Insurance Glossary
Insurers Must Spend At Least 80-85% Of Consumers' Premiums On Direct Care, Says HHS
November 22, 2010
Health insurance companies will have to spend a minimum of 80 to 85% of premiums on direct patient care, the HHS (US Department of Health and Human Services) announced. HHS Secretary Kathleen Sebelius said new medical loss ratio regulations will make the insurance marketplace more transparent.
The regulation for a minimum of insurance premium money spent directly on patient care is called the medical loss ratio provision of the Affordable Care Act. It will be easier for members of the public to buy insurance plans that provide better value for money.
Sebelius said:
"Thanks to the Affordable Care Act, millions of Americans will get better value for their health insurance premium dollar. These new rules are an important step to hold insurance companies accountable and increase value for consumers."
According to HHS, a significant number of health insurance companies charge too much for administrative costs, executive salaries, marketing, overheads, and other costs unrelated to direct patient care - too much of it comes from consumers' premium dollars.
An 80 to 85% minimum, which HHS says is thanks to the Affordable Care Act, will make sure policyholders get more value for their premium dollars. This minimum will start in 2011. Companies that do not do this will have to give consumers a rebate the following year.
HHS says up to 74.8 million Americans will benefit from this new rule. Approximately 9 million Americans may be eligible for rebates worth $1.4 billion as from 2012. Average rebates are thought to be around $164 dollars per person.
Included in the medical loss ratio regulation are how insurance companies should calculate their medical loss ratio, how to provide rebates, and how alterations can be carried out to the medical loss ratio standard so as not to destabilize the market.
As from next year, insurance companies will have to report publicly how the premium dollars are being spent, with meaningful information consumers can understand. Insurance companies that do not meet the 80% minimum of premium dollars spent on medical care and quality improvement activities will have to give them policyholder rebates, starting in 2012.
Jay Angoff, Director of the Office of Consumer Information and Insurance Oversight at HHS, said:
"These rules were carefully developed through a transparent and fair process with significant input from the public, the States, and other key stakeholders. As we build a bridge to 2014, when better, more affordable options are available to consumers, these rules will help make health insurance fairer for consumers now."
The National Association of Insurance Commissioners will have to develop standardized definitions and methodologies for calculating companies' medical loss ratios.
© 2010 MediLexicon International Ltd
$120,000 Grant Spurs California Youths to Build Safe Driving Programs
November 22, 2010
FRESNO, Calif./PRNewswire/ -- California youths from dozens of communities will be brainstorming, building and launching their own safe driving campaigns thanks to a $120,000 grant from The Allstate Foundation. The award was announced today in Fresno where one of many peer-to-peer programs will take place.
The Fresno Police Department joined area leaders, Allstate and the California Friday Night Live Partnership of Tulare County to unveil Youth-to-Youth: Driving the Change. The Friday Night Live Partnership will coordinate Youth-to-Youth: Driving the Change across California, distributing local grants to help Friday Night Live youth leaders host 30 traffic safety events across California. Those youth leaders will be encouraging their friends and classmates to eliminate distractions while driving. Friday Night Live has chapters in 54 California counties.
"This is an exciting teen-led effort to reduce traffic accidents and improve our communities for everyone's benefit," according to Bob Warner, an Allstate agency owner in Clovis. "Across the nation, nearly 3,500 teens die annually in accidents caused by distracted driving—more than 300,000 teens are injured. This will help reduce those crashes."
"Building partnerships like this encourages positive and healthy development for our young people and engages them to become active leaders," says Jim Kooler, California Friday Night Live Partnership Director. "These traffic safety summits will allow California youths to lead their peers in reducing distracted driving collisions."
The California youth traffic safety programs will include:
- X The TXT pledge drives to eliminate cell phone use while driving
- New social media Internet sites for local teens to share distracted driving stories and advice with other teens statewide and across the country
- Involvement from local police and traffic safety officials
- High school campus events to increase program awareness
X The TXT
Fresno teens wasted no time getting the ball rolling, inviting Fresno police chief Jerry Dyer and other area leaders to take the Allstate Foundation X The TXT pledge to not text while driving. These leaders placed their thumbprints on Allstate's X The TXT banner as a symbol of their commitment not to text and drive, and also received pledge cards to use at home so every driver in the family can pledge not to text and drive. Dyer calls the pledge cards a daily visual reminder of the commitment to reduce driving distractions.
The Allstate Foundation
Established in 1952, The Allstate Foundation is an independent, charitable organization made possible by subsidiaries of The Allstate Corporation. The Allstate Foundation strives to make our communities and our nation a better and safer place to live through partnerships with non-profit organizations promoting "safe and vital communities," "tolerance, inclusion, and diversity" and "economic empowerment." Teen safe driving and building financial independence for domestic violence survivors have been priority issues for the Foundation since 2005. For more information, visit www.ProtectTeenDrivers.com.
SOURCE The Allstate Foundation
Copyright © 2010 PR Newswire Association LLC. All rights reserved.
Insurance industry misses technology opportunity
November 22, 2010
NEW YORK (Reuters) - Most insurers are letting consumer technology like smartphones and social media networks get ahead of them, creating a challenge to attract a new generation of customers who are not interested in doing business with agents the way their parents did.
But it has also created an opportunity for companies like Allstate (ALL.N: Quote, Profile, Research, Stock Buzz) and State Farm which have embraced interactive technologies as a way to extend their brand's reach to children of the 1980s and 1990s.
"You're not going to get any more mortality (business) with the things you're doing now" among the younger generation, said Douglas French, managing principal of Ernst & Young's insurance advisory practice, told reporters recently.
While the insurance industry is known for many things, an orientation toward the young and/or hip customer is not one of them. In some ways this contrasts strongly with banks, which are offering check deposit via cell phone and pushing the Internet to replace branches for much of their business.
Catchy advertising gimmicks like Aflac's (AFL.N: Quote, Profile, Research, Stock Buzz) spirited duck or Geico's cavemen notwithstanding, underwriters usually aim their pitches at a middle-aged customer seeking an aura of confident authority about matters like health and property.
While that has continued to work among a segment of the market, branding experts say there is a missed opportunity.
"It's a buggy whip mentality. Everything is moving more and more to high-tech electronic online interface and particularly with this generation," said Robert Passikoff, president of brand loyalty and customer metrics researcher Brand Keys.
"They're still looking at this as a commodity ... if we can get the price down low enough, people will come to us and I don't need a lot of friends on Twitter and Facebook."
FEW BRIGHT SPOTS
There are some companies in the industry that have been more aggressive with their push into new media, though mostly in automotive insurance. Industry executives say auto insurance lends itself to new media because the transactions are in some ways simpler than other insurance lines.
Allstate has a suite of mobile applications for smartphones that offer services like home inventory lists and roadside assistance requests.
"A very significant number, up to a majority, of wireless users will have these devices with them and they expect to be able to interact with companies through these devices where they are," said Bob Wasserman, vice president of e-business for Allstate. "You start to think about what this device can do and you build other capabilities."
State Farm is just as active, with prominent links off its home page to Twitter, Facebook and Flickr feeds and a suite of mobile applications for customers, though they are still just a supplement to the company's traditional network of agents in storefronts across the country.
Berkshire Hathaway's (BRKa.N: Quote, Profile, Research, Stock Buzz) Geico is also aggressive in mobile, offers an application that lets people obtain rate quotes by taking a picture of their drivers license among its lineup of phone applications.
No matter what channel they are using, the auto insurers seem to have picked up on an idea that other insurers have missed: younger customers don't want to go to an agent's office and don't want to be sold products where they already know they can get a better price elsewhere.
Brand Keys' Passikoff said that shift in thinking could take a decade for insurers to really make, but some say that may not be sufficiently aggressive.
"I don't see the industry moving fast enough," said Bill Chrnelich, a partner in PricewaterhouseCoopers' insurance practice, in a recent interview. "This industry isn't focused enough on that change in their sales and distribution."
(Reporting by Ben Berkowitz, editing by Matthew Lewis)
© Thomson Reuters 2010. All rights reserved
Calif. insurance head rejects workers comp rate hike request
November 22, 2010
SACRAMENTO—California Insurance Commissioner Steve Poizner on Friday said he is rejecting for the third consecutive time a filing submitted on behalf of insurers by the Workers' Compensation Insurance Rating Bureau, which is seeking a 27.7% rate increase.
Mr. Poizner said in a statement, “Once again, workers compensation insurers have failed to demonstrate that they have adopted procedures to control costs or that they are operating efficiently….Even in a better economy, I still wouldn't budge on rate increases without the industry first implementing the efficiencies we have recommended.”
California's insurance commissioner can only advise insurers to raise or lower their rates; he cannot order them to do so.
Mark Sektnan, vp at the Sacramento, Calif.-based Assn. of California Insurance Cos., said in response,
“We are disappointed that the commissioner continues to not understand the cost increases that are inherent in the system. His own staff suggests that costs have gone up 20.4%, but the commissioner continues to fail to recognize those cost increases."
Copyright © 2010 Crain Communications, Inc.
Transportation Department Combats Distracted Driving With Video Series
November 18, 2010
A personal story often wields a more powerful message than statistics, and that’s the strategy behind a new government campaign aimed to raise awareness about the consequences of distracted driving.
On Tuesday, Transportation Secretary Ray LaHood announced “Faces of Distracted Driving,” an online video series featuring people who have been injured or lost loved ones. Last year, nearly 5,500 people were killed and half a million more were injured in distracted driving-related crashes.
“Believe it or not, I wasn’t always so outspoken about the dangers of distracted driving. Like a lot of folks, I just didn’t give a lot of thought to it,” wrote Mr. LaHood in his blog “Fast Lane,” adding: “But that all changed as I met people from coast to coast who told me about the loved ones they lost in senseless crashes caused by texting and cellphone use behind the wheel. And it was their stories — of dreams shattered and lives cut short – -that turned the fight to end distracted driving into my personal crusade.”
The series launched with videos of three compelling stories:
Laurie Hevier’s 58-year-old mother, Julie, was killed when a distracted driver struck her from behind as she and her best friend walked along a road in Rudolph, Wisc.
Amos Johnson’s daughter Ashley, 16, was killed when she lost control of her vehicle, crossed the center line and hit a pickup truck in Asheville, N.C. Mr. Johonson said he had warned his daughter against cellphone use behind the wheel, but she was texting at the time of the crash.
Elissa Schee spoke of her 13-year-old daughter, Margay, who was killed in Citra, Fla., when a semitruck slammed into the back of her school bus. The truck driver was talking on his cellphone at the time of the crash and said he never saw the bus, according to the video. Rescuers were unable to get Margay out of the burning bus.
“I feel that a big part of me died with Margay,” said Ms. Schee in the video. She also spoke of her son’s struggles with his sister’s death.
“I ask that people, if they feel the urge to pick up their phone while they’re driving their vehicle, they’ll think about Margay, laying on the bottom of the school bus,” Ms. Schee said.
A new video is expected to be added every few weeks.
People are invited to share their own stories by posting videos on YouTube and to e-mail the links to: faces@distraction.gov.
David Teater, senior director for transportation initiatives for the National Safety Council, a nonprofit advocacy group, said he expected the campaign to make an impact. “Putting a face on distracted driving really gets people to move,” he said, as the public was often more responsive to personal stories than to data or scientific evidence.
Jennifer Smith, president of FocusDriven, a nonprofit organization that promotes cell-free driving, said the video series “is an opportunity for some good to come out of something terribly tragic.”
Mr. Teater and Ms. Smith both lost loved ones to distracted driving. Mr. Teater’s wife, Judy, and Ms. Smith plan to share their own stories in the series in coming weeks.
Copyright 2010 The New York Times Company
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