Natural Disasters Are Just Part of Commissioners’ Concerns

In addition to natural disasters, health care coverage, federal oversight, uniformity and fraud were among issues of concern to the insurance commissioners of three states who comprised the Commis-sioners’ Panel at the fifth annual Arkansas Insurance Day, held in Little Rock Sept. 28 – 29.

The Arkansas I Day-presented jointly by the University of Little Rock and the University of Central Arkansas-was hosted by Arkansas Insurance Commissioner Julie Benafield Bowman and attracted more than 250 attendees, including about 100 college students.

While Mississippi Insurance Commissioner George Dale told the audience that Hurricane Katrina is the number one insurance issue in his state, he conceded that other problems are indeed simmering on the back burner. Dale was joined on the dais by Commi-ssioners Paula Flo-wers of Kentucky and Kim Holland of Oklahoma. Commissioner Bowman moderated the forum.

Commissioner Bowman initiated the discussion by asking the commissioners which topics, aside from natural disasters, were of major concern in their states.

“In Mississippi there are none,” Dale answered. “That’s the whole thing that involves us all in our state. In our state this was basically the mother of all storms.

“We gauge everything that happens in our state with everything that happened with Camille,” Dale continued. He said Mississippi may be at the center of the Bible belt but it has the second largest gaming industry east of the Mississippi River. Dale added that he has said on “more than one occasion that based on the development of the Mississippi Gulf Coast, which is Hancock, Harrison and Jackson counties,” if they ever had another Camille hit the area, there would be poker chips scattered all across the Gulf Coast.

Dale said the budget issues his state was facing before Katrina would be compounded by the storm, and that the lack of health care insurance and the cost of it would continue to be a problem.

As Commissioner of the Kentucky Department of Commerce and Insurance, Flowers wears many hats besides that of insurance commissioner. Describing the diverse industries in addition to insurance that her department oversees, Flowers said, “We have an area that I like to call our island of misfit toys, which is our division of regulatory boards. So if you need a license to work in Tennessee and you’re not a doctor or a lawyer you likely get your license from our department. We license, oversee and regulate the professional conduct of industries as wide as from architects to funeral directors I’m the boxing commissioner. Which I’ll have to tell you, having been the boxing commissioner, I like the insurance stuff much better.”

Flowers said she was appointed insurance commissioner after serving as a “special counsel to this department for the receivership and of several large [failed] HMOs that participated in our TennCare program. … I think that was a good preparation for me to serve as commissioner … I liken it to how medical students are trained. They don’t give you a live patient at first, they give you a dead one-if you can figure out what caused one to fail, you can understand what can help one to run well.”

According to Flowers, the things that are of concern in her state are similar to those that are issues in other states, such as health care, tort reform, the federal government’s interest in regulating the insurance industry and consumer education.

She said with “roughly a million Tennesseans that have no health insurance of any kind,” finding answers to the problems of the uninsured is a top priority. In the area of tort reform, she said her department had been collecting “information on actual losses, actual claims, actual settlements, and actual judgments in our state” and was on the verge of releasing a report on its findings, which she said were “very, very interesting.”

One area that of concern that Tennessee shares with Arkansas, but not necessarily all other states, Flowers said, is that there is “a real shortage of earthquake coverage in the western Tennessee area. With Arkansas we share a fault, a seismic area that recently has been upgraded by FEMA in the western part of our state and the eastern part [of Arkansas] to be in one of the highest hazard earthquake zones in the country, equivalent to the ones in California. So that is an area of increased focus for us.”

Pointing out the need for improvement in insurance consumer education, Flowers explained, “The simple fact is, and I think folks in the insurance industry will agree: Policyholders don’t read the policy. Three days after I got to my new job we had a series of risk retention groups that went belly up. I liken [a risk retention group] to a stripped down Buick that just has the very basic features. But one of the most important features it doesn’t have is it doesn’t participate in the guaranty fund.

“All three of these companies had no safety net. One of these companies was a legal malpractice carrier, and it had been a malpractice carrier promoted for 18 years by the Tennessee Bar Association. There were over 5,700 lawyers in Tennessee that had policies with this risk retention group. And all 5,700 of them have called my office. I’ve had to explain them-let’s take one of your policies. On the bottom, see that large font, very bold, that says: ‘This is a risk retention group. You will have no guaranty fund coverage.’ And they say: ‘What is that supposed to mean?’ So I realized if lawyers can’t understand an insurance policy we’ve really got to work hard.” Oklahoma’s Kim Holland said her department, too, is spending a good amount of time “working with our population to educate them not only with insurance policies and so forth, but really the role of the insurance department, so that not only our industry but our consumers know we are a resource for them if they have questions, problems or concerns.”

It is “a sad thing to me that the insurance industry doesn’t enjoy the reputation that it deserves as one of professionalism and integrity,” Holland said. “Following a commissioner who was indicted for campaign violations and other things, the majority of our work today has been working to restore the public confidence in the Oklahoma insurance department and the insurance commissioner.”

Holland noted that like Tennessee and Mississippi, “uninsured issues are very, very dominant in Oklahoma 20 percent of our population has no health insurance whatsoever; about 30 percent of the drivers in Oklahoma are uninsured; and 40 percent of our nursing homes in Oklahoma are uninsured. So we’re dealing with difficult issues with respect to making sure that every one in our state has at least access and the opportunity to purchase affordable insurance.”

She said Oklahoma is also dealing with annuity fraud issues. Explaining that the insurance department’s anti-fraud unit is very active, she said it was granted law enforcement status by the legislature, which gives it much better access to records and enables them to collaborate with other law enforcement agencies more effectively.

A major focus has been protecting Oklahoma senior citizens from annuity scams. “We get all of Texas’ bad guys in Oklahoma. I don’t know what happens in Texas, but they boot them out, send them north and we get them. We’re really cracking down on that.”

Holland said another challenge for her state are the new Medicaid enrollment policies that allow individuals that have been authorized by the federal government to enroll people into the Medicaid program. “We have determined that these individuals should all have insurance licenses.” Explaining that there are as many as 1,500 volunteers working through non-profit groups enrolling people in the Medicaid program, Holland said they’re talking to enrollees “about insurance programs, comparing one insurance plan against another. And even though they’re not, supposedly, allowed to give advice, you can appreciate that as they’re sitting down at a table across from a senior who’s having difficulty making a decision, it’s going to be natural for them to provide advice and we’re concerned about that from a licensing standpoint.”

Holland said her department is also busy working on issues that are expected to come up in a new legislative session that starts in January.

The Commissioners’ Panel was but one of many educational and informative sessions at the Arkansas symposium. Identity theft, producer compensation disclosure requirements, and careers in insurance were among the sessions available to insurance students and professionals.