Arch Insurance Company, National Untion Fire Company must provide $8 million in rebates; must pay $2.2. million in fines

(New York, NY – Insurance News 360) – New York Financial Services Superintendent Maria T. Vullo announced a combined $2.2 million in fines against Arch Insurance Company (Arch) and National Union Fire Insurance Company of Pittsburgh, PA (National Union Fire), and ordered the insurers to issue $8 million in retroactive rebates after violating state insurance law.

Separate DFS investigations through the Department of Financial Services revealed that both insurers did not satisfy required minimum loss ratio standards in blanket accident and health insurance policies issued to hundreds of New York volunteer firefighter districts, departments and companies, and that National Union Fire charged premium rates that were not filed with DFS.  The violations resulted in the New York volunteer firefighter companies being overcharged premiums in the aggregate amount of nearly $8 million.

“Insurers doing business in New York must comply with New York insurance laws and regulations and those who don’t will be held accountable for their actions,” said Superintendent Vullo.  “Today DFS is holding both Arch Insurance Company and National Union Fire Insurance Company of Pittsburgh, PA responsible for their respective compliance failures, which directly resulted in New York volunteer firefighter companies paying insurance premiums for coverage that did not bear a reasonable relationship to the benefits provided under the policies.”

Between 2011 and 2017, Arch issued 3,332 blanket accident and health insurance policies to 628 New York firefighter companies, and failed to comply with the minimum loss ratio standard required by New York insurance regulation which provides that the premiums must be reasonable in relation to the claims paid under a policy. As a result, the volunteer firefighter companies were overcharged premiums in the aggregate amount of $5.3 million during the period.

Under the Jan. 10 consent order, Arch will pay DFS a million dollar fine and provide rebates to every New York firefighter company, reflective of the company’s portion of the $5.3 million minimum loss ratio shortfall. Arch will also give an up-to-date summary of corrective actions they have taken, and will report to DFS by May 1, 2019 information containing experience data for every blanket accident and health policy form issued in the previous calendar year to volunteer firefighter companies in the state, for the next five years

The investigation of National Union Fire showed that National Union Fire, from 2015-2017, failed to comply with minimum loss ratio standards required by the state. Also, between 2015 and 2018, the company charged premium rates on blanket accident and health policies issued to New York firefighter companies but did not file them with DFS.  This failure to maintain minimum loss ratios in compliance with Insurance Law   resulted in certain New York volunteer firefighter companies being overcharged  premiums in the aggregate amount of $1,571,704. The insurer’s failure to use the premium rates on file with DFS resulted in certain firefighter companies being overcharged premiums in the aggregate amount of $1,213,640.

Under the consent order, National Union Fire  will submit blanket accident and health policy forms and premium rates for DFS’s review and approval that will replace all existing coverage issued to New York volunteer firefighter companies; send notice to the impacted companies of their retroactive rebates; and by March 15, 2019, provide proof to DFS that each affected volunteer firefighter company has been provided retroactive rebates reflective of the company’s portion of the $1,571,704 minimum loss ratio shortfall.

In addition, National Union Fire will pay DFS a fine of $1.2 million and provide retroactive rebates to each affected New York firefighter company reflective of the company’s portion of the $1,213,640 for the use of unapproved premium rates.  National Union Fire will also provide to DFS an up-to-date, detailed summary of corrective actions taken, and will report to DFS by May 1, 2019 for the next five years containing experience data for each blanket accident and health policy form issued to New York volunteer firefighter companies during the prior calendar year.

A copy of the Arch Insurance Company consent order can be found here.

A copy of the National Union Fire Insurance Company of Pittsburgh, PA consent order can be found here.

Source: New York Department of Financial Services.

Minnesota Commerce Department investigation reveals Frontier Communications failure to provide adequate, reliable service

(Saint Paul, MN – Insurance News 360) – On Jan. 4, the Minnesota Commerce Department filed an investigative report with the Minnesota Public Utilities Commission alleging a failure by Frontier Communications to provide adequate, reliable phone and internet service to customers in Minnesota.

The report suggests that the company be made to refund or credit customers for service outages and unauthorized charges; the company should also add customer service staff, and invest in infrastructure and equipment to better the level of services provided.

The investigation focused on the service quality, customer service and billing practices of Frontier Communications of Minnesota, Inc., and its affiliate, Citizens Telecommunications of Minnesota, LLC. Those companies provide landline phone service to almost 100,000 Minnesota homes and businesses, and internet service in northeastern and southern Minnesota, as well as the Twin Cities metro area.

SEven public hearings occurred throughout Frontier’s service area, and the report is based on more than 1,000 consumer complaints and statements, as well as the company’s responses to questions and request from the Commerce Department.

The investigative report details a wide range of concerns about Frontier:

Frequent and lengthy service outages, including loss of customer access to 911 emergency services;

Delays in repairing and restoring service;

Failure to provide expedited responses to service outages affecting vulnerable customers with medical needs;

Failure to maintain and repair equipment, causing service outages and leading to public safety hazards such as lines and damaged equipment on the ground;

Lack of investment in infrastructure to ensure reliable service;

Frequent billing errors, including inaccurate and unauthorized charges;

Failure to provide refunds or bill credits for service outages;

Lack of timely, responsive customer service, including lengthy call wait times, inaccurate information and “lost” repair tickets; and

Discriminatory practices such as prioritizing new service installations over repairs of existing service and providing slower repair services in rural areas compared to more populated areas.

The report is available on the Minnesota Commerce Department website ( It is also available on the Minnesota Public Utilities Commission website ( Click on the eDockets link to go to the search page and then type 18-122 for the docket number.

Source: Minnesota Department of Commerce.

Hayashida named Hawaii Insurance Commissioner

(Honolulu, HI – Insurance News 360) – Colin M. Hayashida was named Hawaii insurance commissioner, according to an announcement issued on Jan. 3. Department of Commerce and Consumer Affairs Commissioner Catherine P. Awakuni Colon made the appointment, effective Jan. 1, 2019.

“I’m honored to have this opportunity and look forward to undertaking the important role of overseeing and supporting Hawaii’s insurance marketplace,” said Hayashida. “With ongoing federal healthcare reform and the impacts of natural disasters in the state, the insurance industry remains fluid with significant issues that we must monitor and navigate. The Insurance Division and its dedicated staff have consistently risen to the challenges before them, and it is my goal to maintain this level of commitment and service to Hawaii and its residents.”

Starting in 2000, Hayashida worked in various analytical jobs within the Insurance Division. Since 2011, he served as the insurance rate and policy analysis manager.

Source: Hawaii Insurance Department.

California Insurance Commissioner issues rule prohibiting gender discrimination in vehicle insurance rates

(Sacramento, CA – Insurance News 360) – On Jan. 3, California Insurance Commisioner Dave Jones issued regulations that prohibit use of gender to determine private automobile insurance ratings. The Gender Non-Discrimination in Automobile Insurance Rating Regulation went into effect on Jan. 1.

The Gender Non-Discrimination in Automobile Insurance Rating Regulation requires all automobile insurance companies operating in California to file a revised class plan that eliminates the use of gender as a rating factor.

“My priority as Insurance Commissioner is to protect all California consumers, and these regulations ensure that auto insurance rates are based on factors within a driver’s control, rather than personal characteristics over which drivers have no control,” said Insurance Commissioner Dave Jones.

Source: California Insurance Department.

Delaware Insurance Department Approves Genworth Acquisition by China Oceanwide

(Dover, DE – Insurance News 360) – The application from China Oceanwide Holdings Group Co. Ltd., and its affiliates to acquire Genworth Life Insurance Company and certain affiliates has been approved by Delaware Insurance Commissioner Trinidad Navarro. The application was filed more than two years ago, and in the past two years, the two companies have adjusted the transaction to address different questions posed by regulators at the state, federal, and international levels.

Commissioner Navarro approved the application after a  November 28, 2018 public hearing, where the findings of former Vice Chancellor Stephen P. Lamb were explained. Judge Lamb was appointed to preside at the public hearing and present him with findings of facts, conclusions of law, and a recommendation as to whether the proposed transaction meets Delaware’s legal requirements for approval.

The Delaware Department of Insurance used internal expert financial staff, along with outside experts to scrutinize the financial, actuarial and data security aspects of this transaction, agreed to notice the public hearing after the parties recently agreed to deposit $375 million in liquid funds into GLIC.  These additional liquid funds will be invested in GLIC and available to pay policyholders was cited in the testimony of the Department witness, by Judge Lamb in his findings, and today by Commissioner Navarro as being vital to the approval of this transaction.  “I am satisfied that China Oceanwide brings immediate new value to the policyholders, and I look forward to working with them and with GLIC’s management to assure that the safety of benefits to GLICs policyholders is always considered the top priority.”

Commissioner Navarro’s approval includes certain additional conditions to assure the ongoing safety of GLIC’s policyholders. This includes restrictions on the parties to assure that GLIC’s funds are used for policyholders; prohibiting any dividends without the Department’s prior approval and tasking China Oceanwide and GLIC to establish teams to continuously meet and respond to Department requests focused on measures of financial health.

“I know that no one act will fix all the challenges of long term care, but I am satisfied that this approval is a step forward, to be followed by many future steps to protect the policyholders,” Navarro said.

Source: Delaware Insurance Department.

California Insurance Commissioner

(Sacramento, CA – Insurance News 360) – Commissioner Jones blasts Trump Administration rule interfering access to abortion, creating confusion that leads to loss of insurance

On Jan. 4, California Insurance Commissioner Dave Jones sent a letter to the U.S Department of Health and Human Services opposing the proposed rule “Patient Protection and Affordable Care Act; Exchange Program Integrity.”

This proposed rule pertains to policies through the exchange, and would require insurers to send separate bills each month for consumers who enroll in health insurance policies that include abortion coverage. The bill would cover the portion of the premium charged for abortion services. State law requires that health insurance policies include abortion coverage.

In part, Commissioner Jones’ letter reads:

“Californians have an inalienable right to privacy secured by the California Constitution, and that right includes the right to choose whether to bear a child or choose to obtain an abortion. The State of California is forbidden from denying or interfering with someone exercising that right.”

“I urge you to withdraw the amendments to the Segregation of Funds for Abortion Services federal rule (45 CFR § 156.280) found in the Patient Protection and Affordable Care Act; Exchange Program Integrity proposed rule. The proposed amendments to 45 CFR § 156.280 serve no purpose other than interfering with access to abortion, and have the potential to create substantial consumer confusion, which could result in cancelation of health coverage generally for some individuals. In California alone this ill-conceived proposed regulation would affect more than 1.3 million consumers enrolled in qualified health plans (QHPs) through California’s Exchange, Covered California.”

“The proposed amendment to the Segregation of Funds for Abortion Services rule found in the Exchange Program Integrity proposed rule is unnecessary and extraordinarily burdensome to consumers and health insurers.”

“It is both absurd and punitive to single out this one medical service and require a separate bill and separate payment be made for this coverage. In addition to inappropriately interfering with a woman’s right to abortion coverage, this rule will likely result in the cancellation of the health insurance policies of consumers who fail to understand these burdensome rules.”

“The proposed changes to 45 CFR § 156.280 are entirely arbitrary and capricious, inconsistent with statute, and come with unacceptable costs to both consumers and QHP issuers. California Department of Insurance strongly opposes the proposed changes to the existing language of § 156.280, because these changes will harm consumers, issuers, and health insurance markets. This proposed regulation, a burdensome federal government intrusion, serves no legitimate purpose and should be withdrawn.”

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 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.

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.