On Monday, we called for a $534,000 fine for Chubb & Son and a 9 month suspension of six of its subsidiaries (which would mean that they couldn't write new business; existing policies would remain in force, and renewals could still be done). The companies' attorneys yesterday demanded an adminstrative hearing on both matters. So the suspension, which was slated to take effect Nov. 18, is stayed for now.
In response to some media queries, here's a list of recent enforcement actions we've taken against these companies. All include the same sort of violations -- improper documentation of decisions about rates -- that led to these latest two orders. (All our disciplinary orders, including those for insurers, insurance agents, brokers, etc., are posted online here.)
2000: $67,000 fine for multiple violations, including failure to provide proper documentation for why credits and debits were applied to certain policies. The fine was actually $135,250, but about half ($67,625) was suspended so long as a compliance plan was followed to fix the problems.
2003: The balance of that fine -- $67,625 -- was imposed, after numerous violations continued, despite the compliance plan. From the 2003 order: "The company’s pattern of a continued high rate of filing and other violations are indicative of a systemic problem."
2007: We imposed a $250,000 fine for ongoing violations. Chubb & Son agreed to fully comply with a compliance plan, including multiple self audits, to fix the problems.
2010: We call for a $534,000 fine, based on hundreds of violations. The companies call for a hearing.
2010: Commissioner Kreidler orders a 9-month suspension of six Chubb subsidiaries' ability to sell new coverage. The companies call for a hearing.
Update: The case ended with a consent order that included a significant fine but no suspension. We posted the details here.
Wednesday, November 10, 2010
Tuesday, November 9, 2010
Job openings
Due primarily to some federal health care reform grants (and one employee who left for a sunnier climate, think of that), the Washington state insurance commissioner's office has a few job openings. Most are limited-duration posititions based on grant money.
Here they are. Click on the position for details about requirements, salary, duties, application process, etc.
Functional Program Analyst 4: Deadline for applying is Nov. 12. These staff advocate on behalf of consumers to ensure that they're being fairly treated by their insurance carriers and by helping educate consumers about insurance. This person will help develop and test online tools to help consumers. This is a project position funded by federal grant dollars, and the grant period runs from Oct. 15, 2010 to Oct. 15, 2011.
Investigator 3: We're looking for a senior investigator to investigate suspected violations of state insurance law. From the job announcement: The Investigator 3 position is an advanced investigative position responsible for conducting complex investigations from the initial discovery of suspected violations, through the prosecution of those involved in illegal activity. Deadline for applying for this job is Nov. 16.
Communications Consultant 4: This is another project job, funded by a federal grant that runs from Oct. 15, 2010 to Oct. 15, 2011. This person will work with our Consumer Protection division to develop and manage communications strategies for consumer assistance and education. Deadline for applying is Nov. 19.
Management Analyst 5: Another project job, with the same grant timeline as those listed above. This would be a project manager position, leading a diverse project team. See the link for much more information on technical details, duties, etc. Deadline for applying: Nov. 19.
Here they are. Click on the position for details about requirements, salary, duties, application process, etc.
Functional Program Analyst 4: Deadline for applying is Nov. 12. These staff advocate on behalf of consumers to ensure that they're being fairly treated by their insurance carriers and by helping educate consumers about insurance. This person will help develop and test online tools to help consumers. This is a project position funded by federal grant dollars, and the grant period runs from Oct. 15, 2010 to Oct. 15, 2011.
Investigator 3: We're looking for a senior investigator to investigate suspected violations of state insurance law. From the job announcement: The Investigator 3 position is an advanced investigative position responsible for conducting complex investigations from the initial discovery of suspected violations, through the prosecution of those involved in illegal activity. Deadline for applying for this job is Nov. 16.
Communications Consultant 4: This is another project job, funded by a federal grant that runs from Oct. 15, 2010 to Oct. 15, 2011. This person will work with our Consumer Protection division to develop and manage communications strategies for consumer assistance and education. Deadline for applying is Nov. 19.
Management Analyst 5: Another project job, with the same grant timeline as those listed above. This would be a project manager position, leading a diverse project team. See the link for much more information on technical details, duties, etc. Deadline for applying: Nov. 19.
Monday, November 8, 2010
Kreidler calls for $534k fine against insurer, issues order to suspend six subsidiaries from writing new coverage for 9 months
Washington State Insurance Commissioner Mike Kreidler on Monday issued an order that would suspend the insurance certificates of six companies, effective Nov. 18. The move – which does not affect existing policies or renewals – would bar the companies from writing new coverage for 9 months.
Kreidler is also proposing a $534,000 fine, contingent on a hearing, against the parent company, Chubb & Son.
The suspension order includes Federal Insurance Company, Pacific Indemnity Company, Great Northern Insurance Company, Executive Risk Indemnity, Inc., Vigilant Insurance Company, and Northwestern Pacific Indemnity Company. All are property and casualty insurers. All are wholly owned subsidiaries of Chubb & Son. The policies affected are all commercial policies.
“It’s highly unusual for us to suspend a company’s certificate to sell insurance. But we’ve repeatedly tried to work with Chubb and its subsidiaries to fix a number of ongoing violations of state law,” Kreidler said in a press release. “Some of the problems that triggered this decision have been recurring for a decade.”
A key issue is Chubb’s repeated failure since 1998 to properly document the reasons for charging higher or lower rates on certain policies.
Repeated examinations and a series of company self-audits ordered by Kreidler since 2007 found hundreds of violations of state law, including numerous recent ones. In some cases, more than half the sample files checked had violations. The $534,000 fine amount was based on 534 violations of state insurance law, at $1,000 per violation.
Chubb can appeal the suspension. The suspension order does not affect the companies’ obligation to honor policies issued prior to the effective date of the suspension. Nor does it affect their authority to renew existing policies. But it would prohibit them from selling new policies during the nine-month period of the suspension.
Note: We'll add a link to the press release shortly. Done. And we added a link up above to the hearing notice re: the fine.
Update: Chubb has demanded a hearing on both the fine and the suspension. See our post re: that here.
Another update: In the end, Chubb's subsidiaries were fined, but there was no suspension. See here for details of the order.
Kreidler is also proposing a $534,000 fine, contingent on a hearing, against the parent company, Chubb & Son.
The suspension order includes Federal Insurance Company, Pacific Indemnity Company, Great Northern Insurance Company, Executive Risk Indemnity, Inc., Vigilant Insurance Company, and Northwestern Pacific Indemnity Company. All are property and casualty insurers. All are wholly owned subsidiaries of Chubb & Son. The policies affected are all commercial policies.
“It’s highly unusual for us to suspend a company’s certificate to sell insurance. But we’ve repeatedly tried to work with Chubb and its subsidiaries to fix a number of ongoing violations of state law,” Kreidler said in a press release. “Some of the problems that triggered this decision have been recurring for a decade.”
A key issue is Chubb’s repeated failure since 1998 to properly document the reasons for charging higher or lower rates on certain policies.
Repeated examinations and a series of company self-audits ordered by Kreidler since 2007 found hundreds of violations of state law, including numerous recent ones. In some cases, more than half the sample files checked had violations. The $534,000 fine amount was based on 534 violations of state insurance law, at $1,000 per violation.
Chubb can appeal the suspension. The suspension order does not affect the companies’ obligation to honor policies issued prior to the effective date of the suspension. Nor does it affect their authority to renew existing policies. But it would prohibit them from selling new policies during the nine-month period of the suspension.
Update: Chubb has demanded a hearing on both the fine and the suspension. See our post re: that here.
Another update: In the end, Chubb's subsidiaries were fined, but there was no suspension. See here for details of the order.
New health plans for small businesses
Small businesses in Washington state looking for health insurance for their employees should check out the new federally-funded Health Insurance Partnership (HIP). This is a new program administered by the state's Health Care Authority that provides small employers access to the same health insurance coverage available in the commercial market, but at significant savings.
The health plans available through the partnership include:
Kaiser Foundation Health Plan of the Northwest, Group Health Cooperative, Regence BlueShield, and Asuris Northwest Health and vary based on annual deductibles ($500-$5,000), co-pays, co-insurance, and prescription drug coverages.
Small employers (up to 50 employees) who don't currently offer health insurance qualify for the program if at least 50 percent of their employees are considered low-wage (their monthly wage doesn't exceed 200 percent of the Federal Poverty Level).
Also, premium subsidies of up to 90 percent are available to employees who qualify based on their family income. Get the details here.
The health plans available through the partnership include:
Kaiser Foundation Health Plan of the Northwest, Group Health Cooperative, Regence BlueShield, and Asuris Northwest Health and vary based on annual deductibles ($500-$5,000), co-pays, co-insurance, and prescription drug coverages.
Small employers (up to 50 employees) who don't currently offer health insurance qualify for the program if at least 50 percent of their employees are considered low-wage (their monthly wage doesn't exceed 200 percent of the Federal Poverty Level).
Also, premium subsidies of up to 90 percent are available to employees who qualify based on their family income. Get the details here.
Friday, November 5, 2010
Issaquah woman pleads to 3 felony charges in insurance fraud case
An Issaquah woman has entered a modified guilty plea to 3 felony counts of using false claims or proof in an insurance claim.
Linda Ann Rose, 67, is scheduled for sentencing in King Couny Superior Court November 19th.
On Nov. 13, 2004, Rose was involved in a parking lot collision. An SUV backed out of a parking stall and struck Rose's rented Ford Mustang. Photos of both vehicles show minimal damage, but Rose claimed that she suffered severe back injuries as a result of the collision. In 2007, her attorney demanded $656,874 from the SUV owner's insurer, and subsequently filed a personal injury lawsuit in the case.
Investigators from the Washington Insurance Commissioner Mike Kreidler's Special Investigations Unit subsequently concluded that Rose knowingly provided altered medical records to her attorney, and that she had had an injured back "well before" the accident.
Linda Ann Rose, 67, is scheduled for sentencing in King Couny Superior Court November 19th.
On Nov. 13, 2004, Rose was involved in a parking lot collision. An SUV backed out of a parking stall and struck Rose's rented Ford Mustang. Photos of both vehicles show minimal damage, but Rose claimed that she suffered severe back injuries as a result of the collision. In 2007, her attorney demanded $656,874 from the SUV owner's insurer, and subsequently filed a personal injury lawsuit in the case.
Investigators from the Washington Insurance Commissioner Mike Kreidler's Special Investigations Unit subsequently concluded that Rose knowingly provided altered medical records to her attorney, and that she had had an injured back "well before" the accident.
Thursday, November 4, 2010
Kreidler re: health insurance rates: "I share your frustration"
Our office continues to hear from people unhappy with health insurance rate hikes.
These can be particularly severe when you bump up into the next five-year "age band." Health insurance, which varies dramatically by age, is priced in 5-year groups. In other words, turning from 58 to 59 won't increase your rates more than usual, but turning from 59 to 60 will. These increases -- coming on top of annual rate hikes -- can be a very tough burden on folks who find themselves paying more and more for fewer and fewer benefits.
Washington state Insurance Commissioner Mike Kreider has issued an open letter to the state's health insurance consumers. From it:
Here's a link to the full text.
These can be particularly severe when you bump up into the next five-year "age band." Health insurance, which varies dramatically by age, is priced in 5-year groups. In other words, turning from 58 to 59 won't increase your rates more than usual, but turning from 59 to 60 will. These increases -- coming on top of annual rate hikes -- can be a very tough burden on folks who find themselves paying more and more for fewer and fewer benefits.
Washington state Insurance Commissioner Mike Kreider has issued an open letter to the state's health insurance consumers. From it:
Many of you have contacted me about your frustration at the rising costs of your health insurance. You’re tired of seeing your premium and out-of-pocket costs increase, at the same time you lose benefits. I don’t blame you for being mad. I share your frustration and take your concerns very seriously.Kreidler said that his authority remains too limited, and that he'll be asking state lawmakers for more power to protect consumers and new rules to increase transparency, so people can see the details of what actually goes into an insurer's rate request. From the letter:
You deserve to know how your premium dollars are being spent and what's driving the cost increases.The good news is that relief is coming; the bad news is that in many cases it won't be until 2014. That's when major provisions of the new federal health care reform law take effect, including a health insurance "exchange" where it's easy to comparison-shop, subsidies to help make insurance affordable, and rate caps based on a percentage of salary.
Here's a link to the full text.
Wednesday, November 3, 2010
Cease and desist order issued to ShieldStar Home Warranty
Washington state’s insurance commissioner on Tuesday ordered a New Jersey home warranty company to stop selling unauthorized service contracts in Washington.
ShieldStar, doing business as ShieldStar Home Warranty and http://www.shieldstar.com/, has sold at least 21 home warranty service contracts in Washington, according to a cease and desist order posted on Insurance Commissioner Mike Kreidler’s website.
This is the third cease and desist order that Kreidler has issued against a home warranty company in the past several months. (The other cases were unrelated to this one.)
In ShieldStar’s case, the contracts cover parts and labor necessary to fix major appliances and systems in the consumer’s home. But neither the company nor several affiliated individuals named in the report are registered in Washington as a service contract provider.
The company has been ordered to mail a copy of the Kreidler’s cease-and-desist order to all its customers in Washington and to report all premiums charged for Washington policies.
The company has the right to demand a hearing. The order is effective immediately.
Update: (12/8/2010) If you purchased a ShieldStar Home Warranty, we want you to know that the cease and desist order does not prevent the company from fulfilling the terms of your contract. Your current contract with ShieldStar is valid under its usual terms and conditions.
Similarly, the order does not prevent the company from providing a refund when requested by a Washington consumer.
If you have any questions or need any assistance with this or any other insurance-related matter, please feel free to call our consumer protection staff at (800) 562-6900
ShieldStar, doing business as ShieldStar Home Warranty and http://www.shieldstar.com/, has sold at least 21 home warranty service contracts in Washington, according to a cease and desist order posted on Insurance Commissioner Mike Kreidler’s website.
This is the third cease and desist order that Kreidler has issued against a home warranty company in the past several months. (The other cases were unrelated to this one.)
In ShieldStar’s case, the contracts cover parts and labor necessary to fix major appliances and systems in the consumer’s home. But neither the company nor several affiliated individuals named in the report are registered in Washington as a service contract provider.
The company has been ordered to mail a copy of the Kreidler’s cease-and-desist order to all its customers in Washington and to report all premiums charged for Washington policies.
The company has the right to demand a hearing. The order is effective immediately.
Update: (12/8/2010) If you purchased a ShieldStar Home Warranty, we want you to know that the cease and desist order does not prevent the company from fulfilling the terms of your contract. Your current contract with ShieldStar is valid under its usual terms and conditions.
Similarly, the order does not prevent the company from providing a refund when requested by a Washington consumer.
If you have any questions or need any assistance with this or any other insurance-related matter, please feel free to call our consumer protection staff at (800) 562-6900
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