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February 28, 2010
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HERE for the PDF version of this newsletter.
Inside this Issue
A Letter from the Executive Director
NALC Highlights
NAIC Focus
NCOIL Notes
News from the States
Industry News
Calendar of Industry
Events
Register Now!
April 14 – April 16, 2010
Kiawah Island Golf Resort
Kiawah Island, South Carolina
 The
NALC will hold its 2010 Spring Conference April 14 – April 16, 2010,
at the Kiawah Island Golf Resort, Kiawah Island, South Carolina.
- Online conference registration, hotel reservation
information, golf registration, and sponsorship information is
available on the
NALC website. You have the option of
registering online, or completing the forms on your computer.
- Please Note: Registration fees are subject to a $50.00 late
fee if not received by March 26, 2010. Registration fees are
non-refundable after April 2, 2010.
- Hotel Reservations: A hotel reservation form is available on
the NALC website. Make your reservations by phone, fax, e-mail
or USPS mail. The NALC room block expires on March 14, 2010.
Reservations received after this date will only be filled on a
space-and-rate available basis.
- Conference Sponsorship: There are many sponsorship
opportunities available. The list of sponsorships is also
available on the
NALC website.
Watch your e-mail for Conference updates and reminders!
Have you checked on the NALC website lately? Not only is there
information about the organization its members and conferences,
there is a private site reserved for members only. If you are
planning to attend the Spring Conference, complete information is
available, along with an online registration function which takes
only minutes to complete.
The private site contains a wealth of information for NALC
members, including the online, interactive versions of the NALC
Newsletter and the Legislative and Regulatory Report – complete with
links to all source and background materials as well. All sources
cited in the publications are available instantly online. In
addition to the publications, NALC members have ready access to
other valuable resources on the Member Services Website at
http://members.nalc.net. There
is a state government resource, complete with insurance department
and legislative information. A similar resource is available for
federal issues.
All you need is your user name and password. If you do not know
this information, please send an e-mail to
nalc@comcast.net. You will
receive your user name and password by return e-mail. If you have
any questions or problems with the NALC website, send an e-mail to
support@nalc.net.
So check it out. You might find it to be a valuable resource.
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The NAIC will hold Spring National Meeting March 26 - 29, 2010,
at the Hyatt Regency & Colorado Convention Center, Denver, Colorado.
Registration, attendee information and the agenda will be available
soon on the
NAIC
website.
Registration is now open for the NAIC and National Insurance
Producer Registry (NIPR) 11th Annual E-Reg Conference. This year’s
conference will be held May 3 - 5, 2010, at the Hyatt Regency Crown
Center in Kansas City, Mo. Online registration is now available at
http://ereg.naic.org.
E-Reg provides the insurance regulatory and industry communities
the opportunity to explore the latest technology trends and
initiatives affecting insurance regulation today. Attendees may
choose from five conference exchanges: company licensing; market
regulation; producer licensing; rate and form filing; and TechEx
(regulators only).
The conference will kick off with a keynote panel addressing the
latest insurance regulatory topics, including producer licensing,
market regulation and speed-to-market initiatives. Attendees also
will receive up-to-date information on key NAIC membership
initiatives and the latest technology solutions. Panel discussions
and hands-on training opportunities will address nearly every aspect
of insurance regulation, from state producer and company licensing
to market analysis and rate and form filing.
The Hyatt Regency Crown Center is located adjacent to the NAIC
Central Office in Kansas City, Mo. The area includes many
attractions, such as the Liberty Memorial, Union Station, downtown,
the Power and Light District, Country Club Plaza, and nearby
theaters and dining.
Register for E-Reg on or before April 6, 2010, to get a special
discounted rate. For more information, including a full agenda for
each conference exchange, visit
http://ereg.naic.org.
Hearing to Focus on Concerns and Consumer Protections
The NAIC has announced plans to hold a public hearing on the
emergence of Stranger Originated/Owned Annuities. The hearing will
focus on the suspect practice of targeting seniors and terminally
ill patients by inducing them to purchase an annuity largely for the
benefit of investors or intermediaries.
"State regulators need to closely examine the conditions of this
evolving marketplace," said Thomas R. Sullivan, Chair of the NAIC
Life Insurance and Annuities Committee and Connecticut Insurance
Commissioner. "We are determined to address how individuals are
being affected by these new transactions and whether new or modified
current laws or regulations are necessary to protect consumers. We
have an intense curiosity for which we intend to examine the
existence and extent of these practices."
The hearing will include industry representatives, state
regulators and consumers. The date and location of the hearing will
be announced as soon as details are confirmed.
Life/Fraternal, Property/Casualty Reports Now Posted Online
The NAIC has released two sets of data that help provide an
indicator of the degree of market concentration in lines of business
and identify leading insurance writers. The 2009 market share data
for life/fraternal and for property/casualty insurers include
countrywide direct written premium for the top 25 groups and
companies as reported on the State Page of the annual statement for
insurers that report to the NAIC.
The property/casualty report contains cumulative market share
data for the following lines of business: personal auto, commercial
auto, workers’ compensation, medical professional liability,
homeowners and other liability (excluding auto liability) insurance.
The life/fraternal market share report contains cumulative market
share data for the following lines of business: life; annuity
considerations; and aggregate total of life insurance, annuity
considerations, deposit-type contract funds, other considerations
and accident/health insurance.
Both of these reports will be refreshed daily through March 12
and then each Monday through the end of March. These abbreviated
reports are available for viewing at no charge on the NAIC Web site:
For more in-depth market share information, please refer to the
complete 2009 Market Share Reports for Property/Casualty and the
2009 Market Share Reports for Life/Fraternal, which will be made
available in summer 2010. The top 125 groups and companies
countrywide are shown in each line of business and the top 10 groups
and companies are shown by state.
Beginning for the first time in 2010, the 2009 Market Share
Report for Property/Casualty will also be divided into sections and
available electronically for those who wish to purchase the report
by lines of business. The line of business sections will consist of:
1) Private Passenger Auto; 2) Commercial Auto; 3) Workers’
Compensation; 4) Property Lines; 5) Commercial Lines; and 6)
Miscellaneous Lines. Any of these publications can be purchased
online via the
NAIC
Store.
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Plan now to attend the NCOIL 2010 Summer Meeting, July 8 through
11, 2010. The meeting will take place at the Boston Park Plaza Hotel
& Towers, Boston, Massachusetts. For more information or to
register, go to
http://www.ncoil.org/schedule/boston10.html.
Healthcare reform legislation passing the U.S. House in November
included language to give the Federal Trade Commission (FTC) certain
authorities over the business of insurance. Despite slowdown on the
healthcare debate, Members are expected to introduce the FTC
language in a separate bill. The writers below answered the
following question: How would giving the FTC authority to study the
business of insurance impact state oversight?
FTC Oversight: An Unwise Move toward Dual Insurance Regulation
By Julie Gackenbach
The national health care debate has reopened the dispute over the
authority of the Federal Trade Commission ("FTC") to investigate the
insurance industry. The House-passed Affordable Health Care for
America Act (H.R. 3692) includes provisions granting the FTC
unfettered authority to conduct studies and prepare reports on
insurance. In addition, the FTC would be empowered to share
information with law enforcement agencies.
The provisions would overturn a 30-year congressionally imposed
prohibition on the FTC from studying or issuing reports on any part
of the insurance industry unless specifically requested by the
relevant congressional committees. The legislation would not limit
the FTC’s authority to the "business of insurance," but would give
the federal agency the discretion to examine virtually any aspect of
insurance, including state legislative and regulatory conduct.
Although included in health reform legislation, the expanded
authority would extend to all lines of insurance.
The legislation represents a first dramatic step toward dual
regulation of insurance. Over-laying state-based supervisory
authority with a new, unrestrained federal investigatory authority
is a recipe for regulatory confusion. The activities of the
insurance industry at large and individual market participants are
expansively, and effectively, regulated at the state level. Adding
the FTC to the insurance regulatory mix would undermine state
authority.
The proposal is billed by supporters as a simple report and
information gathering regime; however, the expanded authority would
effectively transform the FTC into a quasi-regulatory and
enforcement agency. Congress correctly limited the authority of the
FTC in the 1980s and there is no evidence to support a change in
position.
The expansion of FTC authority is unwarranted, unwise and
unnecessary. Congress should not abdicate its oversight
responsibility and must not overrule state legislative and
regulatory authority in favor of unelected federal bureaucrats.
Ms. Gackenbach is
founder of Confrere Strategies in Washington, DC, writing on
behalf of the National Association of Mutual Insurance
Companies (NAMIC).
A Set of Independent Eyes Can Only Help Consumers
and Regulators
By Birny Birnbaum
Under the McCarran Ferguson Act of 1945, states are given sole
authority to regulate insurance, and insurers are granted an
exemption from the federal antitrust laws prohibiting
anticompetitive practices, such as colluding to set rates. The
Federal Trade Commission (FTC)—an agency dedicated to identifying
and stopping anti-competitive market practices—is forbidden from
prosecuting violations related to the business of insurance.
However, until 1981—shortly after the FTC issued a report critical
of whole life insurance products—the FTC could investigate and study
insurance-industry problems and make policy and enforcement
recommendations to states.
FTC studies of insurance markets would address two critical
problems with state insurance regulation. The first is the poor
track record and limited technical skills of regulators on
competition issues. Despite efforts to develop a market analysis
capability, insurance regulators do little sophisticated data
collection and analysis and major market problems are more often
identified by non-regulators, including journalists and state
attorneys general. In some key areas—monitoring competition or
examining unfair discrimination—state regulators have done little or
nothing.
The second problem is the political pressure on state regulators
from the insurance industry with the states. In many states,
insurers are some of the largest employers and seek protection from
market investigations and enforcement actions. In other states,
regulators cannot be relied upon for independence, as demonstrated
recently when regulators codified the massive capital relief granted
by just a few states in order to maintain some measure of level
competition.
State insurance regulators have defended state regulation over
proposals for federal regulation by stating that state diversity is
a strength—that that there are 51 sets of eyes examining insurers’
financial condition. Another set of independent eyes, particularly
with expertise in competition and unfair trade practices, would help
consumers and regulators. With FTC authority limited, there can be
no credible argument about duplicative regulation because the FTC
would not be regulating insurance.
Mr. Birnbaum is
Executive Director of the Center for Economic Justice, based
in Texas, and former Chief Economist at the Texas Department
of Insurance.
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Kansas Insurance Commissioner Sandy Praeger Honored by American
Medical Association
Therese M. Vaughan, NAIC CEO, Dr. Nancy Snyderman, Sandy Praeger and
Dr. Mark Praeger
Kansas Insurance Commissioner and past NAIC President Sandy
Praeger was honored March 3 with the American Medical Association’s
(AMA) top government service award for an elected statewide
official. She was presented with the Dr. Nathan Davis Award for
Outstanding Government Service by chief medical editor for NBC News,
Nancy Snyderman, M.D., at an awards dinner in Washington, D.C. as
part of the AMA’s National Advocacy Conference.
"Insurance consumers in Kansas and all across America are
fortunate to have Sandy Praeger looking out for their interests,"
said Jane L. Cline, NAIC President and West Virginia Insurance
Commissioner. "While all 56 members of our Association are devoted
to serving the public interest, few mirror Sandy’s zeal and
leadership."
"Sandy’s passion for championing parity in the health care system
distinguishes her impressive career," said Roger Sevigny, NAIC Most
Immediate Past President and New Hampshire Insurance Commissioner.
"She has worked diligently to ensure consumers have access to
affordable and quality care."
Nominated by Sevigny, Praeger chairs the NAIC’s Health Insurance
and Managed Care Committee and was recognized for her ongoing
efforts in the health care arena, including advocating for
consumers, serving as a health expert to the national media and
testifying before Congress on behalf of the NAIC. She is one of nine
honorees chosen this year to receive the award.
This is the second time Praeger has been awarded the honor; she
was first honored as a Kansas state senator in 1999. The award,
named for the founding father of the AMA, recognizes elected and
career officials in federal, state or municipal service whose
outstanding contributions have promoted the art and science of
medicine and the betterment of public health.
California Insurance Commissioner Steve Poizner has cut fees for
agents, brokers and adjusters by 6%, reductions made possible by
what he said are new operating efficiencies. The cuts will apply to
hundreds of fees charged by the Department of Insurance and will
take effect July 1. Poizner has cut various fees for more than
300,000 agents, brokers and adjusters four times since taking office
in January 2007. As an example of the fee reductions, the cost of
license renewals will have dropped from $144 in 2007 to $128 in
July.
Poizner also announced the department’s largest revenue stream,
the fees and license account, has gone from a projected $17 million
deficit to a projected 2010-2011 budget year surplus of $3.6
million. That includes the impact of reduced fees, which are
estimated to be $3.4 million lower. Poizner said new efficiencies
have allowed a 15% cut in the department’s operating budget and a
cumulative total of $22 million in fee cuts.
In announcing a 10% cut in the department’s operating budget in
2009, Poizner cited the elimination of some overhead expenses and
already vacant positions. Savings stemmed from an 18-month strategic
review of department priorities.
Elected in 2006, Poizner is a candidate for the 2010 Republican
nomination for governor.
Iowa’s governor has directed the state’s insurance commissioner
to delay an 18% premium rate increase approved for Wellmark Blue
Cross Blue Shield pending an independent review to determine if the
premium hike is justified. The planned rate hike would impact about
80,000 members in the health insurer’s individual health plans.
In a letter to Insurance Commissioner Susan Voss, Gov. Chet
Culver directed her office to hold off on the premium increase for
Wellmark until a third-party, independent actuary can review the
file and determine whether the division’s processes to award
Wellmark the premium rate increase is justified, according to
Culver’s office.
He requested Voss hire a third-party certified actuary, without
any financial relationship to Wellmark, to conduct a secondary
review of Wellmark’s recently approved request for the premium rate
increase. The commissioner is to stay the hike until the third-party
review is completed and published so the public also can review it.
Tom Alger, a spokesman for the Iowa Insurance Division, said the
division is "happy to be participating in this secondary review, and
we think it will help people understand the rating process and how
all of this is determined by cost factors."
The rate increase was to take effect on April 1 but Wellmark
agreed to delay it until May 1, pending the review. In a statement,
Wellmark said it will cooperate with the insurance commissioner. Rob
Schweers, a spokesman for Wellmark Blue Cross Blue Shield, the
largest health insurer in Iowa by membership, said the cost of care
that the company is providing to its members "is rising faster than
our premiums have increased so that creates a deficit."
Wellmark, a mutual insurer, has about 1.8 million members
statewide. The rate increase would affect members enrolled in
several of its individual, under 65, health plans. Wellmark has had
operating losses since 2007, Schweers said. It lost $38.9 million in
the Iowa individual market in 2009 and earnings from premium for
this market segment last year represented a negative 11.5 cents on
every premium dollar collected, he said. For every premium dollar,
94.5 cents was paid to reimburse health care services for its
members, Schweers said.
The company was able to accommodate some of the losses by drawing
down reserves to mitigate the effects of rate increases, Schweers
said. Wellmark has gotten to the point where it needs to make sure
that the premium it’s asking for is adequate to cover what it
projects will be the cost of the health care services that it pays
for in 2010, he said.
State lawmakers have criticized the salaries of some Wellmark
executives and the health insurer’s new $250 million headquarters
under construction in downtown Des Moines. The new building to
consolidate its operations is not contributing to the rate increase,
Schweers said. There’s "an overall lack of understanding" of how
insurance works, he said.
The governor wants an independent, qualified third-party actuary
to conduct a secondary review whenever any health insurer doing
business in Iowa submits a premium increase request to the state
insurance division.
New Mexico has reinstated Insurance Superintendent Morris Chavez,
who had been suspended with pay during an investigation of an
"administrative matter." Chavez returned to work March 8 after a
nearly six-week absence. The New Mexico Public Regulation
Commission, which oversees the Insurance Division, placed Chavez on
indefinite leave Jan. 28.
"I’m fully cleared and I’m happy to be back at work," Chavez
said. The superintendent declined to elaborate on the circumstances
surrounding his hiatus. PRC spokesman Gerald Garner Jr. confirmed
Chavez’s status but declined to comment on the circumstances. Chief
Deputy Superintendent Tom Rushton served as acting superintendent in
Chavez’s absence.
Chavez has led the Insurance Division since October 2006. He
formerly served as the state representative for the New Mexico State
Gaming Control Board. An attorney, Chavez has worked as a licensed
agent in New Mexico and as an underwriter and operations manager for
a surety company in Santa Fe, N.M. He is a 1995 graduate of the
University of San Diego with a B.A. in political science and a 1998
graduate of the University of New Mexico School of Law.
Chavez’s predecessor, Eric Serna, resigned as commissioner in May
2006 as part of an agreement with the PRC. Serna had been placed on
administrative leave at the recommendation of then-state Attorney
General Patricia Madrid after a review by her office revealed
similarities between overpayments by Serna’s department to a local
bank and adverse audit findings of the agency by the state
Legislative Finance Office.
In January, the 10th Circuit Court of Appeals upheld the
conviction of former Deputy Superintendent Joe Ruiz on multiple
corruption charges. In 2008, Ruiz was sentenced to four years in
prison and ordered to pay $105,000 in restitution and fees for his
role in a scheme to reduce regulatory fines against insurers in
exchange for payments to charities linked to Ruiz and Serna.
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