by Madelynne Brown, Assistant Director
Governor Jim Edgar recently signed Senate Bill 802 (Public Act 90-30), which implements the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA imposes new national requirements in both the group and individual health insurance markets. Senate Bill 802 puts these requirements in Illinois law by creating the Illinois Health Insurance Portability and Accountability Act for the federal group reforms and amending the Comprehensive Health Insurance Plan Act to provide group to individual portability for eligible individuals.
Group Insurance Requirements
The group insurance requirements prohibit discrimination against individual participants in groups, provide guaranteed renewability of coverage for all employers, provide guaranteed availability of coverage for employers with from 2 to 50 employees and place limitations on the imposition of preexisting condition exclusions. Employees who previously have had most types of health insurance coverage with no more than a 62 day break in coverage will be given credit toward satisfaction of a new employer's preexisting condition exclusion.
Senate Bill 802 also repeals the Illinois Small Employer Rating Renewability and Portability Health Insurance Act for groups with 3 to 25 employees. The rating provisions are repealed effective July 1, 1997, and the portability provisions are repealed effective June 30, 1998.
The new group requirements have raised a lot of questions. To assure a smooth transition, Department representatives Madelynne Brown, Ron Kotowski and Yvonne Clearwater are holding meetings with industry and preparing written question and answer sheets to address the many questions and operational issues that have arisen as companies begin to implement the law.
Individual Market Requirements
HIPAA also imposes new requirements in the individual market. HIPAA requires the state to assure that federally eligible individuals obtain individual health coverage on a guaranteed issue basis with no preexisting condition exclusions. States had a choice of requiring companies in the individual market to guarantee issue or of selecting an alternative mechanism. HIPAA also requires all issuers of individual health insurance to renew such insurance at the option of the individual. The guaranteed renewability requirements apply even if a state has implemented an alternative mechanism to satisfy the guaranteed issue requirements.
The "alternative mechanism" Illinois has selected to implement these requirements is an expansion of the operation of its high risk pool, the highly successful Illinois Comprehensive Health Insurance Plan (CHIP). The changes to the CHIP Act were effective July 1, 1997. CHIP is a program for persons who are unable to obtain health insurance privately. Since May 1989, CHIP has provided health insurance to more than 12,600 Illinois residents from every county in the state and has paid over $215 million in benefits.
CHIP will provide federally eligible individuals a choice of health insurance coverage without imposing any preexisting condition exclusions. Participants may choose between a standard indemnity plan and a hospital only PPO plan. Initial premiums for federally eligible individuals will be 135% of premiums in the standard market. CHIP will provide this federally required coverage to the federally eligible while continuing to provide coverage with all existing state requirements to those who are only eligible under state law.
The CHIP Board will assess the health insurance industry to cover the deficit between the cost of the plan for the federally eligible and premiums paid by those insureds. The initial Notices of Assessment and Invoices for the anticipated deficit for the federally eligible were mailed to 415 companies on July 15, 1997. The deficit incurred by non-federally eligible CHIP enrollees will continue to be funded by the Illinois General Revenue Fund.
Senate Bill 802 also increased the current lifetime maximum benefit for both state and federally eligible CHIP participants from $500,000 to $1 million to make it comparable to comprehensive health insurance coverage offered in the individual market in Illinois.
Questions about HIPAA CHIP can be directed to the Office of the Board of Directors of the Comprehensive Health Insurance Plan at (217) 782-6333. Questions about the group requirements and individual guaranteed renewability can be directed to the Illinois Department of Insurance at (217) 782-4515 in Springfield or (312) 814-2420 in Chicago.
Back to the top20th anniversary of auto ratios
'96 complaint ratios released
Director Mark Boozell has released the 1996 Illinois statistical summary and consumer complaint ratios for personal lines insurance coverages. "This year marks the 20th anniversary of Illinois' publication of auto insurance complaint ratios," Boozell noted. "A look back shows dramatic improvement not only in company performance, but in our own consumer protection initiatives. For example, in 1976, 93 insurers registered ten or more complaints; in 1996, that number dropped to 39. In 1976, 18 companies had ratios above 10.00, ranging from 10.02 to as high as 43.85; in 1996, one company had a ratio of 11.97, the only one higher than 10.00.
"Regulatory strides over the past twenty years include a statutory requirement that insurance companies establish a consumer affairs department with a toll-free number to respond to policyholder inquiries and complaints; a statutory requirement that insurers provide policyholders with written notice of how to contact the Department of Insurance for assistance; a requirement that companies furnish annual claims information to the Department; and extensive consumer outreach initiatives, including statewide insurance counseling programs for Medicare beneficiaries and one of the most comprehensive homeowners insurance education programs in the country.
"The Illinois Department of Insurance also has a very progressive web site (www.ins.state.il.us) where consumers can compare sample rates for auto, homeowners and Medicare supplement insurance, file a complaint and e-mail my office," Boozell said. "With the addition of the 1996 complaint ratios, consumers can also select a particular company and see the actual reasons for complaints."
During 1996, the Department of Insurance closed 13,081 complaints 12,362 against insurance companies and 719 against health maintenance organizations. An analysis of this complaint data reveals the following:
Total Complaints by Line of Coverage 6,207 (47 percent) auto insurance 1,970 (15 percent) group accident and health insurance 1,129 (9 percent) homeowners insurance 995 (8 percent) individual life insurance 967 (7 percent) individual accident and health 719 (6 percent) HMOs 143 (1 percent) group credit accident and health 951 (7 percent) all other coverages. Major Reasons for Complaints Claims handling insurance companies, 72 percent; HMOs, 92 percent Underwriting insurance companies, 13 percent; HMOs, 5 percent Policyholder Service insurance companies, 9 percent; HMOs, 2 percent Marketing and Sales insurance companies, 6 percent and HMOs, 1 percent. Geographical Distribution of Complaints Chicago/Metropolitan Cook County areas insurance companies, 69 percent; HMOs, 80 percent Downstate insurance companies, 26 percent; HMOs, 16 percent Remaining complaints outside Illinois.
The Department of Insurance calculates a complaint ratio and rank for all licensed HMOs, but limits the insurance company listings to those charged with ten or more complaints per line of coverage. A complaint is defined as a written expression of grievance. The Department does not distinguish between justified and unjustified complaints. A rank of 1 reflects the lowest complaint ratio in the group.
Alphabetical listings by line of coverage
Back to the topIllinois Insurance Director Mark Boozell has ordered Families United for Life Insurance Company, Ltd. and its affiliated organizations to cease and desist the sale of unauthorized group health insurance to Illinois consumers. The unauthorized insurance company is headquartered in the British Virgin Islands, but maintains an office at 6122 North Lincoln in Chicago. Also named in the order were Mayer Eisenstein, Jeremy B. Eisenstein and Marshall Kolodenko, as well as the following entities located in the Chicagoland area: Homefirst Health Plan; Homefirst PPO Group Health Insurance Plan; Homefirst News; Homefirst Independent Physician Association, Inc.; Homefirst Health Services; Homefirst Medical Group; Homefirst Insurance Agency, Inc.; and Lifefirst, Inc.
Although the Department of Insurance declared Families United ineligible to conduct a surplus lines insurance business in Illinois on February 23, 1996, the company has continued to illegally market its group health plan under the name of Homefirst Health Plan which is made available to individuals who join Lifefirst, Inc. The plan operates much like a health maintenance organization with services provided by Homefirst's own clinics and physicians. The plan is marketed as comprehensive coverage, but primarily focuses on home birth services. New enrollees in the plan are often already pregnant and receive extremely limited coverage.
Boozell cautioned Illinois consumers to verify a company's licensing status before buying any type of insurance. "It is important for people to clearly understand that if they buy coverage from an unauthorized insurer, they will have little or no recourse if claims problems arise and they will have no guaranty fund protection if the company becomes insolvent. Few insurance entities provide maternity benefits to women who are already pregnant. That in itself should send up a red flag to potential policyholders," he warned.
The Department of Insurance has scheduled a hearing for August 20 to determine whether or not the cease and desist order will be made permanent.
Back to the topAt press time, the following insurance bills had been signed by Governor Edgar:
HB 8 Creates the Genetic Information Privacy Act HB 586 Allows banks to sell insurance HB 725 Amends Right of Conscience Act to apply to health care payors HB 844 Allows auto rental companies to offer collision damage waivers HB 1266 Includes foreign reinsurers under bond-posting requirements HB 1881 Establishes various health care mandates for both men and women SB 193 Repeals Vision Service Plan Act SB 196 Requires insurers to provide 5 years of loss information, rather than 3, on written request of insured SB 490 Prohibits insurers from underwriting solely on basis of domestic abuse SB 802 Creates the Illinois Health Insurance Portability and Accountability Act
A detailed summary of these and other insurance bills signed into law will be published in a future issue.
Back to the topNew Admissions
Fortress Insurance Company, Rosemont, IL, 6/2/97 United Capitol Insurance Company, Madison, WI, 6/19/97 Farmers Direct Insurance Company, Aurora, IL, 7/2/97 New American Country Insurance Comopany, Chicago, IL, 7/28/97 CAMICO Mutual Insurance Company, Redwood City, CA, 7/30/97 Suspensions Suspension Orders have been extended until 6/30/99 for the following Nebraska insurers: Central National Insurance Company Imperial Casualty and Indemnity Company Protective National Insurance Company Back to the topProducer regulatory action
Revocation of Licensing Authority Ronald G. Baxter 4229 North Wolcott, 2nd Floor Chicago, IL Effective 6/2/97 Jose R. Germoso 3015 Rose Street Franklin Park, IL Effective 5/14/97 Michael T. Henkhaus 1619 Seminary Street Alton, IL Effective 6/13/97 Thomas K. Howard 8 Marion Lane Springfield, IL Effective 6/13/97 International Insurance Services, Inc. 2340 West Fullerton Avenue Chicago, IL Effective 5/14/97 Voluntary Revocation of Producer License Michael W. Bugajski 7413 West Hickory Creek Frankfurt, IL Effective 6/16/97 Paul R. Dowd 482 Thornhill, Unit D2 Wheeling, IL Effective 6/24/97 Richard S. Gewartowski 300 Themes Parkway Park Ridge, IL Effective 6/5/97 John N. Giartonia, III 973 Oliver Avenue Aurora, IL Effective 5/30/97 Alexander Grinya 8974 Western Avenue Des Plaines, IL Effective 6/30/97 Diane E. Holtmann 7836 Patricia Road Germantown, IL Effective 5/27/97 Kenneth S. Khano 3000 West Ardmore Chicago, IL Effective 6/5/97 Carolyn R. Riney PO Box 284 Hillsdale, IL Effective 5/13/97 Edwin V. Rushing RR 2, Box 31A Dongola, IL Effective 5/16/97 Sara A. Toomer 203 East South Mahomet Mahomet, IL Effective 6/16/97 Order of Suspension Craig E. Houser 1136 South Gates Street Aurora, IL Effective 5/29/97 Arthur R. Meyers 229 Gingerbrook Lane Bartlett, IL Effective 5/29/97 Stipulation and Consent Order - Civil Forfeiture Paid Alamo Insurance & Financial Services, Inc. 34171 North Route #45 Grayslake, IL Effective 4/28/97 Amcore Insurance Group, Inc. 640 Blackhawk Blvd. South Beloit, IL Effective 6/5/97 Robert F. Bradley 5441 NE River Road Chicago, IL Effective 5/23/97 First Community Insurance Group 265 Stebbings Court #3 Bourbonnais, IL Effective 5/9/97 Jeffrey D. Lamm 649 Charlemagne Drive Northbrook, IL Effective 5/23/97 Robert H. Nienaber 1210 Fulton Street Peru, IL Effective 5/9/97 Kelly J. Shaw 13 Meyer Drive Freeburg, IL Effective 5/28/97 Chrislynn R. Shraufnagel 1224 South Hinshaw Bloomington, IL Effective 5/16/97 Barney Sidler 6722 North Drake Avenue Lincolnwood, IL Effective 5/5/97 James R. Stewart Rt. 2, Box 40 Thompsonville, IL Effective 5/28/97 Mario Vivas 4233 South Maple Avenue Brookfield, IL Effective 5/1/97 Vivas Insurance Agency 5917 West Cermak Road Cicero, IL Effective 5/1/97 Douglas A. Wheeler 323 South Dearborn Bradley, IL Effective 5/9/97 Other Director's Order Terri A. Mohsenzadeh 400 Eagle Drive #101 Elk Grove, IL Effective 5/14/97 Suspension Order Rescinded Back to the topHearings
Scheduled Hearings: Nanette Mariani Revocation of Producer's License 8/1/97 Hearing No. 3552 Faustino and Sylvia Ovalle; State Farm Fire & Casualty Co. Nonrenewal 8/5/97 Hearing No. 3555 Jerome A. Maher; Allstate Insurance Company Nonrenewal 8/6/97 Hearing No. 3554 Jeffrey Scott Zalay Revocation of Producer's License 8/8/97 Hearing No. 3531 Monumental Life Insurance Company Cease and Desist 8/897 Hearing No. 3559 Alice Bialczak Life and Health Guaranty Association claim 8/8/97 Hearing No. 3557 Conley C. Winter, Jr. Revocation of Producer's License 8/12/97 Hearing No. 3558 Dragan Djordjevic Cease and Desist 8/14/97 Hearing No. 3373 Families United for Life Insurance Co. Ltd. Cease and Desist 8/20/97 Hearing No. 3543 HomeFirst Health Plan HomeFirst PPO Group Health Insurance Plan HomeFirst News HomeFirst Independent Physician Assoc. Inc. HomeFirst Health Services HomeFirst Medical Group LifeFirst Inc. HomeFirst Insurance Agency, Inc. Mayer Eisenstein Marshall Kolodenko Jeremy B. Eisenstein Cease and Desist 8/20/97 Hearing No. 3542 Discount Development Services Cease and Desist 8/22/97 Hearing No. 3535 Anthony R. Wathan Revocation of Producer's License 8/25/97 Hearing No. 3553 Reserve National Insurance Co. Examination 8/27/97 Hearing No. 3556 Factory Service Administrators Cease and Desist 8/27/97 Hearing No. 3548 Richard Allen McClelland Paula Huff Revocation of Producer's License 9/4/97 Hearing No. 3561 Tommie L. Brown Denial of Producer's License Application 9/11/97 Hearing No. 3479 Apollo Casualty Company Disapproval of Agreement 9/16/97 Hearing No. 3560 Matters Settled without Hearing: Melrose Park Police Pension Fund Dismissed 7/22/97 Hearing No. 3529 Melrose Park FireFighters Pension Fund Dismissed 7/22/97 Hearing No. 3528 Paul F. Kelley Economy Fire & Casualty Co. Dismissed 7/14/97 Hearing No. 3550 Completed Hearings: Irma Williams Chicago Motor Club Insurance Co. Nonrenewal effective 6/25/97 Hearing No. 3537 Ronald G. Baxter License Authority revoked 6/2/97 Hearing No. 3518 Maggie Ree Frazier American Service Insurance Co. Cancellation effective 5/29/97 Hearing No. 3533 Richard and Marie Siedlecki State Farm Fire & Casualty Company Cancellation effective 5/14/97 Hearing No. 3521 Terri A. Mohsenzadeh Suspension of Licensing rescinded 5/14/97 Hearing No. 3503 Insurance Company of Great Britain, Ltd. Cease and Desist made permanent 5/14/97 Hearing No. 3478 Ross A. Knisley Order revoking producer's license vacated 6/26/97 Hearing No. 3502 Jose R. Gemose International Insurance Services, Inc. Licensing authority revoked for 3 years 5/14/97 Hearing No. 3512
Back to the topExamination reports filed
Financial Health Direct Insurance, Inc. 5/28/97 Financial American Life Insurance Company 6/12/97 Illinois Founders Insurance Company 6/12/97 Gallant Insurance Company 6/30/97 Reliance Insurance Company of Illinois 7/02/97 Personalcare Insurance of Illinois, Inc. 7/15/97 Western Catholic Union 7/15/97 Market Conduct Standard Life & Accident Insurance Company 6/02/97 Safeway Insurance Company 6/20/97 The Franklin Life Insurance Company 6/25/97 Montgomery Ward Life Insurance Company 6/27/97
The full text of Department rules is printed in the Illinois Register published weekly by the Illinois Secretary of State's Index Department, 111 E. Monroe St., Springfield, IL 62756. Subscriptions are available from that source for an annual fee of $290. Issue numbers and a Department contact person are listed below after each rule summary.
Copies of rules are also available upon written request to the Department of Insurance at a $1 per page charge. Adopted rules are codified in Title 50 of the Illinois Administrative Code.
Rule 855 (Prior Notification of Dividends on Common Stock and Other Distributions) was amended effective April 29, 1997, to require companies submitting a filing relating to issuance of an extraordinary dividend to provide the Department with a calculation of risk based capital, assuming the dividend will be approved and paid.
This information will assist Departmental staff in making a determination to approve or disapprove an extraordinary dividend. (Vol. 21, #19; Judy Pool: property & casualty companies; Larry Gorski: life/accident & health companies.)
The National Flood Insurance Program (NFIP) will offer seminars for insurance agents and company personnel in the following Illinois locations:
Date Location Sponsor 09/17/97 Bloomington IL Dept. of Natural Resources 09/24/97 Chicago Insurance School of Chicago 10/16/97 & 10/17/97 Springfield PIIA of IL, Annual Convention 10/29/97 Lisle NFIP Bureau & Statistical Agent 11/05/97 Lisle NFIP Bureau & Statistical Agent 11/12/97 Lisle NFIP Bureau & Statistical Agent For registration, location details or more information, contact Rich Slevin or Joy Duffy at (630) 955-4550.
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