NEW PRODUCTS l  LIFE INSURANCE AND ANNUITIES  l  HEALTHCARE l
EMPLOYEE BENEFITS l WORKERS' COMP  l  CALIFORNIA

NEW PRODUCTS

Virtual Meetings
Petersen International Underwriters launched a training tool for producers and brokers called “Meetings on Demand.” Live interactive virtual meetings bring audio and video into the workplace for discussions and questions during agent and staff training, general product reviews, new product familiarization, and refresher courses. For more information, visit www.piu.org or call 800-345-8816.

Free Webinar This Friday – Stop Competing On Price
The “WorkComp” Advisory will present a 45-minute webinar designed to help independent agencies revolutionize their sales. "How to Stop Competing on Price: Revamping Your Agency’s Sales Approach" will be held on Friday, March 5 at 2 p.m. EST.  To register for the free webinar, email heather@mywcadvisor.com.

Healthcare Concierge Services
Healthcare Concierge Services is expanding its StandbyMD program with the opening of operations at four major Colorado ski resorts and additional destinations in Mexico and the Dominican Republic. Under the StandbyMD program, travelers receive physician directed healthcare services from a qualified physician who facilitates services around the clock, seven days a week. Services include: prescription drug refills; referrals to medical specialists, chiropractors, dentists, walk-in clinics/urgent care centers; house call visits; and fast access to emergency rooms. Members always have access to English-speaking physicians in all locations. For more information, visit www.StandbyMD.com or call 305-459-4882.

LIFE INSURANCE AND ANNUITIES

The Top 20 Total Annuity Companies
MetLife led annuity sales in 2009, according to a LIMRA report. The top variable annuity writer in 2009 was Prudential Annuities, recording $16.1 billion in VA sales and the top fixed annuity writer in 2009 was New York Life, with a total of $10.3 billion in fixed annuity sales. The following is a ranking of the top 20 total annuity writers:
 
1. MetLife
2. Prudential Annuities
3. TIAA-CREF
4. Jackson National Life
5. AIG
6. Lincoln Financial Group
7. New York Life
8. ING
9. RiverSource Life Insurance 5
10. Allianz
11. John Hancock
12. AEGON
13. AXA Equitable
14. Pacific Life
15. AVIVA
16. Nationwide Life
17. Sun Life Financial
18. Hartford Life
19. American Equity Investments Life
20. Massachusetts Mutual Life
 
For more information, visit http://www.limra.com.

Variable Annuity Assets Soar in the Fourth Quarter
Variable annuities posted a double-digit increase in year-to-year quarter comparisons for the first time in eight quarters, advancing at a rate of 20%. The last time this comparison posted a double-digit increase was in September of 2007, at a rate of 15%, according to a report by the Insured Retirement Institute (IRI).
“The surge in variable annuity assets is a clear indicator that we are indeed on a solid road to recovery…More now than ever, older Americans are looking for dependable, trusted sources of retirement income...Annuities stand alone in guaranteeing lifetime income throughout retirement,” said president and CEO of IRI, Cathy Weatherford.

Variable annuity sales were $31.9 billion for the fourth quarter -- up slightly from $31 billion in the previous quarter. Fourth quarter 2009 net sales were $2.9 billion, compared to third quarter net sales of $2.8 billion. There were $21.9 billion in qualified sales and $10 billion in non-qualified in the fourth quarter. Total 2009 sales were $125.1 billion, compared to $154.8 billion in 2008.

“It is not surprising that year-to-year sales were down. Last year, variable annuity product development was occurring at a dynamic rate, with prospectus filings totaling more than 450 for the year. While 2009 will be noted as a year of change for insured retirement strategies, this year we will see these products further roll out in the market. As we return to simplicity and further align our strategies to the needs of consumers, the industry is optimistic that these new products will gain further traction,” she added. For more information, visit www.IRIonline.org.

Individual Life Insurance Sales Recover Slowly
Individual life insurance sales are showing signs of recovery. After falling by about 30% in the first and second quarters, universal life (UL) sales dropped only 15% in the third quarter, according to LIMRA research. By the fourth quarter, UL sales were only 3% lower than they were in the fourth quarter of 2008. In 2009, UL premium declined 20% compared to 2008.

Total new annualized premium for individual life insurance declined 5% in the fourth quarter of 2009, resulting in a 15% reduction for the year compared to 2008, according to LIMRA's quarterly individual life insurance sales survey.

The first half of 2009 was extremely rocky with sales down 26% in the first quarter and 21% in the second. Individual life insurance sales began to show improvement in the third and fourth quarters. Ashley Durham, LIMRA senior analyst for product research, said that guarantees continue to be important to consumers. Guaranteed death benefit universal life (GDBUL) sales only fell by about 11% in 2009 while non-death benefit guarantee UL products dropped 26%. As a result, GDBUL market share of UL sales increased to 53%, up from 48% in 2008.

Durham said it's interesting that, UL policy count has grown while UL premium has declined over the past year. “We are selling more smaller-face policies to more people. This trend reverses what we have observed for the last decade,” she said.
UL still represents the largest share of the annualized premium at 38%, with whole life at 28% and term at 27%.

Fourth quarter variable products sales remain depressed, down 36% compared to the prior year. However, this marks a more than 50% increase over the prior quarter. For the year, variable products declined by half. Simple and affordable term continued to be appealing to consumers. Sales remained steady throughout the year. Sales were up 1% in the fourth quarter, ending 2009 down only 1%.
Whole life sales increased 12% in the third quarter and another 12 in the fourth quarter after single digit drops in the first two quarters of the year. Marking a 4% gain in 2009, whole life is the only product line to perform better in 2009 than it did in 2008. Policy count also increased 6% in the fourth quarter. Total individual life insurance policy count dropped 3% for the quarter and dropped 2% for the year. For more information, visit http://www.limra.com.

Life Insurance Activity Up
U.S. application activity for individually underwritten life insurance increased 1.2% in January year-over-year, according to the MIB Life Index. January represents the sixth consecutive month where year-over-year change is positive for the U.S. Life Index -- the longest sustained trend of U.S. increases on record. Application activity for the period December 2009 to January 2010 remained flat at 0.1%.
U.S. activity by age group showed: ages 0 to 44, off 2.5%; ages 45 to 59, up 2.5%, and ages 60, up 15.2% -- the 10th consecutive month of year-over-year, double-digit growth. Notably, the 45 to 59 age group has mostly lost ground since 2004, but it is experiencing an upswing in application activity that started in July of 2009 and has continued through this past January. The 2009 North American MIB Life Index Annual Report is available for free at www.mibsolutions.com/LI.
 
HEALTHCARE

Obama's Democrats Voice New Confidence On Healthcare
Democratic leaders in the Congress voiced confidence that they will have the votes, possibly within a couple of months or so, to pass landmark legislation to overhaul the healthcare system, reports Reuters. Facing a wall of Republican opposition, Democrats have said they may resort to a rarely used procedural tactic, known as reconciliation, to win approval on purely partisan votes.

Republican Senator Lamar Alexander warned Democrats to expect voter backlash in November's congressional elections if they try to use reconciliation, which would enable them to win passage in the 100-member Senate with 51 votes rather than the 60 required to clear Republican roadblocks.

Under this method, the House would approve the Senate-passed bill. Then changes to the Senate bill sought by the House would be passed through reconciliation.
  Many of those provisions, such as changes to a tax on high-cost insurance plans and additional federal subsidies to make coverage more affordable, were incorporated in a proposal released by Obama last week. House passage is not assured. The House narrowly approved its healthcare bill last year, but a number of House Democrats have raised concerns about the Senate version, including its less restrictive language on abortion.

Jargon-filled EOBs Obscure Vital Info
When it comes to trying to make sense of a health plan’s explanation of benefits (EOBs), an uninformed consumer is vulnerable to high prices, fraud, and abuse, according to a study by DALBAR Inc. The study compared communications from 34 leading insurers including the federal government’s own Medicare program.
Sixty-eight percent of EOBs got failing grades. The Medicare communication was among the failures, scoring below the industry standard. Kathleen Whalen, Managing Director at DALBAR said, “This failure rate helps to explain why healthcare costs continue to rise with little resistance on the part of consumers -- they just don’t know what they are buying.”
The following are some key findings:
• Nearly 70% firms failed to produce EOBs that provide a basic level of understandability.
• Just 9% of got a DALBAR designation of Excellent for the clarity, content, and design of their EOBs.
• Less than a third of the EOBs got the minimum designation of Good or higher.
• Only three firms include any charts and graphics on their EOBs to help consumers understand how their benefits work.

A handful of innovative health insurers, such as Arkansas BlueCross BlueShield, CIGNA, and Humana, have transformed their EOBs into understandable and useful consumer tools.

Most EOB messaging takes the form of supplemental notes, which are often written in esoteric language. And these supplemental notes are placed far away from the information to which they apply. These hard-to-find notes often contain the most important elements of the EOB, such as the explanations.
The majority of EOBs failed to answer the following most basic consumer questions clearly:
• How much, if anything, do I owe?
• What action should I take now?
• What do I do with this document?
 
For more information, visit www.dalbar.com.

Bill to Repeal Anti-Trust Exemption Draws Fire
The House of Representatives approved a measure that would repeal the McCarran-Ferguson Act’s limited antitrust exemption for health insurers. The Health Insurance Industry Fair Competition Act passed on a 406-19 vote.

Karen Ignagni, president and CEO of America's Health Insurance Plans (AHIP), says, “In attempting to solve a problem that doesn’t exist, this legislation is the triumph of sound bites over substance. The Congressional Budget Office has said that passage of this legislation will do nothing to reduce healthcare costs. Moreover, according to the National Association of Insurance Commissioners, anti-competitive ‘activities are not permitted under the McCarran-Ferguson Act and are not tolerated under state law.’ Real reform means containing costs to ensure that healthcare is affordable for working families and small businesses. It’s time to clear the political hurdles that stand in the way of real cost containment.”

The Independent Insurance Agents & Brokers of America says that the limited antitrust exemption allows small and midsized insurers to price risk accurately, which allows them to compete against each other and compete against large insurers for the benefit of consumers. A Congressional Research Service (CRS) report recently confirmed the pro-competitive nature of the McCarran-Ferguson antitrust provisions, stating that efforts to further limit the McCarran-Ferguson antitrust provisions could lead to less competition, undercutting the fundamental purpose of the federal antitrust laws.

Business Roundtable Urges Healthcare Reform
In September 2009, Business Roundtable issued a report on healthcare cost trends prepared by Hewitt Associates. Its central finding was that, if present trends continue, the cost to provide an employee with healthcare will rise from $10,000 to $28,000 over 10 years. Cost increases of this magnitude imperil the competitiveness of our companies and the healthcare coverage of our employees; they must be addressed.

John J. Castellani, President of Business Roundtable said, “The escalating burden these costs place on employers, individuals and the government is not sustainable. We believe that many of the delivery-system reforms under consideration will make significant strides towards reducing the cost burden on purchasers while improving access to and the quality of the care provided. These provisions must be protected and strengthened during the healthcare reform negotiations including new steps towards medical liability reform which is essential to any healthcare cost containment strategy...The economic and human consequences of not addressing the cost spiral are too great to quit. We are committed to continue fighting for reform done right.” For more information, visit www.businessroundtable.org.

A Choice of Health Plans Makes for Happier Employees
People with a choice of health plans are more likely to be satisfied with their health plan and their healthcare, according to a study by the Employee Benefits Research Institute (EBRI). However, controlling for choice of plan did not change the difference in satisfaction rates among people with traditional coverage and those enrolled in consumer-driven health plans and high-deductible health plans.
Large firms are much more likely than small firms to offer a choice of plans. People who have a choice of health plans tend to have higher incomes and higher education. Fifty percent to 60% of the covered population has a choice of health plans because a disproportionate share of those with employment-based health benefits work for a large firm.
 
EMPLOYEE BENEFITS

Administration to Offer Assistance for 403(b) Plans
The Dept. of Labor's Employee Benefits Security Administration (EBSA) is sending a letter to administrators of the approximately 16,000 403(b) plans subject to ERISA to remind them that their 2009 Form 5500 annual reporting requirements have changed and to direct them to various EBSA resources for help in understanding and complying with the new requirements. The initiatives are part of the agency's ongoing compliance assistance program to help employers, plan officials and service providers.

Like administrators of 401(k) plans, 403(b) plan administrators now must file basic financial and other compliance information annually with the government on a Form 5500 or Form 5500-SF (a simplified report that many small 403(b) plans can use). Large plans (generally those with 100 or more participants) must include a report of an independent qualified public accountant with their Form 5500. All Form 5500s beginning with the 2009 plan year must be filed electronically using the department's new EFAST2 system.

The department's outreach letter points out that EBSA has also issued specific legal guidance and has several publications that are designed to explain the new annual reporting and electronic filing rules. For example, a new Field Assistance Bulletin (FAB) 2010-01 answers many frequently asked questions on the new Form 5500 reporting requirements. The department also published a brochure, titled “Getting Ready for Changes in Filing Your Plan's Annual Return/Report Form 5500.” All of these materials are available at www.dol.gov/ebsa/403b.html. A help desk is available from 8:00 a.m. to 8:00 p.m. (ET) at 866-463-3278.

WORKER'S COMP
How a PBM Can Control Workers’ Comp Costs
PMA Companies issued the following tips on how a pharmacy benefit management (PBM) company can control Workers’ Comp costs:

1. Discounted Rates on Prescriptions -- Through established direct contracts with national retail pharmacies, PBM programs can negotiate significantly discounted rates on prescriptions for injured workers.

2. Better Network Penetration -- A pharmacy network is a group of retail pharmacies that provides discounted rates on prescriptions negotiated by your PBM. Effective PBMs employ strategies to maximize network penetration.

3. Generic Conversion -- Generic transactions represent approximately 65% of prescriptions. There are substantial opportunities for savings since generics cost 20% to 40% less than name brands.

4. Appropriate Use of Mail Service -- Mail-order pharmacy for Workers’ Compensation has proven to achieve an industry benchmark of 8% to 12% cost savings over traditional retail environments and advanced mail-order programs can achieve a 20% to 25% cost savings.

5. Customizable Formularies – An established formulary will help control and monitor prescription utilization, duration and cost, and should be customizable to clients’ needs.

6. Effective Utilization Management -- An effective PBM should have online tools for utilization management. An interactive reporting platform can retrieve and analyze program trends, as well as critical claims, enabling claims adjusters to make more informed decisions instantly.

7. Innovative Clinical Management -- The PBM should have clinical reviews and system alerts to help ensure immediate communication takes place when potential emergencies or treatment complications occur.

8. Insightful Data and Reporting -- With flexible web portal reporting providing dashboards, scorecards and graphs, PBMs now offer greater insight into program performance.

The full paper, part of an educational series by PMA Companies called PMA Insights, can be viewed at www.pmagroup.com.

IN CALIFORNIA
Anthem Blue Cross Sued for Premium Increases
A class action lawsuit filed by Consumer Watchdog charges that Anthem Blue Cross has used rate hikes to force patients into lower-benefit and higher-deductible health coverage in violation of state law, according to the group, many of the Californians who were recently hit with massive premium increases were informed several months ago by Blue Cross that it was closing their policies and would be offered alternative plans with much more limited benefits. Those who chose to stay with their coverage were later told that its price was going to skyrocket. http://www.consumerwatchdog.org.