on September 28, 2014 by admin in Insurance Industry, Comments (0)

Insurance industry grows in Kentucky

The amount of insurance premiums collected in Kentucky has grown by $5 billion since 2008, ranking it 27th in the nation. As part of the industry’s growth, citizens in the commonwealth will also have two new health insurance companies competing for their business in 2015.

Sharon Clark, commissioner of the Kentucky of Department of Insurance, reported to legislators this week at the Interim Joint Committee on Banking and Insurance meeting that since she took office in 2008 the industry remains healthy and vibrant.

In 2008, there were 1,650 insurance companies doing business in the state. That number has grown to 2,024. Also, in 2008 there were 120,566 licensed producers, agents and brokers in Kentucky and as of 2014, there are 174,000, according to Clark.

Because of the strong market, the new insurance companies, WellCare Health Plans Kentucky and CareSource Kentucky, have scheduled open enrollment for Nov. 15 through Feb. 15.

With growth also comes increased revenue from premium tax, Clark said.

“With the growth of that, it enables an insurance premium tax,” Clark said. “Last year, that brought in $138 million for our firefighters and police, which is a good benefit for them. Additionally, it was $250 million taken in by local governments from premium checks. It is a very good source of revenue for them.”

Clark said unfortunately growth has increased the number of insurance fraud cases per year in the state. Last year there were 1,686 insurance fraud referrals with 86 convictions.

Apprising Kentucky lawmakers about health insurance benefits, Clark said the federal government will scrutinize benefits in 2016, but will allow them to remain the same in 2015.

“We have recommended that they let that stay stable for another two or three years to let the marketplace settle down,” Clark said. “There are also some questions in Washington about the adequacy of the networks, of the providers. We have not had those issues. Kentucky is very fortunate compared to other states.”

With the large enrollment numbers in the state, the challenge though has been servicing a population that has little or no experience with personal insurance.

“We have had some issues with delays on pharmacy benefits … and also we are dealing with so many people that have never had insurance before,” Clark said.

“We are having to do a lot of education. Some people didn’t know the difference between co-pay, a premium or a deductible. It’s really been a challenge that we’ve tried to educate the population we have in the marketplace as to what the benefits are.”

National issues

Since the recent data breaches at realtors like Home Depot and Target, Clark said the federal government is looking into making cyber liability a priority.

Just as lethal as a terrorist attack, a breach of the banking industry would equally be as devastating to the nation, Clark emphasized and reported that all insurance companies are required to have cyber IT technology in place, putting them ahead of the banking industry.

“Now that is not the case with the small mutual type insurance companies,” Clark said. “We’ve been aware of this issue for several years, and what we are working on is to develop a mechanism where if the FBI detects cyber breaches that impact our industries we can work with them. I wanted to put that on your radar. You will be hearing more about the cyber liability risk.”

Also in a similar arena is terrorism risk insurance.

After 9/11, Clark said the insurance industry took a huge hit on claims from casualties and worker compensation claims. Congress authorized a program called the Terrorism Risk Insurance Act to provide a backstop of insurance coverage in the event of an attack.

The program was set to expire in 2005, according to Clark, but was extended and will expire at the end of the year.

“The property and casualty insurance industry cannot and will not take on terrorism liability,” Clark said. “They have told us that. They don’t have the resources or capabilities to do it. That’s why there needs to be a federal backstop.

“My hopes were they would pass it in the Senate. We had the NBA, the NFL — all the national sports leagues — that went there because of the avenues that could be potential targets. Kentucky certainly should worry about Churchill Downs and our basketball programs.”

Article source: http://www.the-messenger.com/article_364c5c90-4713-11e4-a5c2-efeabf3651a4.html

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