Feds Prepare to Judge Double-Digit Health Insurance Hikes

Federal officials are preparing to judge health insurance rate increases of 10% or more for excessiveness in seven states determined to have ineffective rate review processes.

The Center for Consumer Information & Insurance Oversight found rate review systems to be insufficient in Alabama, Arizona, Idaho, Louisiana, Missouri, Montana, Wyoming and four territories. Under final rate review regulations adopted under the authority of the Affordable Care Act, federal officials will conduct reviews "until those areas are able to strengthen their review processes and authorities," CCIIO, a division of the Centers for Medicare & Medicaid Services, announced. The center also announced partnerships with three states -- Iowa, Pennsylvania and Virginia -- it deemed to have a partially effective review program.

Louisiana Insurance Commissioner Jim Donelon plans to introduce legislation to establish a review structure in order to make the federal involvement unnecessary. The CCIIO designation is not a surprise, Donelon said.

"Historically, we have not had prior approval of rates at all," he said.

The rate review regulation -- finalized in May and effective Sept. 1 -- requires the use of independent experts to review proposed increases of 10% or more for most individual and small group health insurance plans. Reviews will be the job of state regulators. Federal officials gained the authority to perform rate reviews in states that lack the resources or otherwise decline to take on the responsibility. Starting September 2012, the 10% level will be replaced with thresholds that reflect state-specific insurance and health care cost trends in each state, developed with federal officials (BestWire, May 20, 2011).

The Affordable Care Act allocated $250 million for states to improve their oversight processes. So far, 43 States and the District of Columbia are using $44 million in grants.

Health insurers have criticized what they see as an assumption of blame for rising rates. The rising cost of providing medical care is the number-one reason for rate increases, they said. Insurers have also criticized the 10% threshold for considering an increase potentially excessive as arbitrary and not based on actuarial data (BestWire, May 20, 2011).

The regulation also requires insurance companies to provide easily comprehensible information to their customers about their reasons for rate increases judged to be unreasonable or excessive. They will be required to publicly justify and post online any "unreasonable" rate increases.

(By Sean P. Carr, Washington Bureau Manager: sean.carr@ambest.com)

A.M. Best: Life Business Issued Declined 3.1% in 2010

A new A.M. Best Co. Statistical Study shows the face amount of life insurance policies issued during 2010 declined 3.1% to $2.87 trillion compared with a year earlier.

Term life on a business issued basis marked a steeper descent, falling 11.7% to $1.13 trillion.

Group life business issued declined at a less significant rate yet ended up at essentially the same plateau, dropping 1.5% to just above $1.13 trillion, according to another study. The five A.M. Best Statistical Studies looked at total life issued; ordinary life issued; term life issued; group life issued and credit life issued.

Andrew Edelsberg, a vice president in the life/health division at A.M. Best Co., said term sales were driven down last year by higher rates and the sluggish economy's impact on consumer spending.

"Term pricing generally increased as carriers were, in many cases, forced to self-fund Regulation XXX reserves as alternative solutions became relatively expensive," Edelsberg said. "We saw an increase in whole life and universal life sales due to consumer's demand for cash value policies, as well as universal life with no-lapse guarantees."

Edelsberg also said that large mutuals with career distribution had a favorable experience with whole life sales trends.

Northwestern Mutual Group bucked overall segment declines and gained across separate categories of rankings. Total life issued increased 9.5% to $123.9 billion, boosting the Milwaukee, Wis.-based mutual ahead of ING USA Life Group and into the top three.

Metropolitan Life & Affiliated Cos. held the top ranking with $288.8 billion in total life business issued for 2010 (down 5.9%), and was trailed by Prudential of America Group with $186.3 billion (down 9.2%).

Northwestern jumped ahead of MetLife and into the top spot for ordinary life business issued. For term life issued, Northwestern moved up two positions to secure the No. 2 slot.

Shawn Mauser, Northwestern's director of life products, said the company saw significant increases for all life products. He suggested it stems from a changing consumer mindset that has migrated away from the paralysis in 2008 and 2009, when he said there was a tendency to postpone financial decisions.

He described a resurgence taking place with consumers taking a broader and more thorough look at their overall financial situation.

"What we saw in that was a shift in their risk posture overall, and that affects what they are doing with their accumulated assets as well as their insurance," Mauser said. "It wasn't a full-fledged retreat from taking risk; I would say it was just a greater appreciation for safety in the overall context of how much risk people are willing to take."

Mauser said more than half of Northwestern's new sales last year came from existing clients.

"I think that speaks to a flight to quality in some respects, but a confirmation of their previous Northwestern Mutual purchases," Mauser said.

Despite experiencing a 37.6% decline on term life business issued, Prudential's group life business issued increased 14.6% to $126.9 million.

In terms of total life business issued, Prudential of America Group held its No. 2 position.

Mark Hug, chief marketing officer for individual life at Prudential, said the company raised prices twice in 2009 for its life-protection products.

"While it was painful, it was necessary," Hug said. "Our competition didn't respond as quickly as we thought they would, but they have responded since."

Hug cited a confluence of events that were triggered back in 2009, which he described as a favorable year for Prudential. He said Prudential benefitted from a flight to quality in 2009 that ensued as the recession ended.

One factor was that American International Group had lost its spot as the top seller of term insurance in the United States. "They pretty much dropped off the map," Hug said. "So all of that term insurance had to go someplace, and we were a big benefactor of that."

He said other key players in the term market also experienced difficulties during 2009, issues that have since abated and enabled their return to the term segment. Combining that return factor with an overall reduction in the amount of coverage purchased has provided a subsequent confluence for the life industry. Hug said Prudential believes that the overall drop in coverage can be "associated with the loss of disposable income of the middle class, as they suffer through high unemployment."

Standard Insurance Group notched a 53% increase in group life business issued, raising that 2010 figure to $68.1 billion. As a result, the boost moved Standard up five places into the No. 6 slot. Brad Nantz, vice president of employee benefit sales at Standard, said this happened despite a challenging economy in which shrinking headcounts and static wages dampened organic growth.

"Our stable, expert sales force delivered strong group life sales and persistency," Nantz said. "We also saw volume growth as a result of key technology investments in new services and capabilities, including improved enrollment tools and online beneficiary management, which appealed to private employers looking for ease and efficiency."

Northwestern Mutual Life Insurance Co. currently has a Best's Financial Strength Rating of A++ (Superior).
Prudential Insurance Company of America currently has a Best's Financial Strength Rating of A+ (Superior).
Standard Insurance Co. currently has a Best's Financial Strength Rating of A (Excellent).
(By Al Slavin, senior associate editor, BestWeek)

For Your Auto Cheapest Insurance: Explored

Like it or not, in the event you or somebody you know is pulled over for a traffic violation or involved in an accident whilst driving uninsured in the US these days, the punishment is loss of driving privileges for up to a year’s time. Now automobile insurance does make ideal sense but ever because the law requiring it was put into place, it has been mandatory for all drivers.

Get into an accident whilst you’re not covered and in that split second your life can turn out to be a nightmare. To begin with without an insurance carrier you are “on your own” and this means that even if you’re not at fault, you’ll be left to fight your own legal battles. On the other hand, if you’re insured, it’s your carrier’s job to hire an attorney and investigator to clear your name.

The fact is though, that it’s extremely simple to go without paying your insurance premiums, and this is for a number of typical reasons. Perhaps you’ve encountered recent financial issues, and have to cut something from your budget. Or maybe you’ve never even been in an accident and it’s been years because you received a traffic violation. Either way, driving whilst uninsured is just like playing Russian roulette.

One of probably the most typical questions that individuals ask before they begin browsing on-line for insurance quotes is “what are the mitigating factors that will drive their costs up”? Still an additional typical question is “what can they do to actually keep their insurance premiums down”? The easy answer here is that two of the large things that they take a look at, is your prior driving record, and also the type and value of vehicle you drive.

How old you are also factors in heavily simply because if you’re young and particularly in your teens you’re merely much more likely to get into traffic accidents. Then one much more factor that you are able to change is where you live. Now in the event you live, say out in the country, in a sparsely populated area, you will be paying less than in the event you live in a crowded metropolitan area that sees a great deal of accidents.

Now if all of the above risk factors apply to you then you will be looking at higher than usual quotes, and that’s a fact. Even so, in spite of all those risk factors you will find things that you are able to do to help you drive your costs down. Going with a high deductible which is the fee that you pay whenever you file a claim is one of them, as is going with a carrier that offers discounts for things like completing driving courses.
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Gmail to proffer alternative Gmail devoid of ‘Conversations’

An alternative version of Gmail could be expected as the new avatar will be without the 'Conversations' features, according to reports from Business Insider.

The step has been taken in lieu of the 'confusion' factor as Gmail administrators state that they have been receiving complaints from users who find the feature confusing.

This feature aids in integrating all e-mails with same subject lines into one folder that makes the user to follow an easier conversation.

Many of the users found this feature a complete wastage of effort as on many occasions they have failed to read important messages because of this.

This serious accusation has supposedly been felt by Google and thus they finally have decided to introduce an alternative version in two months time.

The recent appointment of Head of Gmail, Vic Gundotra suggests that Google's prior attitude towards Gmail complaints as 'tone deafness' will soon change.

Samsung to upgrade Galaxy S II this September

South Korean electronics giant, Samsung might be planning to upgrade its Galaxy S II smartphone with a new 1.4GHz dual-core processor this September.

The handset was launched with a 1.2GHz dual-core processor after it was upgraded from 1GHz dual-core CPU before release. The handset was revealed with the 1GHz dual-core processor at Mobile World Congress.

The handset features a 4.3-inch Super AMOLED display and Google’s Android operating system. The new ultra-thin smartphone with the powerful processor might be released at IFA along with the latest version of Google’s Android Gingerbread OS, version 2.3.4.

The new device will retain its 8-megapixel camera with 1080p Full HD video recording capabilities, 1GB of RAM and the thin form factor.

Meanwhile, the company has reduced the price of Galaxy SII smartphone by £70 on the day when rumors about the new version in September emerged. The handset is already the best selling handset and is priced at about £429.49 in the UK.