California’s settlement with UnumProvident, which changes the way in which disability policies are handled in the state, also could make coverage more expensive and difficult to find, said Karen Ignagni, president and CEO of America’s Health Insurance Plans.
“California’s disability insurers now have a new standard, one that will provide a better sense of security for policyholders, which is what disability insurance is really all about,” said California Insurance Commissioner John Garamendi.
But Ignagni noted that the deal also could have negative consequences for employers and individuals, who will likely be facing increased premiums as claims costs rise and coverage becomes more difficult to find.
“It’s a classic regulatory conundrum,” she said. “Regulators seek to protect their constituents, but the results may increase costs significantly and make it more difficult for employers and individuals to get disability coverage.”
Ignagni noted that the settlement agreement may run counter to the goals of some claimants themselves. “It appears to do an about-face on return-to-work efforts” undertaken by disability advocates, she said, possibly undermining “a great deal of work in the last two decades.”
The settlement also “moves in a very different direction” from the changes made in the workers’ compensation system in California over the past two years, she added, in which lawmakers sought to balance the need to protect the consumer with the need to ensure that businesses could operate and grow in the market.
Although UnumProvident has said that after the California settlement it has amended its multistate agreement and will now send notices to claimants of the other states for claims denied or terminated in calendar years 1997 through 1999, Ignagni said AHIP has not heard of any efforts in those states or in Montana, the only other state to not sign onto the multistate agreement, to seek to change the terms of their agreements.
Ignagni said AHIP will conduct an “impact analysis” of the California agreement and will investigate whether the deal raises any ERISA issues that should be under the jurisdiction of the federal Department of Labor rather than Garamendi.
Regarding the meeting the department has scheduled for Nov. 17 to discuss disability coverage issues with insurers, Ignagni said that, through its members, AHIP “will be a party at those discussions.”
The results may increase costs significantly and make it more difficult for employers and individuals to get disability coverage,” says AHIP President and CEO Karen Ignagni.