More "Interesting" UL News

A few months ago we blogged on a lawsuit against TransAmerica Life regarding the cost of insurance (COI) in their Universal Life products. At the time, we noted that this was most likely an uphill battle, seeing as how every single UL contract specifically says that they can charge the maximum COI as stated in the policy.

Now, perhaps inspired by the TA litigation, policyholders of other carriers are also suing their insurers, citing much the same legal reasoning. Obviously, I'm sympathetic to their plight, but I'm also in favor of the rule of law, and contractual law in this case specifically.

The problem is this little phrase:

"[O]n top of the contract’s guaranteed maximum rates, express or implied contractual limitations serve as a check on discretion, prohibiting the insurer from considering factors other than mortality experience."

That is, carriers are constrained from using poor investment results as justification for increasing internal insurance costs. And I tend to agree with this: certainly, carriers should look to their portfolio's performance when deciding how much interest to credit, but this has nothing to do with mortality costs (that is, how many of their insureds died the previous year). It seems to me that if interest rates were driving mortality rates, we've got much bigger problems going on here.

No jumping out of windows, please.

Blogging for The Pelican State

Longtime readers may recall the extraordinary outpouring of support for those hit by Katrina; we were glad to help raise much needed funds for those most deeply affected.

Flash forward 11 years, and folks in Louisiana are once again facing devastating losses. I reached out to my old Cavalcade of Risk roster to see if any of those fine folks could help with an updated version of that 2005 project.

Thankfully, 'Ironman' came through, and has set up a page with all kinds of ways to help out:

"We've also selected a handful of charitable organizations that are focused on providing disaster relief across Acadiana, which are tied to national organizations that have been ranked highly by Consumer Reports and the Christian Science Monitor for their effectiveness in putting donated funds into real relief efforts."

This is just an outstanding response, and I would urge IB readers to head on over - Thank you, Ironman!

Death, Accidentally

So, working on a new (to me) group client, and one of the things we're looking at is the group term life insurance. They're currently with a carrier that's not known for this product (they tend to more individually-tailored plans), and so I asked about the rates. The client gave me the number, and I asked if that included Accidental Death and Dismemberment (AD&D), as well. She told me "I wish but it does not."

Which is fine, and helps me keep things in order (and perspective) as I'm putting together the quote. But it reminded me of a philosophical conundrum I've occasionally pondered: what's the deal with AD&D [ed: channeling Seinfeld, are we?]?

I ask because here's the premise of that product:

"So you're telling me that my widow/widower needs twice as much money if I get hit by a bus and die instantly than if I get cancer and endure a long, expensive death?"

Again, I don't think there's anything inherently wrong, evil or fattening about this type of coverage; I just don't understand why folks would pay extra for it. Now, if there was a rider that paid double for getting cancer or having a stroke...

But that's another post.

Nothing new under the Sun

We've been writing about Balance Billing and "PARE" claims for almost 11 years (here for example). Briefly, the issue is that there is essentially a class of providers who, although they may ply their trade inside a network-approved facility, are nonetheless not contracted with a given (or any). network. Thus, even if you carefully choose an in-network facility and surgeon (for example), odds are your anesthesiologist and radiologist are not in-network, and can charge you pretty much whatever they wish.

It's not a new problem, but that doesn't stop some folks from lamenting that it's just the latest way for providers to ding patients:

"It’s getting harder and harder to keep medical costs within your insurance network—even during a single hospital stay."

And they've coined a new term for the practice: "drive-by doctoring." This of course makes zero sense: generally, such providers are well-established, with good reputations and solid credentials. They've just figured out a sweet deal: become the only pathologist in a given hospital, refuse to join any network, and bill away. Now, whether or not this is "right" or moral or "fair" is up for discussion, but that it's a new phenomenon isn't.

To be fair, Slate does point out that some states (Pennsylvania, for instance) have protections against such practices (and we discussed the current state of the law nationally here).

There's really not a lot one can do about this, other than to just be aware, and then try to negotiate a better price (which may be difficult, seeing as how the services have already been delivered).

Cause & Effect (or Bye-Bye Choice): George Hamilton edition

Back in Aught '11, Bob noted that the ACA's "tanning bed tax" was slated to bring in some $200 million per year. Even 5 years ago, the reality fell far short:

"The first 9 months of 2011 has generated only $54 million which means the expected revenue will be less than half what was expected."

But that was then, and this is now:

"Tanning industry blames 10,000 salon closings on ObamaCare"

Naturally, shuttering over half of these businesses is going to further reduce the numbers projected by O'care enthusiasts. And tan-seekers aren't the only folks losing choice:

[Map Courtesy of New York Times - click to embiggen]

 "In many parts of the country, Obamacare customers will be down to one insurer when they go to sign up for coverage next year on the public exchanges."

As FoIB Reed Abelson reports, almost one-in-five victims O'Care participants will have (at most) one carrier from which to "choose." Kind of like Model T color choices, no?

Adding insult to injury, a handful of entire states will likely be down to a single carrier. So much for competition and bending the cost curve down. And so much for "choice."

More on Flood Insurance

"It won't happen to me"

Yeah, about that:



Courtesy of the Insurance Information Institute

End of the Week Miscellany

In no particular order:

■ We last noted how The Centennial State's move towards a Single Payer option threatened to send that state's budget "off a financial cliff." Well it turns out that there's one group in particular dead set agin' it. FoIB Holly R alerts us that "liberal group ProgressNow Colorado held a news conference ... to announce its opposition to the measure."

As I've repeatedly said, I'm all in favor of 58 individual state laboratories trying out new models. Seems to me a great way to get a sense of which ones hold promise, and which ones don't.

■ Aetna's bailing on huge swaths of the individual major medical market has had a devastating affect on at least one small Arizona community:

"People in Pinal County are at risk of a health insurance problem that hasn't happened anywhere else in the country: no companies offering marketplace health insurance"

Turns out, Aetna was the only carrier left standing in that area. And an overwhelming majority of those with plans qualified for a subsidy. Unfortunately, there seems to be nowhere to spend it.

■ And this is an interesting, if odd, little story from Across the Pond:

"There's an app that lets you buy restaurants' leftovers ... saving the good food from going to waste"

Here's how it works:



Why mention it? Well, it would seem like this idea might be very attractive here in the US, but it's likely liability concerns (not to mention health department rules) would be insurmountable.

Too bad, really.