Commerce Committee adopts H.R. 10 amendments
Cost containment report favors open
competion
Staff announcements
KidCare enrolls Illinois producers
to help reach uninsured children
Illinois takes a second look at viaticals
Legislation update
Exam reports filed
Producer regulatory action
Company action
Hearings
An extensive public appeal by the nation's insurance commissioners has won support for a series of amendments to financial services legislation, H.R. 10. For the past several weeks, the National Association of Insurance Commissioners and individual state regulators, including Illinois Director Nat Shapo, have publicized their concerns about the federal proposal -- specifically the potential loss of valuable regulatory safeguards over insurance transactions.
On Tuesday, May 25, Shapo joined nineteen other insurance regulators from around the country in visiting approximately 120 members of Congress during a day-long effort by the NAIC to point out the anti-consumer impact of H.R. 10 and lobby for amendments. Shapo met with several members of the Illinois delegation, and, in a meeting arranged by Rep. John Shimkus (R-Illinois), spent half an hour with Shimkus and Finance and Hazardous Materials Subcommittee Chairman Michael Oxley (D-Ohio). Thanks in large part to Congressman Shimkus' interest, Chairman Oxley indicated a willingness to consider the NAIC amendments. "I was very impressed with how open-minded the Congressmen were to pro-consumer arguments," Shapo said.
The regulatory community feared that without the amendments, H.R. 10 would exempt insurance business conducted by national banks and their insurance company affiliates from nearly all state consumer protection and solvency laws, leaving insurance consumers with nowhere to turn when they have a problem with their insurance coverage.
The NAIC estimates that state insurance departments receive more than 350,000 consumers complaints and 13.5 million consumer inquiries annually. Collectively, state insurance departments employ 10,000 dedicated public servants who devote all or most of their professional attention to assisting consumers. In Illinois, the Department of Insurance handles over 14,000 consumer complaints and 70,000 general inquiries each year.
"The original language in H.R. 10 so strongly favored preemption that it set up state regulators to be losers in probable court challenges to our jurisdiction," Shapo said. "One need only look at federal ERISA laws which removed more than fifty percent of all health care insurers from state insurance regulation to see the courts' bent towards preemption."
Illinois has been fully supportive of the NAIC's efforts to correct serious regulatory deficiencies in H.R. 10. The amendments:
"The amendments clarify our authority for the continued application of state insurance consumer and solvency regulation and assure that insurance business will be conducted on a level regulatory playing field," Shapo said. "Without those alterations, the pending legislation would have served to dismantle a decades long system of insurance regulation without providing alternatives for consumer protection at the federal level. The elimination of any avenue for consumer advocacy would be disastrous for the insurance buying public."
The amendments were adopted by a 26 to 1 vote of the House Commerce Subcommittee on Finance and Hazardous Materials on May 27, and by the full House Commerce Committee on June 10. Shapo said NAIC members will continue their efforts to preserve the amendments in the House Rules Committee which will ultimately determine which version of the bill will be sent to the full House of Representatives.
Shapo warned that "the fight on these amendments is just starting. We are gearing up for a severe challenge from banking interests in the Rules Committee. After that, the bill will face more debate on the House floor and in a House-Senate Conference to resolve differences between the two chambers' bills."
The Illinois Department's latest analysis of property and casualty insurance underscores the success of the state's competitive marketplace. Released April 15, the Annual Report on Insurance Cost Containment describes a viable, flexible and cost effective market that provides Illinois insurance consumers with wide product choice at competitive prices.
"Insurance regulators have a tri-fold responsibility to the insurance buying public," Insurance Director Nat Shapo said. "We must ensure that insurance coverage is available, reasonably priced, and sold by reliable companies. The Cost Containment Report shows that open competition achieves those goals.
"I take my responsibility as a regulator very seriously, and I am not a free market ideologue," Shapo said. "The Ryan administration supports the Illinois system because it produces tangible results for the consumer as demonstrated by this report."
Mandated by the Illinois Insurance Cost Containment Act (Article XLII, 215 ILCS 5/1202-d), the report analyzes auto, homeowners, commercial auto liability, medical malpractice and other liability coverages in terms of availability, profitability and reliability. Among the report's significant findings are:
Availability:
Director Nat Shapo appointed Cathy Travis as the new Special Deputy Receiver, effective April 27, 1999. Cathy has worked for the Office of the Special Deputy Receiver (OSD) for 12 years, most recently serving as General Counsel.
D. Daniel Barr was named General Counsel, effective June 1. Dan has been a litigation partner at the firm of Bell Boyd & Lloyd for the past 22 years, where his practice has included significant insurance litigation as well as work for OSD on the First Oak Brook estate.
by David Citron, IL Department of Public Aid
Governor George H. Ryan has said that investing state resources to improve the lives of Illinois children is a priority of his administration. The state's employers can provide the support necessary to meet that priority by promoting a program called KidCare among their employees.
"Our goal in the next year is to increase KidCare enrollment so that more uninsured children in working families can receive the benefits of regular health care," says Governor Ryan. "Healthier children make better students and better students become stronger, more involved citizens and employees."
KidCare extends health care coverage to an entirely new population of children who have not been eligible for state medical assistance. KidCare also provides rebates to qualified families who are covered by employer or private plans and pay premiums. A family of four with an annual income of $30,895 would be eligible for coverage.
Reaching families to tell them about the benefits of KidCare and how to apply has been a challenge. To meet that challenge and to make KidCare a success, the state is enlisting the aid of licensed producers to spread the word about how children of working families can qualify for health care coverage at no cost or at low cost, depending on a family's income. Producers will be paid $50 for each completed application accepted into the program.
The health care coverage part of the KidCare program covers physician, laboratory and hospital care, emergency rooms, prescription drugs, and most other services. It also covers dentistry, optometry, and podiatry as needed. Co-payments for office visits or prescription drugs are no more than $5 and may be lower (or $0) depending upon income. Premiums may be charged (depending upon income), but the premium is no more than $15 per child or $30 per family per month.
The reimbursement program is called KidCare Rebate. It provides reimbursement directly to the employee for group health insurance premiums actually paid by the employee up to $75 per child per month. Children would continue to receive coverage under the parent's program. This works only in situations where the employee makes a payroll contribution to the child's coverage or the parent has purchased private coverage for the child.
To help you inform your insureds about KidCare, the state can provide brochures which explain the plans, eligibility requirements, benefits and cost sharing. The state also has developed a new and shorter mail-in application for KidCare. Processing typically takes about a month to six weeks and financial eligibility is for a year but is renewable so long as the program requirements are met upon renewal.
KidCare can make a difference in the work place not just for employees and their families. Having reliable health care coverage for children means employees can reduce lost work time and improve a company's overall productivity.
Insurance agents, health care providers, health departments and social service agencies across the state are working to help families complete the KidCare applications and make presentations to employees and answer questions at the work site.
To being selling KidCare you must complete an Application Agreement and receive applications and other materials from us. To learn more about how KidCare can expand your health insurance business, call Joel Rodgers at the KidCare hotline in Springfield (217) 524-7212.
by Charles Budinger, Life/A&H Compliance
An increasing amount of attention is being given to the viatical settlement industry. A viatical settlement is the sale of a life insurance policy by a terminally, catastrophically or chronically ill policyholder (called a "viator") to a third party, typically a licensed viatical settlement provider. In these transactions, the policyholder receives cash during his or her lifetime and the viatical settlement provider becomes the owner and/or beneficiary of the life insurance policy. As such, the provider pays the premiums and collects the death benefit when the insured dies.
Regulation of the viatical settlement industry in Illinois began in 1996, with the enactment of Public Act 89-484, the Viatical Settlements Act. The Act authorizes the Department of Insurance to license viatical settlement providers and to approve viatical settlement contracts. Subsequently, the Department began drafting a rule to address licensure requirements for viatical settlement providers, disclosure requirements to the insured and minimum standards for insurance company practices. Several provisions which currently appear in the NAIC Viatical Settlements Model will most likely be included in the Illinois rule.
One of the more significant such provisions is the Standards for Evaluation of Reasonable Payments which would establish minimum amounts to be paid to a viator. The minimum percentage of the death benefit is 80% when the insured's life expectancy is less than 6 months, but 50% when the life expectancy is 24 months or more. Viatical settlement providers will not be allowed to charge a commission to the viator.
Another provision would require viatical settlement providers to submit an annual report to the Department identifying, for each policy viaticated: the date which the viatical settlement was entered into; the life expectancy of the viator at the time of the agreement; the death benefit amount of the policy; the amount paid for the viatical settlement; and, if the viator has died, the date of death and the total premiums paid to keep the policy in force.
The Department is also considering addressing advertising standards. If the advertisement emphasizes the speed with which the viatication will occur, it must disclose the average time frame from completed application to the date of offer, and from acceptance of the offer to receipt of funds by the viator. If advertising emphasizes the dollar amounts available to viators, it must disclose the average purchase price as a percent of face value obtained by viators contracting with the advertiser during the past six months.
In the past two years, viatical settlement providers have begun taking the product in a new direction, causing the Department to re-examine the entire concept of viatical settlement contracts, even while moving ahead with the draft of our rule. In 1997, viatical settlement providers introduced a non-traditional form of the viatical settlement adding healthy senior citizens to the traditional clientele of terminally ill people who need access to the value of their life insurance policies. Shortly after that, viatical settlement providers began buying contracts on the lives of healthy individuals of any age.
Then in January 1998, the Department was deluged with phone inquiries about a new type of "investment" wherein viatical settlement providers were beginning to function as their own viatical settlement brokers. A broker matches a potential buyer or group of buyers with a particular policy currently on the market and collects a commission from the viatical settlement provider on the eventual sale. Under the new scenario, viatical settlement providers are seeking their own investors.
However, this practice raises new regulatory concerns for the Department. Should the pooling and marketing of monies be addressed in a separate rule? Should this arrangement now be labeled as an investment and, if so, who should regulate it? Should the viaticating of contracts on healthy lives be addressed in the current draft of the Viatical Settlements Rule? What are the ramifications with respect to insurable interest, fraud and the impact on traditional life insurance, including practices related to soliciting individuals to purchase insurance solely for the purpose of viaticating the policy?
These considerations definitely will impact the final rule that Illinois will adopt. However, since it is very difficult to regulate a rapidly evolving industry, such as the viatical settlement industry, our rule will act as a springboard for future regulation while immediately establishing minimum standards to respond to the needs of the consumer.
Senate Bill 417, PA 90-817, was signed into law effective March 23, 1999. The bill amends the Insurance Code to clarify the treatment of government reciprocals. It also exempts contracts for the repair and monitoring of private alarm or security systems from the Service Contract Act.
Market Conduct
Alexander Hamilton Life Insurance Company -- 3/17/99
Central Mutual Insurance Company -- 3/26/99
Fortis Insurance Company -- 3/18/99
Interstate Bankers Casualty -- 3/31/99
Jefferson Pilot Insurance Company -- 3/17/99
John Hancock Mutual Life Insurance Company -- 5/17/99
John Hancock Variable Life Insurance Company -- 5/17/99
Reserve National Insurance Company -- 3/17/99
Financial
Belvidere Farmers Mutual Insurance Company -- 4/9/99
Berlin Mutual County Fire Insurance Company -- 1/14/99
Brothers of the Christian Schools & Affiliate -- 4/16/99
Carlyle Mutual County Fire Insurance Company -- 4/9/99
Chicago Hospital Risk Pooling Program (The) -- 4/21/99
The Dental Concern, Ltd.-- 4/16/99
First Financial Insurance Company -- 3/16/99
Germantown Mutual Insurance Company -- 4/13/99
Greene County Mutual Fire Insurance Company -- 4/13/99
Humana HealthChicago, Inc.-- 4/16/99
Humana HealthChicago Insurance Company -- 4/16/99
Illinois Compensation Trust -- 4/13/99
Illinois Provider Trust -- 4/13/99
Insurance Company of Illinois -- 4/16/99
Lanark Mutual Insurance Company -- 4/13/99
Menard County Mutual Fire Insurance Company of Petersburg -- 4/16/99
Montgomery Mutual Insurance Company -- 4/22/99
Prime Syndicate Inc. -- 5/3/99
Safeway Insurance Company -- 4/21/99
Underwriters at Lloyds London -- 2/17/99
USPlate Glass Insurance Company -- 4/16/99
Victor Adams Mutual Insurance Company -- 4/13/99
West Point Mutual Insurance Company -- 4/13/99
(Copies of regulatory orders are available upon written request to the Producer Regulatory Unit, for $1/page. The number of pages are indicated in parentheses following the effective date.)
Revocation of Licensing Authority
David M. Schlessiner
4153 West Devon Avenue
Chicago, IL 60646
Effective 4/5/99 (2)
Kenneth C. Waters
543 Beacon Point
St. Louis, MO 63040
Effective 3/15/99 (4)
Voluntary Revocation
Anthony G. Fiorenza
524 Hunter Road
Calendonia, IL 61011
Effective 4/19/99 (1)
Order of Suspension
Donald E. Moran
10821 Keating, Apt. 1 SE
Oak Lawn, IL 60453
Effective 4/8/99 (7)
Other Action
James Joseph Doyle
PO Box 280
Hindsale, IL 60521
Suspension lifted 3/24/99
Stipulation and Consent Order - Civil Forfeiture Paid
John R. Acton
401 West Maple Street, PO Box 354
Cayuga, IN 47928
Effective 4/6/99 (3)
Kenneth E. Bennett
8334 Shore Drive
Machesney Park, IL 61111
Effective 4/2/99 (3)
Ken Bennett and Associates, Inc.
3923 East State Street
Rockford, IL 61108
Effective 4/2/99 (3)
Ambrose Cameron
D/B/A Cameron Insurance Agency
309 Greenwood
Glenwood, IL 60425
Effective 3/22/99 (9)
Ellis Insurance
1905 Camp Jackson Blvd.
Cahokia, IL 62206
Effective 2/10/99 (4)
Norman Gunnar Olson
3901 West 95th Street
Evergreen Park, IL 60642
Effective 4/2/99 (6)
Norman G. Olson Insurance Agency, Inc.
3901 West 95th Street
Evergreen Park, IL 60805
Effective 4/2/99 (6)
John Podobinsky
9801 Dupont Avenue South
Bloomington, MN 55431
Effective 2/10/99 (3)
John E. Schultz
213 North Center
Melvin, IL 60952
Effective 3/4/99 (4)
Gary R. Wright
6153 Muirfield Lane
Rockford, IL 61114
Effective 2/1/99 (2)
Stipulation and Consent Order - No Civil Forfeiture
Howard Jerome Sachnoff
1452 Hemlock Knoll
Northbrook, IL 60062
Effective 4/7/99 (3)
Denial of Request for License
Karen W. Arnold
2434 West Fargo
Apartment 200
Chicago, IL 60645
Effective 4/19/99 (2)
Jethro Black Jr
1807 Muny Vista Court
Alton, IL 62002
Effective 3/8/99 (1)
William G. Foster
6704 Echo #1
Westmont, IL 60559
Effective 4/8/99 (7)
Edward K. Miller
27 Lucas Drive
Palos Hill, IL 60465
Effective 4/6/99 (18)
Gregory F. Rounds
346 East 91st Street
Chicago, IL 60619-7340
Effective 3/8/99 (2)
Ronald M. South
12923 Polo Park Drive
St. Louis, MO 63146
Effective 3/24/99 (7)
Desmond Ware
2111 South 9th
Maywood, IL 60153
Effective 3/22/99 (1)
Robert J. White, Jr.
10205 South Karlov
Oaklawn, IL 60453
Effective 4/5/99 (3)
New Admissions
Kemper Comprehensive Insurance Company, IL, 4/13/99
Specialty National Insurance Company, IL, 4/13/99
State Farm Florida Insurance Company, FL, 5/5/99
Fines
The following entities were issued Stipulation and Consent Orders and fined for Insurance Code violations and/or improper claims practices cited in their Illinois market conduct examinations:
John Hancock Mutual Life Insurance Company, MA, 5/17/99, $15,000
John Hancock Variable Life Insurance Company, MA, 5/17/99, $10,000
Suspension
LMI Insurance Company, OH, Order of Suspension effective 7/1/99 until 6/30/2001; company has no policies in force in Illinois.
Scheduled Hearings:
Philip James Campell
5/19/99 Hearing No. 3721
Suspension of licensing authority
Margaret Kopecki
5/27/99 Hearing No. 3722
Suspension of licensing authority
Kevin & Buckner
State Farm Fire & Casualty Insurance Company
5/28/99 Hearing No. 3820
Cancellation
National Employer Benefit Association
National Employees Union Health
and Welfare Fund
National Employees Union, Danville, Ill.
National Employees Union, Harrison, New Jersey
Interstate Administrative Services
Robert J. Jennings
6/8/99 Hearing No. 3713
Cease and desist
H. Thomas Lane, Jr.
6/9/99 Hearing No. 3711
Revocation of licensing authority
Industrial Shippers Association
National Council on Compensation Insurance
6/10/99 Hearing No. 3706
Rate classification
Matters Settled without Hearing:
Brian Gehrich
Hearing No. 3716
Hearing dismissed 5/3/99
Judith Hedberg
State Farm Fire & Casualty Insurance Company
Hearing No. 3715
Hearing dismissed 3/30/99
Completed Hearings:
Duxler Libertyville Tire, Inc.
National Council on Compensation Insurance
Hearing No. 3696
Previous Workers Compensation Appeals Board decision affirmed;
NCCI to do special study 4/22/99
Willie J. Valentine
Hearing No. 3648
Licensing authority revocation rescinded 4/23/99
Donald E. Moran
Hearing No. 3692
Producer's license suspended until complies with
Sec. 505.2 of Insurance Code 4/8/99
William G. Foster
Hearing No. 3694
Application for producer's license denied 4/8/99
John L. Kendra
Hearing No. 3687
Letter of denial for license rescinded 4/6/99
Edward K. Miller, Jr.
Hearing No. 3641
Application for producer's license denied 4/6/99
| Copyright ©2007 DOI | Contact Us | Privacy/Disclaimer | Illinois Privacy Information | Kids Privacy | Web Accessibility |