Report detailing analysis of climate risk exposure of insurers’ investments now available

(Sacramento, CA – Insurance News 360) – On Jan. 4, California Insurance Commissioner Dave Jones released the results of analysis of climate risk exposure faced by insurance industry investors. The climate risk scenario analysis, prepared for the Department by leading climate risk modeler 2° Investing Initiative, is the first of its kind to include analysis of both physical and transition risks faced by insurers assets.  An under 2 degrees Celsius scenario is also included in the analysis for the first time.

“This initiative shows that scenario analysis is an accessible tool for financial supervisors to monitor both physical and transition climate risks and support their regulated entities on managing these risks. It creates a blueprint that other financial supervisors can follow. Automated, scalable and technology driven solutions related to sustainability are ushering in an era of more cost effective supervision – both for supervisors and financial institutions,” said Jakob Thomae, Managing Director, 2° Investing Initiative.

The climate risk scenario reveals that insurer assets are exposed to climate-related transition risks with the possibility of fossil fuel investments becoming stranded assets and that  these assets face additional risks due to climate-related physical impacts. For example, investments in coal-powered utilities are significantly exposed to wildfires and that a number of other assets in which insurers invest could be adversely impacted by water scarcity.

“Insurers, like all investors, need to analyze and consider the climate change related risks facing their considerable investment portfolios,” said Insurance Commissioner Dave Jones. “While we are the first financial regulator to undertake an analysis of both climate-related physical risks and transition risks to insurer investments, we know that other financial regulators as well as investors are also moving forward to implement the important recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, including climate risk scenario analysis. I urge insurance companies to run multiple scenarios in assessing their investment and underwriting exposure to climate-related risk, especially in light of the recent UN Intergovernmental Panel on Climate Change and US National Climate Assessment reports and the adoption of an international Paris Agreement ‘rulebook’ at COP 24 all of which point to a transition away from burning fossil fuels. Climate-related physical risks such as wildfires are also becoming more pronounced, with implications for insurers as underwriters and investors.”

Source: California Insurance Department.

Supreme Court denies review of decision upholding Commissioner’s Fair Claims Settlement Practices Regulations

(Los Angeles, CA – Insurance News 360) – A decade of legal battles over the implementation of the Unfair Insurance Practices Act (UIPA), the California Supreme Court denied review of the 4th Appellate District’s decision that upheld Commissioner Dave Jones’ Fair Claims Settlement Practices Regulations. The regulations detail how insurance claims must be processed, and are the foundation of determining how many violations occur as part of the fine assessment process.

This allows the Department of Insurance to levy up to $91 million in fines against PacifiCare for numerous unfair claims practices, including wrongful denials for life-saving treatment for people battling serious illness and claim payment denials for providers and hospitals—all because the insurer was focused on maximizing profits through what it called “efficiencies” after the 2005 botched $9 billion acquisition of PacifiCare by UnitedHealthcare. Examinations revealed that the company knew about these issues.

Misrepresenting what medications or treatments an insurance policy covers, failing to promptly pay claims where liability is reasonably clear, and forcing claimants to file lawsuits to get full payment, and other acts are considered unfair practices. The Insurance Code allows the commissioner to impose fines of up to $5,000 each time an insurer commits an unfair act or practice on a consumer, or up to $10,000 each time if the insurer did so willfully.

“UnitedHealthcare purchased PacifiCare and imposed cost-cutting measures that destroyed PacifiCare’s claims-handling processes and its arguments in litigation that insurance companies should be allowed to willfully harm consumers as long as they don’t do it too often, reflect a gross disregard of the lives and well-being of the consumers who paid for the promise of coverage,” Commissioner Jones said. “Customers have no choice but to rely on the integrity of their health insurance companies. PacifiCare breached that trust. By any measure, 908,000 violations reflect a general business practice of violating consumer protection laws. I am delighted the Supreme Court has rejected further challenges to the insurance commissioner’s authority to punish insurance companies for knowingly harming even one consumer.”

Based on departmental examination results and following an administrative hearing that took three years, Insurance Commissioner Dave Jones found PacifiCare committed 908,547 separate violations of the UIPA, and he imposed fines aggregating $173,603,750 in penalties. On behalf of PacifiCare, UnitedHealthcare sued the commissioner, arguing that none of its harmful conduct violated the Insurance Code.

The Appeals Court rejected PacifiCare’s argument that insurers are immune from fines for unfair acts, stating “PacifiCare’s interpretation of section 790.03(h) is not only internally problematic, it stands in contrast to virtually every other statute the Legislature has enacted in connection with (1) enforcement of the Insurance Code against insurers generally; (2) enforcement of the UIPA in particular; and (3) the imposition of administrative penalties against insurers in other contexts.”

The court also rejected PacifiCare’s argument that the commissioner must prove an insurer had “actual knowledge” of its illegal conduct and held that it was within the commissioner’s authority to hold the insurer responsible if its agents or employees were aware of facts that would cause a reasonable person to know of the violations. The court also found the commissioner’s reasoning was sensible in that restricting the definition of “knowingly” to one particular individual’s actual knowledge would fail to take into account that many people handle a claim, and an unfair practice can be committed by cumulative acts, not simply the intentional act of one person.”

Source: California Insurance Department.

California Insurance Commissioner estimates COIN impact investments could reach $29 billion

(Sacramento, CA – Insurance News 360) – Investments through the California Organized Invenstment Network (COIN) are expected to reach $29 billion by the end of 2018, according to California Insurance Commissioner Dave Jones.

The report explains the program, which sources and structures financially sound investments for insurers. The expected outcome is based on prior data call findings and tracking of these investments, which support renewable energy projects, affordable housing opportunities, health centers, economic development, jobs, and numerous other social and environmental benefits in the state.

Insurance company holdings in California community development and green investments have more than tripled from $6.6 billion at the end of 2010 to $22 billion at the end of 2015, according to prior data call findings. Growth trends show that COIN could have quadrupled from $6.6 billion in 2010, when Commissioner Jones was first elected to lead the Department of Insurance.

“Insurer investments into California’s underserved communities and environment remain crucial to the economic development of the State,” said Insurance Commissioner Dave Jones. “I encourage policymakers to authorize the Department of Insurance to obtain annual reporting from insurers on their community and green investments in California and to reinstate the COIN CDFI Tax Credit.”

Established in 1996, COIN is a collaborative effort between the California Department of Insurance, insurance industry, community affordable housing and economic development organizations, and community advocates to support investments benefitting California’s environment and low-to-moderate (LMI) income and rural communities.

Source: California Insurance Department.

California releases report on prescription drug costs and insurance costs

(Sacramento, CA – Insurance News 360) – On Jan. 2, the California Department of Insurance released the Prescription Drug Cost Transparency Report, which compiles information from nine health insurers about prescription drug coverage.

The report includes information on prescription drugs dispensed at a plan pharmacy, network pharmacy, or mail order pharmacy for outpatient use, and include the following drug categories: generic, brand name, and specialty. CDI-regulated insurers reported to the department the 25 most frequently prescribed drugs, the 25 most costly drugs by total annual plan spending, and the 25 drugs with the highest year-over-year increase in total annual plan spending for calendar year 2017 for individual and group coverage. This mandated reporting by insurers is meant to demonstrate the overall impact of drug costs on health insurance premiums in California.

“Our Prescription Drug Cost Transparency Report is an important first step toward providing more information for consumers and policymakers regarding the cost of drugs,” said Commissioner Jones. “More work needs to be done by policymakers to address the rising cost of drugs which significantly contribute to overall healthcare costs and health insurance premiums.”

Source: California Insurance Department.

Job openings, hiring fall in November

(Washington, DC – Insurance News 360) – The U.S. Bureau of Labor Statistics’ Job Opening and Labor Turnover Survey for November revealed a drop to 6.9 million openings and a slight decrease in hires to 5.7 million, and a slight fall in quits to 3.4 million.

Job openings dropped 243,000 to 6.9 percent on the last day of November, and job openings in the private sector decreased by 237,000. There was little change in government.

Job openings in “other services” and construction both fell (66,000 and 45,000, respectively).

The number of new hires dropped by 218,000 to 5.7 million in November, and the rate of hires was 3.8 percent overall. The federal government increased hiring by 8,000 positions, but professional and business services fell by 167,000, and total private sector hires fell by 236,000.

Separations didn’t change much, with 5.5 million in November, and a rate of 3.7 percent. Total separations decreased in professional and business services (-122,000) and in accommodation and food services (-88,000). The number of total separations was little changed in all four regions. The number of quits fell by 112,000. In professional and business services, there was a drop of 84,000; accommodation and food services saw a decrease of 62,000.

Source: U. S. Bureau of Labor Statistics.

Arkansas residents see 10 percent increase in options to get insurance from agents and agencies

(Little Rock, AR – Insurance News 360) – From 2017 to 2018, the state of Arkansas saw an increase in insurance producers and adjusters – from 122,053 at the end of 2017 to 135,291 at the end of 2018.

Arkansas Insurance Commissioner Allen Kerr announced this finding on Jan. 4.

“I am very proud of the record of new insurance jobs and businesses the Arkansas Insurance Department has had through my first four years as Commissioner.  It is a testament to the ‘open for business’ culture Governor Hutchinson has created in Arkansas.  The Department will continue to promote our state as a welcoming home for the insurance industry and a land of opportunities for new insurance agents,” he said.

Since December 2014, the number of licensed insurance producers and adjusters has increased by more than half. Licensed insurance agencies also saw a 4.9 percent increase as of Dec. 31, 2018, up to 9,723 from 9,269 the previous year.

Source: Arkansas Insurance Department.

Enrollees with high deductibles engage more in healthcare than traditional plan enrollees

(Washington, D.C. – Insurance News 360) – The 14th annual survey of consumer engagement in health care shows that consumers are more cost-conscious and seek more information than in years past.

The Employee Benefit Research Institute and Greenwald & Associates conducted a consumer engagement survey that looked at value-based health insurance design, growth of high deductible plans and their impact on consumers’ behavior and attitudes.

The study revealed that nearly half of enrollees in a high deductible health plan were in a plan paired with a consumer-directed health plan (with a health savings account, or health reimbursement arrangement. Also, those who enrolled in high deductible plans are more engaged than traditional plan enrollees.

These are also more likely to look for information and exhibit cost-conscious behaviors. They are more likely to research doctors and hospitals, inquire about generic drug options, seek less costly treatment solutions, negotiate lower prices for services,and ask questions about coverage for specific medications. They are also more likely to create a budget for medical expenses, use online cost-tracking tools offered by healthcare providers, and take preventative measures to preserve health, including enrolling in wellness programs. But, those differences though, may be tied to outside factors.

“HDHP enrollees have a higher level of education than traditional plan enrollees, consider themselves to be in very good health, and receive a higher level of income,” said Paul Fronstin, Director of Health Education, Employee Benefits Research Institute. “It is important to remember that these advantages may drive people to select the HDHP option.”

Source: Employee Benefit Research Institute U.S.

Two pharmacy benefit managers received licenses under the Arkansas Pharmacy Benefits Manager Licensure Act, which was signed into law on March 20, 2018.

(Little Rock, AR – Insurance News 360) – Arkansas Insurance Commissioner Allen Kerr made a statement on Jan. 7.

“Thanks to the hard work of Arkansas Insurance Department staff, we are able to issue these first licenses for pharmacy benefit managers following the passage of the new law in March.  This law protects Arkansas consumers and has sparked a nationwide conversation on how other states can help their citizens have continued access to needed prescriptions and information on cheaper pharmaceuticals.”

A Pharmacy Benefits Manager License for Aetna Health Management, LLC based in Hartford, Connecticut was one such approval. A second was granted to CaremarkPCS Health, L.L.C. of Scottsdale, Arizona.  Aetna Health Management does business in Arkansas as Aetna Pharmacy Management and is registered as a Foreign Limited Liability Company with the Secretary of State. CaremarkPCS Health does business in Arkansas as CVS Caremark and is registered as a Foreign Limited Liability Company.

Kerr also granted OmptumRX a 60-day conditional license, active Jan 1, upon the Department’s completion of the company’s application.

Source: Arkansas Insurance Department.

Consumer Price Index for Urban Consumers rises 2.3 percent from Sept. 2017- Sept. 2018

(Washington, DC – Insurance News 360) – The U.S. Bureau of Labor Statistics announced on October 15 that the consumer price index for all urban consumers (CPI-U) rose 2.3 percent; this is not seasonally adjusted.

Food prices increased 1.4 percent, with prices for food consumed away from home increasing 2.6 percent. Food consumed at home increased in price by 0.4 percent.

Energy prices increased 4.8 percent. The index for fuel oil jumped 23.5 percent, while the gasoline index increased by 9.1 percent. Electricity and natural gas both declined 1.2 percent.

Prices for energy increased 4.8percent over the year ending September 2018. The index for fuel oil rose sharply, increasing 23.4 percent. The gasoline index rose 9.1 percent over the last 12 months, while the electricity and natural gas indexes both declined, falling 1.2 percent.

For items other than food an energy, the index increased 2.2 percent; the shelter index is up 3.3 percent over the year and medical care index is up 1.7 percent as well.

This information is from the Consumer Price Index program and these figures are not seasonally adjusted. To learn more, see “Consumer Price Index — September 2018.”

Source: U.S. Bureau of Labor Statistics.

Wolf Administration Announces Agreement with Insurers to Eliminate Barriers to Medication-Assisted Treatment

(Harrisburg, PA  - Insurance News 360) – In October, Gov. Tom Wolf’s administration came to agreement with commercial insurers in Pennsylvania to align prior-authorization processes for opioid prescriptions to protect patient health and safety while ensuring patients have unrestricted access to medication-assisted treatment (MAT) when needed to battle opioid addiction.

“It is vital we take all possible steps to make sure patients are receiving the most appropriate treatment for their pain, while at the same time appropriately managing and monitoring the risks associated with opioids,” Department of Health Secretary Dr. Rachel Levine said. “Medication-assisted treatment is an effective, evidence-based treatment to help those with the disease of addiction to opioids and this step by private insurers allows more people with opioid use disorder to be able to access this form of treatment. Treatment works and recovery is possible for those who are battling this disease.”

The announcement, made Oct. 12, followed a summit of Pennsylvania’s largest health insurers and the Medicaid managed care program, the departments of Drug and Alcohol Programs, Health, and Human Services, and the Insurance Department. The summit was part of the administration’s ongoing effort to battle the opioid crisis.

Insurers agreeing to the guidelines include Aetna, Capital BlueCross, Geisinger, Highmark, Independence Blue Cross, UPMC, and United Healthcare.

“I want to thank Governor Wolf for his continued leadership on battling the opioid crisis in our state, and our insurers for coming to the table to find ways to cover appropriate treatment when it is needed, and for working with our medical providers to properly manage and monitor this treatment,” Insurance Commissioner Jessica Altman said.

This move closely aligns commercial insurance prior-authorization requirements for opioid prescriptions and access to MAT with requirements used by both Medicaid fee-for-service and managed care programs. The requirements were implemented earlier this year by the Department of Human Services.

These guidelines apply to individual, small group, and large group fully insured plans. Self-funded plans, where employers provide health care coverage administered by a third party, are regulated by the federal government and are not included in this agreement.

They implement thresholds for prior authorization for long- and short-acting opioids, morphine milligram equivalents (MME) and exceptions for active cancer, sickle cell crisis, and palliative care/hospice patients. Some insurers are phasing in their alignment with many of the guidelines. Patients should consult with their insurer to find out how these guidelines are being incorporated into their specific health plan.

Under this agreement, commercial insurers will cover MAT without prior authorization in the following ways:

• Coverage of at least one Buprenorphine/naloxone combination product

• Coverage of Methadone as MAT

• Coverage of injectable and oral Naltrexone

Commercial insurers have also committed to coverage of at least one form of nasal naloxone without quantity limits. The guidelines also provide that MAT will be covered at the lowest patient cost tier on the plan’s pharmacy benefit, as applicable.

Source: Pennsylvania Department of Insurance.