholders and
does business in states, including Delaware,
Maryland, Pennsylvania and Virginia as well
as the District of Columbia.
“By and large, any homeowner we deal
with won’t see a tremendous difference in
price,” he said. “We ensure they have the
4HE CHOICE IS 3)-0,%
Their web site
right deductible and that the amount of
coverage is accurate, and after that, there
may be a few bells and whistles we can
knock off, but not many.”
Glattly said she feels more policy shifting is occurring not just because of the
Our web site
economic climate, but because of the soft
property-casualty market, companies are
being more aggressive to get business
and issue competitive pricing.
The Big I survey also urges consumers to consult with a licensed agent
before making a decision that may save
in the short-term, but could bring serious financial loss later.
Glattly called matching the right coverage while also taking advantage of
competitive pricing a “win-win for everybody.”
“The client walks away with better
coverage at a reduced cost and we did
not lose them to another company,” she
said. “But you have to look at their circumstances and at the end of the day,
provide them with the best coverage.”
McCartin said independent agents
definitely have the edge when it comes to
meeting customers’ needs for both pricing and attention.
“We have competitive products and I
think people get diluted by going direct,”
he said. “They can get a better deal with us
and things like 24-hour emergency access. You can’t get that on the Internet.” IFA
//FINANCIAL SERVICES
New life expected for federal
‘death tax’ under Obama
Helping Brokers
Service
Their Business
President Barack Obama and other Democrats want to keep the federal estate
tax in place, rather than accepting its
planned repeal in 2010.
The Wall Street Journal reported that
the Senate Finance Committee will move
quickly to prevent the scheduled repeal
of the tax, while Obama plans to offer his
proposal for estate-tax preservation as
part of his budget plan next month.
The so-called “death tax” had made financial planning for people seeking to
preserve and protect their estates especially difficult, and the rising levels at
which estates have been taxed over the
last few years have in part explained why
some small business owners have sold
their businesses. IFA
Insurance Services. Nice and Simple.
WWWNASINFOCOM s EXT 6 | Southeastern Pennsylvania / New Jersey / Delaware
|
IFAwebnews.com
February 2009
// NEW PRODUCT
Insurer offers three new individual N.J. health plan options
Horizon Blue Cross Blue Shield of New
Jersey launched three new health plans
designed to provide cost savings and expanded benefits for people looking to purchase individual health policies in New
Jersey, according to the company.
The Horizon Direct Access plans should
complement the company’s existing individual products, the Horizon Basic and Essential EPO and EPO Plus plans, and its
Horizon HMO plans, company officials said.
Meehan said the new products are
geared toward the changing economic cli-
mate. “Our portfolio now offers New Jersey
residents a choice of price and coverage
options, which is especially important in
these tough economic times,” he said.
The new plan offerings include Horizon
Direct Access Plan A/50 70/50, with co-insurance paid at 70% for in-network and
50% for out-of-network; Horizon Direct Access Plan C 80/70, with co-insurance paid
at 80% for in-network and 70% for out-ofnetwork; and Horizon Direct Access Plan C
100/70, with co-insurance paid at 100% for
in-network and 70% for out-of-network. IFA
// LEGISLATION
Bill on self-referrals could boost N.J. auto insurance rates
An insurance trade group is suggesting
that the New Jersey Senate’s passage of a
bill allowing doctors to make self-referrals
to their ambulatory surgical centers could
lead to more insurance fraud, drive up auto
insurance rates and jeopardize patients.
The Property Casualty Insurers Association of America strongly opposes Senate Bill
787, which passed 37-1-2. The bill still needs
House and governor approval.
“While on the surface, S787 appears to be
an attempt to reform the practice of self re-
ferral by medical practitioners, the fact is it
would allow doctors to pocket millions of dollars from improperly filed insurance claims,”
said Richard Stokes, PCI regional manager.
Senate Bill 787 would change language
related to ambulatory surgical centers to
allow medical providers to refer patients to
facilities in which they have a financial interest. Lifting the restrictions on self-referral will invite more insurance fraud into the
New Jersey marketplace, thereby driving up
insurance costs, the association said. IFA
with SAVOY ASSOCIATES.
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Penn: State seizes control of LTC insurer
From page 1
tion is the first receivership action the
Pennsylvania Insurance Department has
taken in more than four years.
According to the state’s insurance department, the order places Penn Treaty under the statutory control of the department and also grants Ario direct authority
to preserve the company’s assets and oversee its current financial situation and operations, while continuing to pay policyholder claims.
Last year, the insurer voluntarily agreed
to a rehabilitation plan with the insurance
department, pending their efforts to raise
enough money to meet state surplus statues, but could not accomplish that goal
by a Dec. 31, 2008, deadline.
“It is the insurance department’s responsibility to take action when a company is in financially hazardous condition,”
Ario said in a prepared statement. “Placing
Penn Treaty into rehabilitation will make
certain that long-term care policyholder
claims are paid, helping to ensure continuity of care for a community in need.”
Ario added that “we must protect the
us the flexibility to personalize the type of assistance that
company’s assets and put policyholder
protections into place.”
“I want to assure policyholders that
their policies remain in effect during this
rehabilitation and that their premiums
should continue to be paid in order for
coverage to remain in place,” he said.
The insurance department will perform
an independent, comprehensive evaluation of the company’s finances, according to
a statement, and based on this review and
analysis, will then determine the viability of
a rehabilitation plan. Any plan will give payment priority to policyholder claims.
Penn Treaty provides long-term care insurance to more than 126,000 policyholders and together with its subsidiary, American Network Insurance Co., write
long-term care insurance in all 50 states
and the District of Columbia.
In December, Penn Treaty announced
that it entered into a non-binding letter of
intent to sell a majority interest in American Network Insurance Co., including
nearly all of its long-term care policies issued since 2002. The company would retain ownership of prior policies and anticipated closing the deal by February. IFA
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|
IFAwebnews.com
February 2009
|
7
Bollinger expands South Jersey presence
Allied Insurance of Vineland joins with
Short Hills-based insurance broker
Bollinger Inc. has acquired Allied Insurance Services of Vineland, N.J., as it expands its presence in the state.
The Short Hills, N.J.-based insurer said
Michael M. Rossi III, principal owner of
AIS, has joined Bollinger as senior vice
president of Bollinger’s South Jersey region.
Rossi said that even though his company’s name will change, the merger “empowers us with the ability to combine our
excellent customer service capabilities
with a broad selection of new products.”
The merger shows Bollinger is “committed” to South Jersey, said Jack Windolf,
chairman and CEO of Bollinger.
With commission revenues in excess of
$100 million and over 400 employees,
Bollinger is the nation’s 5th largest privately held insurance broker.
Bollinger has branch offices in New York,
N.Y., Philadelphia, Pa., Greenwich, Conn.,
as well as Princeton, N.J., and Moorestown,
N.J. The firm provides business and personal insurance and employee benefit programs, as well as specialty insurance programs for golf and country clubs, amateur
sports, and schools and colleges. IFA
LEGALBRIEFS
Florida executives charged in $30M life settlement
Top officials of a defunct Fort Lauderdale, Fla.-based viatical- and life-settlement firm have been charged in connection with the alleged defrauding of
28,000 investors of more than $30 million. The charges against Mutual Benefits follow a
four-year investigation by the U.S. Justice Department in Miami.
Financial
Services
A 25-count indictment accuses Joel Steinger, 59, who was identified as Mutual Benefits’
principal executive, his brother and company founder Steven Steiner, 56, and two
lawyers in Fort Lauderdale, Michael J. McNerney and Anthony Lovoti Jr., of conspiracy
to commit money laundering and wire fraud, among other charges. If convicted, they
could face up to 20 years each in prison.
Almost five years ago, federal regulators shut down the company and placed it in
receivership.
Prosecutors allege that Mutual Benefits was operating a massive Ponzi scheme, which
used money from new investors to pay premiums for older policies and that Joel
Steinger hired doctors to provide bogus life expectancy statements for the elderly and
AIDS patients who sold policies to the firm
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Louisiana hurricane victims nearing settlement
More than three years after the flooding caused by Hurricanes Katrina and
Rita in Louisiana a court is notifying those who may have been affected in
four parishes in New Orleans of a possible $20.8 million class-action settlement.
PropertyCasualty
The fund was gathered from the defendants’ insurers in response to the hurricanes that
hit the Gulf Coast in September 2005, causing at least 1,836 deaths and an estimated
$81.2 billion in damage, mostly from storm surge and overflowing levees.
The notifications, ordered by U.S. District Court Judge Stanwood R. Duval Jr., are going
to those affected by flooding due to any failures or overtopping of levees that occurred
within the Parishes of Jefferson, Orleans, Plaquemines and St. Bernard.
The civil suit alleges levees and other flood and water control structures failed and/or
were overtopped as a result of Hurricanes Katrina and Rita because they were not properly designed, inspected or maintained, and that this failure caused property loss,
property damage and personal injury. Defendants said in court papers that the levees
failed for reasons beyond their control and that they did not do anything wrong.
Midland National settles deferred annuity suit
Civil
Settlement
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Midland National Life Insurance Co. has settled with the Minnesota Attorney General’s Office over its sale of deferred annuities in Minnesota.
“Midland National entered into the settlement agreement because the agreement is
consistent with Midland National’s procedures,” said Esfand Dinshaw, president of Midland National’s annuity division, in a prepared statement.
Terms of the settlement were not disclosed. Midland National said it did not enter into a
consent judgment, and in announcing the settlement continued to argue its case.
Calif. life agent allegedly bilked elderly woman of $100K
A former life agent in California was arrested and charged with three felony
counts in connection with allegedly stealing $100,000 from an 83-year-old
woman who had been his client, according to the California insurance commissioner’s
office. Ian Max Henriquez, 42, of Los Angeles, was charged with grand theft, identity
theft and theft from an elder. Bail is set at $150,000.
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In January 2008, Henriquez illegally completed life insurance company surrender documents, forging the signature of his client to obtain $100,000 from the client’s life annuity
policy, prosecutors said. When the victim had stopped receiving her annuity policy statements, she notified her son-in-law. Her son-in-law contacted the insurance company,
which informed him that the mailing address for his mother-in-law had been changed
and that a $100,000 check had been issued in her name against her annuity policy.
For the latest Legal News, go to IFAwebnews.com.
|
IFAwebnews.com
February 2009
Calendar
of Events
■
notablenews
February
CPAHU hosts health
policy speaker
12 – Board Meeting – NAIFA-GP. 8-10
a.m. Plymouth Meeting, Pa.
18 – Monthly Meeting – NAIW. 5:30
p.m.
Grace-Marie Turner (middle), president of The
Galen Institute, recently spoke to members of the
Central Pennsylvania Association of Health Underwriters. Turner spoke about the insurance industry and how future legislation could impact
agents, brokers, carriers and consumers with attendees including Charles “Chub” Neiman (left)
and Robert Dickman of the CPAHU board. For
more photos from this event, go to
IFAwebnews.com and click on “Photo Gallery.”
19 – February Breakfast Meeting –
CPCU-Philadelphia. 8-10 a.m. Union
League, Philadelphia, Pa. Contact:
[email protected].
19 – DVD Program – GPSFSP. 8-11:30
a.m. Society of FSP, Newtown Square, Pa.
Contact: 215-878-1366 or email [email protected].
■
March
Send photos of your company events and
happenings: [email protected]
p.m.
19 – Section Meeting – GPSFSP. 8-9:30
a.m. Haverford Trust, Radnor, Pa. Contact:
215-878-1366 or email [email protected].
19 – March Breakfast Meeting – CPCUPhiladelphia. 8-10 a.m. Union League,
Philadelphia, Pa. Contact:
[email protected].
■
April
p.m.
16 – Franklin Luncheon Award – CPCUPhiladelphia. 11:30 a.m.-1:30 p.m. Union
League, Philadelphia, Pa. Contact:
[email protected].
28 – Annual Financial Professionals
Dinner – GPSFSP. The Desmond Hotel,
Malvern, Pa. Contact: 215-878-1366 or
email [email protected].
Send Your Events!
• The easiest way to submit events is online:
Phone: 215.227.2024 Fax: 410.667.7977
Email: [email protected]
// REGULATION
New GAO report wavers
on regulatory position
A new government report on the U.S. financial regulatory system falls short on
choosing a side regarding the debate on
an optional federal charter.
The new Government Accounting Office report suggests that Congress could
“consider the advantages and disadvantages of providing a federal charter option for insurance and creating a federal
insurance regulatory entity;” however, it
does say creating a federal insurance
charter could “have unintended consequences for states.” IFA
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|
IFAwebnews.com
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February 2009
|
9
PeopleNews
James Walsh has been
promoted to vice president
of claims for PMA Management Corp. of Blue
Bell, Pa. Walsh was assistant vice president of
eastern region claims for
the PMA Insurance Group.
James Walsh
Stubbs Insurance Associates Inc. of Wernersville, Pa., has announced
that Lee Ann Underkoffler, customer-service
agent, has successfully earned the designation
of certified insurance service representative
from the Professional Insurance Agents Association and the Society of CISR.
Susan Sallada, president
of Universal Service
Agency Inc. in Fort Washington, Pa., was re-elected
to the board of the Insurance Agents & Brokers of
Mechanicsburg, Pa. and
reappointed to the
Susan Sallada
National Association of
Professional Insurance.
Joyce M. Bailey of AAA
Mid-Atlantic Insurance
Sales, headquartered in
Wilmington, Del., has completed the annual
continuing education
requirements of the Society of Certified Insurance
Joyce M. Bailey
Counselors. Bailey has
been a CIC since 1988.
Erie Insurance, with seven offices in Pennsylvania, has named Mark Dombrowski as
department manager of government relations.
He has also held roles in the insurer’s communications and marketing departments.
Slocum Insurance & Financial Services of
Salisbury, Md. has added Jack Harper to its
staff. Harper has more than 20 years in the
insurance and financial service industry and is
licensed to do business in Maryland,
Delaware and Virginia.
Matt L. Warye
Joseph Lesko
Matt L. Warye has been
named vice president of
Safeco Insurance and
mid-Atlantic regional general manager, serving
Pennsylvania and six
other states. Also joining
Christina Berg
Safeco’s mid-Atlantic Personal lines field operations as agency
manager for Pennsylvania is Joseph Lesko
and as marketing manager, Christina Berg.
See it all. Now.
Local and national news, information and resources.
In print and online.
Anita Z. Bourke has
joined the Malvern, Pa.based American Institute
for CPCU/Insurance Institute of America as
executive vice president.
She is president of IMA in
Kansas, a subsidiary of the
IMA Financial Group.
Anita Z. Bourke
William J. Casey, Jr., was named executive
vice president of the Northeast region for
Arch Insurance Group, a division of Arch
Capital Group. Casey, who most recently
served with Zurich North America, is responsible for the overall direction of the region,
which includes Delaware, Pennsylvania and
New Jersey.
Capital BlueCross of Harrisburg, Pa.,
announced the following promotions: Glenn
|
IFAwebnews.com
Heisey to the office of corporate secretary;
Steve Krupinski to senior vice president of
human resources; David Skerpon to vice
president of corporate communications; Barclay Fitzpatrick to vice president of
corporate strategy and business
development; and Aji Abraham to vice president of government affairs and policy.
Lincoln Financial Group,
headquartered in Philadelphia, has hired Tom
McGirr as head of IRA
strategies, retirement solutions. He previously served
as a vice president for
Fidelity’s retail division.
Tom McGirr
Michael Patrick has been
hired by HM Insurance
Group of Pittsburgh, a
Highmark company, as a
sales consultant for the
company’s HM Worksite
Advantage product line,
with a territory including
New Jersey and Pennsyl- Michael Patrick
vania.
John Bodnar, president
and CEO of Bodnar
Financial Services in
Florham Park, N.J., was
elected as a new member
of the board of trustees for
Radnor, N.J.-based Cabrini
College. Bodnar serves as John Bodnar
treasurer of the New Jersey Association of Insurance and Financial
Advisors and is a licensee of the Certified
Financial Planner Board of Standards.
Lori Toot recently joined
York, Pa.-based
McConkey Benefits &
Financial Services in the
role of client service
agent, bringing to the
company more than 17
years of experience in
employee benefits.
Lori Toot
Send Your News!
• The easiest way to submit events is online:
Phone: 215.227.2024 Fax: 410.667.7977
Email: [email protected]
February 2009
Waiting list for adultBasic hits record number
Pennsylvania commissioner says coverage problem symbolizes ‘urgency’ of health care reform issue
By Keith L. Martin
Insurance Commissioner Joel Ario
says the waiting list for Pennsylvania’s
adultBasic program is at its highest point
ever and could get to 250,000 residents by
the end of 2009.
Ario said the current waiting list stands at
145,800 adults between the ages of 19 and 64
who are eligible for the state-sponsored insurance. That is the largest number waiting
for coverage since June 2001 when the Health
Investment Insurance Act (Act 71 of 2001)
was signed into law.
Act 77 invested proceeds of the state’s tobacco settlement in the health of Pennsylvanians, to the tune of around $400 million
each year, and funds from the state’s four
nonprofit BlueCross BlueShield providers.
Current enrollment in the program as of
the end of 2008 was 46,543, according to the
insurance department.
News straight to your inbox.
Subscribe at
the program pay a
premium of $35 per
// Waiting for health care reform
month for coverage,
150,000
those on the waitPennsylvania's adultBasic
ing list have the opwait list hit 145,800 at the
tion of purchasing
end of 2008. The number
adultBasic coverage
dropped in Jan. 2008 when
for $305 per month
new funds opened up
through the insur120,000
29,368 slots.
ance department.
As for whether
the legislature will
make any progress
on expanding the
90,000
adultBasic
program, Ario said he
is “guardedly optimistic.”
“It has proved
60,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
difficult here in
Pennsylvania and
nationally to do health care reform,” he said. reform is not a great one.”
“There are a lot of different interest groups,
Rendell and state legislators continue to
for example, which makes it hard to get some- debate wider expansion of health care fundthing done, but I think people appreciate the ing, with Republican senators historically
nature of the problem. The history of health opposed to his plans. IFA
State lawmakers ended their 2008 session
without action on several proposals by Gov.
Ed Rendell, including the expansion of
adultBasic, a topic sure to be renewed as the
General Assembly reconvenes in Harrisburg.
“[The waiting list] shows that we have a
health care crisis and need health care reform,” Ario said. “We may need help from
the federal government, but we need the
state to step up. We could be at 250,000 by
the end of this year.”
Signals ‘urgency of the issue’
At the end of December 2007, the wait
list was at 85,649, according to the Pennsylvania Insurance Department, a sharp
contrast to the latest wait list numbers.
“These numbers are an indicator of the
urgency of the issue,” Ario said. “There is
clearly a strong demand for health care as
there are people willing to wait on the list,
some signing up knowing that it could be a
year [before they are enrolled].”
Eligible participants are taken on a first
come, first served basis as openings in the
program become available. While those in
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February 2009
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11
Horst Insurance acquires
Lancaster independent agency
you had the
freedom to offer
your clients more...
Lancaster, Pa.-based Horst Insurance is
buying InsuranceMasters of Lancaster in a
deal that will increase Horst’s market share
by more than 30%.
Horst is a commercial, personal and
employee benefits insurance provider
serving Pennsylvania, Maryland and
Delaware, while InsuranceMasters is an
independent agency with roots to 1924.
The deal will allow Horst to offer InsuranceMasters’ clients new services, including CSR/24, which provides 24-hour
phone and Internet access to their accounts, and MyWave, an online HR and
risk management tool.
InsuranceMasters formed in 1995 after
the merger between Ament Insurance and
Glenn E. Orndorf Inc. Ament Insurance
was formed in 1953 and Glenn E. Orndorf,
Inc. was formerly Leo I. Hain Inc., which
was formed in 1924.
InsuranceMasters' 11
employees will serve
their 2,300 clients from
Horst Insurance’s Granite Run Drive headquarters location.
“With common carDavid C. King
rier relationships already in place, the InsuranceMasters
team and client-base are a perfect fit,”
said David C. King, president and CEO of
Horst Insurance.
Horst Insurance provides commercial
and personal insurance services and
employee group benefits to more than
7,000 clients in Pennsylvania, Maryland
and Delaware. With nearly 50 employees, Horst has offices in Lancaster,
Chadds Ford, Pa., and Doylestown, Pa. IFA
Rogue: Ario targets agent misconduct
From page 1
marketplace.
“We can direct resources to address the
issue and enhance our consumer protection role,” he said.
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0707-5083 L04089402(exp0409)
Jack Yanosky will head the licensing and
enforcement bureau and the department
is still working to fill the director position
for the market conduct bureau.
They will likely do so internally, as Ario
said that with a tight state budget, vacan-
‘Bad players’ hurt industry
// IFA_FAST FACT
Regarding Ario’s “rogue agents,”
Pa. Insurance Department reshuffled
Gallagher said “there are a few bad
players that give the whole indusA spokeswoman at the Pennsylvania Insurance
try a bad rap” and the goal for regDepartment said some of the department’s offices
and bureaus were recently aligned, including:
ulators is to investigate any misconduct
and
address
it
• Office of Market Regulation
immediately. Both men acknowlIncludes: Bureau of Consumer Services; Bureau of
Licensing & Enforcement (formerly Bureau of Proedged that the vast majority of
ducer Services); Bureau of Market Conduct; Fraud
agents and brokers follow the
Division
rules, but there are those who do
not who can hurt the industry.
• Office of Children’s Health Insurance Program
(CHIP) and adultBasic
“It has always been the goal of
Includes: CHIP; adultBasic; MCARE
our agency to address these issues, but now we can do it more
• Office of Consumer Liaison
effectively,” Gallagher said. “The
Now includes Market Surveillance Division
overall goal is to ensure, to the
best of our ability, that we take care of cies will remain for the foreseeable future.
agents abusing [the system], leading to The insurance department is currently withmore issues in the marketplace. The agent out 10%, or between 40 and 50, employees
is a key player in the marketplace, so to en- but that level is normal operating procedure,
hance confidence, taking proper enforce- according to the commissioner.
ment actions can lead to a better climate.”
“At any given time, we have that amount,”
Gallagher also said that since agents Ario said. “There is always movement in and
know more often when there is peer mis- out, so we are not operating with a full comconduct versus consumers, agent-to-agent pliment. If there is a continued freeze and
referrals to the office can be addressed faster we move more towards 20%, a some point it
becomes a problem.” IFA
by sharing information among bureaus.
|
IFAwebnews.com
February 2009
On the Hill
News From The Nation’s Capitol
Health reform unlikely before
2010, key congressman says
A vote on serious national health insurance
reform isn’t likely to occur before early 2010,
according to the chair of the U.S. House of
Representatives’ Ways and Means Health
Subcommittee.
Rep. Pete Stark (D-Calif.) said during a press
conference on proposed health reform that
he hopes to see a national health reform
plan introduced and debated in Congress
throughout 2009, with a vote on national
health reform, regardless of what approach
is taken, in early 2010. If the process of
reform drags on into summer and fall of
2010, it could jeopardize the re-elections of a
number of members of Congress, he said.
Stark said many stakeholders will need most
of 2009 to weigh in on various proposals. In
talking about those stakeholders, Stark said
doctors, consumer groups and private insurers would have to have time to comment.
Obama to boost Medicaid,
employer health subsidies
President Barack Obama and Congressional
Democrats are considering an expansion of
Medicaid and subsidies for employers providing health coverage as part of his
two-year economic recovery plan.
Obama wants to allow workers who lose
jobs where insurance coverage was not
available to apply for coverage under Medicaid. Those workers are not now eligible for
federal health insurance assistance.
He also plans to provide subsidies to
employers who must continue health insurance benefits under COBRA to workers
who are either laid off or retire, as well as
their dependents, the newspaper reported.
Groups welcome Daschle to
health reform dialogue
A pair of insurance industry organizations are
welcoming the nomination of Tom Daschle
as the next Secretary of the U.S.
Department of Health and Human Services.
“It signals that the incoming administration
intends to prioritize comprehensive health
care reform,” Karen Ignagni, president and
CEO of America’s Health Insurance Plans,
said in a statement. “Senator Daschle is
exceptionally well qualified to bring people
together in support of universal coverage,
cost-containment, and improved quality.”
The statement came on the heels of AHIP’s
board of directors issuing a comprehensive
health care reform proposal to cover all
Americans, reduce the growth of health care
costs and improve the quality and value of
care.
In addition to AHIP, Washington, D.C.-based
Business Roundtable also praised Presidentelect Barack Obama’s selection. John J.
Castellani, president of the association of
chief executive officers of a collection U.S.
companies, including Aetna, CIGNA and
Liberty Mutual Group, said, “We look forward to working together with
President-elect Obama and Secretary-designate Daschle to ensure that all Americans
have access to high-quality, affordable health
Pennsylvania, eight other states settle
Marsh case regarding bid-rigging
Nine attorneys general have settled with
insurance broker Marsh & McLennan, resolving a four-year investigation into the
New York-based insurer’s role in a nationwide bid-rigging scheme.
Marsh allegedly made collusive arrangements whereby brokers entered into agreements with insurers to receive undisclosed
compensation and engaged in anticompetitive conduct in the market for commercial liability insurance, according to a
statement by Massachusetts Attorney General Martha Coakley.
Florida, Hawaii, Maryland, Massachusetts, Michigan, Pennsylvania, Oregon,
Texas and West Virginia will divide the $7
million settlement, one of several to occur with insurers over bid-rigging
schemes. “Marsh’s conduct underscores the
need for strong enforcement and deterrence in the insurance arena,” Coakley said
in a prepared statement.
In the alleged scheme, Marsh would
create the appearance of a competitive
bidding process, instructing certain insurers to submit inflated, intentionally uncompetitive bids. The schemes gave commercial policyholders the impression they
were receiving the most competitive premiums, when in fact, they were being overcharged. Marsh is also accused of a “payto-play” arrangement with insurers. IFA
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N.M. senator to take Clinton’s
spot on universal health team
Sen. Jeff Bingaman (D-N.M.) will focus on
insurance coverage as part of Sen. Ted
Kennedy’s legislative team working to create
universal health care.
Bingaman takes the place of Sen. Hillary
Rodham Clinton (D-N.Y.), President Obama’s
nominee for secretary of state. Bingham
joins Sen. Christopher Dodd (D-Conn.), who
is serving as chief deputy for health reform,
Sen. Tom Harkin (D-Iowa), who is heading a
work group on prevention and public health
and Sen. Barbara Mikulski (D-Md.), leading a
similar group on improvements in quality.
FINRA head is Obama’s pick
for next chief of SEC
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February 2009
|
13
New tools can make term life sales easier, more profitable
Expert: Term life sales can open door for
agents to other more lucrative areas
By Bob Graham
Agents who choose not to write term insurance policies – typically because they
require a lot of work for little compensation
– should rethink that policy, according to
the president of the Life Insurance Direct
Marketing Association.
New tools make it easier and beneficial
for agents to revisit their approach to term
life, which historically flourishes in tough
economic times, said Pat Wedeking, who
founded the national organization of direct marketers of life insurance products
four years ago.
“They need to see that if they can get
them for term, that’s better than nothing,” said Wedeking, president of Quick
Life Center, a Denver, Colo.-based company that provides agents and financial
service professionals with a quick way to
sell term insurance. “And I can convert it
down the road.”
His company and others in the association, which also includes many life carriers
as members, provide agents with easier
tools to process term policies. In one scenario, the agent fills out contact information, then receives between 50% and 75%
of the commission. In another scenario,
the agent completes an application and
keeps the entire commission. The term solution provider is paid with the override,
Wedeking said.
LIDMA recently held its annual conference and its members suggest that interest
among agents is growing.
Wedeking said his 1-year-old firm, which
provides agents and financial service professionals with tools to easily sell term insurance, is on track to sell $20 million in cumulative premium by its third year. It also
intends to sell $50 million in premium in its
fifth year.
He said property/casualty agents,
lawyers, estate planners, as well as health
insurance brokers are all using the services to boost business.
“What my firm and the others do is take
away all of the tedious administrative information gathering that takes time that agents
don’t want to offer,” Wedeking said. IFA
// HEALTH INSURANCE
Senator: Don’t pit govt.
against private insurers
During his U.S. Senate nomination hearing to oversee the U.S. Health and Human
Services office, nominee and former Sen.
Tom Daschle was urged not to rush into
federalizing health care.
Sen. Mike Enzi (R-Wyo.) voiced skepticism about expanding government health
care to compete with private carriers.
“Forcing private plans to compete with
federal programs, with their price controls and ability to shift costs to taxpayers,
will inevitably doom true competition and
could ultimately lead to a single payer,
government-run health care program,”
Enzi said. IFA
In Memoriam
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■ Nancy Brownell, 80, of Carbondale, Pa.;
former employee of McGovern Insurance
Agency in Carbondale.
■ Ruth G. Cartwright, 85, of Windsor Ridge,
Pa.; 34-year account underwriter for Liberty
Mutual Insurance Co.
■ William P. Dadio, 67, of Bethlehem
Township, N.J. and Lake Hauto, Pa.; 34-year
sales agent for Allstate Insurance Co. and
owner of Dadio Insurance Agency in
Bethlehem before retiring in 2001.
■ Robert W. Evans Jr., 90, of Pottstown, Pa.;
broker for Robert W. Evans Real Estate and
Insurance/Richard A. Zuber Real Estate and
Insurance; former director of Boyertown
Mutual Insurance Co and Harleysville
Insurance Co.
■ Susan D. Hacker, 51, of Allentown, Pa.;
accounting and administrative coordinator for
Arbor Insurance Co. of Allentown for 14 years.
■ Mona F. Jones, 92, formerly of Wilkes-Barre,
Pa.; 22-year executive secretary to the
president and treasurer for Pennsylvania
Millers Mutual Insurance Co.
■ Veronica Krawczun, 71, of Tuckerton, N.J.;
co-owned and operated Krawczun Insurance in
Trenton, later Sypek & Stanford Insurance, to
culminate 40 year career in insurance.
■ Gloria June (Heidler) Mulholland, 86, of
Norristown and York, Pa.; retired employee of
National Liberty Life Insurance in Frazier, Pa.
Call 866-422-9188 for more information!
■ Alvin Ruh, 95, of Summit, N.J.; independent
insurance agent, retiring from the Ruh Agency
in 1979; former member of the Independent
Insurance Agents of America and former
president of the Union County Independent
Insurance Agents.
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■ Larry Saylor, 62, of Linwood, N.J.; 40-year
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|
IFAwebnews.com
February 2009
NEWPRODUCTS
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New software for filing surplus lines taxes available
Property/
Casualty
Offering a wide range of Superior Commercial
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with Comprehensive Coverage at Competitive Prices
WillComply recently released its newest software application, a second version of its surplus lines taxes information Web site.
Company officials said the enhanced Web site gives insurance agents, program administrators, and insurance companies the ability to more accurately file complicated surplus
lines taxes in all 50 state and is continuously updated by tax specialists that are aware of
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Bi-monthly life settlement trade report unveiled
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A new bi-monthly life settlement and longevity markets trade report has
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The Life-Exchange Trade Report is updated twice monthly for subscribers.
Coverage for payment card security breach offered
Property/
Casualty
Fireman’s Fund Insurance Co. has introduced coverage for retailers that
experience a breach of their payment card security system.
The new product is designed to avoid the payment for a single breach of a payment card
security system of tens of thousands of dollars in penalties and extra expenses, company officials said.
Payment card security insurance offers the following coverages: reimbursement for contractual penalties, chargebacks and payment card reissuing expenses outlined in the
business’ merchant service agreement; upgrades to software and hardware systems
(including installation and re-scanning services) to bring the payment system into compliance; extra expense for late payment fees and other bank service charges related to the
data breach; crisis management expenses to restore reputation; and extra expense for
promotional items such as restaurant gift certificates or service coupons for the affected
individuals in the data breach.
Register Now … Thursday, April 9, 2009
Online tool ranking mutual funds debuts
Topics on
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Available on the MUTUALdecision Web site are Return Gap and Active Share models.
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a mutual fund’s portfolio holdings differ from the portfolio’s benchmark index – and if the
fund outperforms its benchmark.
Join fellow health and property/casualty
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|
IFAwebnews.com
February 2009
|
15
// LIFE INSURANCE
Variable, universal life sales down 33% in third quarter
Variable life and universal life products
dropped by one third in the third quarter
of 2008, fueling an overall decrease of 11%
drop in new annualized premium for individual life insurance policies, according
to LIMRA’s quarterly sales report.
“Variable life and variable universal life
products saw the steepest decline, plunging
33% for the quarter,” said Ashley Durham,
LIMRA analyst for product research. “Given
the current equity market environment, it’s
not surprising that variable products took
the biggest hit. Not only are individual VUL
sales suffering, a number of companies
have noted that corporate owned and private placement sales are much lower than
they were this time last year.”
Sales in whole life products saw a dramatic jump in the third quarter—up 7% for
the quarter and 2% year-to-date. According to survey responses, most of the increase came from the traditionally top sellers who have been trying to renew interest
in their whole life products this year. They
attributed the increases to factors such as
product introductions and fire sales.
After seven straight years of considerable growth, universal life premium is experiencing a significant decline in 2008.
Third quarter premium dropped 12% over
the same period in 2007 and is down 2%
year-to-date.
LIMRA said term premiums were flat
for the quarter. IFA
!
te
a
Atlantic Regional Life and
D
e
th
Health Underwriters
e
v
ANNUAL SALES CONFERENCE & EXHIBITION
Sa
“Making the Connection”
May 13-14, 2009
Trump Taj Mahal
Atlantic City, New Jersey
New Jersey brokers must disclose
commissions, fees on contracts
New law requires producers selling
health insurance to cite any compensation
Producers selling health insurance in
New Jersey must now disclose any compensation received in conjunction with
the sale. The law, approved July 8, 2008,
took effect Monday (Jan. 5).
Producers must disclose the commission of the issuing agent, the general
agent, consultant fee, brokerage fee and
any other fees as both a percentage and
as an amount in dollars per covered employee, according to a bulletin to producers from Commissioner Steven M.
Store: Highmark goes direct to consumers
From page 1
Camp Hill, Pa.-based insurer.
“As the health insurance market becomes increasingly consumer-driven,
health insurers are positioning themselves
to meet growing demands for health insurance products and information
through retail marketing channels,” said
Steven Nelson, vice president of consumerism and retail marketing at Highmark, in a prepared statement.
PAHU supports move
This year at the Atlantic Regional Life and Health Underwriters
Conference we have some exciting features to offer you!
Keynote Speaker: Steve Adubato, PhD will provide an interactive presentation “Making
the Connection” focusing on how to make the sales and service connection in these
troubled times specifically geared to Health Insurance and Finance Services individuals.
I Concentrated One Day CE Format - Van Mueller will speak at one of the sessions
regarding Annuity Training!
I Sponsorship Opportunities Available
I Wednesday Golf Outing
I Outstanding Educational Seminars
I Full Social Schedule with Two Cocktail Receptions, Banquet Dinner and Karaoke Event
I Networking
I Expanded Exhibitor Show
I
At the conference you will get a first look from the taping of the One-on-One
“Healthy Living” television program starring Senator Joseph Vitale. The segment
will also include an engaging question and answer period.
Visit www.njahu.org
for more information on this event, or contact (908) 359-1184,
[email protected]. We look forward to seeing you there.
Goldman (No. 08-16).
The disclosure is required for “any insurance contract that meets the definition
of ‘health insurance,’” the bulletin states. It
further states that it applies to anyone participating in the negotiation, purchase or
sale of a health insurance contract, as well
as non-insurance health carriers, such as
hospital, medical, health and dental service corporations; dental plan organizations, prepaid prescription plans and
HMOs, said the bulletin, dated Oct. 1, 2008.
However, coverage that is an “incidental
part of a life or annuity contract” is not included in the disclosure requirements. IFA
Stewart T. Anmuth, president of the
Pennsylvania Association of Health Underwriters, said his organization supports any
efforts to help consumers find the right
health benefits for their situation.
“The Pennsylvania Association of
Health Underwriters believe that consumers benefit when they can make an informed choice,” Anmuth said in a prepared statement. “Independent insurance
brokers bring value to insurance because
they help the consumer compare options,
make choices and assist individuals and
businesses navigate the complexities of
the health insurance system.”
The organization, which represents
about 1,000 health insurance agents and
brokers across Pennsylvania, “welcomes all
efforts to help people get healthcare coverage and thus access to healthcare. We certainly hope Highmark’s new venture helps
more people get cost effective healthcare
coverage through the private sector.”
Nelson told Insurance & Financial Advisor that because agents typically don’t
serve these individuals, the retail store will
|
IFAwebnews.com
not compete with them. He added that
plans call for the people enrolled in coverage at the store to be connected with an
agent, whose selection will be based on
his or her success with Highmark.
Located in Mechanicsburg
The Highmark Direct store in Mechanicsburg’s Silver Springs Square Shopping
Center will be a 3,200-square-foot sales
outlet for consumers who do not currently
have Highmark products and will not replace the current Highmark Member Service locations, which are currently located
in Camp Hill and Allentown, Pa.
The Highmark Direct store also will provide informational seminars and educational information.
Highmark officials said in the announcement that a recent study from
McKinsey & Co., a national consulting
firm, showing that consumers pay 25% the same percentage as employers contribute - of the $2 trillion spent annually on
health care, suggests the need for the store.
Highmark officials said when consumers visit the Highmark Direct store,
they can meet one-on-one with a Highmark sales associate, who will be a licensed agent, to discuss health insurance options and apply in-store for
health insurance coverage. The store
will also feature self-service kiosks
where customers can shop for health
insurance plans on their own or research other options. IFA
February 2009
Pennsylvania’s ruling on IBC merger cuts both ways
Wharton School professor says decision
will lead to Phila. marketplace changes
By Keith L. Martin
Whether Pennsylvania Insurance
Commissioner Joel Ario approves a merger
of the state’s two largest health insurers,
the repercussions will definitely impact
the market, according to a health insurance expert.
In 2007, Pittsburgh-based Highmark
and Philadelphia-based
Independence Blue Cross
applied for consolidation,
which would create a market share of between 53%
and 70%, according to various sources.
Mark Pauly, professor
Mark Pauly
of Health Care Manage-
ment at the Wharton School of the University of Pennsylvania, said that in the most
fundamental terms, the possible merger
of Independence Blue Cross and Highmark Inc., which he calls an “end-to-end”
merger where two non-competing companies plan to combine, is less threatening
than if the merger is denied.
comments and studies, Ario could release
his decision any time after Jan. 26.
At press time, Ario had not ruled.
In testimony before the Senate Banking
and Insurance Committee in October, the
chief executives of both health insurers denied that a potential showdown between
the two in southeastern Pennsylvania
would occur if the merger is denied.
‘Some day competitors’
“If the merger is not permitted to happen, you likely create ‘some day competitors,’” Pauly said. “There is a credible argument that if this is not allowed to
happen, the speculation is that the two
would compete. This isn’t a typical merger
…as the effect on competition [if approved] is that you reduce potential competition versus actual competition.”
After nearly a year of hearings, public
‘Formidable competition’ seen
If Ario approves the merger, the concern
on the part of fellow insurers in the state,
Pauly said, is “formidable competition, not
in the market, but in how the company will
work aggressively.”
“They’ll be pretty rich,” he said. “They’ve
got much more as a combination in terms
of resources. The conglomeration will not
only possess powerful economic resources,
but become a powerful political resource.”
Pauly said other state health insurance
companies should “be prepared for more
aggressive competition.”
“I’d make sure my financial position is
stable as you may get involved in a price or
marketing war,” he said. “Also, the combined company could be a bigger player in
terms of regulation, so that is something
else to be wary of” for fellow insurers. IFA
Competitors ready for battle – either way
Three other health insurers say they plan to
continue business as usual after ruling
By Keith L. Martin
Three health insurers are preparing
for what could happen if their two biggest
competitors – Highmark Inc. and Independence Blue Cross – are approved to
merge or if the consolidation is denied by
the Pennsylvania insurance commissioner.
Representatives of three health insurers
that would likely compete with the merged
company told Insurance & Financial Advisor that while they wouldn’t weigh in on
the merger itself, they are prepared for either outcome. At press time, Commissioner
Joel Ario had not ruled.
Aetna spokesman Walt Cherniak said
that the company’s prime focus in the
state remains Philadelphia and that the
operation of the insurer has no plans for
change regardless of the outcome of the
proposed merger. In 2007, Aetna had a
Pennsylvania market share of 9%. Highmark and IBC together would control between 53% and 70% of the state’s health insurance marketplace.
‘Sound strategies for business’
“We expect we’ll be employing the same
strategies as now,” Cherniak said. “Market disparities can make you change a little, but we’ve
established sound strategies for business.”
Capital Blue Cross, with an 8% market
share, said that since a split with Highmark
in 2001, competition with the insurer has
been a reality.
“Competition was forced on us and put
us in competition mode,” said Mike
Merenda, executive vice-president/general
counsel for the Harrisburg, Pa.-based insurer. “We had to take on a bigger company
and emerged as a company leader. We are
not focused on the path of Highmark, but
focused on what we can do to stay a leader.”
Highmark’s CEO Kenneth Melani told state
legislators at a hearing last year that Highmark had not done as well as expected when
competing in Capital Blue Cross’ market,
Central Pennsylvania and the Lehigh Valley.
Merenda acknowledged that if there is a
merger, “there is a challenge but we plan to
do the same as we’ve done in the past,” he
said. “If approved, we hope there are proper
protections in place to protect [consumers]
and the marketplace.”
UnitedHealthcare, which controls less than
one percent of the market, issued a statement
saying, “We strongly believe that this competition is in the best interests of both the state
and its citizens and are eager to continue playing our part in bringing the benefits of competition to the people of Pennsylvania.”
Representatives for Philadelphia-based
CIGNA, which also controls less than one
percent of the market, declined to comment on the potential merger and its potential impact on their operations. IFA
More online:
IFAwebnews.com
Check IFAwebnews.com for the latest on
this breaking story.
|
IFAwebnews.com
February 2009
|
17
U.S. life insurance sector could see more problems in 2009
Damage from continued credit, equity
market issues could haunt insurers
The damage from continued turmoil
in the credit and equity markets is likely
to cause more problems for the U.S. life
insurance sector, according to Standard
& Poor’s Ratings Services.
The ratings service is maintaining its
negative outlook on the sector because
it is expecting higher-than-normal
credit losses, lower fee-based revenues,
increasing equity market-based reserves and reduced financial flexibility.
The ratings service expects to take
negative rating or outlook actions on
several life insurers in the next six
months, given the adverse consequences from these turbulent markets,
it said. These negative effects have
dampened profitability and capital levels during the first nine months of 2008,
trends that are expected to continue.
Ratings downgrades possible
“Companies already dealing with
weaker capitalization, higher risk profiles
in their investments or liabilities, and vulnerable competitive positions are at
greater risk for such a downgrade or neg-
ative outlook revision,” said Standard &
Poor’s credit analyst Kevin Ahern. “The
higher-rated companies, ‘AA-’ and above,
have the largest proportions of stable outlooks, confirming our views of their sustainable business models, greater diversification, and better financial flexibility.”
Nonetheless, companies with higher
ratings and stable outlooks are equally
subject to these difficult markets. It
could be hard for them to maintain their
strengths amid the market volatility and
dislocations, though less so than it will
be for their not-as-well-diversified (and
lower-rated) peers, S&P officials said. IFA
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// AWARD
Keystone Insurers recognizes
‘exemplary’ Pa. agency
Keystone Insurers Group, a propertycasualty company, has selected a Pennsylvania agency as one the recipients of
its fifth annual KIG Exemplary Awards.
Meixell-Diehl Insurance of Lewisburg,
Pa., was selected as one of the outstanding Keystone partners that has done
business for a minimum of two years.
Also selected were GHT Insurance
Agency of Richmond, Va., and Wayah Insurance Group of Franklin, N.C.
Colin Buzzard, executive vice president of sales and marketing for
Northumberland, Pa.-based Keystone,
said the award was implemented in 2003
“to objectively recognize the Keystone
Partner in each state that best exemplifies profitability, production and commitment to our core insurance carriers.”
Keystone has 172 franchise partners
in Indiana, North Carolina, Pennsylvania, Ohio and Virginia.
The company is the fourth largest privately held property-casualty insurance
agency in the United States. IFA
// RECOGNITION
Penn Mutual creates
lectureship honoring veteran
Penn Mutual Life Insurance of Horsham,
Pa., announced the creation of the Maurice L.
Stewart Lectureship with
The American College.
The annual lecture at
the Bryn Mawr, Pa.,
school will feature insurance industry leadMaurice L. Stewart
ers in honor of Stewart,
who serves as executive consultant to the
life insurer as part of a 56-year career in
insurance. IFA
// UPCOMING EVENT
Broad Product Line of Life, DI & LTC products
Whole Life, Limited Pay Life * Term Blends
Seven Second To Die products including 10 year term
High Early Cash Value WL (90% first year cash value)
No Lapse UL & VUL
The Blue Chip Company with the highest industry financial
Strength ratings.
Central PA I-Day scheduled
for April 9 in Camp Hill
Central PA I-Day is scheduled at the
Radisson Penn Harris Hotel & Convention Center at 1150 Camp Hill Bypass in
Camp Hill, Pa., Thursday, April 9.
For more information, contact Rebecca Haner at 717-255-6894 or
[email protected]. IFA
WOULDN’T YOU REALLY PREFER TO SHOW YOUR
CLIENTS MASSMUTUAL?
Contact: Frank Lazarus, CLU, ChFC, CASL
610-766-3003
[email protected]
|
IFAwebnews.com
February 2009
Blue Cross fined $150,000 for violations
Aetna cuts Pa. jobs; CIGNA plans cuts
Printer malfunction caused 3,800 members’ private information to be disclosed
Two national health insurers are cutting
positions from offices in Pennsylvania,
part of broader moves by Aetna and
Philadelphia-based CIGNA to prepare for
the effects of the recession.
“As the economy has taken a downturn,
a number of employers have been reducing jobs,” Christopher Curran, a
spokesman for CIGNA, told Insurance &
Financial Advisor. “As they reduce jobs, it’s
a trickle down to us.”
CIGNA has not decided on job eliminations, if any, for about 1,200 workers at its
Center City offices and about 3,600 more
workers spread about Pennsylvania,
Delaware and New Jersey. Job consolidations are also expected.
Meanwhile, Aetna announced in De-
By Keith L. Martin
BlueCross BlueShield of Delaware is
hoping to return an early Christmas gift
from former state insurance commissioner
Matt Denn: a fine of $150,000.
Following a Dec. 24 hearing, Denn
levied the fine, the maximum permitted
under state law, against the Wilmington,
Del.-based insurer for mistakenly disclosing the private medical information of
3,800 of its members.
Denn said his department is willing to
consider reducing the fine if BlueCross can
provide proof of measures in place to prevent the incident from occurring again before Feb. 1. If that occurs, it will be an issue
for new commissioner Karen Weldin Stewart to decide as Denn was sworn in as
Delaware’s lieutenant governor on Jan. 20.
In a statement to Insurance & Financial
Advisor, BlueCross apologized for the “regrettable occurrence caused by a printer
malfunction” and said “existing procedures have been reinforced and enhanced
to prevent a reoccurrence.”
“We are currently reviewing the insurance commissioner’s opinion and will respond accordingly,” the statement said.
BlueCross sent 3,800 “explanation of
benefit” forms to members in November
featuring their information on the front,
but another member’s name, medical
provider, description of service provided
and their account number.
Denn found that the insurer violated
two state insurance regulations. IFA
cember the elimination about 1,000 jobs,
with 165 in Pennsylvania and 375 at its
headquarters in Hartford, Conn. The cuts,
effective Jan. 1, were mostly to IT and administrative positions, company officials
said. The majority of those jobs are at
Aetna’s offices in Blue Bell, Pa., according
to the company.
Aetna’s moves will not affect the company’s ability to deliver services to customers, said Aetna spokesman Fred
Laberge. “We were careful to target jobs
that didn’t target claims or customer services,” he said.
About 3% of Aetna’s entire workforce
will be cut, including about 375 positions
at its headquarters in Hartford, Conn., according to Laberge. IFA
For the Record
ficient funds. As of September 2006, $27,196 in premiums were due. Duval told investigators the insufficient
funds occurred because over 15 months he had paid a
contractor about $27,000 from his fiduciary account.
Pa. fines/actions
The following is based on information
recently provided by the Pennsylvania
Department of Insurance.
James C. Bradley Sr.
Broomall, Pa.
Action: Suspended license for five years and must
cease and desist in all activities described in the order.
Synopsis: Bradley, a licensed agent from 1972 until he
retired in 2008, misrepresented information on a Nationwide auto insurance policy in November 2006 regarding the custody of a policyholder’s child.
Docket No. CO08-09-021
New Jersey actions
The following is based on information from
the New Jersey Department of Banking and
Insurance.
Robert M. Ryerson
Freehold, N.J.
Action: Paid a $500 administrative penalty.
Synopsis: Producer failed to notify the department of
a formal investigation initiated and subsequent penalty
imposed by NASD/FINRA.
Larry M. Celaschi
Stockdale, Pa.
Action: Suspended license for five years and must
cease and desist in all activities described in the order.
Synopsis: Celaschi, a licensed agent since 1985, paid
a $306.58 premium payment for a Golden Rule shortterm major medical policy for a client using his personal Visa card, then deposited the check from the
policyholder for payment into his personal account. He
also, although not appointed by Highmark at the time,
submitted in August 2007 a Highmark Direct Blue insurance application for a client and collected a premium,
which he forwarded to his office manager, who was
appointed by Highmark.
Case #E08-99
FINRA actions
The following is based on information
provided by FINRA.
Susquehanna Capital Group
Bala Cynwyd, Pa.
Action: Censured and fined $10,000.
Synopsis: Accused of failing to accept or decline in
the NASD/NASDAQ TRF transactions in reportable securities within 20 minutes after the firm had an obligation to accept or decline in the TRF.
Brokerage Professionals Inc.
Media, Pa.
Action: Paid a $3,000 fine.
Synopsis: Company failed to make surplus lines filings
to the insurance department and did not remit taxes to
the insurance department until March 6, 2008.
FINRA Case #2007008050901
Actions from Other States
Ace American Insurance Co.
Philadelphia, Pa.
Ace Property & Casualty Insurance Co.
Phillip Duval d/b/a PH Insurance Agency
Chester, Pa.
Action: Paid a $10,000 fine; suspended insurance licenses for five years.
Synopsis: AIG Agency between September 2005 and
September 2006 tried to debit Duval’s agency account
for premiums and repeatedly received notices of insuf-
Philadelphia, Pa.
Action: Paid $2,000.
Synopsis: Companies delivered or issued insurance
policies or endorsements without having filed the policies or endorsements with the bureau at least 30 days
prior to their effective date.
Virginia Case INS-2008-00215
|
IFAwebnews.com
February 2009
|
19

Pennsylvania | New Jersey | Delaware

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