Just exactly who says independent insurance agents are not getting their fair share?

A representative of the IIABA (Independent Insurance Agents & Brokers of America), that’s who!

Wesley Bissett claims that insurance companies are requiring independent agents to do more, and should receive contingent commissions for their additional work. Read the rest of this entry »

The recent news that Tokio Marine, Japan’s largest insurer, is buying Philadelphia Consolidated Holding Corp. and Philadelphia Insurance Cos. for $4 billion may mark the start of a buying spree for the industry. I’m willing to bet that this deal will be the first in a series of foreign acquisitions of American insurance companies in the near future.With the dollar worth nearly nothing inside, and, more importantly, in this case, outside the U.S. these days, buyers can purchase a lot of American insurance company with their foreign money. Couple that value of foreign money with the tremendous profits property-casualty insurers are amassing since Hurricane Katrina three years ago and it would seem that more of them are likely to become acquisition targets in the near future. The property-casualty market may be the only one, however, to generate foreign interest.The flat life insurance market might discourage acquisitions in that arena, and no one - probably not even some of the health insurers themselves - want to grab onto a health carrier right now with universal health and other reform proposals swirling around.I’ll bet at least two more of these foreign acquisitions will occur in the next six months.

A financial service firm has found a big, wide-open, no-one-seems-to-notice market for its long-term care insurance products. That new market for New Jersey-based Prudential Financial is the gay, lesbian, bi-sexual and transgender community, according to an article at IFAwebnews.com.

Oh, sure Prudential runs the risk of either torquing its current client base when they get wind of the new marketing push for LTC products or enraging the GLBT community if it has any missteps along the way. “Marketplace,” the public radio program, did a news report July 7 about how car companies are treading lightly for fear of one of those possible outcomes. One error and either the general public or the GLBT community is up in arms, and if you really strike out, both are mad.

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The CEOs of Independence Blue Cross and Highmark Inc. were emphatic that any condition of approval forcing them to give up either the Blue Cross (under which IBC operates) or the Blue Shield (under which Highmark operates) would put an end to their proposed merger, according to an IFAwebnews.com article.

Kenneth Melani of Highmark and Joseph Frick of IBC may have given Pennsylvania Insurance Commissioner Joel Ario an easy out, if he’s even interested in killing the merger. Here’s my thinking: Impose the one condition the CEOs oppose: abandoning either the Blue Cross or Blue Shield name mark. Then watch as the state’s two largest health insurers walk away from their deal.

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Don Bailey, CEO of Willis North America, had a simple message for insurance regulators in New York looking at broker compensation and contingent commissions: Eliminate them for everyone. Bailey’s testimony on the topic featured a well-reasoned call for the termination of all contingent commissions in New York within three years. According to an IFAwebnews.com article, Bailey even gave two suggestions for how to do it: Force agents who register for licenses to stop taking them or challenge the insurance industry to resolve its own problem. The first one makes sense; the second one seems unlikely to lead to a quick resolution, although it would be fun to watch.

Bailey asked New York Insurance Superintendent Eric Dinallo and representatives of the New York attorney general’s office to create a “level playing field” because Willis – and probably the three other major insurance brokerages that settled issues in New York over paying contingent claims – is at an “unfair disadvantage.” Of course, if you flash back a few years, prior to then New York Attorney General Eliot Spitzer’s investigation that led to the settlements and now the hearings about contingent commissions, many of Willis’ competitors would have argued that Willis had an unfair advantage. The playing field for Willis’ competitors then was as uneven as it probably seems now to Willis and the others who settled claims about contingent commissions in New York.

Ending contingent commissions is the right move. What remains to be seen is how best to do it and how long it will take afterward for another brokerage to claim that the playing field is once again uneven.

The former CEO of Maryland’s CareFirst BlueCross BlueShield, William L. Jews, must feel as if he is Alice magically falling into Wonderland.How else could one possibly rationalize Maryland Insurance Commissioner Ralph S. Tyler’s ruling against a previously approved exit compensation package for Mr. Jews, which permits CareFirst to pay Mr. Jews only half of what they originally agreed to? Read the rest of this entry »

Nine types of insurance fraud appear to be emerging as trends this year, according to the Coalition Against Insurance Fraud’s just released 2007 annual report.

Eight of the trends identified in the report involve thieves taking advantage of the unsuspecting. They include: claiming the loss of a home from arson to get avoid foreclosure; selling a vehicle to someone, then claiming it as stolen; lying about where a vehicle is registered to obtain lower premiums; medical fraud rings; using immigrants to fake injuries in crashes or to be fake patients in health schemes; misdirecting prescription drugs to junkies (insurance fraud, the group says, is “the leading financier of this large drug problem”); schemes to get workers’ compensation fraudulently; and medical identity theft to steal a victim’s health insurance.

The ninth is insurance agents taking advantage of the unsuspecting. The report says “a disturbing number [of agents] stole client premiums without buying the promised coverage. Others sold fake coverage, or conned elderly clients into giving up perfectly good life policies and buying expensive new coverage they did not need.” (The report does indicate that “most insurance agents are honest.”)

Insurance sales are based on trust. Buyers have to be able to trust the people whose advice they are relying on for important, potentially life-and-death decisions. That “a disturbing number” of insurance agents chose to abuse this trust is extremely alarming, but no more so than if it were just one agent. For if any agent’s actions raise concerns, then it’s the whole industry that deals with the consequences.

The British say more motorists are using fraudulent insurance claims to free themselves from debt in a trend likely to hit the United States next.

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This columnist predicted after the announced merger of Willis Group and Hilb Rogal & Hobbs (HRH) that HRH would basically disappear, and that the Virginia headquarters would, as a Monty Python skit put it, “cease to exist.”

News of the closure of the HRH headquarters in Richmond were first reported in the July print issue of Insurance & Financial Advisor’s Virginia edition.

According to the story, Willis CEO Joe Plumeri told HRH employees in the Richmond HQ that there would be opportunities for them in New York once the meger was complete. But that really means, “hey, you can move to the rat race of New York or find other work.” Read the rest of this entry »

The U.S. Supreme Court recently chose not to rule in a case in which a Texas widow can’t collect more than $426,000 in life insurance benefits because her sick (and now deceased) husband never returned to work, thus making the policy inactive. All of which means she won’t collect a dime.

She claims she and her husband weren’t notified that he needed to return to work, after the employer switched carriers.

While not widely reported, the Bush Administration actually stepped in and asked the court to hear the case, but the justices declined.

Which in effect means the woman is out the money — and a husband.

The circus is making three stops in Pennsylvania over the next two weeks as Pennsylvania’s insurance commissioner, Joel Ario, will serve as ringmaster as the sides debate, discuss, dispute, dissemble and distort the possible effects of a merger between Independence Blue Cross and Highmark Inc.

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