Brown Urges Clinton to Support Disaster Bill
Lloyd's Agreement Receives Approval
Experts Work Together to Solve Health Care Puzzle
Department Conquers New Territory in Cyberspace
Warning Given to Co.s to Disclose Records
Brochure Teaches Employees their Rights
DOI Continues Regulation to Protect Consumers
Brown Questions Regulation on Banks
Brown Calls for Lower Rates
The Louisiana Insurance Rating Commission unanimously adopted Commissioner Jim Brown’s recommendation that property and casualty insurance companies factor in costs savings from tort reform in proposed rate filings. The action came after a study, commissioned by Brown, disclosed significant savings due to recent adopted tort reform legislation.
The study was conducted by the internationally known actuarial and consulting firm of Tillinghast-Towers Perrin. An analysis of the study led to the conclusion that, overall, Louisiana consumers should see a $42 million reduction in auto insurance rates.
"Now that we know that changes in the state’s liability laws will generate this projected savings, we need to pass these savings on to consumers," said Commissioner Brown.
Copies of the study were mailed to all property and casualty insurance companies doing business in the state. Companies whose requested rate adjustments were deferred in August will have their rate request considered at subsequent meetings with the condition that the companies respond to the Tillinghast report and its impact on their planned rate changes. be reconsidered have their requests Commissioner Brown first proposed the study to get additional information before rate increases were approved by the Louisiana Insurance Rating Commission. However, the Rating Commission, whose voting members are appointed by the governor, approved rate increases including a 4.5 percent increase in automobile insurance rates for State Farm Insurance Company.
Gov. Mike Foster's response was swift and effective. The governor’s office subsequently fired all the Rating Commission members who voted for the rate increase and replaced them with other appointees.
Since the projected savings in automobile coverage will be on liability insurance, consumers who purchase the minimum insurance required will see the biggest savings, 5.5 percent, compared to those who carry high limits with additional coverage.
Liability insurance makes up a smaller portion of the insurance for those who purchase coverage beyond the minimums required by state law, but even they should see a reduction of at least 2 percent.
Brown also said he wanted every company to give a complete review of investment income. "Insurance companies are coming to us in Louisiana saying they need rate increases. Yet, they have millions of dollars invested generating considerable income from premium dollars."
Dear Friends,
I want to discuss how you can protect yourself against costly hurricane damage. There are two things many people are not aware of when it comes to preparing for a hurricane.
The first is that those inland can be in as much or more danger than those who live on the coast. The second is that once a hurricane or tropical storm enters the Gulf of Mexico many companies restrict the sale of insurance.
People who live inland tend to think they will be immune from damage caused by a hurricane, but they are wrong. Hurricanes can bring inland torrential rains, which can cause flooding.
Homeowners need to be prepared for hurricanes by purchasing flood insurance. This insurance coverage is separate from regular homeowners’ insurance. Another area to check is the coverage on other property like a car, boat, or vacation home.
Most people wait too late to buy insurance to protect themselves from hurricane waves, winds, and rains. They do not know that there is a 30-day waiting period before flood insurance policies becomes effective.
Also, once a hurricane reaches the 80 longitude/20 latitude line most companies restrict the sale of insurance.
The best way to prevent this from happening to you is to check your coverage now and make sure you are protected for the future. If you do not have insurance to protect you during hurricane season, you should check with your insurance agent. Flood insurance can be purchased from the National Flood Insurance Program through local agents.
Our Department feels this is such an important issue that we have created a Hurricane Preparedness Guide to answer consumers' questions.
Free copies of the guide can be obtained by calling the Department’s toll-free number or a copy can be downloaded from the Department’s homepage at ../images.
Those who have questions or problems concerning flood insurance can call the Louisiana Department of Insurance toll-free at 1-800-259-5300 or 5301.
Sincerely,
James H. "Jim" Brown
Commissioner of Insurance
Insurance Commissioner Jim Brown asked President Clinton to resolve any differences the administration has with a Senate catastrophic disaster bill.
Brown said the bill would hold down insurance costs for homeowners in disaster prone areas including Louisiana.
Commissioner Brown took advantage of a brief meeting in July with President Clinton who was in New Orleans to address a convention of the Disabled American Veterans.
"I asked President Clinton to reconsider the administration’s position on the bill, and he seemed receptive, after I stressed how important the proposed legislation is to Louisiana property owners," said Commissioner Brown after the meeting. Louisiana has been a key state in support of the bill.
The bill would provide a fund for programs to reduce the damages from catastrophes such as hurricanes, and to ensure swift and effective emergency response when catastrophes occur.
It would also establish the National Commission on Catastrophic Risk in Insurance in the Treasury Department to calculate adequate but fair loss cost estimates for establishing insurance rates. The bill would provide a mechanism to provide the insurance industry with a source of financial backing in the case of catastrophic occurrences.
"It is very apparent that the states are inadequately prepared for major catastrophes, and this is an issue where federal help is appropriate and necessary," said Commissioner Brown.
The Clinton Administration has voiced opposition to the bill which is in the Senate Committee on Commerce, Science and Transportation. Commissioner Brown has testified before congressional committees in support of Senate Bill 1043 by Sen. Ted Stevens, R-Alaska. A similar bill is in the House Transportation Committee.
Commissioner Brown was in Washington recently to meet with members of the Louisiana Congressional Delegation, urging their continued support of the bill.
Lloyd's Agreement Receives Approval
Louisiana Insurance Commissioner Jim Brown applauded an agreement by Lloyd’s of London to reduce the debts of American members of its syndicates by 20 percent as a reasonable compromise to a conflict that otherwise could escalate to the detriment of policyholders worldwide.
"My concern is the protection of policyholders, and in my estimation this agreement represents a much more reasonable approach than a protracted, costly legal battle that could threaten the survival of Lloyd," Brown said. "It is in the best interest of policyholders, including those in Louisiana, that this 300-year-old institution survives to pay its obligations."
The dispute involved participants known as "names" who put up money and risked their fortunes in Lloyd’s syndicates which have suffered great losses. The Lloyd’s insurance market has lost more than $12 billion in the five years leading up to 1992 due to earthquake, hurricane and pollution claims.
As of Sept. 12, ninety-four percent of the names have accepted an agreement to keep Lloyd's financially solvent.
However, nearly 2,000 investors rejected a plan that would cut their losses in return for an agreement to end all litigation.
In the midst of hundreds of lawsuits, Lloyd's has offered its 34,000 investors a $4.8 billion settlement.
LLoyd's has released information saying that 32,801 of its 34,000 investors have accepted the plan. Most of those who have refused are in the United States. Many of these investors intend to keep fighting Lloyd's in court.
However, these investors suffered a setback Wednesday, September 11 when the 4th U.S. Circuit Court of Appeals denied their bid for an emergency appeal of a ruling that put the Lloyd's reconstruction plan back on track in late August after a judge delayed its activation.
Lloyd’s said the credits would further reduce the amount the U.S. investors have to pay to enter a global settlement plan known as Equitas. Equitas will be a reinsurance company that will handle many of the Lloyd’s money-losing claims.
Those names who are residents of states which are or may not become involved in litigation against Lloyd’s will not receive the special benefits of the state credit fund and may not be able to receive the basic benefits of the Reconstruction and Renewal (R&R) plan, in the absence of an agreement with those states.
"It would be a tragedy if some U.S. names are denied the enormous benefits of R&R due to the ill-advised action of securities regulators in their state. It is difficult to understand why a small minority of state regulators insist upon threatening the ability of their citizens to receive hundreds of millions of dollars in financial assistance under the plan," said Peter Lane, Managing Director of Lloyd’s North America, in a PR Newswire story.
Our state agreed to this settlement, because we wanted to protect policyholders, Brown said.
"If Lloyd’s had dissolved it would have caused tragic ripple effects throughout the state," he said." It would have caused the most damage to policyholders who have risks involving chemical and offshore industries which are in a high concentration in Louisiana."
Louisiana led the way for this original agreement by being the first state to sign a cease fire agreement.
"Louisiana acted as a catalyst for regulators in other states to try to reach a settlement in a dispute that had the potential for toppling Lloyd’s," Brown said.
Committee Looks at Problems in Health Care
Insurance Commissioner Jim Brown called for statewide planning which would take into account both private and public sector problems in dealing with health care in the state.
Brown made the comments during a meeting of the Louisiana Health Care Commission.
"Everybody is going their own way, and we have to start sitting down and bringing the public and private sector together in planning for health care in Louisiana," Brown said.
The Legislature created the Louisiana Health Care Commission at Brown’s request in 1992 to study the availability and affordability of health care insurance in the state. The Commission is composed of a diverse group of professionals from throughout the state.
During the meeting, Brown suggested the need for subcommittees to address many health care reform initiatives and suggested areas of focus.
He asked that the committee focus on the use of gag rules which allow networks to restrict what practitioners can tell their patients about health care choices.
"Some HMOs limit the options for treatment that can be suggested by a doctor because of the cost factor. Some states require that doctors lay out all options available to patients. This only seems right," Brown said. "It’s hard for me to believe that a company would instruct a physician not to give patients every option for their own health, but this apparently happens in Louisiana and other states."
Another area he called on the committee to address was the Medicaid crisis with emphasis on coverage for the working poor and the present cuts by the Department of Health and Hospitals.
Brown said, "The state should be coordinating private medical insurance and government subsidized Medicare and Medicaid in terms of regulation, licensing, complaints and benefits offered. We need to emphasize dialogue between our Department and DHH because of the common ground we share."
Commissioner Brown suggested inviting Bobby Jindal, Secretary of the DHH, or his designee, to attend all future Health Care Commission meetings. The Commission then passed a resolution encouraging interaction between the two departments to reconstruct the Medicaid program in Louisiana.
Jindal Speaks to Health Care Commission
According to Bobby Jindal, Secretary of the Department of Health and Hospitals, there are several key pieces to the Louisiana public health care puzzle.
As part of the effort to coordinate health care reform between the Department of Insurance and the DHH, Jindal spoke to the Louisiana Health Care Commission recently.
During the meeting, Jindal pointed to several statistics that make up the health care puzzle in Louisiana.
Besides the fact that Louisiana has the highest number of Medicaid recipients, close to one million people in the state are uninsured. Also the cost in Louisiana for serving one Medicaid recipient is $3500, whereas the southern average is $2700.
After Jindal pointed out these startling numbers, The Louisiana Health Care Commission, in conjunction with the Department of Insurance, resolved to interact with DHH to discuss and develop plans to solve Louisiana's health care crisis.
Commissioner Brown reminded the Commission of their responsibility and commitment to health care reform. "This Commission's charge is not just to make it through another year, but to come up with a solution to the state's health care problem," said Brown.
DOI Releases Health Care Report
Louisiana has one of the most costly health delivery systems in the country, serving a population that is among the least healthy, according to a health care report issued by the Louisiana Department of Insurance. Commissioner Jim Brown released a report on August 15, 1996 entitled, "Louisiana's Health Care Crisis," that proposed four alternatives to solve the state's Medicaid crisis.
"Unless the underlying problem of a very high cost delivery system is fixed first, no solution will be a lasting, effective one," said Commissioner Brown.
According to Brown, the four alternatives that merit consideration to solve the state's Medicaid crisis are: Managed Care, Competitive Bidding, the Voucher System, and the Competitive Plan.
"Quick fixes to the Medicaid budget may provide a stopgap solution, but they leave in place the fundamental problems in our health care system that generated the inefficiencies in Medicaid in the first place," said Brown.
Copies of the report are available from the Louisiana Department of Insurance by calling 1-800-259-5300 or 342-0895 in Baton Rouge.
Since its March debut, LDOI Online has expanded its format to include the Ask Commissioner Brown column, publications from the Senior Health Information Program, and Dos and Don’ts of Workers’ Compensation.
Commissioner Brown realizes the importance of reaching the public through the Internet.
"These additions to our homepage are part of an ongoing effort to reach insurance industry professionals and to provide consumers with essential information to make more educated decisions about their insurance," Brown said.
Ask Commissioner Brown, the question-and-answer style column distributed weekly to news publications and communities statewide, is now accessible through LDOI Online.
The articles are organized into categories that benefit the person searching for information on a certain topic.
"Insurance can be a complicated thing," Brown said. "This column gives me a chance to address questions ranging from how to know the difference between Medicare and Medicaid to whether or not to move a car after an auto accident."
Also new to the Department's homepage are two publications issued by the Senior Health Insurance Information Program. The 1996 Medicare Supplement Comparison Guide, explaining types of insurance policies that supplement Medicare, and the Medicare Health Maintenance Organizations brochure, explaining an alternative to Medicare and Medicare supplement insurance, are both available for viewing and downloading from LDOI Online.
The Department’s latest publication, Workers’ Compensation Dos and Don’ts, is also available through LDOI Online. The brochure provides the proper guidelines people should follow when they experience an injury at their place of employment.
"Our homepage is constantly being updated, so when consumers, the media, and insurance industry professionals are searching online for the latest information on insurance in Louisiana, this is the first website they should bookmark," Brown said. Besides the new additions, LDOI Online offers access to other Department publications including the Hurricane Preparedness Guide, the Buyer Beware brochure, Answers to Common Questions about Flood Insurance, Consumers’ Guide to Auto/Home Insurance, Consumers’ Guide to Health/Life Insurance, the 1996 Auto/Home Rate Comparison Guide, and the Louisiana Insurance Update.
LDOI Online also showcases an eight-month backlog of news releases from the Department. Through the homepage, Internet users have immediate access to the latest news concerning the Department and insurance-related issues.
Commissioner Brown encourages people on the Internet to send electronic mail to the Department. Whether it's a letter to the Commissioner or a question about insurance, people can send e-mail through the E-mail center located on the Department's homepage or send mail directly to public@ldi.state.la.us.
Besides the Department's own information, LDOI Online features links to various insurance- and health-related sites on the World Wide Web providing the user with additional routes of information. The links include the homepages of the Association of Insurance Commissioners, the Federal Emergency Management Agency and the Health Care Financing Authority.
Future plans for the LDOI Online homepage include a link to the Insurance Testing Center, featuring information pertaining to Louisiana, and an online complaint form allowing Internet users to file complaints through the homepage. These expansions will benefit both the insurance professional and the consumer.
The Louisiana Department of Insurance homepage can be accessed at http://www.ldi.state.la.us.
Insurance Commissioner Jim Brown issued a warning to insurance companies recently calling for disclosure of medical records upon written request of a policyholder or applicant.
"I think it is serious enough grounds to warrant revocation of an insurer’s license," Brown said.
He said Louisiana has had a disclosure law since 1991.
The law requires insurance companies to release medical records if a policyholder or applicant makes a written request.
"I want insurance companies operating in Louisiana to know that this commissioner of insurance thinks they have a moral, ethical and legal responsibility in Louisiana to disclose medical records and make them available to policyholders and applicants," Brown said. Brown issued this warning to companies a day after a federal appeals court heard arguments in a Mississippi suit involving medical records and disclosure.
In that case, a woman was suing Jackson National Life Insurance Co., because it allegedly refused to tell her husband he had tested positive for the AIDS virus. However, a federal District Court judge ruled that under Mississippi law the company did not have to reveal the information.
A three-judge panel of the 5th U.S. Circuit Court of Appeals has not indicated when it will rule.
Twenty-one states have similar laws to Louisiana’s and disclosure legislation is being considered in Congress.
The Department of Insurance releases a new brochure to help employees better understand their rights under workers’ compensation insurance.
This brochure, "Workers’ Compensation Dos and Don’ts," is designed to remind employees of key areas they need to look into if injured at work.
"Workers compensation can be a confusing issue," Brown said. "I hope this brochure will clear up any confusion about what to do and what not to do if you are injured at work."
One important issue many people forget about is that workers’ compensation insurance covers job-related injuries regardless of fault. Workers’ compensation insurance provides medical care, death benefits, disability payments and rehabilitation. You can make a claim at work even if it is not the employers' fault that you were injured.
"This brochure explains your rights as an employee," Brown said. "Now, not after you’ve been injured, is the time to understand these rights."
Single copies of the brochure are free and can be requested by calling the Department’s toll-free number, 1-800-259-5300 or 5301, or in Baton Rouge at 342-5317. Copies can also be downloaded from the Department’s homepage at ../images.
Insurance Commissioner Jim Brown recently met in Washington D.C. with the Comptroller of the Currency to discuss joint guidelines for regulating banks selling insurance.
A recent Supreme Court decision allows banks in Louisiana and elsewhere around the country to sell insurance under certain conditions.
Comptroller of the Currency, Eugene A. Ludwig, and his staff are considering guidelines to be made public in the near future.
"It is important that some joint understanding be reached between the Louisiana Department of Insurance and the Comptroller’s office," Brown said. "We want to follow the decision handed down by the Supreme Court, but Louisiana law is very clear that the Department of Insurance regulates the sale of insurance." Brown said he want to be cooperative as Louisiana Commissioner of Insurance, but that he cannot stand for federal intervention into what has always been a state function.
Brown conveyed several concerns to the Comptroller’s office.
"I want to make sure that there is no question, either by the Comptroller or the regulated banks, that institutions selling insurance will be subject to state insurance examination laws and unfair trade practice laws," Brown said.
"State laws were adopted to protect the public and the need for those laws exists to protect the public regardless of whether consumers purchase insurance from a traditional insurance agency or a bank."
He said the Department plans to issue a regulatory bulletin spelling out how state regulatory laws will be enforced in regard to banks selling insurance.
Insurance regulators from several other states joined Brown in Washington D.C., to meet with the Comptroller’s staff. Brown was joined by Arkansas Insurance Commissioner Lee Douglas in representing Southern states.
The Department's stepped up enforcement of the state's insurance code is getting results, as records of fines and regulatory sanctions demonstrate.
In 1992, a total of six companies and agents were fined by the Department. In contrast, 304 fines were levied by the Department in 1995. This is an increase of 298 fines.
"The fines jumped when we first stepped up enforcement efforts, peaked when we shut down enforcement companies and revoked or suspended licenses," Brown said.
In 1994 and 1996 the numbers are consistent with each other, he said. Our high numbers occurred in 1993 when we were at the height of our clean up program.
Even though we have these corrupt and insolvent companies out, we will continue to regulate the state's industry, he said.
The amount of money collected each year has also been consistent with the number fined. In the past three fiscal years, the Department has collected more than $525,000 in fines per year.
Among other regulatory actions of the Department are:
(a) 353 balances collected owed by agents to insolvent estates of insurers for Receivership
(b) 296 certificates of authority, which authorize a company to conduct business, revoked.