Agents Coalition Forming Around 2012 Unicameral Session

IIAN’s Health Insurance Exchange Task Force has been pro-actively involved over the past month in meetings with the Nebraska Insurance Department, the Unicameral Banking, Commerce & Insurance (BC&I) Committee, and a group of state senators who are developing a bill to enable a Nebraska Health Insurance Exchange in 2012. The IIAN Task Force, chaired by Mark Lisko of Omaha, has been instrumental in forming a coalition of Nebraska agent associations including IIAN, NAIFA-Nebraska (Life Underwriters), NAHU (Health Underwriters), and PIA. The coalition released its Key Principles for Creating a Health Insurance Exchange for Nebraska on December 20.

IIAN Task Force Chairman Lisko testified at a Banking, Commerce & Insurance committee hearing on November 30, in support of forming a Nebraska Exchange – as did all of the testifiers who spoke at the hearing. Even though BC&I Committee Chairman Rich Pals told the Lincoln Journal-Star it is not likely any bill would get out of committee and be debated in the 2012 regular session, IIAN and other members of the new agents coalition will continue to work with a group of state senators - led by Senator Jeremy Nordquist - who are crafting a bill to be introduced in 2012.

Department of Insurance Director Bruce Ramge said at the hearing that it was "too early, too soon" to discuss or speculate on any bills for the coming legislative session. "This is really an ongoing process," he said. "The administration (Gov. Dave Heineman) has been clear that it prefers to have answers to some of the remaining uncertainties before making a commitment. We're hoping that some of that will be cleared up in the early spring by the Supreme Court." That could mean a special session would be needed if the state decides to go ahead with its own exchange sometime after the short session adjourns in mid-April.

The Insurance Department has received a $5.5 million “Level 1” grant to help plan and design an exchange – and has asked IIAN and other members of the agents coalition to provide specific input regarding how licensed agents would be involved and compensated in a Nebraska exchange.
The state has a deadline looming June 29, 2012 to apply for another larger grant to design a health exchange, if it decides to create a state-based exchange. The “Level 2” grant could be worth $60 million to $80 million to the state, according to observers.

Legislative Fixes Pending

Thanks in large part to lobbying by the Big “I”, the National Association of Insurance Commissioners (NAIC) passed a resolution last month that urged HHS to consider the effects of the MLR rule on producers. Nebraska Insurance Director Bruce Ramge supported agents by voting for the resolution. Producers already have seen commission cuts as a result of carriers’ efforts to meet the new claims-versus-administrative-cost thresholds in the rule. Carriers that fail to meet the thresholds will be required to send rebates to policyholders beginning next year. However, the U.S. Department of Health and Human Services (HHS) did not take the advice of the NAIC and decided earlier this month not to change its position on the inclusion of producer commissions in carriers' administrative costs in the rule.

Click here to read IIABA's response to the MLR rule.

The Big “I” will now focus our efforts on a legislative fix with Congress. The Access to Professional Health Insurance Advisors Act of 2011 (HR 1206) would exclude producer compensation from the MLR calculation and provide state insurance regulators with greater flexibility in MLR implementation. Another bill, (HR 2077) would repeal the MLR rule entirely. Both bills are before the U.S. House of Representatives.

Watch for IIAN's New "Capitol Notes" E-Bulletin

When the 2012 Unicameral session starts on January 4, IIAN Legislative Representative, Jim Cavanaugh, will be there from the first day to “sine die”, scheduled for April 12, 2012. IIAN’s Legislative committee, chaired by Bob Hoppe of Columbus, meets regularly with Cavanaugh during the session to pro-actively address issues important to independent insurance agents. In addition to being involved in one or more bills enabling a Nebraska Health Insurance Exchange, IIAN will address bills carried over from last year’s “long session”. See what passed in 2011 and list of bills carried over to 2012. Along with the Exchange issue, child welfare reform, the budget, job creation, and population growth are expected to be major central themes during the session. And watch for IIAN’s new Capitol Notes e-bulletin and YouTube video reports throughout the session!
  

The Nebraska Department of Insurance recently announced 2012 workers' compensation loss costs for the voluntary market, which will increase 4.9% on average. The new rates will be effective on all workers' compensation policy renewals from February 1, 2012 to January 31, 2013. Within the overall average increase of 4.9%, it is notable that specific industries will be impacted to a greater/lesser extent - while Manufacturing, Contracting and Office/Clerical are in the 4.4%-5.2% range, Trucking – Short Haul will be up 11.8%, Grocer Retail up 13.1%, Excavating up 15%, and Drywall Installation up 16%, for example. What is causing the Nebraska rates to increase? Over the past five years, Nebraska workers’ compensation medical cost per case has risen 26.5%. In addition, the indemnity portion of a workers’ compensation claim over the last five years has risen 13.29%.

Big "I" Will Continue Working for Reform

Last week, President signed H.R. 2055, the “Consolidated Appropriations Act,” (known as the mini-bus) which extends the National Flood Insurance Program (NFIP) until May 31, 2012, into law. The NFIP was set to expire December 23 at midnight without this legislation. “The Big ‘I’ is grateful to Congress and President Obama for making sure this latest extension became law,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs. “It is important to note that our work on this important issue is far from over and the next few months provide ample opportunity for Congress to pass long-term extension and reform legislation that provides the necessary certainty for consumers.”

“Today’s extension, although greatly appreciated, is just a temporary patch,” says John Prible, Big “I” vice president for federal government affairs. “The Big ‘I’ looks forward to working with Congress and the Obama administration over the next few months to also pass a long-term extension with the reforms needed to put the NFIP on solid financial footing for the future.”
The House and Senate are currently working on legislation that would extend the NFIP for five years and make some much-needed reforms to the program. The House passed their version in July, and the Senate Banking Subcommittee has passed a version also, but it still has yet to be considered by the full Senate.

BusinessInsurance.com reports, "The Nebraska Supreme Court says workers compensation benefits can't be denied to a former hospital employee who did not disclose prior work injuries in a pre-employment screening, a reversal of a longstanding employer right." According to the story, the court ruled unanimously last reversing a 1979 state Supreme Court decision. Read the article.

Here are some industry leaders' responses to this question over the past several weeks:

• RIMS: Their survey said average renewal premiums rose in three of four commercial lines, anywhere from 1.2% to 2.1%. The only line where prices fell was in directors and officers insurance. RIMS said it would take a large catastrophe to trigger a "hard market" where prices rise more substantially than they already have. Many industry executives think they are on the verge of such a market after one of the worst disaster years in history, with insured losses globally topping $70 billion so far.
• Marsh: 48% of property policies renewed in the fourth quarter have been at a rate at least 1% higher. Nearly 20% of policies have been renewed at rate increases of more than 10%.
• Marketscout: P & C insurance rates rose an average of 1% in November compared to last November which is the first across-the-board increase in more than 6 years. No class of coverage saw a rate decrease. Commercial property, and business owner policies increased 2%. The smaller the account size the greater the increase.
• KBW: The pricing cycle is entering a phase that is "not in any way a traditional hard market." Rate increases will be modest and not uniform. Operating results will diverge widely, reserve releases are slowing, investment yields are dropping and underlying loss ratios are deteriorating. These factors are offset by only modest rate increases.
• W.R. Berkley: The insurance industry is now "definitively in a hardening market," adding that the industry is "just at the beginning of price increases."
• Willis: The market may not be turning yet as the industry remains well capitalized and has not seen a "game-changing" event that would cause a turn. If the economy dips into another recession, the resulting lack of demand for insurance products could put the brakes on insurers' efforts to pursue rate increases.
• Chartis: The industry's use of better tools to assess risk and allocate capital might bring about the end of traditional market cycles altogether. The industry might instead see shorter, flatter "micro cycles" going forward.
• Towers Watson: Commercial insurance prices rose 2% during the 2011 third quarter-especially for mid-market and large accounts-but loss costs have increased 4% compared to 2010.
  
  

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