Director's Message Regarding Health Insurance Premiums for 2017

As has been reported on our website and on healthcare.gov, Arizona’s rates for Obamacare-compliant health insurance for plan year 2017 are increasing significantly.  First, I want to say that I am sorry that your rates have increased so substantially.  While the Department’s role in rate review is limited, I want to acknowledge your frustration with the rising health insurance costs.  It is a difficult time for the Arizona health insurance market and the 2017 plan year will be extremely challenging.

As you are likely aware from the extensive media coverage, almost all of the insurers participating on the Arizona healthcare exchange, commonly known as the Obamacare marketplace, withdrew from the exchange or discontinued their exchange plans for next year. Neither the state nor the federal government have the authority to compel a company to sell insurance on the exchange.  As explained to the Department, the withdrawals were due to insurance companies suffering large financial losses from their participation on the exchange.  As a result, Arizona was left with only one insurance company per county that will be issuing policies that are eligible for premium subsidies on the exchange in 2017.  This means that one insurer will be absorbing all of the major medical insurance risk on exchange in each county.  Unfortunately for us, this substantial assumption of risk led to the filing of significant premium rate increases to cover that financial risk.

When a rate increase is filed with the Department of Insurance, the ADOI does not have legal authority to approve or disapprove the major medical insurance rate.  The Department’s responsibility is to review the rate filing to confirm that valid, detailed financial and actuarial information (as required by federal and state law) is provided in support of the rate increase.  In order to perform that review, the ADOI engages independent actuaries to scrutinize the rate filings in depth to confirm compliance with the laws and regulations.

Despite the magnitude of the premium increases, the independent actuaries’ detailed reviews found that the insurers had provided the required financial and actuarial information in support of the rate increases.  The ADOI carefully supervised and reviewed the actuarial work performed, and determined that the premium rate increases were in compliance with Arizona law.  Therefore, the ADOI “filed” the rates for use in Arizona.

Insurers are required to provide a written description justifying the rate increase (an actuarial memorandum) and a simple and brief narrative describing the data and assumptions that the insurer used to develop its rate increase (a consumer justification).  This information is available for your viewing at https://ratereview.healthcare.gov/

Lastly, while many individuals who purchase their coverage on the exchange receive subsidies that will cover most or all of the premium increase, roughly a quarter of those enrolled in Marketplace plans are ineligible for subsidies and will be faced with the difficult choice of paying a dramatically higher price or going without insurance and facing a stiff penalty from the federal government.  The Governor’s Office has expressed its concerns to Congress about this situation (http://www.mccain.senate.gov/public/_cache/files/556409f1-2002-4ec5-9301-54c8438df9e5/corieri-testimony-senate-homeland-security-9-15-16.pdf) and encourages you to contact your federal representatives as well with your concerns (https://www.usa.gov/elected-officials).

Priority: 
Leslie R. Hess
Extension of Major Medical Transitional Policies through Calendar Year 2018

Phoenix - The Arizona Department of Insurance (ADOI) announced today that insurers in the individual and small group[1] major medical health insurance markets can choose to renew transitional policies for a policy year beginning on or before October 1, 2018, provided all transitional coverage ends by December 31, 2018.    Transitional policies are non-Affordable-Care-Act-compliant policies that have been continuously in effect since by or before December 31, 2013.  At least 6 health insurers have individual or small group transitional policies still in effect in Arizona.

This extension is the maximum extension permitted under the Insurance Standards Bulletin issued on February 23, 2017 by the Center for Consumer Information and Insurance Oversight (CCIIO), and gives insurers the option to continue the pre-2014 individual and small group policies covering approximately 70,000 Arizonans through the end of 2018.  Insurers that offer this extension of transitional coverage are required to send each policyholder a renewal notice that explains the offer to continue the transitional policy through the end of 2018 and includes information regarding any related price increase.  Insurers must also send a 90-day notice for the final discontinuation of the transitional plans.

The extension does not affect grandfathered policies issued prior to March 23, 2010.  These policies can remain in effect as long as they maintain grandfathered status.

For additional information on the Affordable Care Act, please visit the Arizona Department of Insurance website or call Consumer Assistance at (602) 364-2499. 

 

[1] Small Group refers to a policy issued to an employer who employs at least two but not more than fifty eligible employees

(ARS § 20-2301(A)(21)).

 

Insurance Agent Arrested for Stealing $80,000 of Premiums

Phoenix, AZ – It seems that between March 2016 and January 2017, Ms. Rosita Johns diverted over $80,000.00 in premiums paid by two companies towards their workers’ compensation and general liability insurance policies.  

On August 10, 2016, Burke Construction Group Inc. filed a complaint with the Arizona Department of Insurance Consumer Protection Division concerning the theft of $11,200 it paid to Ms. Johns for a surety bond.  Johns never issued the bond and appears to have diverted the funds for her personal use.  On October 25, 2016, the Department revoked her individual insurance license as well as the licenses of three of her business entities.  It was at that time, the Consumer Protection Division referred the case to the Department’s Fraud Division.

Further investigation by the Fraud Division uncovered another victim, which paid more than $69,470 for workers compensation, general liability, and automobile policies.  Ms. Johns did not forward the premiums to the insurance company and policies were not issued.  Again, it appears John’s diverted the funds for her personal use.

On April 5, 2017, Johns was taken into custody and booked into the Maricopa County Jail for theft and insurance fraud.  The Fraud Division’s investigation is ongoing as additional victims are being identified.

The investigation is being submitted to the Arizona Attorney General’s Office for prosecution.

Insurance Professional License Number Crosswalk (MS EXCEL)

With the Department of Insurance move off of its old regulatory system to State Based Systems ("SBS"), the license number for each Arizona-licensed insurance professional (insurance producer/agent, surplus lines broker, insurance adjuster, etc.) changed. Attached is a MICROSOFT EXCEL file that contains the name, old (legacy) license number, new license number and National Producer Number for each insurance professional licensed whose license expired/expires on or after 4/30/2016. Use the LICENSE SEARCH menu option at the top of this page to view the license record for a particular licensee or company.

Insurance Professional License Number Crosswalk (CSV)

With the Department of Insurance move off of its old regulatory system to State Based Systems ("SBS"), the license number for each Arizona-licensed insurance professional (insurance producer/agent, surplus lines broker, insurance adjuster, etc.) changed. Attached is a COMMA-SEPARATED VALUES (CSV) file that contains the name, old (legacy) license number, new license number and National Producer Number for each insurance professional licensed whose license expired/expires on or after 4/30/2016. Use the LICENSE SEARCH menu option at the top of this page to view the license record for a particular licensee or company.

GO-PRO Video Leads to Conviction of Insurance Fraud Suspect

Phoenix, AZ – Robert Atlas falsely reported to GEICO that he had crashed his 2012 Corvette Stingray while exiting the I-10 freeway, on the exit ramp at Wild horse pass in Chandler Arizona. Robert was paid $61,465.11 by GEICO for the loss of his Corvette. It was later discovered that on 10/10/2015, Robert Atlas had actually raced his Corvette Stingray in a drag race at a drag racing event at Wild Horse Pass Motorsports Park. He subsequently lost control of his corvette during the race and crashed into the concrete barrier totaling his Corvette Stingray. This crash was captured on a Go-Pro video and published on YouTube. The policy does not cover damage caused to the vehicle if it was involved in drag racing. Robert was later shown the video footage and he admitted to making the false claim to GEICO Insurance.


On 1-25-17, Robert Atlas pled guilty to Insurance Fraud as a Class 6 Undesignated offense and as required by the Plea Agreement he paid the entire amount of restitution back to GEICO Insurance prior to sentencing. He was sentenced to two years supervised probation and was assessed $1,560.00 in court costs.


The case was investigated by the Arizona Department of Insurance Fraud Unit and prosecuted by the Arizona Attorney General’s Office.


YouTube video below.


https://www.youtube.com/watch?v=j-xdgp3x4g0