News Briefs

Illinois

Katrina Could Affect Ill. Insurance Rates:

Experts say the path of destruction left by Hurricane Katrina likely will lead to higher insurance rates in the metro-east and across the country, although it is unclear how much and how soon rates will rise, according to a report compiled by the Belleville News-Democrat.

Although insurers track claims experience on a state-by-state basis, and claims in Mississippi and Louisiana won’t affect the calculation of Illinois rates, the cost of in-demand construction supplies will, said Dick Luedke, a spokesman for State Farm Insurance Co. in Bloomington, Ill.

“If the cost of building materials goes up because of the lack of supply, that’s going to have an effect countrywide,” Luedke said. “It will cost more to repair houses in Illinois because of the increased materials cost, so Illinois customers could see some increase in their rates to compensate for that factor.”

Michael McRaith, director of the Illinois Department of Insurance, said people with policies from large insurance companies are probably safe from a major rate hike.

“Your larger companies, like State Farm and Allstate, are very well funded,” McRaith said. “They have large surpluses that they can tap into when something like this happens.”

Because Illinois does not regulate homeowners insurance, the government can’t step in and block a potential rate increase, McRaith said.

Despite the high financial toll of the destruction in Mississippi and Louisiana, insurance companies might dodge most of the financial blow since many property owners in the coastal area did not have flood insurance.

Kansas

GE Plans Sale of Insurance Units:

General Electric Co. likely will sell all of its remaining insurance operations, which include Kansas City-based GE Insurance Solutions, according to comments made by the head of GE Insurance Solutions.

Ron Pressman, head of GE Insurance Solutions, said GE probably will “sell down to no involvement in the insurance sector” over time. He said insurance businesses such as the medical malpractice insurer GE recently sold are better positioned if they aren’t “trapped” inside GE and “starved for capital.”

GE has been selling insurance properties including a subsidiary of its Kansas City-based GE Insurance Solutions in July. Berkshire Hathaway Inc. paid $825 million for Medical Protective Corp. of Fort Wayne, Ind., which provides professional liability insurance to doctors and dentists. GE Insurance Solutions, formerly called Employers Reinsurance, employs 850 in the Kansas City area.

“Two to three years from now it probably will be a more robust (mergers and acquisitions) market,” Pressman said. “We’re patient. If something comes at us soon, great. If it takes a couple of years, so be it.”

Pressman said interest in insurance companies likely will increase as recent regulatory scrutiny subsides.

Meanwhile, Richard Smith, chief operating officer of GE Insurance Solutions, left the company to join consumer credit rating company Equifax Inc. Smith will become chairman and chief executive officer of Equifax, succeeding Thomas F. Chapman, who will retire at the end of the year.

Smith worked at General Electric Co. for 22 years and most recently led all business units for GE Insurance, including property and casualty reinsurance, commercial lines insurance, and life and health reinsurance.

The company won’t name a successor to Smith, a GE Insurance spokesman said, and company CEO Ron Pressman will take over Smith’s duties.

GE Insurance posted net income of $36 million in 2004. On July 1, the company sold its Medical Protective Corp. unit to Berkshire Hathaway Inc. for $825 million.

Minnesota

Most Minn. Employers Offer Med Benefits:

More than half of Minnesota employers offer paid medical insurance to full-time employees, according to the 2005 Minnesota Employee Benefits Survey.

About 53 percent of firms offer paid medical insurance, while just 12 percent offer benefits to part-time employees, according to the statistics released earlier this month by the Minnesota Department of Employment and Economic Development. Forty-five percent of firms offer family medical coverage.

The survey found that large firms were far more likely than small firms to offer medical benefits, driving the number of employees with access to health insurance higher. About 80 percent of full-time workers in the state and 15.9 percent of part-time workers are offered some type of employee-sponsored medical insurance. Overall, about 64.8 percent of full-time employees and 8.6 percent of part-time workers participate in employer-sponsored medical plans.

Meanwhile, about 29 percent of firms offer dental coverage to full-time employees and 25 percent offer family dental coverage.

Roughly 46 percent of employers offer retirement benefits to full-time workers, with most offering defined contribution plans.

The most common employee benefit is paid vacation, which 62 percent of firms offer to their full-time workers.

Ohio

Ohio DOI Collecting Med Liability Data:

The Ohio Department of Insurance recently launched a Web-based medical liability data collection application that enables insurers and those who pay medical liability claims on behalf of health care providers to securely report to the Department their costs of defending medical liability claims, and paying judgments and settlements.

“The Ohio Department of Insurance has aggressively pursued measures to help stabilize a historically volatile medical liability insurance market,” said Ohio DOI Director Ann Womer Benjamin said. “Rate increases are much lower this year than in recent years and this new lawsuit information will provide the Department and Ohio policymakers with greater insight into the factors that impact medical liability insurance rates.”

House Bill 215, which became effective September 13, 2004, mandated that admitted and non-admitted insurers, risk retention groups, and self-insurers report “closed claims data” to the Department. The Department created the on-line application to simplify the task of reporting the data. The secure application is located on the Department’s website at www.ohioinsurance.gov, under the medical malpractice insurance link.

The Ohio Medical Malpractice Commission, chaired by Director Womer Benjamin, issued a final report in April 2005. The report suggested, among other measures, the creation of a “patient safety center” to help prevent medical errors, and the implementation of a pilot malpractice docket for medical malpractice lawsuits. The commission had previously recommended in an interim report the collection of lawsuit data effectuated by H.B. 215.

The Department joins Florida, Illinois, Kentucky, Michigan and Missouri as states that states that have implemented procedures to collect medical malpractice closed claims data.