News digest: Interesting bits and pieces from around the insurance industry
A quick roundup of notable news items of late from around the insurance industry.
• LIFE INSURANCE: 4 more insurance companies settle for $3.4 million over DMF use
State insurance regulators recently reached settlements with four more life insurance companies regarding payment of unclaimed death benefits, terms of which include paying a combined total of $3.4 million.
The Hartford Financial Services Group ($2.1 million), Securian Financial Group Inc. $625,000), Great American Insurance Group $400,000) and Standard Insurance Co. ($277,000) reached the settlement with five state insurance departments (North Dakota, California, Florida, New Hampshire and Pennsylvania).
Regulators were investigating the companies' use of the Social Security Administration's Death Master File (DMF) database, which helps insurers identify deceased insurance policyholders and pay benefits to beneficiaries who may not know they are owed money.
More from the Investment News story:
To date, state regulators have either reached settlements or concluded the investigation of 27 of the top 40 life insurance companies with regard to death-benefit-payout practices, constituting 78% of the total market by premium volume, according to California's insurance department. Primerica's activity was probed as part of the recent investigation, and was found to be in compliance with the law.
Read the full story here.
• RETIREMENT PLANNING: Social Security faces $32 trillion shortfall
According to an Aug. 8 article from CNBC, Social Security’s total income is projected to exceed its total cost through 2019, as it has since 1982. After 2019, interest income and money taken out of reserves will provide resources needed to offset Social Security’s annual deficits until 2034. By then, if Congress does nothing, the federal government will collect enough in payroll taxes to pay about 75% of scheduled retirement benefits until 2090.
But an “infinite horizon” projection from the Social Security and Medicare Boards of Trustees annual report shows Social Security will have $32.1 trillion in unfunded liabilities by 2090 - $6.3 trillion more than last year’s projection.
From the article:
So what would have a big impact on Social Security's fiscal standing if you don't cut benefits? Raising payroll taxes. Smith found that increasing payroll taxes by 3 percentage points from 12.4 percent — half paid by employers and half paid by employees — to 15.4 percent would make Social Security reserves last at least 53 years longer, or until 2087.
• HEALTH CARE REFORM: Key opponent of ’90s Clinton mandatory health insurance plan dies
Longtime leading lobbyist opposing universal health care Michael Bromberg passed away recently at the age of 78. Here are some excerpts from the Washington Post obit this week:
When President Carter proposed aggressive cost-containment measures in 1977 to limit soaring health-care costs, Mr. Bromberg helped organize a voluntary, industry-wide effort to lower prices, deterring the federal government from further regulation.
A decade later, amid continued calls for health-care reform, Mr. Bromberg spearheaded the founding of the Healthcare Leadership Council, a consortium of top health-care executives who worked to oppose a single-payer system of health insurance, in which the government — rather than private insurers — pays all health-care costs. For any reforms that did pass, the consortium pushed to minimize government regulation.
Following the 1992 presidential election of Bill Clinton, who had called for comprehensive health insurance on the campaign trail, large-scale health-care reform seemed inevitable.
A task force led by first lady Hillary Clinton and Clinton aide Ira Magaziner, a former business consultant, drafted a 1,342-page plan that proposed to make health insurance mandatory — a core element that some health-care lobbyists, chief among them Mr. Bromberg, found unacceptable.
In their first meeting, Mr. Bromberg later said, he pushed for Clinton to compromise on the bill by dropping the universal-coverage mandate and a provision that would have put a cap on the cost of health care, among other items. The hypothetical compromise bill, he said, would have still allowed individuals to take their insurance plan with them from job to job, included vouchers to ensure coverage for children and pregnant women, and insured coverage for individuals with preexisting conditions.
Mr. Bromberg’s later attempts to forge a compromise were unsuccessful, and he became a chief opponent of the bill, meeting with newspaper editorial boards and successfully lobbying members of Congress behind the scenes.
After the bill was defeated, in 1994, Mr. Bromberg expressed disappointment that a compromise to expand health-care coverage was not reached. The Clintons, he told the PBS program “Frontline,” had failed to seize a historic opportunity.
“You can’t walk in here with a plan, this gigantic, and just hand it to the Congress, and expect them to pass it. It’s just not going to happen,” he said. “But, they could’ve had half of it.”
Kind of makes you wonder what the U.S. health insurance landscape would look like today had there been a compromise back then. Feel free to add a comment on this thread.
• PERSONAL LINES: ‘Quilt’ beta testing ‘refreshingly simple’ renters insurance platform
Digital broker/MGA “Quilt,” which sells renters insurance through its partner, Security First Insurance Company, has launched in beta at https://getquilt.com.
Check out its online quote tool, which asks a series of questions in a quick, simple way with many multiple-choice answers.
Ormond Beach, Fla.-based Security First, which specializes in Florida homeowners insurance, announced Aug. 16 that it is approaching the $500 million in premiums milestone and has formed a Regulatory Compliance Department to position the company for future growth and reporting expectations.
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