NAIC NewsWire
Drug Overdose Deaths Drop in U.S. for First Time Since 1990
The New York Times (07/17/19) Goodnough, Abby; Katz, Josh

Preliminary data released by the Centers for Disease Control and Prevention on July 17 show that total drug overdose deaths in the United States fell about 5% last year, marking the first decline since 1990. The decrease was almost entirely due to a decline in deaths from prescription opioid painkillers. Fatal overdoses involving other drugs, particularly fentanyl and methamphetamine, continued to rise. Despite the drop, the number of overdose deaths in 2018 still topped 68,000, surpassing the nation's peak annual deaths from car crashes, AIDS, or guns. Experts say the overall decline in overdose deaths could be due to more cautious prescribing of opioid painkillers, increased access to treatment and to the overdose-reversing drug naloxone, and the growing awareness of the danger of fentanyl, among other things.
Berkshire Hathaway Insurer Settles NY Probe for $3 Million
New York Post (07/18/19) Dugan, Kevin

New York Department of Financial Services (DFS) Superintendent Linda Lacewell has settled with Applied Underwriters, the troubled insurance company owned by Warren Buffet's Berkshire Hathaway, and five related companies for $3 million over the sale of "misleading" workers' compensation insurance packages that wound up costing business owners more than expected. Lacewell said, "Today we are holding Applied Underwriters responsible for illegally operating outside of the department's oversight to sell a complex product to hundreds of New York small and medium-sized businesses." Regulators in California, Vermont, and New Jersey also have clamped down on the company, with California's insurance regulator calling out the company for "bait and switch" tactics that pushed up the price of insurance. When DFS began its investigation in December 2015, Applied agreed to stop selling the insurance products in question, including "EquityComp" and "SolutionOne," in the state, according to the consent agreement, which noted that "the program as implemented did not comply with New York law." Related Stories: New York Business Journal; Business Insurance (registration); WorkCompCentral (subscription); BestWire (subscription)
Investigation Finds Many Seniors Overpaying for Life Insurance (PA) (07/18/19) Van Osdol, Paul

Insurance companies have long sold small policies to senior citizens to cover funeral and burial expenses, but as people live longer, experts say policyholders frequently pay more in premium costs than their policy would ever pay out. Pennsylvania Insurance Commissioner Jessica Altman observes, "That's part of the risk being borne both by the insurance company and the policyholder." Experts say seniors and their families should discuss any life insurance policy with family members or trusted advisers before buying it and check to see whether the policy has what is called a "paid-up policy option," which allows policyholders to stop making payments if they have already paid what the policy is worth. In Pennsylvania, anyone who buys a policy and has buyer's remorse can cancel within 10 days with a full refund.

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New Chair on the Block Discusses Reconstructing the Suitability Model
National Law Review (07/18/19) Black, Anna Young; Bigayer, Jamie

Ohio Department of Insurance Director Jillian Froment, the new chair of the National Association of Insurance Commissioners' Annuity Suitability Working Group, invited regulators and interested parties to develop the required standard of care foundation for the Suitability in Annuity Transactions Model Regulation at a June 20 in-person meeting. Froment used the Iowa Insurance Division's May 30 proposed draft revisions to the Suitability Model as the building blocks for the discussion. Iowa Insurance Commissioner Doug Ommen explained that Iowa's draft reconstructed the suitability obligation into an elevated "professional standard" under which producers are required to know the products they recommend and know their customers. Iowa's draft includes specific processes to take place and requires the exercising of professional judgment in making a recommendation to consumers.
Ask 13: Can You Buy Insurance to Protect Your Home Against Mudslides, Landslides?
WLOS ABC 13 (Asheville, NC) (07/18/19) Fraboni, Frank

Homeowners insurance policies in North Carolina will not protect against mudslides or landslides, and "difference in conditions" (DIC) policies are not available in the state. "None of the admitted insurers licensed to write insurance in North Carolina write a DIC policy that would provide coverage for mudslide or landslide," says Ben Powell of the North Carolina Department of Insurance. "They consider the risk to be too severe and could not price it to a level of affordability."
Barry Damage Count Underway (07/18/19) Decker, Bill

Officials in St. Mary, Louisiana, urge residents who sustained storm damage from Hurricane Barry to report it to the Office of Homeland Security and Emergency Preparedness. The information collected could help the parish be included in a declaration that could result in more assistance for the community. Insurance tips from Louisiana Insurance Commissioner Jim Donelon include taking photos of any damage and whatever reasonable repairs are needed, keeping receipts, and contacting the insurance agent as soon as possible.
CONSUMER ALERT: Division of Insurance Offers Tips for Earthquake Insurance
Nevada Division of Insurance (07/18/19)

With the amount of seismic activity recently, including two significant earthquakes in California that were also felt by residents in Las Vegas, the Nevada Division of Insurance encourages consumers to be proactive and learn more about earthquake insurance. "Just as with flood coverage, the time is now to consider earthquake insurance before disaster occurs," explained Insurance Commissioner Barbara Richardson. "To determine if earthquake coverage is right for them, consumers should determine their risk and balance it against the cost to purchase an earthquake policy." Typical homeowners and renters insurance exclude coverages for flood and earthquake; these protections must be purchased separately. Consumers who don't have such coverage may be responsible for any damage to their property or injuries that may occur after an earthquake. For more detailed information, the division also offers a Consumer's Guide to Earthquake Insurance.
Consumer Alert: CFO: Watch Out for These Top 3 Fraud Tactics
Florida Department of Financial Services (07/18/19)

CFO Jimmy Patronis warns Floridians of a recent report from the Federal Trade Commission's Consumer Sentinel Network, which outlines top types of fraud in Florida. According to the report, debt collection, imposter scams, and identity theft top the list of the most reported fraud categories in the state. Patronis said, "As we face a fraud epidemic in Florida, it's important for consumers to be aware of the latest tactics used by scam artists. We are committed to continuing to work with state and local officials so we can improve investigative efforts to combat fraud in Florida. We must protect our consumers, especially seniors, from financial scams and identity theft. If you or a loved one feel you have been the victim of fraud, please visit my website at to report it immediately. The more these scams are reported, the greater chance we have to bring these fraudsters to justice."
Opinion: Fund Managers Led into a $13 Trillion Temptation
Bloomberg (07/18/19) Gilbert, Mark

With nearly $13 trillion of bonds in the global debt market yielding less than zero, fund managers increasingly are chasing returns in less liquid assets. Bloomberg Opinion columnist Mark Gilbert argues that regulators are right to pay closer attention to any misadventures in illiquidity, calling the decline in interest income available in the global bond market "truly staggering." The average yield on the world's $54 trillion of investment grade debt is just 1.5%, down from 9% at the start of 1990 and about half of its average since then. Further, $2.4 trillion of the below investment grade bonds yield less than 6%, down from as much as 21% in 1990 and an average of close to 10% during the past two decades or so. Meanwhile, the world's stock market, as measured by the MSCI World Index, is near a record high. In Europe, private equity is poised to overtake hedge funds as the dominant asset class in the so-called alternatives space, with aggregate investment in private equity up 25% since the end of 2015 and reaching 559 billion euros ($628 billion) by mid-2018. According to a report by Greenwich Associates, "illiquid assets are not marked to market. As a result, changes in valuation take longer to play out in institutional portfolios."
Health Insurers Make it Easy for Scammers to Steal Millions. Who Pays? You.
ProPublica (07/19/19) Allen, Marshall

Health care costs are out-of-control for a number of reasons, ranging from unnecessary treatment and high prices to waste and fraud. Many patients believe insurers are tightly controlling their health care dollars, but no one knows how much of the $1.2 trillion in private insurance spending in 2017 was spent on fraud. Some investigators and health care experts estimate that fraud eats up 10% of all health care spending, and no one checks to see if those people with federal ID numbers that allow them to bill insurers have valid licenses. In one case, a workout instructor bilked $25 million from top health insurers like Aetna, Cigna, and UnitedHealthcare through fraudulent billing for what he considered "preventive medicine." The losses sustained by insurers from these schemes ultimately are passed on to policyholders through higher premiums and out-of-pocket fees or reduced coverage.
'Dangerous Heat Wave Is Building' as Temperatures Spike in the Central and Eastern U.S.
Washington Post (07/18/19) Freedman, Andrew; Samenow, Jason

The National Weather Service said on July 18 that "a widespread and dangerous heat wave is building in the central and eastern United States," with air temperatures climbing toward 100 degrees from the Plains to the Midwest, the Mississippi River Valley, and eastward to the heavily populated Boston-to-Washington corridor. Heat advisories and warnings affect 154 million Americans. In many major population centers, the heat index is expected to peak around 110 degrees between Friday and Sunday. The actual air temperature is expected to reach at least 95 degrees for more than half the population of the Lower 48 over the next several days. A sprawling, strong high-pressure area, known as a "heat dome" is a trigger for this heat wave, and another high-pressure area in the Western Atlantic, known as the "Bermuda High" is playing a role as well. The Weather Service projects 123 warm low temperature records to be tied or broken. Related Stories: CNN (video); Wall Street Journal (subscription)
Despite Threats from Hurricanes and Rising Seas, Populations Continue to Swell Along the Coast
Orlando Sentinel (07/17/19) Chokey, Aric

Census Bureau estimates show rising populations in most counties along the Atlantic and Gulf coasts, even as those areas face threats from hurricanes and sea-level rise. The population on the Atlantic Coast increased an estimated 7% from 2010 to 2018, outpacing 6% growth nationwide and accounting for 18% of the country's overall population.
Hurricane Irma Flood Insurance Payments Top $1 Billion in Florida
WINK News (07/17/19)

The Federal Emergency Management Agency's (FEMA) National Flood Insurance Program (NFIP) has paid more than $1 billion toward 21,949 flood insurance claims from policyholders whose properties were flooded during Hurricane Irma nearly two years ago. Florida has more NFIP policies in force than any other state, but officials continue to urge Florida homeowners, renters, and business owners to contact their insurance agent and insure their properties from flooding. This is because those who manage risk through insurance recover faster and more fully after a disaster. "One of the most important steps you can take to prepare for hurricane season is to buy flood insurance," said Federal Coordinating Officer Gary Stanley, the FEMA official in charge of Florida's Hurricane Irma recovery efforts. "Homeowners insurance does not cover losses from flooding, so don't wait, purchase flood insurance today. A policy typically takes 30 days to go into effect, so when the next storm is on its way, it could be too late."
San Francisco Residents Are Fleeing to What May Be the Most Earthquake-Proof City in California
Business Insider (07/19/19) Bendix, Aria

No city is entirely safe from earthquakes, but recent reports suggest that Sacramento is the safest metropolitan area for earthquakes in all of California, based on its location, topography, and history of quakes. One of Sacramento's greatest advantages is that it doesn't have many active fault lines nearby. San Francisco, on the other hand, is located directly along the San Andreas fault — the 750-mile fault line that could produce the next "Big One." As rents reach an all-time high and the cost of living becomes unreasonable, some are residents are trading in their riskier homes in San Francisco for homes in Sacramento. Between 2010 and 2018, San Francisco County lost nearly 3,000 net domestic residents — a sign that locals are steadily fleeing their neighborhoods. While it may not be the safety of Sacramento attracting new residents, maps from the U.S. Geological Survey and California Department of Conservation show that Sacramento has escaped significant earthquakes over the last century. When it comes to flooding, however, Sacramento is one of the riskiest places in the country.
How Big Data Can Help You Choose Better Health Insurance
Fast Company (07/16/19) Walsh, Dylan

Stanford School of Medicine associate professor Kate Bundorf says the complexity associated with choosing a health insurance plan often leads consumers to select suboptimal plans with higher costs. To determine the types of tools that would help people make better health insurance decisions, Bundorf, along with Maria Polyakova of Stanford School of Medicine and Ming Tai-seale of the University of California, San Diego, developed a web-based tool with an algorithm that matched the medical records of Medicare Part D enrollees with the best health insurance options for prescription drugs. Study participants who were given "expert" suggestions alongside cost estimates opted to switch plans 36% more often than the control group, generating $270,000 in savings. If the same effects were extrapolated to the nearly 25 million people enrolled in Medicare Part D — assuming an equivalent rate of participation — savings would total about $680 million. Polyakova notes, "The people who chose to interact with the algorithm were ... active shoppers who were seeking out information. This suggests that if we want to improve the choices of people who currently have the worst plans, then simply offering the tool online won't solve the problem."
Twin Falls Woman Given Probation for Fraudulent Insurance Claim
KMVT Southern Idaho (07/16/19)

Taylor Scruggs of Twin Falls, Idaho, was sentenced on July 15 for insurance fraud on false claims she made in 2017. Idaho Attorney General Lawrence Wasden said Scruggs was placed on two years felony probation and granted withheld judgement. She was ordered to pay a $500 fine, court costs, and fees. The court also ordered her to pay $896 in restitution to the Idaho Department of Insurance. The court says Scruggs was in a two-car crash on Oct. 18, 2017. She purchased auto insurance after the crash. A claim was denied after investigators learned the crash occurred before the policy was purchased. Idaho Deputy Attorney General Jessica Cafferty in the Attorney General's Special Prosecutions Unit prosecuted the case, while the Idaho Department of Insurance investigated.
Long Beach Financial Advisor Sentenced to Over 10 Years in State Prison After Embezzling Nearly $1 Million
California Department of Insurance (07/18/19)

Tom Fallon was sentenced on July 18 in the Long Beach Superior Court after being convicted in an open plea of 25 criminal counts of money laundering and grand theft. Fallon was sentenced to 10 years and four months in state prison. Restitution was ordered in the amount of $995,118. A year-long investigation by the California Department of Insurance found that Fallon convinced his victims to deposit their workers' compensation settlement checks into Workers' Compensation Medicare Set Aside Accounts, as required by law. However, Fallon convinced his victims to deposit their settlement funds with companies he owns in order to embezzle $995,118 for his personal gain and to fund various other businesses. "Fallon abused his clients' trust in order to access their money and then stole it to stuff his own pockets," said Insurance Commissioner Ricardo Lara. "Fallon's callous actions ruined lives. Thanks to the hard work of investigators at the Department of Insurance and the Los Angeles County District Attorney's office, his victims have justice."
Port Lavaca Insurance Agent, Wife Arrested on Fraud and Forgery Charges
Victoria Advocate (Texas) (07/17/19) Venable, Kali

Paul Michael Orta, a Farmers Insurance agent in Port Lavaca, Texas, and his wife, Marisa Renee Orta, were arrested on July 17 on warrants charging them with forgery of a financial instrument and misapplication of fiduciary property of financial funds between $2,500 and $30,000. The Ortas are accused of misappropriating the payments of several customers, so multiple counts of the charges are likely, said Chief Deputy Johnny Krause of the Calhoun County Sheriff's Office. Krause said an investigation into the agency was sparked by customer complaints made to the Texas Department of Insurance and the sheriff's office. "We had some customers come in with questions about their insurance policies being mishandled," he said. The investigation reportedly revealed that the Ortas forged electronic signatures to complete transactions their customers were unaware of, according to Krause, and those transactions resulted in misappropriated premium payments.
Texas Judge Signs Temporary Restraining Order on Aliera Health
BestWire (07/18/19) Darragh, Timothy

A judge in Travis County, Texas, issued an order prohibiting Aliera Healthcare Inc. from signing up new customers in the state as the company and the Texas Insurance Department debate whether its operations with a health-sharing ministry violate state regulations. The judge said the state presented evidence that "irreparable injury, loss, and/or damage" could occur without a temporary restraining order. The order prohibits Aliera Healthcare from accepting "any new customers in the State of Texas until such time that this case is resolved." The order also sets a hearing for July 29, at which time the court will decide whether the temporary restraining order should be made into a temporary injunction following arguments by Aliera. The Department of Insurance in the state of Washington in May filed a cease-and-desist motion against Aliera and Trinity, saying it found some consumers believed they were purchasing health insurance.
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