Midland National’s Questionable Annuity Sales

Midland NationLawal Life Insurance Company has agreed to pay a $1.3 million settlement and reform its business practices. The Dept. of Insurance says that Midland National did not inform its own agents that the annuity products they were selling had not been filed with the California Department of Insurance and did not provide important consumer protections. In fact, Midland National agents sold certificates to group annuities that were issued out of state.

Investigators also found numerous instances in which Midland National agents earned commissions by selling unnecessary replacement annuities to senior citizens. In one example involving an 85-year-old woman, an agent replaced a higher-interest annuity for one that left her locked into a lower-earning rate for eight years. Her existing annuity had no surrender charges and guaranteed a 5.5% interest. She was sold a Midland National annuity that guaranteed a 4.35% interest rate for eight years and 3% in interest thereafter — substantially less than her existing investment. Additionally, the Midland annuity had a surrender charge of 10% for five years, grading down to zero after eight years.

In another example, a 75-year-old woman paid about $91,000 to Midland National for an annuity. The annuity had a 14-year surrender period, which meant that she could not fully liquidate the annuity without paying a penalty until she was 89 years old. Two years after buying the annuity, she had to surrender it to pay her bills after her husband was placed in a board and care facility after a stroke. She paid a surrender penalty of about $27,500 to Midland National. Insurance Commissioner Dave Jones said, “Selling a long-term annuity with a 10- or 15-year surrender period to someone of advanced age can have dangerous financial consequence. If they need to liquidate assets to pay for increasing or unexpected health care or long-term care expenses before the surrender period ends, they will likely face large surrender penalties payments.”

Jones said, “Midland’s illegal tactics provided big commissions for their agents and handsome profits for Midland while seniors lost money… I sponsored AB 689 (Blumenfield), which was signed into law by Governor Brown in 2011. This law also gives me the authority to revoke an agent’s license, impose fines, and restore money lost to the consumer.” The law requires document and product suitability reviews for annuity sales and documentation of the review to protect the consumer.
The $1.3 million Midland National has agreed to pay consists of a $900,000 monetary penalty and $400,000 in attorneys’ fees and costs. Within five years, Midland National will undergo another market conduct exam to ensure that they are complying with the conditions of the settlement.

Premiums Are Lower When There Are More Hospitals

More competitive hospital markets had more than 8% reductions in premiums. That translates into savings of more than $20 a month for consumers in markets with less hospital concentration, according to a report commissioned by America’s Health Insurance Plans (AHIP). The report, authored by Scott Thompson, Ph.D. and published in the Antitrust Health Care Chronicle, finds that hospital systems with strong market influence can often negotiate higher rates for their services. Each additional effective hospital competitor is associated with a 1.5% drop in the cost of insurance premiums. Consumers in more competitive markets, such as Los Angeles, saw average monthly savings of $32.90 in reduced premiums when compared to consumers purchasing coverage in San Francisco, a market with fewer hospital competitors.

AHIP president and CEO Karen Ignagni said, “Consumers and employers benefit from competitive markets that promote affordability and choice. More needs to be done to encourage competition among providers. Hospital consolidation comes with a price that consumers and employers simply cannot afford.”

How Covered California Improves the Health of Members

Insurance coverage is helping improve care for Californians with of a number of prominent health conditions including asthma and diabetes, according to Covered California. Estimates are based on the following data from the California Department of Public Health, the federal Department of Health and Human Services and the U.S. Centers for Disease Control and Prevention:
• 8,700 more Californians will have access to care to better control their asthma.
• 45,064 Californians will be diagnosed with diabetes and could begin treatment.
• 63,922 Californians with diabetes will be able to increase their medication to control the disease.
• 36,527 Californians will avoid catastrophic medical expenses.
The following table outlines statewide enrollment in the Covered California exchange by county:

County Open Enrollment in 2014(plan selections through March 31, 2014) New Enrollment
in 2015
(plan selections through Feb. 2, 2015)
Enrollees % of Total Enrollment Enrollees % of Total Enrollment
Alameda 65,171 4.7% 13,266 4.6%
Alpine 82 0.0% <10 0.0%
Amador 1,224 0.1% 269 0.1%
Butte 6,799 0.5% 1,379 0.5%
Calaveras 1,704 0.1% 330 0.1%
Colusa 995 0.1% 221 0.1%
Contra Costa 39,349 2.8% 7,790 2.7%
Del Norte 476 0.0% 181 0.1%
El Dorado 7,479 0.5% 1,456 0.5%
Fresno 23,164 1.7% 4,798 1.7%
Glenn 837 0.1% 176 0.1%
Humboldt 5,679 0.4% 1,055 0.4%
Imperial 4,401 0.3% 1,260 0.4%
Inyo 609 0.0% 128 0.0%
Kern 18,083 1.3% 4,287 1.5%
Kings 2,160 0.2% 508 0.2%
Lake 2,313 0.2% 499 0.2%
Lassen 414 0.0% 108 0.0%
Los Angeles 400,889 28.7% 81,321 28.2%
Madera 3,835 0.3% 913 0.3%
Marin 13,041 0.9% 2,349 0.8%
Mariposa 569 0.0% 131 0.0%
Mendocino 4,526 0.3% 711 0.2%
Merced 8,403 0.6% 1,737 0.6%
Modoc 256 0.0% 57 0.0%
Mono 866 0.1% 192 0.1%
Monterey 16,523 1.2% 3,020 1.0%
Napa 5,496 0.4% 1,067 0.4%
Nevada 6,098 0.4% 1,145 0.4%
Orange 131,804 9.4% 27,653 9.6%
Placer 13,048 0.9% 2,880 1.0%
Plumas 791 0.1% 148 0.1%
Riverside 69,350 5.0% 15,029 5.2%
Sacramento 43,796 3.1% 9,251 3.2%
San Benito 2,121 0.2% 318 0.1%
San Bernardino 53,623 3.8% 12,157 4.2%
San Diego 121,900 8.7% 28,394 9.8%
San Francisco 40,826 2.9% 7,002 2.4%
San Joaquin 24,202 1.7% 4,920 1.7%
San Luis Obispo 12,256 0.9% 2,123 0.7%
San Mateo 26,671 1.9% 5,081 1.8%
Santa Barbara 16,295 1.2% 3,096 1.1%
Santa Clara 64,924 4.7% 13,099 4.5%
Santa Cruz 15,071 1.1% 2,582 0.9%
Shasta 6,053 0.4% 1,441 0.5%
Sierra 90 0.0% 22 0.0%
Siskiyou 1,439 0.1% 275 0.1%
Solano 11,180 0.8% 2,583 0.9%
Sonoma 22,364 1.6% 4,361 1.5%
Stanislaus 18,504 1.3% 3,556 1.2%
Sutter 3,901 0.3% 586 0.2%
Tehama 1,723 0.1% 427 0.1%
Trinity 493 0.0% 106 0.0%
Tulare 9,832 0.7% 2,257 0.8%
Tuolumne 2,107 0.2% 409 0.1%
Ventura 33,234 2.4% 6,960 2.4%
Yolo 5,217 0.4% 1,128 0.4%
Yuba 1,666 0.1% 360 0.1%



Commissioner Jones to Investigate Anthem data breach

Insurance Commissioner Dave Jones directed the California Department of Insurance to conduct a financial and market conduct examination of Anthem Blue Cross of California and to join other insurance regulators in a multi-state national investigation regarding the Anthem data breach that could affect more than 80 million people. The California Department of Insurance expects to be a lead participating state in the national multi-state examination announced by the National Association of Insurance Commissioners. The financial and market conduct examinations will investigate all aspects of the data breach. A major component will include analyzing Anthem’s information technology systems to determine what protections were in place and what actions could have been taken to minimize data losses. Anthem briefed California Insurance Commissioner Dave Jones along with other state insurance commissioners on the breach and the steps Anthem is taking in response to the breach, including outreach to consumers. Anthem announced will provide identity theft insurance coverage to cover losses and will provide individual assistance to consumers who suffer identity theft. Current and former Anthem customers can call Anthem at 877-263-7995 to get more information. It is anticipated that all states and territories will participate in the examination. California, as well as other states with significant Anthem business, will take the lead in the investigation.


NAHU Supports Value-based Pricing in Medicare

The National Association of Health Underwriters (NAHU) commends the Department of Health and Human Services (HHS) Secretary Sylvia Burwell for setting timelines and goals that will transition Medicare and hopefully the healthcare system at large from a fee-for-service system to a quality and value-based payment model. Janet Trautwein, CEO of NAHU said, “This is the first time in the history of the Medicare program that HHS has supported an alternative payment model that focuses more on value, outcomes and reduced healthcare costs. The goal of this bipartisan initiative is to improve the quality of medical care we receive while spending less money to do so.”
For more information, visit www.nahu.org.

Cigna to Improve Affordability of Hepatitis C Treatment

Cigna has reached an agreement with Gilead Sciences to include Harvoni as the only preferred brand prescription drug treatment for customers with hepatitis C genotype 1, the most common form of the disease in the United States. Cigna clients and customers benefit from breakthrough clinical cure rates for hepatitis C while significantly lowering the cost of drug treatment.

Clinical studies have shown that 94% to 99% of individuals with genotype 1 hepatitis C treated with Harvoni achieve a sustained virologic response (SVR). Customers who have an SVR when tested 12 weeks after the completion of treatment are considered cured. Cigna continues to invest in analyzing real-world SVR outcomes with the leading hepatitis C treatments across the genotypes as we believe creating alignment around clinical and financial outcomes drives more affordable access to essential medications, added Maesner. The agreement includes development of an innovative outcomes incentive alignment based on actual SVR results across Cigna’s customer population. Cigna is continuing to offer therapy support management through Cigna Specialty Pharmacy Services to every customer undergoing hepatitis C treatment and conduct real-world outcomes assessments on existing and new hepatitis C drug treatments, including Harvoni, to further develop outcome-based strategies.


Small Businesses Slow to Embrace Wellness Best Practices

Small businesses need to do a better job of protecting the health of their workers, according to a survey by EMPLOYERS. Seventy-seven percent of small businesses don’t offer employees non-traditional seating options, such as stand-up desks, treadmill desks, or balance balls, despite research that shows sitting for extended periods can lead to increased risks of heart disease, cancer, and other ailments. Twenty-nine percent of small business owners say that their employees typically remain seated for more than an hour at a time. Forty-two percent don’t provide monitor stands to improve the posture and comfort of employees who primarily work on computers.

Only 55% of employees who work primarily on computers are encouraged by their small business employers to take routine breaks to rest their eyes. Not doing so can lead to eyestrain or other injuries. The survey also reveals the following:
• 23% of hourly and salary employees often wait up to three or four hours before taking a break.
• 42% of small business employees don’t use all of their allotted time off from work each year.
• 65% have worked at some point during their planned vacation time.
For more information, visit www.employers.com.

The Right Way to Do Absence Management

A study by the Guardian reveals four steps to effective absence management:
1. Set a solid philosophy – The highest priority should be returning employees to safe and productive work while encouraging wellness.
2. Take key foundational steps – Get a buy-in from senior management and follow a strategic communications campaign.
3. Develop an effective model – Key predictors of success are to use the same outside resource for short-term disability and FMLA administration, and make health management referrals.
4. Measuring success carefully – 48% of all employers say that employee engagement is the most critical measure of success.

In the survey, employers say they have been better able to overcome absence management obstacles due resources and third-party expertise that’s now available in the marketplace. Fifty-three percent of companies face challenges applying the  Americans with Disabilities Amendments Act (ADA/ADAA) regulations, down from 60% in 2012. The survey also reveals the following about employers:
• 58% have a hard time interpreting federal and state leave laws.
• 54% have challenges ensuring that employees can perform their essential duties before returning employees to work.
• 42% lack the staff to manage absenteeism.

For more information, visit www.GuardianAnytime.com.


Major Trends Affecting the Insurance Industry

A report by Professional Insurance Marketing Association (PIMA) outlines key issues that will affect the insurance industry over the next five years. The report was prepared by a task force of leaders among brokers, insurance companies, and other industry partners serving the affinity benefits niche of the insurance industry. The report outlines the following trends:

• Changing Consumer Demographics: Marketers need to focus on the needs of Boomers, Hispanics, women, and Millennials who will have growing purchasing power.
• New Technology: Big data and new technologies are revolutionizing how business is done, including disintermediation and the entrance of non-insurance entities into the insurance market.
• Regulatory and Legislative Environment: Not only are there more regulations affecting the insurance landscape, but also they are coming from multiple and sometimes conflicting regulatory bodies. Increasing scrutiny from state and federal entities will require continuous monitoring.

Visit www.pima-assn.org to read the report.


Affordable Care Act Advisor Module

HotSchedules released a module to help employers manage schedules and preserve employee hours while controlling labor costs under the Affordable Care Act’s Employer Mandate. For more information, visit http://www.hotschedules.com/acadvisor.


Health and wellness company Nudge, is offering apps that track physical activity, calorie intake, sleep, hydration levels, and indulgence. Additional features, such as visual feedback systems and graphs, help users create a plan to change bad habits and improve wellness. You can download the Nudge app at the Google Play Store. For more information, visit http://www.nudgeyourself.com.

Guide on Matching Voluntary Benefits to Demographics

Purchasing Power is offering an interactive guide to matching voluntary benefits to the three generations in the workforce. It can be viewed on phones and tablets in addition to computers. The guide discusses the three generations, their financial stressors, and their varying benefit needs. It presents a menu of traditional and non-traditional voluntary benefits available in today’s marketplace. For more information, visit www.PurchasingPower.com.

Mobile Selling System for Life Insurance

Voya Financial launched Voya Life Journey, a tablet-based mobile selling system to help agents educate consumers about the value of life insurance as part of a holistic approach to retirement readiness. The interactive tool allows agents to provide recommendations for tailored life insurance solutions, based on their customer’s retirement goals and potential obstacles that could undermine their financial security. For more information on the Voya Life Journey mobile selling system, contact the Life Sales Desk at 866-464-7355 and select option 6.

Universal Life

Transamerica launched TransElitesm – life insurance with living benefits. Similar to traditional life insurance, TransElitesm can also be used for final expenses, a survivor’s college tuition, a survivor’s living expenses, or as an inheritance for beneficiaries. But that’s where TransElitesm stops being traditional and goes beyond. If the insured is diagnosed with a terminal illness, a portion of the policy’s death benefit can be used to provide some financial relief. In the event the insured is laid off, the policy’s monthly deductions can be waived for up to six months. Because of its potential to accumulate cash value, loan and withdrawal options are available. For more information, call 800-400-3042, ext. 1271126 or email Renee.Preslar@Transamerica.com.

Social Referral Marketing

SocialTwist launched KnownCircle.com, a social referral network where consumers can discover and connect with professional service providers that are most trusted by their friends and family. KnownCircle is available to the insurance industry with more than 200,000 agency and broker profiles. Over the next few months the platform will expand to include additional professional service providers including tax preparers, real estate agents, attorneys and more. Professional service providers can set up their profiles for free and invite customers to endorse them by simply joining their KnownCircle. Now, anytime the customer’s friends or family are in the market for a service, they can just search knowncircle.com and discover the service providers specifically endorsed by people they know. Customers can also choose to refer the service provider directly – by sending emails or posting to their social networks – all from within the KnownCircle platform. For more information, visit www.knowncircle.com.

Faster Claims Payment

Aflac introduced One Day Pay, which allows the company to receive, process, approve, and disburse payments to policyholders for eligible claims within one business day. Once the questions are answered, SmartClaim identifies the supporting documents the policyholder needs to upload. With a few clicks of a mouse, the claim is submitted and processing begins. SmartClaim submission is available for individual accident, cancer, hospital and sickness, hospital indemnity, intensive care, and specified health event claims – regardless of whether claims are simple, moderate, or complex. To learn more, visit aflac.com/onedaypay.

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