Brown's Auto Rate Reduction Bills Making Way Through Legislature
Prudential's Unfair Sales Practices Affect LA Policyholders
Banks to Follow Rules for Consumer Protection
One Year Anniversary Marks Online Success
Experts Track Way Through Health Care Maze
Spotlight -- Life Insurance Buyer's Guide
Brown Offers Support to Church Leaders
Brown's Auto Rate Reduction Bills Making Way Through Legislature
Insurance Commissioner Jim Brown’s plan for reducing Louisiana automobile insurance rates is making its way through the Legislature.
With Gov. Mike Foster's proposed “no fault” plan stalled, the governor adopted and modified Brown's proposed “No Pay, No Play” concept. The bill, by Rep. James Donelon, R-Metairie, cleared the House Civil Law Committee and awaits further action as of this writing.
“I'm convinced that we will have some reforms in place that will lower insurance rates, given my efforts, the mood of the public, the resolve of the Foster Administration and the Legislature,” said Commissioner Brown.
Under the No Pay, No Play concept, uninsured drivers are restricted to the amount of damages they can collect in an automobile accident. Meanwhile, other measures in Brown’s package of Automobile Insurance Rate Reduction bills were making their way through the Legislature.
The Brown plan proposes the most significant crackdown on the operation of motor vehicles in the state since driver’s licenses were first required in 1946.
While devising the plan, Brown wanted to lower auto insurance rates without jeopardizing
people’s benefits while maintaining highway safety. He believes his plan, conservatively
estimating, could reduce rates by 20 percent overall.
The 71-page report, issued by the Department of Insurance compares Louisiana driving
conditions and laws to those of other states throughout the country.
According to Brown, Louisiana is at the high end of the worst statistics. “You
can look all over the country and see that many drivers in Louisiana do not obey
the law, and have poor driving habits,” said Brown. “If we tighten our
laws to reach the average throughout the country, the cost of automobile insurance
should drop dramatically.”
One proposal made by Brown would be to get uninsured drivers off the highways. Under
this proposal, all vehicles in Louisiana will carry a mandatory insurance identification
sticker on the windshield. Cars without valid stickers will be immediately towed
and impounded.
“The yellow sticker system is not working,” said Brown. “We have to put some teeth into the law, and get these cars off the road. It is not fair for two-thirds of the drivers to obey the law, then have to pay for the drivers who ignore the law by not carrying insurance.”
Another proposal would dramatically increase the penalties for drunk driving including a “three strikes and you’re out” provision. Under Brown’s proposal, drivers who receive a third DWI will face automatic jail time, pay a fine of $1,000, and have their automobile sold out from under them. “This is a very severe penalty, but I don’t believe the citizens of Louisiana want to tolerate someone with a third offense drunk driving charge being on the highways. We need to get these drivers off our roads,” Brown said.
The Department of Insurance will also propose a mediation system intended to avoid costly court proceedings. Any accident where a claim of $25,000 or less is in dispute will be subject to mediation if either party requests it.
Brown also proposes increasing the driving age for new drivers from 15 to 16, and requiring mandatory driver’s education before any new drivers receive a license. Licensing will be “graduated,” requiring 16-year-old drivers to have an adult over 21 years of age in the car for the first six months.
Finally, Brown’s proposal includes an oversight council to see that present laws on the books are enforced. “We pick up the newspapers regularly and read where someone received a seventh offense DWI or repeatedly violated some other law on the books. Why aren’t these laws being enforced?” asked Brown.
Brown believes that the public needs to know what areas of the state are ignoring enforcement of state laws.
“I want local citizens to get involved in this important issue. People should be able to turn to their local officials and get results in lowering automobile insurance rates,” said Brown.
Copies of the Brown's auto rate reduction proposal are available by request or can be downloaded through the Department's homepage at ../images. Brown also invites anyone who has any questions or comments about his proposal to call the Department toll-free at 1-800-259-5300 or 5301 or send e-mail to public@ldi.state.la.us.
Letter from the Comissioner
Dear Friends,
I have proposed a list of reforms that I'm convinced will lower insurance rates by making all drivers accountable for their actions on Louisiana highways.
Besides getting uninsured motorists and drunk drivers off the roads, I want to make clear that responsible drivers can also do their part in lowering their insurance rates.
First of all, most insurance companies usually give discounts for a variety of reasons. Installing anti-theft devices such as car alarms, locks for the steering column, and ignition interruption sytems can help bring your rates down.
When you are shopping for a vehicle, consider optional safety features such as airbags, automatic seat belts and anti-lock brakes as possible rate reductions. Some insurance companies also give discounts for storing your vehicle in a garage, taking driver’s education, or insuring more than one vehicle with the company.
Another way to bring down your insurance costs is to shop around and compare different insurance company rates. The 1997 Auto/Home Rate Comparison Guide is a good place to start when comparing insurance prices.
As one of our Department’s most popular publications, the rate guide gives you the opportunity to compare automobile and homeowners rates in one easy step.
You can get a free copy of the rate guide by calling the Department’s toll-free number or you can download a copy from our homepage at ../images.
If you have any questions or problems concerning automobile insurance or any other insurance-related issue call the Louisiana Department of Insurance at 1-800-259-5300 or 5301.
Sincerely,
James H. “Jim” Brown
Commissioner of Insurance
Prudential's Unfair Sales Practices Affect LA Policyholders
Settlement Reached
After months of negotiations, Louisiana reached a settlement with Prudential Insurance Company of America totaling to $550,000 in fines and reimbursements for misleading sales practices.
Even though 43 other states signed an initial remediation plan, Insurance Commissioner Jim Brown continued negotiations to give Louisiana policyholders additional benefits.
“We reached what I believe is a much stronger agreement and the best deal possible for the 60,000 policyholders that were affected in this state,” said Brown.
The complaint against Prudential involved a practice known as “churning” in which agents persuade existing policyholders to buy new, more expensive coverage that is dependent on cash value drawn from the older policy.
“I hope this fine sends a message that we will not tolerate our citizens being
victimized by unfair trade practices,” said
Commissioner Brown.
Remediation for Victims
The Department of Insurance notified the 60,000 Louisiana policyholders that were affected by Prudential’s misleading sales practices of their opportunity to receive remediation.
Notices were mailed in February 1997 to policyholders who bought a total of 82,000 whole life insurance policies from the life insurance giant from Jan.1982 to Dec. 1995.
As part of Prudential’s process of examining claims to determine remediation, the mailing included a Notice and Election form. Policyholders need to choose a remediation option and return the form to Prudential by the June 1, 1997 deadline.
The alternatives from which the wronged policyholders have to choose are the Alternative Dispute Process and Basic Claim Relief.
In the Alternative Dispute Process, policyholders submit their claims and have an opportunity for an independent review if they are not satisfied with the outcome of their claim.
Policyholders may choose the Basic Claim Relief, without having to submit a claim that they were misled or harmed. Under this option, policyholders could receive a preferred rate loan to use for policy premium payments, or they could purchase a life insurance policy, annuity or mutual fund which has been enhanced at Prudential’s expense.
“In other words, if you feel you were victimized, this is your chance to have your life insurance programs reexamined,” Brown said.
Brown urges policyholders to read over the information they received in the mail before choosing between the two options available. Everyone should also retain a copy of the completed form for each policy and return the signed original to Prudential in advance of the June deadline.
Even though the level of remediation may be higher if it is proven that Prudential destroyed records that should be available for investigation, Brown encourages people to still mail in their completed forms.
“Don’t put off filling out the form until the question of the destruction of documents is settled,” Brown said. “My agreement with Prudential ensures that all Louisiana policyholders will get the best deal possible, even if they have already sent in the form when the final settlement is made,” he said.
The Department of Insurance wants to help the victims of this situation. Anyone with questions about Prudential’s settlement can call the Department toll-free at 1-800-259-5300 or 5301.
Banks to Follow Rules for Consumer Protection
Banks selling insurance under federal ruling are now subject to Louisiana consumer laws.
In February 1997, Commissioner Jim Brown announced that banks selling insurance in Louisiana will be prohibited from requiring loan customers to buy insurance from the lender as a condition of a loan.
Previously, banks were limited to the sale of credit life insurance policies, but a U.S. Supreme Court case decided in 1996 allows some banks throughout the country to sell insurance under certain conditions.
To enforce the policy, the Insurance Department issued a bulletin spelling out specific guidelines that regulate bank insurance selling practices. Brown said he intends to police banking institutions’ insurance sales practices as tough as the rest of the insurance industry.
“State insurance laws were adopted to protect the public, and the need for those laws exists regardless of whether consumers purchase insurance from a traditional insurance agency or a bank,” the Commissioner said.
According to the guidelines, insurance related documents must not be part of the loan application. This is to ensure that the purchase of insurance is not a consideration of the loan officer.
The guidelines state that bank personnel may inform a customer that acceptable insurance is required for loan approval and that insurance is available from the bank.
The customer must be informed by bank personnel that he or she does not have to purchase insurance from the bank, but can actually purchase acceptable insurance through other agents. If the customer chooses another agent, the bank’s decision regarding a loan, or terms of a loan, will not be affected.
Commissioner Brown said all banks will be required to provide full disclosure of the identity of the insurance company that is providing the coverage.
The bulletin also recommends that a bank have a separate affiliate or subsidiary to conduct its insurance activities. Banks selling insurance other than credit life insurance must become licensed as an insurance agency, and bank employees selling insurance will be required to become licensed insurance agents.
One Year Anniversary Marks Online Success
Since the March 1996 debut of LDOI Online, the Department’s homepage on the World Wide Web, consumers and insurance industry professionals have profited from the wealth of information available.
When it first entered cyberspace, LDOI Online began with only a few news releases and some general Department information. After a year, the homepage has grown to be an essential source of insurance information including a backlog of Department news releases since January 1996, an e-mail center, publications available for downloading, links to insurance-related sites, and much more.
“Our Department tries to make it easier for people to get information about insurance. The homepage provides a 24-hour online avenue for Internet users to get answers to the insurance-related questions they are looking for,” Commissioner Brown said.
The homepage has recently expanded its format to feature information about the Investigative Insurance Division, Licensing Division, and the Senior Health Insurance Information Program (SHIIP). Each new section offers valuable insurance information to Internet users.
The Insurance Investigative Division developed a Fraud Report Center in its efforts to fight fraudulent insurance operations. Users can anonymously send confidential insurance fraud tips through an online claim report, read news articles describing the Department’s fraud fighting efforts, and view general information about the Division.
“I am convinced that people suspecting insurance fraud will respond better
to the 24-hour convenience of e-mailing a confidential tip to the Department rather
than making a phone call or writing a letter during a hectic work day,” said
Brown.
Internet users, especially insurance agents and companies, should visit the Licensing
section on LDOI Online. Besides providing current regulations and guidelines about
insurance licensing in Louisiana, the page offers access to the Insurance Testing
Center where users can download testing forms.
As a source for seniors searching for health insurance information, the homepage also features two recent SHIIP publications available for downloading. “To HMO or Not to HMO?” takes an objective look at Medicare managed plans, while “Your Rights and Obligations While Enrolled in a Medicare HMO” lists specific rules that apply when receiving Medicare.
LDOI Online is frequently updated with the weekly Ask Commissioner Brown columns and Department news releases. All of the Department’s publications are also available for downloading (see list on p. 4), making it convenient for consumers to gather insurance information through their computers at home.
Brown strongly encourages anyone searching for insurance-related information to access the Louisiana Department of Insurance homepage at ../images Anyone with questions, concerns or comments can e-mail the Department at public@ldi.state.la.us.
Experts Track Way Through Health Care Maze
Experts Tackle Health Care Problems
The Department of Insurance brought over 700 people together from Louisiana and throughout the country to discuss the troubling health care issues in the state.
Government officials, business representatives, consumers, health care providers and academics gathered at the Radisson Hotel in Baton Rouge on January 28, 1997 to attend a health care conference sponsored by the Department entitled “Health Care in Louisiana: Issues and Answers.”
Commissioner Jim Brown welcomed people to the conference by stressing the fact that everyone needs to work together on this complicated issue.
“Health care needs to be in the forefront as we work together to find solutions,” said Brown.
Governor Mike Foster agreed with Brown by saying, “We can’t afford to have parts of the government go off in different directions. This needs to be a cooperative effort.”
The conference examined four areas of concern in Louisiana health care: (1) the potential impact of federal changes in health insurance laws, (2) the risk sharing arrangements among providers, provider organizations and health plans, (3) the Department of Health and Hospitals methods of Medicaid reform, and (4) Medicare options for expanding managed care at a reduced cost to senior citizens.
The data received from conference discussions provided the beginning point for an in-depth study by the Department’s Louisiana Health Care Commission.
Federal Act Affects State Laws
Brown proposed new health insurance reform legislation during the 1997 session to implement the changes brought forth in the recent Kennedy-Kassebaum Act.
“We already have the most costly but ineffective health care system in the country. Failure to pass my legislation to streamline regulation of portability and other reforms in the Kennedy-Kassebaum Act will result in additional costs,” Brown told members of the Employee Benefits Planning Association of Louisiana.
The Kennedy-Kassebaum Act, also known as the Health Insurance Reform Act, is designed to help Americans who are caught in “job lock,” afraid to change jobs or start their own businesses because they have pre-existing conditions that would prevent them from obtaining new insurance coverage.
Brown is asking the state Legislature to pass three pieces of legislation that addresses the Kennedy-Kassebaum Act in the areas of enforcement, individual market requirements and optional coverage.
The enforcement legislation authorizes the Department to administer the federal portability provisions that apply to licensed insurers in Louisiana. The federal government is encouraging states to assume enforcement of the federal portability provisions and prevent the development of a dual regulatory system.
The health insurance legislation addresses the federal requirements for guaranteed issue to individuals who lose their group coverage. Brown proposes to expand the state’s Health Insurance Association plan to meet the guaranteed issue requirements. There are several advantages to consumers for taking this approach.
Eligible individuals will be able to get immediate access to comprehensive coverage. There is a mechanism for using available governmental funds to reduce premium rates. Costs above the maximum premium rates are spread across all health insurance companies in a fair and equitable manner. And the effect of the federal requirements on the cost of individual insurance is minimized.
The legislation on optional coverage issues amends requirements for long term care insurance and viatical settlements. It also authorizes issuance of high deductible policies in conjunction with federal medical savings accounts.
New Legislation Targets Consumer Issues
The series of health bills proposed by Brown would also increase consumer protections and choice.
Under this new legislation, Brown would require insurers to cover such diagnostic screening services as mammography and prostate screening without any deductible being applied. This means the consumer would only be required to pay a co-payment or co-insurance amount.
Brown also proposes a new licensing mechanism allowing insurance companies to offer a full range of health insurance products. This legislation would eliminate duplicate requirements and allow companies to be more competitive, which helps reduce rates for the consumer.
To prevent problems that occurred in other states, managed care organizations would be required to meet the same coverage and benefit options as all other major medical insurers in the state. Additionally, claim payment requirements for major medical plans will now apply to HMOs who offer a point of service option.
The legislation would also propose that the Department works in conjunction with the Department of Health and hospitals to review the quality of HMOs in the state. According to Brown, this step would allow the regulators and health experts to set appropriate standards for consumer services.
“We want to make sure the people of Louisiana have a state agency with the authority to step in whenever there's a problem,” said Brown.
Brown also plans to establish a pilot program to offer affordable health insurance coverage to uninsured school children. An advisory committee will develop the plan to subsidize affordable coverage for families with incomes below 250% of the federal poverty level.
Spotlight -- Life Insurance Buyer's Guide
If you are looking for answers to your life insurance questions, the Department is now offering the new Life Insurance Buyer’s Guide. Adopted by the National Association of Insurance Commissioners (NAIC), the Buyer’s Guide discusses many issues concerning life insurance.
The Buyer’s Guide contains information on how consumers can find a policy that meets their needs and fits their budget, guidelines for deciding how much insurance an individual needs and considerations for those who are thinking of dropping a current life insurance policy.
“Our new Life Insurance Buyer’s Guide is an excellent resource for anyone who is about to buy a life insurance policy,” said Commissioner Brown.
The guide also includes a detailed explanation of the use of sales illustrations which might accompany policies where cash values, death benefits, dividends or premiums may vary based on unpredictable circumstances.
Detailed descriptions of the different types of insurance, including term insurance and cash value life insurance, are also included in the buyer’s guide. The cash value section covers the range or cash value types, which involve whole life insurance, universal life insurance and variable life insurance.
“Consumers want forthright and easy to understand information when making important decisions about their life insurance,” said NAIC President Brian Atchinson.
Single copies of the publication are available by request through the Department or can be downloaded from the Department’s homepage.
Brown Offers Support to Church Leaders
Since the outbreak of church arson in Louisiana, Commissioner of Insurance Jim Brown has been traveling around the state to meet with church leaders.
During summit meetings held in New Orleans, Monroe, Alexandria, and Shreveport, Brown addressed the common problems churches face together in their fight against arson.
The summits also acknowledged churches that fell victim to arson and urged ministers to call the Department if they have any trouble getting insurance coverage.
In the New Orleans summit, Brown joined Gov. Mike Foster to meet with other elected officials and civil leaders at Asia Baptist Church.
“Churches are the hearts and souls of Louisiana communities,” Brown said. “I am committed to making affordable insurance available to all our churches and to the individuals and families who worship in them.”
To calm church leaders worries about getting and keeping insurance on their churches, Brown contacted major insurance companies to ensure that church insurance would be available.
Brown assured everyone around the state that as long as he is Commissioner, all churches will be able to get affordable insurance from stable insurance companies licensed to do business in Louisiana.
The church arson summits hosted by the Department were the first of their kind in the South.