Mike Hammond, ICAE President (Fireman’s Fund), opens the 2011 Charleston Exchange.

ICAE Welcome and Welcome to South Carolina

Mike Hammond, ICAE president, opened the 2011 ICAE Exchange by welcoming all attendees and thanking the sponsors of the 2011 Exchange—noting especially Diamond sponsor, Nationwide Insurance; Emerald sponsor, SureBridge; and Platinum sponsor, LexisNexis.

On a somber note, Hammond called for a moment of silence in memoriam for Kim Sledge, ICAE regulator attendee from the Louisiana Department of Insurance, who died while performing her job as investigator for the department. She was a strong supporter of ICAE and her many friends in attendance remember and will miss her.

A southern-style welcome
Jim Byrd, deputy director, South Carolina Department of Insurance (DOI), took the podium to add the department’s official welcome with the words, “I am from the government and I am here to help you.”   And he proceeded to do just that—to help all attendees learn more about the Charleston venue, he presented an in-depth overview of the city and surrounding area noting, “Charleston is listed on the 2011 World’s Best list of cities in the U.S. and Canada and features historic, architectural, sporting, and cultural attractions that make the city of interest to all ages.”

Jim Byrd, deputy director, South Carolina DOI, provided a ‘southern hospitality’ welcome to Exchange attendees.

South Carolina DOI
More to the topic for attendees, Byrd shared information about the South Carolina DOI.  In South Carolina, the governor appoints the director and, Byrd observed, the current director is able to strike the right note of providing a positive business atmosphere while still being considered to be a friend of the consumer.

What is South Carolina’s DOI up to at this time?  Byrd provided a detailed overview of the department in terms of services provided:

• Complaint-handling process includes a same-day acknowledgment of complaint with a timeline so consumer knows where an issue stands now and what to expect in the future.
• Outreach and education initiatives, noting that outreach is working because the volume for South Carolina is estimated at  300 walk-ins and almost 60,000 additional contacts—phone or written—each year. To ensure all consumers are reached, South Carolina uses innovative outreach methods from emails to health fairs to collateral materials.
• Disaster Assistance Program provides consumers with immediate assistance and helps direct consumers to quick resolution after experiencing losses.
• Market Assistance Programs help identify and eliminate those producers who might not be up to ethical standards required by the state.

Thanking consumer affairs

Byrd acknowledged the importance of the work of consumer affairs professionals and recognized the scope of consumer affairs professionals’ knowledge base—noting that consumer affairs professionals need to know about virtually every aspect of a company.  He stated the consumer services sector “as being the unsung hero of insurance commerce.”  Although he hesitated to discuss the notion of partnership between DOIs and the industry, he noted a working interaction was, in his opinion, one of the best ways to help the consumer. Comments concluded, Byrd announced he would let the group get to work and officially opened the 2011 ICAE Exchange.

CONTACT INFO

James Byrd
Deputy Director
South Carolina Department of Insurance
Capital Station – 1201 Main Street
Columbia, SC  29201
803.737.6143
jbyrd@doi.sc.gov
www.doi.sc.gov

PRESENTATION

Click here to view Byrd’s presentation

Brenda Cude (University of Georgia) offers hands-on exercises to attendees that will improve written communication skills.

Brenda Cude, professor at University of Georgia in consumer economics, was back by popular demand to lead the group in a detailed presentation on how consumer affairs specialists can best respond to their constituents.  To create this session, Dr. Cude drew on her considerable skills and knowledge base and then conducted insurance-specific research—resulting in a session of great appeal to this diverse group.

Preparing to write:  Content, content, content
Cude presented participants with detailed content about how to prepare to write and how to get the content right—noting that frequently more attention needs to be placed on preparation of content to best serve the consumer.  She cautioned that all content should be gathered from the consumer or audience perspective.

Further, she offered what every communicator needs to accomplish—before the response is crafted.  Here’s where the work begins by:

• Knowing and working toward meeting the deadline—note it and work toward it—but if responder cannot meet a deadline, that deadline should be renegotiated as soon as possible.
• Gathering information necessary to pull together an accurate response—find areas to streamline including approvals, updated contact names, DOI requirements.
• Identifying areas where those who are specialists in writing or specialists in the complaint subject matter to which you are responding can be used.
• Reviewing of all relevant information to really figure out the situation.  Busy and speed to respond are not reasons for poor research.
• Working to separate fact from emotion when reviewing consumer complaints.  Try to know all conversations that have occurred regarding any specific complaint.
• Taking the time to create an outline what is necessary to communicate in the response letter—if a DOI provides an outline, use it.  Make sure the information is returned in the same order asked.

Cude shares a variety of resources, tools and guidelines to attendees.

Martin Mitchell, director, product policy at America’s Health Insurance Plans, provides attendees with the latest info on the Affordable Care Act.

ICAE was indeed fortunate to have Martin Mitchell, a member of the Product Policy Department at America’s Health Insurance Plans (AHIP).  At AHIP, Mr. Mitchell supports state regulatory and legislative activities for health insurance products and government relations.  At the ICAE Exchange, Mitchell provided an update on health care reform.

The Affordable Care Act (ACA) is sweeping in its provisions and the changes mandated for companies, regulators and consumers.  To keep attendees current, Mitchell provided an in-depth overview of the ACA in terms of a historic perspective, a summary of health insurance plan regulation, a review of the legislation with timeline, and an overview of the new concepts and terminology that have become vogue since the passage of the ACA.

Perhaps most important, Mitchell reviewed what were immediate and near-term reforms, meaning those becoming manifest within the next year and those that will become manifest in the future. Mitchell noted that, as encompassing as the near-term reforms are, the long-term reforms targeted for 2014 and beyond are extremely aggressive.  Some of the provisions for 2014 he highlighted include:

• Guarantee insurance for every individual and small employer applying for coverage
• Level of rating—what factors can be used in rating
• Private market reforms including:
• The elimination of preexisting conditions exclusions
• Essential health benefits package
• State exchanges
• Purchase incentives for individuals and families
• Employer responsibility to offer coverage
• Individual mandates
  

The future: 2017
Mitchell reviewed extensively the future-state vision of 2017.  Here, the creation of standard documents for the insurance-consuming public is to be adopted at the federal level.  The documents include:

• A Summary of Benefits and Coverage, and
• A Uniform Glossary of health coverage and medical terms used in insurance.

The documents, by law, will be user-friendly, geared toward an understanding level such that a majority of insurance consumers could understand the information.

Comments are currently being gathered for the standards proposed, distribution channels and a time frame for dissemination.  Mitchell noted these are not off-the shelf documents, but vary by product, individual and location.  The complexity of these documents, the potential importance to the insurance-buying public, and the processes needed to create them makes this a monumental task.  Although Mitchell expressed support for the concepts, he noted the most pressing concerns with the standard-document mandate are the cost to produce documents and operational concerns to deploy the documents effectively.

Mitchell expresses that long-term reforms targeted for 2014 and beyond are very aggressive.

A word on enforcement
Mitchell closed with some final thoughts on the enforcement of this ruling.  Of special interest to regulators, he observed that states have primary enforcement responsibilities, but federal enforcement is provided for and therefore will step in where states have failed to enforce rule against carriers.

So much information; so little time
He urged all present to keep abreast of the very complex issues involved and to work to ensure all organizations are compliant.  A consummate professional, Mitchell worked on an ad hoc basis through lunch and through the Life and Health breakout session to continue the dialogue and knowledge transfer with Exchange attendees.

CONTACT INFO

Martin L. Mitchell, Jr.
Director, Product Policy
America’s Health Insurance Plans (AHIP)
601 Pennsylvania Ave., NW
Washington, DC 20004
202.861.1476
mmitchell@ahip.org
www.ahip.org

PRESENTATION

Click here to view Mitchell’s presentation

Marty Fisher (Martha Fisher & Associates) reviews the work completed by ICAE members and regulators during the Columbus, GA, roundtable last March.

With the advance of social media as a major resource for consumers and as a communications medium for industries, the Insurance Consumer Affairs Exchange (ICAE) chose to make the topic of social media its focus for the group’s 2011 Roundtable event held in March. Because social media is a consumer-oriented engagement medium, ICAE believed the consumer affairs professionals who attend ICAE events as members or regulators would be ideally suited to discussing the application of social media from a consumer affairs perspective.

The Process
Initially discussed at ICAE’s Roundtable event held in March 2011 in Columbus, Georgia and hosted by Aflac, the draft position paper on uses and guidelines for social media from a consumer affairs perspective distilled the thoughts of industry professionals from the regulatory, compliance and consumer affairs sectors.  Because the topic was considered to be of sufficient impact to the entire insurance sector generally, consumer affairs specifically, and had deep applications for the regulatory community with which ICAE interacts, the Roundtable attendees determined the best next step would be to bring the draft position paper to the larger ICAE group at the fall Exchange for additional vetting.

Our goal
For both Roundtable and Exchange attendees, the agreed-upon goal was:  To create a position paper to articulate the opportunities and risks identified with the use of social media.  The paper needs to generate guidelines or recommended best practices such that identified risks can be mitigated and identified opportunities can be maximized. Ultimately, the position paper would help all consumer affairs stakeholders successfully integrate social media into their respective organizations. The integration of social media was noted during the meeting as especially important because of the numbers of consumers already actively using it.

Fisher explains that this effort’s goal is to create a position paper to articulate the opportunities and risks identified with the use of social media.

Product
Working together at the Exchange, both in small-group and general sessions, the group reviewed the draft social media position paper.  Additionally, the attendees were given and reviewed a synopsis of the NAIC’s guidelines on the use of social media within the insurance industry.   Click here to view the position paper in its entirety.

After discussion and recommended modifications, the attendees:

• Endorsed the ICAE position paper on the use of social media from a consumer affairs perspective, and
• Agreed, to a person, to socialize the ICAE position paper within their organization, department, or within a professional group or association.

Next steps: 

The current iteration of the position paper is being circulated to the ICAE board of trustees and to participants for final review.  Once reviewed, the document will be available for socialization—providing the industry with consumer affairs professionals’ input on the utilization of social media from our perspective.

CONTACT INFO

Martha Fisher
Principal
Martha Fisher & Associates
4781 Coach Rd.
Columbus, OH  43220
614.457.8585
mfishercompany@aol.com

Ted Clark (Kansas DOI) shares concerns with recent insurance fraud activities.

Ted Clark, director, anti-fraud division, Kansas Department of Insurance shared an insider’s view on insurance fraud, drawing on his most recent experiences to discuss current trends.  Clark’s presentation made it clear that many new trends in fraud are more complex than in the past, resulting in more complex investigations.  Here’s what Kansas anti-fraud is working on now:

Viatical Scams
Clark noted that viatical scams are trending up and are of concern due to the negative impact on both consumers and companies. What is a viatical scam? Simply put, a viatical company will buy or invest in life insurance policies to collect the proceeds and disburse—betting the insured will die prior to the need to pay out any funds, yet putting some money in the pocket of the insured through the buyout. Viatical scams are a form of insurance fraud that many do not understand prior to investing—this was prevalent during the initial Aids epidemic and is now used against the elderly.

Viatical scams are now even more complex because the Stranger Originated Life Insurance (STOLI), a form of viatical, is becoming more and more prevalent in the marketplace.  The STOLI presents considerable confusion to the regulators because of regulation priority—STOLIs are investments in insurance products so does insurance oversight handle regulation or does investment oversight have priority?

Medical identity theft
Medical identity theft is defined as using an identity for treatment or to bill for goods or services not provided.  Clark noted medical identity theft can harm consumers in a variety of ways, including cost AND the generation of a false medical history—creating long-term financial and medical issues for the individual.   Perpetrators have multiple avenues to gather information used in medical fraud and—adding to the complexity—now sell information for fraud use to others.

Clark noted that medical identity theft can be caught by individuals being diligent in review benefits packages, the yearly summary of benefits and by monitoring medical and credit records.

Service providers
Clark noted that the fraud involving roofers continue to be an issue. Roofing frauds usually spike after storms—and Kansas sees plenty of storms.  He noted that fraudulent roofers will do anything from actually creating damage to requesting insurance checks be signed over—without work performed.

Producer problems
Producer problems have traditionally been present in the insurance industry and this is typically a bigger problem during a poor economy.  Producer problems include myriad issues and have included upgraded policies, selling improper products, churning for commissions, and cashing premium checks.

Clark noted additional fraud techniques experiencing new highs include product liability claims, arson, false or inflated burglary claims, vehicle owner give-ups, and vehicles with pre-existing damage.

Clark stresses the need to work together so we can stay ahead of the ever-changing fraud problems.

What’s being done on a national level
As chair of the NAIC task force for anti-fraud, Clark works extensively with the NAIC and the entire working group.  Their activities, personnel and reach are extensive.  Current projects for this group include:

• Linking systems so that one report can be sent to multiple entities so that cases can be transmitted immediately and in a more user-friendly fashion.
• Standardization of suspected fraud reporting form to assist working on fraud cases in a more global fashion so that positive data mining can be realized.
• Developing model guidelines for standardized filings of anti-fraud plans.
• Review of medical benefits plans to determine if any aspects of a plan are unethical, illegal or fraudulently marketed.
• Working with title insurance task force to review mortgage fraud, and
• Determining best practices to keep DOI agents safe during investigations.

Clark pointed out that all initiatives are geared toward having the many consumer-oriented agencies working together to avoid errors and omissions.  The overriding goal?  To stay ahead of the ever-changing and growingly complex fraud options perpetrated against the insurance-buying public.

CONTACT INFO

Theodore K. Clark
Anti-Fraud Divisoin Director & NAIC AFTF Chair
Kansas Insurance Department
420 SW 9^th Street
Topeka, KS  66612
785.296.2752
tclark@ksinsurance.org
www.ksinsurance.org

PRESENTATION

Click here to view Clark’s presentation

Candace Iskowitz (Insurance Institute for Business & Home Safety) provides attendees with several compelling video clips of IBHS test results

Presenter Candace Iskowitz, director of Public Affairs for Insurance Institute for Business and Home Safety (IBHS), focused on safety research. Simply put, she wowed the crowd with her knowledge, the scope of IBHS’ activities, and the concepts provided.

No such thing as luck
Ms. Iskowitz shared just a few of the affordable and effective solutions IBHS has researched to help protect homes, businesses and lives. The not-for-profit organization is supported by property and casualty companies and provides objective science to significantly reduce property losses, injuries and deaths.

How does IBHS accomplish this?
IBHS currently has five main initiatives:

• Conduct building science experiments
• Identify mitigation solutions for the building chain
• Improve public policy
• Develop voluntary standards and guidance
• Communicate research findings

Deeper dive:  The Science of building performance and solutions
Via its research center in South Carolina, IBHS can recreate mother nature within its lab.  The lab recreates real-world phenomena (storms, hurricane, and wind) to determine building performances for the purpose of formulating specific building protection recommendations. By showing actual demonstrations, ICAE attendees saw how simple, low-cost preventative precautions such as fortified doors and windows, protecting soffits, gabling vents and sealing roof decks can actually minimize risk or save an entire home during a disaster event such as high wind, high water, or wild fire (an issue for 38 states).

Iskowitz discussed additional topics such as mold mitigation, generator use, water damage and earthquake—and reviewed the choices consumers can make using IBHS guidelines to help prevent or mitigate these disaster events.

Iskowitz explains the IBHS proprietary program, FORTIFIED, which provides information and designation ratings for building construction.

What’s next for IBHS—raising hail
Noting the unusual weather patterns exhibited across the nation in recent years, IBHS has determined its next step will be recreating hail storms in the lab.  The purpose will be to help consumers and insurers determine what products and standards work best in hail storms.  And, although laboratory-based snow storms are not specifically planned at this point, specific communication on general safety for buildings in extreme snow situations has been generated.

Voluntary is best
IBHS enhances the insurance industry by helping to control costs and enhances the consumer experience by controlling loss. IBHS is working to educate insurers and consumers to be involved in voluntary, fortified superior construction standards. By making information available on affordable changes to homes and buildings, significant savings can be realized for both consumer and insurers.  The IBHS proprietary program, FORTIFIED, provides information and designation ratings.

Outreach and communication of findings
Any effective relationship begins with communication and IBHS recognizes the solutions generated in the lab must be deployed to the general public to generate life-and-property savings.  To this end, IBHS uses a variety of communication and outreach methods including traditional media, electronic and social media sites to deploy all information from emergency notifications to rebuilding tips after a disaster. To maximize its outreach potential, IBHS makes all its proprietary information available to insurers and DOIs who may want to rebrand and deploy within their distribution channels.

The IBHS array of materials available is impressive and suitable for consumers, DOIs, and producers.  All are encouraged to access the IBHS website at www.disastersafety.org to view all available information. In addition, the organization will send complete files for branding and printing by interested organizations.

In closing, Iskowitz stated that consumers do not have to build bunkers to be safe, but long-term solutions are available to help homeowners protect their investments.  She urged all in attendance to work with IBHS toward the common goal enhancing the consumer knowledge base and therefore controlling loss.

CONTACT INFO

Candace Iskowitz
Director, Public Affairs
Insurance Institute for Business & Home Safety (IBSH)
4775 E. Fowler Ave.
Tampa, FL  33617
813.675.1047
ciskowitz@ibhs.org
www.ibhs.org

PRESENTATION

Click here to view Iskowitz’s presentation

Bob Lisson (North Carolina DOI) updates Exchange attendees on NAIC’s efforts on uniformity in complaint handling and reporting.

Robert Lisson, deputy commissioner, North Carolina DOI, returned after a three-year hiatus to update Exchange participants on the status of the NAIC complaint coding project.  This update is of vital importance to all attendees because the actions accomplished by this NAIC working group are impressive, significant, and will have a long-range, extremely positive, impact on the industry and the insurance-buying consumer.

Responsibilities defined
Lisson noted the Complaint Handling and Reporting Standards (D) Working Group was given the task to create and promote uniformity in complaint handling and reporting.   Specifically, this group was given the responsibility to:

• Clarify and edit the existing reason and disposition codes within NAIC’s existing coding structure
• Modify the structure of the CDS coding scheme, grouping reason codes and creating new fields
• Establish guidelines for consistent complaint handling, starting with the definition of a complaint
• Develop and/or enhance training materials for regulators who work with complaints
• Establish guidelines for the consistent reporting of complaint-related statistics
• Examine best practices and technology applications and models to help states promote uniformity

Ever forward
Lisson observed that given the intricacy of the tasks, the complexity of the NAIC, and the sheer amount of data involved, significant strides have been made.

Currently, many elements of this work group’s recommendations have been approved including a revised complaint database system manual; standardized definitions for complaint, confirmed and inquiry;  consolidation and mapping of NAIC reason and disposition codes; and the creation of confirmed, not confirmed, and subject fields.

Lisson acknowledges that NAIC’s efforts were initiated by ICAE’s initial position paper suggesting the need for uniformity.

As sweeping as progress has been, this committee is moving ever forward.  Currently, the committee is still reviewing additional topics—including complaint reconciliation and the code change/update process.

Forward movement on databases
Lisson noted the NAIC maintains two complaint databases: CDS—a regulator-only database that holds all complaints, and CIS—a consumer information source that is available to anyone and lists only confirmed complaints.

Recommendations to enhance and improve the usability for both databases have been put forward, especially around the use of confirmed and unconfirmed. Lisson explained that to foster a spirit of fairness to companies, regulators and consumers, the CIS database will continue to use the disposition code to determine confirmed status until all states fully implement use of the proposed confirmed definitions.

Acknowledging the work
Lisson stated that a wealth of data is available via the NAIC website, where all working groups’ activities are detailed. He encouraged all attending to access the NAIC website to remain current with the many important initiatives undertaken by the NAIC—and to keep current with this Working Group’s initiatives.

CONTACT INFO

Robert Lisson
Deputy Commissioner
North Carolina Department of Insurance
817 Richmond St.
Raleigh, NC  27609
919.807.6751
bob.lisson@ncdoi.gov
www.ncdoi.com

PRESENTATION

Click here to view Lisson’s presentation

Joy Hatchette (Maryland Insurance Administration) explains the appeals process for consumer complaints as provided in state law.

“Everything but the locusts,” is how Joy Hatchette, associate commissioner of the Maryland Insurance Administration, described the many disasters Maryland has experienced in the past year. Hatchette took the stage to discuss Maryland’s state-mandated appeals process established by law for consumers.

The process
In Maryland, any aggrieved consumer can request a hearing, but that request must be in writing.  (Any form of written communication can—and has been—used.)  The demand for hearing must meet certain minimal thresholds, one being the time threshold of 30 days from grievance occurrence to request the hearing. After all concerned entities are notified, documents are gathered for the complaint file.

As with any hearing, the Maryland administrative hearing provides for a fair, impartial and independent opportunity for all parties to be heard on the issues in question.  Cases are assigned either within the department OR within the Office of Administrative Hearings. In either case, the Hearing Officer determines facts and reviews the evidence and ultimately issues a decision on the issues presented.

Regarding representation, consumers may have an attorney if they choose to do so, but it is not a requirement. Corporations may have qualified individuals represent the company, but those individuals must have clear decision-making authority.

Hatchette provides details of Maryland’s hearing process.

Hearing Procedure
Proceedings, witnesses and concerned parties may appear in person, by telephone, or via video conference.  However, just as with any hearing, swearing-in is required.  The party with the burden of proof starts the proceedings, meaning the company has the burden of proof in cancellation and non-renewal cases.  Then, procedure follows usual court protocol of direct questioning and cross examination.  Unlike usual court proceedings, these hearings require a lesser standard of proof than beyond reasonable doubt.

The numbers
Many attending, while recognizing this appeal process may provide significant consumer safeguards, wondered about how time-intensive or laborious this process could become.  Hatchette replied with specific numbers. The Maryland numbers track almost the same for 2009-2011 (to date) with little variance, so the 2010 numbers for request of hearings are shown here:

• Auto protests:  112 for 5,328 complaints (although Hatchette noted auto protests are the one protest where a fee is required to file a hearing request)
• Property and casualty, general:  123 requests out of 2,163 complaints received
• Life and health:  65 protests of 3,995 complaints received
• Appeals and grievances for medical necessity cases: 20 requests out of 816 decisions

Consumer benefits
Maryland is noted for having a general assembly that works hard to protect the consumer and, because of this appeal process, Maryland’s insurance regulators work to fully notify all stakeholders—especially the consumer—about all protection options available.   That being said, Hatchette explained that consumer protections really only accomplish so much in terms of protecting the consumer.  She opined that consumer and agent education is truly the key to ensuring all consumers know exactly what their policy is and what they can expect—which is the ultimate form of consumer protection.

CONTACT INFO

Joy Hatchette
Associate Commissioner, CEAU
Maryland Insurance Administration
200 Saint Paul Place, Suite 2700
Baltimore, MD  21202
410.468.2029
jhatchette@mdinsurance.state.md.us
www.mdinsurance.state.md.us

PRESENTATION

Click here to view Hatchette’s presentation