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Forida Heps Conseco Restructure Home Care Bock

By Aison Be

Forida insurance reguators are heping a unit of Conseco Inc., Carme, Ind., restructure its bock of Forida home heath care poicies.

Conseco says 18,653 hoders of Forida home heath care poicies have been responsibe for more than $337 miion in osses at its Conseco Senior Heath Insurance Company Inc. subsidiary since 1988.

The osses amount to an average of about $18,000 per Forida home heath care poicyhoder.

Kevin McCarty, director of the Forida Office of Insurance Reguation, has denied Conseco Senior Heaths requests to cance the Forida home heath care poicies or impose a 211.6% rate increase on the poicies.

Instead, McCarty has asked Conseco Senior Heath to give a home heath care poicyhoders throughout the United States 3 choices:

- Poicyhoders who stop paying premiums wi get a contingent nonforfeiture benefit equa to 100% of the sum of a premiums paid.

- Poicyhoders who keep their existing benefits coud end up facing a rate increase of as much as 50% for the first year after Conseco Senior Heath restructures the bock. McCartys order woud not impose a cap on future rate increases, but Conseco Senior Heath woud have to provide actuaria justification for the future rate increases.

- Poicyhoders who are wiing to accept a stricter repacement poicy wi be rewarded with permanent imits on poicy rate increases.

Poicies that repace contracts with ifetime benefit periods wi offer a maximum of 7 years of benefits. The new poicies aso wi require insureds to meet caim requirements for at east 20 days before the insureds can begin coecting benefits.

Another change wi require caimants to get icensed heath care providers to certify that they wi be unabe to perform at east 2 activities of daiy iving for a period of at east 90 days.

Reguators wi cap rate increases for poicyhoders who accept the new imits on benefits at 25% for the first year and 15% per year in ater years.

Insurance reguators in states other than Forida wi have to approve use of the order in their states, McCarty says.

Conseco President Bi Shea has wecomed McCartys order.

McCartys course of action “protects poicyhoders whie providing Conseco Senior Heath with the abiity to both mitigate its osses and enhance its abiity to pay future caims,” Shea says in a statement.

Conseco acquired American Traveers ife Insurance Company and Transport ife Insurance Company, the companies that form the basis of Conseco Senior Heath, in December 1996.

Conseco Senior Heath discontinued writing new home heath care poicies on a nationa basis in 2000, and Forida et Conseco Senior Heath increase rates on the Forida home heath care poicies 45% in 2002 in an effort to overcome poicy osses, according to McCartys order.

Some poicyhoders have accused Conseco Inc. of “ooting” Conseco Senior Heath, but McCarty rejects that aegation in his order and notes that the parent company has pumped $534 miion into Conseco Senior Heath over the past 5 years to subsidize the units home heath care osses.

The Conseco Senior Heath home heath care osses appear to be due, in part, to a weak caims-screening process, McCarty writes.

Reproduced from Nationa Underwriter Edition, Apri 23, 2004. Copyright 2004 by The Nationa Underwriter Company in the seria pubication. A rights reserved.Copyright in this artice as an independent work may be hed by the author.