Daily Insurance Report  
Walt Bernard Podgurski,  Editor,  440-773-1108, 

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Editorial Mission Statement: The goal of this publication is to provide readers a broad selection of what is being written about the insurance industry and related issues. Some articles may have a “tilt” towards a particular perspective one way or another. Inclusion in this newsletter is not an endorsement of any views or content; but report the various and differing views appearing in media.
Daily Insurance Report Friday, 03/16/18

Wells Fargo faces sanctions for auto insurance payouts: Report
U.S. regulators are preparing to sanction Wells Fargo for receiving commissions on auto insurance policies it helped force on more than half a million drivers, people with direct knowledge of the probes told Reuters.
In July, Wells Fargo blamed a third-party vendor for wrongly layering insurance policies on its auto borrowers. Wells Fargo did not explain that it received payouts when those policies were written.
The fact that Wells Fargo stood to profit from the insurance program will form the backbone of fresh sanctions against the bank, said people with knowledge of the matter who were not authorized to speak publicly.
Those penalties would be the latest in a long-running scandal over how the nation's third-largest lender treated its customers.
The Office of the Comptroller of the Currency (OCC), Wells Fargo's primary regulator, is asking the bank which executives knew about the payments and whether they should have been stopped sooner, said the sources.

Wells Fargo CEO's 36% Pay Increase Criticized by Senator Warren
By Dan Reichl / Bloomberg
Wells Fargo & Co. Chief Executive Officer Tim Sloan’s pay raise drew criticism from U.S. Senator Elizabeth Warren.
“Wells Fargo is about to be sanctioned for running an auto-insurance scam that cost Americans millions of dollars. I don’t think that sort of corporate management merits a raise for CEO Tim Sloan,” Warren, a Massachusetts Democrat and frequent Wall Street critic, said Thursday in a tweet.
The San Francisco-based bank has been embroiled in scandals for 16 months, including a revelation that auto-loan clients were forced to pay for unwanted car insurance. The firm announced this week that it paid Sloan $17.4 million for 2017, a 36 percent increase from a year earlier.
“I disagree with almost everything Elizabeth Warren says,” Sloan told reporters after an appearance at the Detroit Economic Club, according to a report by Reuters. “Most of her comments are both ill-informed and inappropriate.”

Life / Health / Employee Benefits

Alphabet Has Filed 186 Health Care Patents. Watch Out, World
Michela Tindera , FORBES STAFF
Big tech firms have already disrupted retail, media, finance and nearly every other industry. Up next? Life sciences, according to Ernst & Young .
Between 2013 and 2017 Alphabet GOOGL, Microsoft MSFT and Apple AAPL filed over 300 patents tied to health care, according to a new report published by the Ernst & Young Life Sciences division released Tuesday. Alphabet filed 186 patents, Microsoft filed 73 and Apple filed 54 in that time span, representing a 38% increase in the number of health-related patents filed by these three companies every two years.
This kind of deep-pocketed competition represents a new challenge to drug companies, Ernst & Young says. EY argued that while blockbuster drug launches can still be incredibly lucrative, as reimbursement pressures have grown, the number of drugs that are actually achieving at least 50% of analysts’ peak sales forecasts has been falling since 2005. Instead, EY’s report suggests, life sciences companies need to focus on harnessing the data they have to develop digital platforms that could create a way for patients to understand their health in a way that AirBnb has helped consumers find a cheap room or Uber has helped find a ride.
“Some of the skills that tech companies have are exactly what the industry needs,” said Ernst & Young global life sciences industry leader, Pamela Spence said, pointing to big tech firms’ wealth of data scientists on staff. “The rising demographics of an aging population and the emerging middle class around the world has suddenly created a huge additional market for health care.”

Report: Individual Insurance Premiums Next Year 40% Lower Under Alexander-Murray, Collins-Nelson Than if Congress Doesn’t Act
Press Release / Senator Susan Collins
Leading Health Care Experts at Oliver Wyman say bills will Cover 3.2 Million More Americans
Washington, D.C. - Health care experts at Oliver Wyman released an analysis today showing that the passage of a proposal based on the Alexander-Murray Bipartisan Health Care Stabilization Act and the Collins-Nelson Lower Premiums Through Reinsurance Act will lower premiums, compared to what people in the individual market will pay if Congress doesn’t act, by more than 40 percent in the individual market and provide insurance coverage to an additional 3.2 million individuals.
Oliver Wyman based its analysis on a proposal that would fund CSRs—temporary payments to reduce out-of-pocket costs for low-income Americans in the individual market—and provide $10 billion annually for invisible risk pool/reinsurance funding in 2019, 2020, and 2021. It also factored in increased flexibility for states that seek to use waivers under Section 1332 of the Affordable Care Act. The analysis applies to ACA-compliant plans in the individual market, both on and off the exchange.

Tailoring self-funding benefit strategies to the needs of the client
By Cort Olsen
Liana Hemingway was devastated when she had to inform Eckerd College’s faculty and staff that yet another round of premium increases meant the school had no choice but to stop funding some of their benefits.
“We’re a small private liberal arts college that is tuition dependent and we just couldn’t afford it anymore,” recalls Hemingway, Eckerd's HR director. “It was the first time during my 15-year tenure where we were faced with having to cut benefits.”
So, the St. Petersburg, Fla., school started considering a more radical approach. Once a month, Hemmingway and the Eckerd College’s benefits committee began meeting regularly with Paula Beersdorf, the president of Sun Risk Management, a local health insurance agency. During those monthly sessions, Beersdorf presents the committee with the steps it can take to become self-insured, as it mulls which of several approaches to persue.
Beersdorf, who has advised clients on self-funding strategies for the past 30 years, finds her services in much demand these days, as a growing number of employers are confronted with unsustainable premium increases. Not a believer in "one-size fits all," she says there is a self-funding strategy for every employer, regardless of its circumstances.
The trick, Beersdorf maintains, is to pair the right approach with the right client. Here are four basic strategies that she often recommends:
1. HRAs
2. Level-funding
3. Captives
4. Partial self-funding

The Dishonest Claims about Healthcare
by Robert Huebscher / Advisor Perspectives
A recent paper from the World Economic Forum – the group that runs the Davos conference – stated that Americans pay more for healthcare than other countries but get inferior outcomes. That rhetoric was amplified by Warren Buffett, when he called health care costs a “hungry tapeworm” eating into the American economy. But, before you assume that Americans are not getting good value for their health care dollars, let’s look at the data.
The data (from the Davos paper) at the heart of those claims will be familiar to anyone who has followed health care issues:
The dark blue bars show that the U.S. spends more on healthcare as a percentage of GDP (17.1%) than other developed countries, and the light gray bars show Americans have a lower life expectancy at birth (age 79).
Those facts are not in dispute. The problems are that life expectancy at birth is a highly imperfect measure of health care outcomes and that health care spending as a percentage of GDP doesn’t accurately measure how much a government’s outlays affect the health of its citizens.
Measuring health care-related spending and outcomes is a daunting and complex task. It is foolhardy to look for a simple answer, whether it is in life expectancy or spending as a percent of GDP.
But it is dishonest to condemn the U.S. because it spends more on healthcare as a percentage of GDP or it has shorter life expectancies at birth.
The U.S. has a problem delivering good health care to all its citizens. Blacks, the poor and the poorly educated do not have as good outcomes as whites. We have a problem with homicide, opioids, smoking and obesity.
An unbiased way to measure health care outcomes is with the survival rate of certain kinds of cancers, and, on this basis, the U.S. has an outstandingly good record.
The U.S. spends a lot delivering this health care, but that money does not benefit all segments of its population equally. The rich get better healthcare and pay a high price for it.
It is shortsighted to look only at health care spending when asking whether government outlays provide good health outcomes. One should also look at how much a government spends on health-related services (including social services), not just on healthcare, and on this basis the U.S. is not an outlier.
If you are worried about treating a complex and life-threatening disease – and not the hungry tapeworm that Buffett fears – then you’re best bet is the U.S. health care system.

Only Half of Americans Feel Knowledgeable about Health Savings Accounts
A new joint report by the LIMRA Secure Retirement Institute and Insured Retirement Institute (IRI) and finds only 51 percent of Americans believe they are knowledgeable about Health Savings Accounts (HSAs).
The study surveyed consumers, financial advisors, asset managers, and employers to get a complete understanding of the HSA market and how this product is being used. The survey results indicate there is much to be done to educate consumers, advisors and employers to ensure the full benefits of HSAs are realized.
The survey found that many Americans are unaware that they can use their HSA assets ̶ accumulated in their working years ̶ to pay for health care and long-term care expenses in retirement. In fact, 2 in 5 Americans mistakenly believe that balances must be spent by the end of the year, or forfeited. The growing costs of health care and long-term care have prompted many advisors to address these risks with their clients as they plan for retirement. Nine in ten advisors surveyed say they typically discuss healthcare or long-term care with clients but only 7 in 10 have specifically addressed the use of an HSA. Those who do not discuss HSAs acknowledge they have insufficient expertise with HSAs. Nearly all advisors (96 percent) surveyed say they would like to learn more.
“Today, only a quarter of Americans plan to use HSA assets to fund future health care costs in retirement,” noted Judy Zaiken, corporate vice president and project director, LIMRA Secure Retirement Institute. “The findings underscore a great opportunity for the industry to educate consumers and advisors on the value of using HSAs for tax-free asset growth and as a financial hedge against retirement health care costs, which is still an uncommon strategy.”

Other Insurance News

LIMRA Secure Retirement Institute: U.S. Single Premium Pension Buy-out Sales Nearly Double in the Fourth Quarter
WINDSOR, Conn.,Fourth quarter pension buyout sales jump 96 percent March 1, 2018—U.S. single premium pension buy-out product sales were $11.1 billion in the fourth quarter of 2017, a 96 percent increase compared with fourth quarter 2016 results. This is first time that fourth quarter buy-out sales have surpassed $10 billion in the last 5 years and the 11th consecutive quarter of sales over $1 billion, according to LIMRA Secure Retirement Institute’s quarterly U.S. Group Annuity Risk Transfer Survey.
In 2017, single premium buy-out product sales were $23 billion, 68 percent higher than 2016.

Longevity Insurance is Underused in Retirement Planning
A Way to Hedge Against the Risk of Living to a Very Old Age - Tips from AnnuityAdvantage
More people are living into their late 80s, 90s, and even past 100. But longevity isn't so great if you run out of money.
To avoid that risk, you can buy "longevity insurance." It's a special kind of deferred annuity that assures you'll have a guaranteed income forever, even if you live to 100 or beyond.
"A longevity annuity hedges against the financial risk of living a very long life," says Ken Nuss, CEO of AnnuityAdvantage, an online annuity marketplace. "You can think of it as the opposite of life insurance."
The longevity annuity - also called a deferred income annuity - combines tax-deferral with a future stream of income. It defers payments until a future date that you choose. Most buyers choose to start taking payments when they turn 80 or older, Nuss says.
You'll know the exact amount of monthly lifetime income you'll receive and the exact date when it begins. You can buy either a single-life annuity or a joint-life annuity, which typically covers both spouses.
"It's the most efficient way to protect against outliving your assets in very old age," Nuss says.
The power of the approach results from two things. First, the insurer invests your money for many years, enabling it to compound until you begin receiving income. Second, buyers who do not live to an advanced old age subsidize those who do.
"The longer you delay taking payments and the more advanced age you start taking them, the greater the monthly payout," Nuss says.

Survey: 18 percent of healthcare employees willing to sell patient data
By Jake Smith for iGeneration / ZDnet
Nearly one in five employees in the healthcare field said they're willing to sell confidential data like login credentials to unauthorized parties, a new survey from Accenture claims. Nearly one quarter of the survey's respondents said they know someone in their organization who has sold their credentials or access to an unauthorized outsider.
The study also found some employees will sell data for cheap:
The survey, of 912 employees of provider and payer organizations in the United States and Canada, found that the 18 percent of respondents willing to sell confidential data to unauthorized parties would do so for as little as between $500 and $1,000. In addition, respondents from provider organizations were significantly more likely than those in payer organizations to say they would sell confidential data (21 percent vs. 12 percent). This includes selling login credentials, installing tracking software and downloading data to a portable drive, among other actions.
Other key points from the survey:
99 percent of respondents feel responsible for the security of data.
21 percent keep their user name and password written down next to their computer.
88 percent said their organization provides security training.
For respondents who received training, 19 percent said they would sell confidential data.
Accenture conducted its online survey with 912 qualified employees of health providers (601) and payer organizations (311) from the US and Canada.

Central Kentucky farmer allegedly got $2.6 million through insurance fraud
BY BILL ESTEP / Herald-Leader
A Paris farmer with operations in several Central Kentucky counties grossed $2.6 million through fraudulent crop-insurance claims and other illegal acts, a federal grand jury has charged.
Ronnie Jolly, 46, was indicted March 1 but the charges were sealed until Tuesday.
Jolly owned or rented farm land in Bourbon, Scott, Bath, Fleming and Montgomery counties and was a major producer of tobacco, corn and soybeans, according to the indictment.
Jolly allegedly lied to insurers by turning in less crop production than he really had and filing insurance claims based on the falsified, lower yields.
He allegedly sold the excess crop production in other people’s names or under fake names, including Fred House and Jon Brown, profiting both from false insurance claims and the sale of the unreported commodities, the indictment said.
In 2012, for example, Jolly produced 41,767 bushels of corn but reported only 11,833. He sold the unreported corn under two other names, including that of his minor son, and received an insurance payment of $347,191, according to the indictment.

Danish woman invalidates insurance after sharing run on social media
Ritzau/The Local
The running app Endomondo has cost a Danish woman insurance payouts covering her inability to work on health grounds.
The woman's insurance company, AP Pension, used the woman's profile from the app to prove that she did not qualify for full cover, trade union 3F writes on its website.
She had received 200,000 kroner (27,000 euros) annually since 2008 for reduced ability to work caused by a whiplash injury sustained in 2007, according to the report.
But AP Pension were reportedly given a tip-off in 2015, resulting in an investigation that included scrutiny of her activity on social media.
This showed that the woman was member of a sports association and had taken part in sporting events.
The insurance firm also gained access to the woman's profile on popular fitness app Endomondo, where users can share stats from their training sessions.
The woman's profile reportedly showed photographs and running times registered from her training.
"It is in everyone's interests to prevent insurance fraud. But it is concerning that information from a running app can be used in such a case as this.
"It is important for companies to have correct ethical practices, including when they are investigating potential fraudsters. I assume that the woman's Endomondo profile was public. Otherwise it is concerning how they may have obtained this data," Anette Høyrup, a senior legal advisor with consumer organisation Forbrugerrådet Tænk, said to 3F.
"It shows how necessary it is to think about where we share our private data," Høyrup added.

Grab and Chubb sign partnership to provide innovative in-app insurance solutions throughout Southeast Asia
- Partnership blends the power of Grab's ecosystem and Chubb's insurance expertise
- Initial offerings to include accident, hospitalization and other critical insurance coverage to Grab's 2.6 million driver-partners, accessible through the Grab driver app
- Telematics and other data from Grab platform to be used for development of customised and cost-effective insurance products for Southeast Asia
- Partnership announced as part of the launch of Grab Financial, the fintech platform within the Grab ecosystem
SINGAPORE, March 13, 2018 /PRNewswire/ -- Grab, the leading on-demand transportation and fintech platform in Southeast Asia, has announced a partnership with Chubb, the world's largest publicly traded property and casualty insurance company, to offer insurance solutions for Grab's driver-partners. Using the Grab app, drivers will be able to select different insurance options to protect their vehicles, their livelihoods and, ultimately, even their families, with access to loss of income insurance, per-ride schemes, personal accident policies and motor insurance. The companies will also explore leveraging data technology from Grab's platform, including telematics, machine learning and predictive analytics to offer insurance solutions personalized to the specific needs of different private-hire vehicle drivers in Southeast Asia.
The partnership was announced as part of the launch of Grab Financial, the fintech platform within the Grab ecosystem. Encompassing all of Grab's fintech offerings, Grab Financial offers payments services, rewards and loyalty services, financial services and agent services.

LIMRA Announces 2018’s Rising Stars of Distribution under 40
WINDSOR, Conn., March 15, 2018 - LIMRA today announced the 10 winners of its contest to recognize Rising Stars of Distribution under 40 in the financial services industry. The contest searched for innovative and dedicated individuals who are making a difference in Distribution.
“These future distribution leaders will help shape the industry in the years to come. Their skills and abilities are essential for organizations to be able to keep pace and compete today and in the future,” said Patrick Leary, corporate vice president, Distribution Research at LIMRA. “We are excited to celebrate the successes of these young professionals.”
The winners will be honored at a reception during LIMRA’s Annual Conference, which will be held Oct. 28-30, 2018, in New York City. To learn more about the conference, please visit: http://www.limra.com/annual/
To view the winners and read excerpts from their nominations, please visit: 2018’s Rising Stars in Distribution
Brady Aarssen, Assistant Vice President, Business Development Strategy / Great-West Life Assurance Company Jessica Bush
Director, Client Relationship Center - Service / Western & Southern Financial Group
David Goettelmann, Lead Manager - Project Management, Chief Sales Office / AXA US
Tony Govender, Branch Manager / Sanlam Sky
Nathan Jacobson, Vice-President, Life Distribution / Allianz Life Insurance Company of North America
Ellen Kottke, Senior Product and Sales Consultant / Allianz Life Insurance Company of North America
Judy Lai, Manager, Distribution Talent Development / Penn Mutual
Nicole Miller, New Client Acquisition Program Manager / Western & Southern Life Insurance Company
Craig Molldrem, Senior Partner & Financial Advisor / North Star Resource Group
April Weaver, eWholesaler Greater Northeast Territory / Pacific Life Insurance Company

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Walt Bernard Podgurski - - Editor