What would being able to buy health ins. across state lines do for me? - Tilted Forum Project Discussion Community

ASU2003 · 10-26-2009, 04:55 AM

The republicans keep saying that doing this will lower my costs and should be the way to go. But, would this really work? Haven't we done this with credit cards, and now all credit cards come from North Dakota and Delaware? While it is more efficient, those two states had the fewest laws and regulations on the industry. And they offered major tax breaks to get them to move there. Why wouldn't the health care industry do the same thing?

The one benefit would be for large nation-wide companies. Instead of having to shop around and offer 50 different plans to each state, they could offer the same plan across their whole company.

Are there any other reasons, either positive or negative that this would cause? Do you think if the 'public option' is a nationwide plan, that insurance companies would need to come up with nationwide plans to compete? Would my healthcare costs go up to pay for doctors in New York, Florida, and California because the cost of living is higher? Has anyone heard if the 'public option' will cost you more if you live someplace with high prices?

Or do you think this will become a major headache? Little scam companies will be started in far away states, and you won't be able to contact them or find them when you have an expense. Will there will be 500 different plans to choose from with a bunch of different fine print, laws, and regulations on all these plans?

ratbastid · 10-26-2009, 04:58 AM

As I understand it (and I confess, I'm sketchy), the idea of segregating the insurance market along state lines was to force companies NOT to average prices across the country. So, expensive markets would have expensive insurance, but consumers in cheaper markets wouldn't have to bear that cost.

Call me cynical, but I think without some sort of pressure valve like the public option is intended to be, corporations will find SOME way to screw consumers no matter what constellation of regulations are placed on them.

rahl · 10-26-2009, 05:40 AM

Quote:

Originally Posted by ASU2003

The republicans keep saying that doing this will lower my costs and should be the way to go. But, would this really work? Haven't we done this with credit cards, and now all credit cards come from North Dakota and Delaware? While it is more efficient, those two states had the fewest laws and regulations on the industry. And they offered major tax breaks to get them to move there. Why wouldn't the health care industry do the same thing?

The one benefit would be for large nation-wide companies. Instead of having to shop around and offer 50 different plans to each state, they could offer the same plan across their whole company.

Are there any other reasons, either positive or negative that this would cause? Do you think if the 'public option' is a nationwide plan, that insurance companies would need to come up with nationwide plans to compete? Would my healthcare costs go up to pay for doctors in New York, Florida, and California because the cost of living is higher? Has anyone heard if the 'public option' will cost you more if you live someplace with high prices?

Or do you think this will become a major headache? Little scam companies will be started in far away states, and you won't be able to contact them or find them when you have an expense. Will there will be 500 different plans to choose from with a bunch of different fine print, laws, and regulations on all these plans?

Insurance companies already to business in multiple states. The problem is that they have to conform to each individual states insurance regulation, set forth by the states dept. of insurance. A national set of regulations would help

The_Jazz · 10-26-2009, 05:47 AM

I'm going to resist injecting my opinions into this post as much as possible and address some of the factual issues with the hopes that it will foster the conversation.

The state-by-state regulatory system that we have wasn't really designed. It developed over a period of time. The federal government never really sought to provide much oversight until about 20 years ago. That goes for health, life, property/casualty and all the other lines.

The large companies already operate across state lines, pretty much with impunity. For instance, even though I live in Illinois, my health insurance carrier is Blue Cross/Blue Shield of [southern state]. The BC/BS company has to follow IL laws here, but so long as they are filed to do business in the state, they are allowed to do so. This is done because my company's corporate headquarters are in the unnamed southern state and is an unusual arrangement.

What the Republicans propose that is different than the current system is to allow smaller companies to use brokers to seek the best coverage ("best" being a qualitative term defined by the buyer) available in the entire nation rather than the local companies. The prospective carriers would still need to be filed and authorized to transact business in that state (no mean feat in some states since it can take years in spots), so buyers could potentially access all points of a larger network.

Health insurance costs are already localized, but costs from area to area generally do not vary too much, at least in terms of hospital care (which is the big ticket item) because the local health insurors have negotiated those prices downwards already. There is more variance in office visits, especially with specialists.

Derwood · 10-26-2009, 06:07 AM

Isn't the larger problem that the big players in the insurance business more or less collude with one another by sharing information and artificially setting prices? In other words, we have the exact opposite of competition

rahl · 10-26-2009, 06:11 AM

Quote:

Originally Posted by Derwood

Isn't the larger problem that the big players in the insurance business more or less collude with one another by sharing information and artificially setting prices? In other words, we have the exact opposite of competition

This is a BS statement without any proof. If you can show me ANY date backing up this claim then I would be able to entertain the notion, but that just isn't the case. Insurance companies are constantly competeing to get your business. Businesses shop around every single year to get the best rates they can get, there is plenty of competition in most states.

However there are some states where only 1 or 2 companies do business, having a national set of insurance regs would eliminate the need to be appointed by individual states to do business allowing for greater competition.

The_Jazz · 10-26-2009, 06:15 AM

Quote:

Originally Posted by Derwood

Isn't the larger problem that the big players in the insurance business more or less collude with one another by sharing information and artificially setting prices? In other words, we have the exact opposite of competition

Not really. There's already a very efficient countermeasure in place for this problem. Almost every insurance carrier (and the exceptions don't factor into this discussion based on what they do) has to file rates with the state that basically say "our base rates are between x and y". They then credit or debit those rates to compete. If a risk is too cheap, then that will knock some insurors out of the competition. Conversely, if a risk is too tough, then it will knock others out of the competition since they can't get to the price.

I cannot imagine how fucked up my life would get if insurors were no longer required to share information on losses. A couple of carriers tried that about 8 years ago, and it had the opposite effect than I think you intend, Derwood. It killed competition since the competing carriers had no idea what the historical loss history was and could not price things accurately. Granted, this was on the P&C side, so things are necessarily different. But sharing loss history is going to be universal in the industry and I can't imagine a carrier wreckless enough to not even ask about prior loss history in any segment of the industry.

Or are you referring to something completely different and I've made assumptions here?

aceventura3 · 11-03-2009, 07:56 AM

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What would being able to buy health ins. across state lines do for me?

It may not do anything for you personally, but for me I like the idea of having choice. Over the years I have been insured through large corporate employer plans, group plans, individual plans, I have been responsible for putting employer plans in place, I have lived in multiple states, I have had coverage denied and I have seen big premium increases for no apparent reason. I like the idea of having insurers know they have to compete for my business and be responsive to my needs. In many cases where competition is limited it has a lot to do with state regulation making it difficult for new players to get into a state market profitably.

I know the issue is a bit more complicated than it appears, but I think moving in the direction of being able to buy health insurance across state lines is a good thing regardless of what Congress does with the other issues.

ASU2003 · 11-03-2009, 08:18 AM

But why would United Health - Texas offer a lower premium than United Health - Georgia? Why would a large national insurance comapny compete against themselves? And then what would happen if nobody bought from United Health - New York because salaries are higher there and doctors charge more, meaning higher premiums?

rahl · 11-03-2009, 08:40 AM

Quote:

Originally Posted by ASU2003

But why would United Health - Texas offer a lower premium than United Health - Georgia? Why would a large national insurance comapny compete against themselves? And then what would happen if nobody bought from United Health - New York because salaries are higher there and doctors charge more, meaning higher premiums?

One reason it would be cheaper in Texas is risk classification. Auto insurance is a prime example. Your rates are determined by a number of things...zip code, credit score etc.

aceventura3 · 11-03-2009, 09:18 AM

Quote:

Originally Posted by ASU2003

But why would United Health - Texas offer a lower premium than United Health - Georgia?

Perhaps, the costs to conduct business could be lower. On one hand you have insurance companies competing, on the other (depending on how they do it) you would have state insurance departments competing. For example it is less expensive to incorporate in Nevada compared to California. A corporation doing business in California still pays California taxes on the business they do in California but the overall costs of a business incorporated in Nevada operating nationally would be lower than a California corporation operating nationally.

Perhaps the premiums would be lower based on underwriting or the pools of people insured by one company compared to another. Perhaps a pool that includes too many people on a "southern diet" is a bad thing.

Perhaps a carrier would specialize in certain types of risks and based on that specialization they add special value to covering the people who fit that category. For example power weightlifters won't fit the traditional height and weight charts - but they may be more healthy than the general population. And perhaps in one state there is not enough of them for one insurance to bother with in that state, but pooled nationally you could have several carriers who target that market and underwrite and rate accordingly.

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Why would a large national insurance comapny compete against themselves?

To gain market share. Think KFC, Pizza Hut and Taco Bell, all YUM brands. They compete, but they cater to specific market segments. It gives the consumer choice. think of Coke, what do they have about 3,000 different types of soft drinks world wide? Many compete with each other, but for Coke it is about market share and profits.

the irony is that corporations like restrictions to competition, they don't want you to have choice. They know if they get control of the market they can control the market. Anti-big corporation types should favor more competition, not less.

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And then what would happen if nobody bought from United Health - New York because salaries are higher there and doctors charge more, meaning higher premiums?

They go out of business. Or they could lower their overhead costs to get competitive. the cost of the docotrs would be the same for everyone entering into the NY market, unless they negotiate better deals - that is a business practice issue. Better businesses thrive, the weak wither and die.

The_Jazz · 11-06-2009, 07:36 AM

Ace, that makes no sense at all. It's not like BCBS has to have underwriting offices in all 50 states. That would have the opposite effect of what you're thinking - it would be incredibly inefficient. Why should they have an office in Rhode Island when they can have one in Boston, an hour away, with the authority to conduct business in Rhode Island? Why shouldn't the Denver office be able to undewrite for Wyoming, especially since it's going to be very difficult to find talented underwriters in a state with only 1M people? Why would you locate your underwriting office to Nevada if the talent pool isn't there to accomplish your goals?

aceventura3 · 11-06-2009, 07:50 AM

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Originally Posted by The_Jazz

Ace, that makes no sense at all. It's not like BCBS has to have underwriting offices in all 50 states.

I agree. I think they would place offices where the offices would give them the most benefit.

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That would have the opposite effect of what you're thinking - it would be incredibly inefficient.

I am not sure what I wrote to make you come to this conclusion. But I think businesses run inefficiently eventually go out of business unless they have protection from competition.

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Why should they have an office in Rhode Island when they can have one in Boston, an hour away, with the authority to conduct business in Rhode Island? Why shouldn't the Denver office be able to undewrite for Wyoming, especially since it's going to be very difficult to find talented underwriters in a state with only 1M people? Why would you locate your underwriting office to Nevada if the talent pool isn't there to accomplish your goals?

I don't think it matters where they have underwriting offices and they should locate an office like that in the place the best suits there needs.

I think improved efficiencies can lower costs to the consumer. We often hear about overhead or administrative costs being too high and that is a justification for a public option. A public option is not going to actually help a company reduce costs. It would be nice to see Congress actually look at why admin. costs are high and help reduce those costs rather than assume big business simply wants to take advantage of people.

rahl · 11-06-2009, 07:56 AM

Quote:

Originally Posted by The_Jazz

Ace, that makes no sense at all. It's not like BCBS has to have underwriting offices in all 50 states. That would have the opposite effect of what you're thinking - it would be incredibly inefficient. Why should they have an office in Rhode Island when they can have one in Boston, an hour away, with the authority to conduct business in Rhode Island? Why shouldn't the Denver office be able to undewrite for Wyoming, especially since it's going to be very difficult to find talented underwriters in a state with only 1M people? Why would you locate your underwriting office to Nevada if the talent pool isn't there to accomplish your goals?

I can't speak for all insurance companies, but my company is based in NC. Our underwriting department is also based there. As far as I know there is no law currently that says that you must have an office in the state you are doing business in, so I'm not sure what your post means. We do business in all 50 states with only one underwriting office location.

The_Jazz · 11-06-2009, 08:07 AM

Quote:

Originally Posted by rahl

I can't speak for all insurance companies, but my company is based in NC. Our underwriting department is also based there. As far as I know there is no law currently that says that you must have an office in the state you are doing business in, so I'm not sure what your post means. We do business in all 50 states with only one underwriting office location.

Absolutely, and that's not uncommon. But how many different carriers are you using? If it's only one, then your example doesn't really fit the situation because you'd only be using that one to compete across state lines, which is theoretically already happening (assuming that you do have business in all 50 states). If you have more than one at your disposal to use in different states under different circumstances, then you're still already competing across state lines. At the end of the day, that's what it boils down to. An insurance company may be able to transact business in all 50 states, but, from the consumer's point of view, the different carriers that they use (the issuing company - i.e., National Union vs. Ins. Co. of the State of PA vs. Lexington vs. American Home, etc. all of which are AIG/Chartis companies) they are different companies. In reality they are not (well, Lexington is, but that's not really germain here).

In the Property/Casualty world, insurance companies have rules about internal competition. They don't want to give different quotes to the same buyer through different buyers. It makes them look stupid. That's worth pointing out because I think that health insurers will figure out fairly quickly that internal competition is bad for them and find ways to stem the flow.

rahl · 11-06-2009, 08:13 AM

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Originally Posted by The_Jazz

Absolutely, and that's not uncommon. But how many different carriers are you using? If it's only one, then your example doesn't really fit the situation because you'd only be using that one to compete across state lines, which is theoretically already happening (assuming that you do have business in all 50 states). If you have more than one at your disposal to use in different states under different circumstances, then you're still already competing across state lines. At the end of the day, that's what it boils down to. An insurance company may be able to transact business in all 50 states, but, from the consumer's point of view, the different carriers that they use (the issuing company - i.e., National Union vs. Ins. Co. of the State of PA vs. Lexington vs. American Home, etc. all of which are AIG/Chartis companies) they are different companies. In reality they are not (well, Lexington is, but that's not really germain here).

In the Property/Casualty world, insurance companies have rules about internal competition. They don't want to give different quotes to the same buyer through different buyers. It makes them look stupid. That's worth pointing out because I think that health insurers will figure out fairly quickly that internal competition is bad for them and find ways to stem the flow.

Are you reffering to the brokers point of view or the company's? What internal competition do you mean? I'm an agent for a supplemental company not health insurance, but it's the same license. And I deal with health ins. brokers all the time. I don't deal with multiple carriers just my own.

The_Jazz · 11-06-2009, 08:18 AM

Quote:

Originally Posted by aceventura3

I am not sure what I wrote to make you come to this conclusion. But I think businesses run inefficiently eventually go out of business unless they have protection from competition.

[shrug] You're the one who talked about incorporating across state lines. If they're transacting business in a state, they're already paying the state taxes/insolvency fees. That goes with getting approved to conduct business in the state in the first place.

I guess chalk it up to confusion in what you really meant based on the reality of how state insurance regulations actually work.

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I think improved efficiencies can lower costs to the consumer. We often hear about overhead or administrative costs being too high and that is a justification for a public option. A public option is not going to actually help a company reduce costs. It would be nice to see Congress actually look at why admin. costs are high and help reduce those costs rather than assume big business simply wants to take advantage of people.

Heh. Big business always wants to take advantage of people. That's the nature of competitive capitalism. Whether or not that advantage is unfair is a separate philosophical conversation.

What this boils down to, at it's core, and at least for me, is that the Republicans want to trump individual state insurance departments and force them to loosen regulation. If an individual state WANTS to allow other health insurors to conduct business in the state, they already have the ability to do so. Now, why do you suppose that they haven't?

---------- Post added at 10:18 AM ---------- Previous post was at 10:15 AM ----------

Quote:

Originally Posted by rahl

Are you reffering to the brokers point of view or the company's? What internal competition do you mean? I'm an agent for a supplemental company not health insurance, but it's the same license. And I deal with health ins. brokers all the time. I don't deal with multiple carriers just my own.

What is being proposed is that different insurance carriers (which are commonly owned by a single insurance company, i.e. the various Blue Cross/Blue Shield companies) be allowed to conduct business across state lines. So that BCBS of IL could compete against BCBS of AL, for example. That is the internal competition, and in the P&C world, it only happens rarely.

Derwood · 11-06-2009, 08:20 AM

maybe this has been asked before (and maybe it's a non-issue), but would insurance companies all up and relocate to whichever state gives them the best tax incentives? If so, what does that do to the cities/towns whose local economies/employment base are tied to those relocating companies?

rahl · 11-06-2009, 08:24 AM

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What is being proposed is that different insurance carriers (which are commonly owned by a single insurance company, i.e. the various Blue Cross/Blue Shield companies) be allowed to conduct business across state lines. So that BCBS of IL could compete against BCBS of AL, for example. That is the internal competition, and in the P&C world, it only happens rarely.[/QUOTE]

I see. Thanks, I haven't read the bill. In that case internal competition would be pointless. If I were to change something I would do away with state depts' of insurance and have a federal dept. This would make for easier competition across the country. It's rediculous all the different state laws that a company has to conform to.

---------- Post added at 11:24 AM ---------- Previous post was at 11:22 AM ----------

Quote:

Originally Posted by Derwood

maybe this has been asked before (and maybe it's a non-issue), but would insurance companies all up and relocate to whichever state gives them the best tax incentives? If so, what does that do to the cities/towns whose local economies/employment base are tied to those relocating companies?

That would make the most sense if they did wouldn't it? wouldn't you if you could? All comissions paid to local agents in the state would still be subjected to their state taxes so I don't think it would matter all that much.

The_Jazz · 11-06-2009, 08:33 AM

Quote:

Originally Posted by Derwood

maybe this has been asked before (and maybe it's a non-issue), but would insurance companies all up and relocate to whichever state gives them the best tax incentives? If so, what does that do to the cities/towns whose local economies/employment base are tied to those relocating companies?

Honestly, this has already been done. And it's been done quite well. Back in the day, most mid-sized cities had several local offices of various carriers (AIG, Travelers, etc.). Those were slowly closed so that now folks in Little Rock, AR conduct most of their business in Dallas, Houston or Chicago, depending on how the insurance companies have set things up.

The problem with relocating to a smaller spot is that there will almost certainly be attrition of talent among the current staff and a lack of experience folks in the new spot. I'm sure that a lot of companies would love to move Wichita to take advantage of the lower wages, lower cost of living, etc., but they don't because they know that there aren't enough experience underwriters, claims adjusters, assistants, etc. to make it work. And it takes time to train someone into that role. An underwriting trainee, at least on the P&C side, typically has 3-4 years of training before they're even allowed to start doing any supervised underwriting.

aceventura3 · 11-06-2009, 08:48 AM

In most states there are "admitted" insurance companies and "non-admitted". The location of administrative or processing offices have nothing to do with the status, however the regulations they are subject to can greatly affect costs. An uninformed consumer (by consumer I am not just talking about insuring a Honda civic, in that market I doubt you could even use a non-admitted insurance company) would never want to use a "non-admitted" carrier, but an informed consumer could save a ton of money in the "non-admitted" market. One important question for insurance across state lines would be for minimum federal standards for any health insurance company, where states could further enhance regulations for the state's needs. Here is a definition from the web on "admitted" v. "non-admitted":

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Carriers are "admitted" by the state insurance department of each state. This means they are subject to the state's rules, regulations, and overviews.

From an insured's point of view, an "admitted" carrier means that if you think the company has treated you unfairly, or cancelled your policy unjustly, you can submit a complaint to your state insurance department and have them review it, and possibly remedy the problem. A "non-admitted" carrier is NOT subject to your state regulations, AND you will also have to pay a "surplus lines tax" and "stamping fee" on your policy - these vary from state to state, but usually total around 4% of the policy premium or less. You would ALSO usually have to pay an inspection fee for the policy - and you might or might not have an inspector come out to review your property and/or operations.

Non-admitted carriers have more flexibility with both policy terms and pricing, so there are coverages that you can get through a non-admitted company that you can't find through an admitted company. If you're considering purchasing a policy through a non-admitted carrier, be SURE you know what the current "A.M. Best" rating is for the carrier - and if it's not at LEAST B++, do not buy the policy. You can find ratings at A.M. Best Company, or through the agent offering the policy.

It is basic but accurate.

Insurance Question...What is an admitted or non-admitted carrier? - Yahoo! Answers

The_Jazz · 11-06-2009, 09:04 AM

Ace, as a guy that does this for a living every single day, let me tell you that it's not accurate AT ALL.

First, it is illegal in all 50 states to have non-admitted primary auto insurance. Period. No exceptions. Your Honda Civic will never, ever be insured by a non-admitted carrier.

All insurance carriers conducting business in a state, admitted and non-admitted alike, are beholden to state regulations. Non-admitted carriers answer to state regulators on a very regular basis. I know this because I am part of the process a lot of the time. A non-admitted carrier, for instance, has to follow the same cancellation procedures as an admitted carrier.

The difference is that admitted insurance carriers have to have their rates on file with the state and are only allowed to deviate off those using pre-determined (and filed) exceptions and using pre-determined coverage forms. Non-admitted carriers don't have to file rates or forms.

I go through these differences dozens, if not hundreds of times a day. It is what I do for a living.

Non-admitted insurance companies are the equivalent of auto insurance companies for bad drivers. They deal in the tough, nasty, hairy, claim-ridden accounts. Hotels on the beach in Florida, gun manufacturers, helmet importers, doctors that just got out of rehab, etc. all end up in the non-admitted arena.

I can think of hundreds of reasons why allowing non-admitted health insurance is a fantastically bad idea, not the least of which is that the consumer would get screwed more often than not.

---------- Post added at 11:04 AM ---------- Previous post was at 11:02 AM ----------

Also, the average surplus lines tax is around 3%, not all states charge a stamping fee, inspection fees get charged by admitted carriers all the time, inspectors visit accounts all the time and anyone buying coverage from a B++ non-admitted carrier is a fucking idiot that gets what they deserve. I can't even get an exception to transact business with a B++ carrier, not that I would ever want one since that's the sign of a carrier about to fold. I know you didn't write this, Ace, but this is one of those examples why you shouldn't assume that things are accurate on the internet. Whoever wrote this is not very familiar with my industry.

aceventura3 · 11-06-2009, 01:07 PM

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Originally Posted by The_Jazz

Ace, as a guy that does this for a living every single day, let me tell you that it's not accurate AT ALL.

First, it is illegal in all 50 states to have non-admitted primary auto insurance. Period. No exceptions. Your Honda Civic will never, ever be insured by a non-admitted carrier.

Re-read what I wrote.

Also, if a Honda Civic was covered under certain commercial policies for liability coverage, it could be under a surplus lines policy.

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All insurance carriers conducting business in a state, admitted and non-admitted alike, are beholden to state regulations.

Again, re-read what I wrote. There are differences in regulatory rules.

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The difference is that admitted insurance carriers have to have their rates on file with the state and are only allowed to deviate off those using pre-determined (and filed) exceptions and using pre-determined coverage forms. Non-admitted carriers don't have to file rates or forms.

that can have a big difference on premiums, true?

Quote:

Non-admitted insurance companies are the equivalent of auto insurance companies for bad drivers. They deal in the tough, nasty, hairy, claim-ridden accounts. Hotels on the beach in Florida, gun manufacturers, helmet importers, doctors that just got out of rehab, etc. all end up in the non-admitted arena.

Not true in all cases. You seem to want to go into a level of detail beyond the scope of the question at hand. I wrote in an earlier post that this is not as simple as it appears. Even your knowledge seems to indicate that you deal with a sliver of the total of the whole of this issue. I am not trying to be offensive and I admit my knowledge is limited, I am not an expert in all types of surplus lines of insurance, self insurance, re-insurance, etc.

For those interested in a better description, I found one:

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What is Excess & Surplus Lines Insurance?

Excess and surplus lines insurance is a segment of the insurance market that allows consumers to buy property and casualty insurance through the state regulated insurance market, where policyholders, agents, brokers and insurance companies all have the ability to design specific insurance coverages and negotiate pricing based on the risks to be secured. “Freedom of rate and form” has given the E&S market the ability to adapt quickly to changing market conditions and those of the consumers and commercial entities seeking this unique insurance protection.

Most AAMGA Managing General Agency members are entrusted to write both admitted and excess and surplus lines insurance by insurance companies who have delegated underwriting authority to them. They and other excess and surplus line insurance professionals may also be members of the National Association of Professional Surplus Line Offices (NAPSLO); www.napslo.org, which works in conjunction with the AAMGA on numerous matters of mutual interest to the respective organizations.

The E&S originated when those who needed insurance coverage were unable to secure it from the standard carriers (or admitted carriers) due to a variety of reasons (e.g., new entity or one that does not have a adequate loss history; one that has unique coverage requirements; or a loss record that does not fit the underwriting requirements of a standard carrier).

The E&S industry is comprised of a variety of insurance companies writing what is referred to as "main street" business. The general contractor, trucking company, restaurant, bar or hotel, entities with environmental, professional liability and employment related risks and other unique exposures, are the staples of the business. A few large organizations will write the oil refineries, aircraft liability, property coverage on a communications satellite, etc.
What is an admitted carrier or standard lines carrier?

An admitted carrier or standard carrier is an insurance company that has received a license from the state department of insurance for the authority to write specific lines of insurance. These companies are also bound by rate and form regulations, and are strictly regulated to protect policy holders from a variety of illegal and unethical practices, including fraud. Admitted carriers are also required to financially contribute to the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due to their policyholders.
What is an excess and surplus (E&S) lines carrier and how is it different from an admitted carrier?

An E&S carrier is not required to be licensed by the state, but is allowed to do business in that state. Sometimes, E&S carriers are also referred to as non-admitted or unlicensed carriers; however, E&S carriers are financially stable companies that are regulated in other ways.

Most states require that E&S carriers submit financial information, articles of incorporation, list of officers, and other general details. They also cannot write insurance that is typically available in the admitted market, they are not protected by the state guarantee fund, may pay higher taxes, may only write a policy if it has been rejected by three different admitted carriers, and only when the agent placing the business has a surplus lines license. AAMGA member State Surplus Line and Stamping Offices, as well as insurance departments in the states maintain a list of approved surplus lines insurance companies. Policies can only be written by companies on this approved list.

Excess and Surplus line carriers are not bound by most of the rate and form regulations imposed on standard market companies, allowing them the flexibility to change the coverage offered and the rate charged without time constraints and financial costs associated with the filing process. This is good for both the company and the policyholder.
Why am I insured by an E&S company?

Most likely, your policy is written by an E&S carrier because the standard carriers have elected not to cover your insurance needs. The reasons for this vary, but could include the following:

* The risk does not meet the guidelines of the standard market due to age, location, loss history or cancellation;
* The policy limits exceed the guidelines for the standard market;
* The risk is "outside the box" of what the standard carriers are comfortable writing. Sometimes, this is referred to as an "unusual risk", as there is just no other way to describe pet insurance, coverage for a hole-in-one event, protection for an amusement park, etc.;
* The risk is "extraordinary" and the standard carriers may not be comfortable covering such a risk. Usually these are very large exposures with equally high potential for loss such as aviation liability insurance, protection for a demolition business, etc.

Why does the disclosure on my policy state that the policy is written by a non-licensed or non-admitted insurance carrier and what does that mean?

When your policy is written by an Excess & Surplus line insurance carrier, a disclosure of that is required by law. What it means to the policyholder is that IF the carrier were to become insolvent, the policyholder is not eligible for recourse through the state guarantee fund. However, studies including those by the respected A.M. Best organization, which monitors and reports on insurance company solvencies and other important issues, show that the percentage of excess and surplus line carriers that become insolvent is lower than the percentage of admitted carriers that suffer the same fate. The key consideration is to do business with those insurance organizations that are financially strong and have the ability to pay claims when a covered loss occurs, whether the company is an E&S carrier or not.
Is the E&S market regulated?

As mentioned earlier, the E&S market is regulated in a different fashion than licensed or admitted companies. While the amount of direct regulation is less and the amount of free market competition is greater, specifically in the forms used and the rates charged, the E&S industry is still watched very closely. They also cannot write insurance that is typically available in the admitted market, they are not protected by the state guarantee fund, may pay higher taxes, may only write a policy if it has been rejected by 3 different admitted carriers, and the agent placing the business must have a surplus lines license. States also maintain a list of approved surplus lines companies, and policies can only be written by companies on the approved list.

Excess and Surplus Lines FAQ's | AAMGA

How can this help an individual in the health insurance market related to the OP? Again, it goes to a question of choice. If I form a group to self insure or if I have a condition that is difficult to insure, or whatever the reason, should I have a choice of insuring with a non-admitted carrier - I would say give me the choice.

10-26-2009, 04:55 AM	#1 (permalink)
ASU2003 immoral minority Location: Back in Ohio	What would being able to buy health ins. across state lines do for me? The republicans keep saying that doing this will lower my costs and should be the way to go. But, would this really work? Haven't we done this with credit cards, and now all credit cards come from North Dakota and Delaware? While it is more efficient, those two states had the fewest laws and regulations on the industry. And they offered major tax breaks to get them to move there. Why wouldn't the health care industry do the same thing? The one benefit would be for large nation-wide companies. Instead of having to shop around and offer 50 different plans to each state, they could offer the same plan across their whole company. Are there any other reasons, either positive or negative that this would cause? Do you think if the 'public option' is a nationwide plan, that insurance companies would need to come up with nationwide plans to compete? Would my healthcare costs go up to pay for doctors in New York, Florida, and California because the cost of living is higher? Has anyone heard if the 'public option' will cost you more if you live someplace with high prices? Or do you think this will become a major headache? Little scam companies will be started in far away states, and you won't be able to contact them or find them when you have an expense. Will there will be 500 different plans to choose from with a bunch of different fine print, laws, and regulations on all these plans?

10-26-2009, 05:47 AM	#4 (permalink)
The_Jazz Asshole Administrator Location: Chicago	I'm going to resist injecting my opinions into this post as much as possible and address some of the factual issues with the hopes that it will foster the conversation. The state-by-state regulatory system that we have wasn't really designed. It developed over a period of time. The federal government never really sought to provide much oversight until about 20 years ago. That goes for health, life, property/casualty and all the other lines. The large companies already operate across state lines, pretty much with impunity. For instance, even though I live in Illinois, my health insurance carrier is Blue Cross/Blue Shield of [southern state]. The BC/BS company has to follow IL laws here, but so long as they are filed to do business in the state, they are allowed to do so. This is done because my company's corporate headquarters are in the unnamed southern state and is an unusual arrangement. What the Republicans propose that is different than the current system is to allow smaller companies to use brokers to seek the best coverage ("best" being a qualitative term defined by the buyer) available in the entire nation rather than the local companies. The prospective carriers would still need to be filed and authorized to transact business in that state (no mean feat in some states since it can take years in spots), so buyers could potentially access all points of a larger network. Health insurance costs are already localized, but costs from area to area generally do not vary too much, at least in terms of hospital care (which is the big ticket item) because the local health insurors have negotiated those prices downwards already. There is more variance in office visits, especially with specialists. __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

11-06-2009, 07:36 AM	#12 (permalink)
The_Jazz Asshole Administrator Location: Chicago	Ace, that makes no sense at all. It's not like BCBS has to have underwriting offices in all 50 states. That would have the opposite effect of what you're thinking - it would be incredibly inefficient. Why should they have an office in Rhode Island when they can have one in Boston, an hour away, with the authority to conduct business in Rhode Island? Why shouldn't the Denver office be able to undewrite for Wyoming, especially since it's going to be very difficult to find talented underwriters in a state with only 1M people? Why would you locate your underwriting office to Nevada if the talent pool isn't there to accomplish your goals? __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

11-06-2009, 09:04 AM	#22 (permalink)
The_Jazz Asshole Administrator Location: Chicago	Ace, as a guy that does this for a living every single day, let me tell you that it's not accurate AT ALL. First, it is illegal in all 50 states to have non-admitted primary auto insurance. Period. No exceptions. Your Honda Civic will never, ever be insured by a non-admitted carrier. All insurance carriers conducting business in a state, admitted and non-admitted alike, are beholden to state regulations. Non-admitted carriers answer to state regulators on a very regular basis. I know this because I am part of the process a lot of the time. A non-admitted carrier, for instance, has to follow the same cancellation procedures as an admitted carrier. The difference is that admitted insurance carriers have to have their rates on file with the state and are only allowed to deviate off those using pre-determined (and filed) exceptions and using pre-determined coverage forms. Non-admitted carriers don't have to file rates or forms. I go through these differences dozens, if not hundreds of times a day. It is what I do for a living. Non-admitted insurance companies are the equivalent of auto insurance companies for bad drivers. They deal in the tough, nasty, hairy, claim-ridden accounts. Hotels on the beach in Florida, gun manufacturers, helmet importers, doctors that just got out of rehab, etc. all end up in the non-admitted arena. I can think of hundreds of reasons why allowing non-admitted health insurance is a fantastically bad idea, not the least of which is that the consumer would get screwed more often than not. ---------- Post added at 11:04 AM ---------- Previous post was at 11:02 AM ---------- Also, the average surplus lines tax is around 3%, not all states charge a stamping fee, inspection fees get charged by admitted carriers all the time, inspectors visit accounts all the time and anyone buying coverage from a B++ non-admitted carrier is a fucking idiot that gets what they deserve. I can't even get an exception to transact business with a B++ carrier, not that I would ever want one since that's the sign of a carrier about to fold. I know you didn't write this, Ace, but this is one of those examples why you shouldn't assume that things are accurate on the internet. Whoever wrote this is not very familiar with my industry. __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

10-26-2009, 04:58 AM	#2 (permalink)
ratbastid Darth Papa Location: Yonder	As I understand it (and I confess, I'm sketchy), the idea of segregating the insurance market along state lines was to force companies NOT to average prices across the country. So, expensive markets would have expensive insurance, but consumers in cheaper markets wouldn't have to bear that cost. Call me cynical, but I think without some sort of pressure valve like the public option is intended to be, corporations will find SOME way to screw consumers no matter what constellation of regulations are placed on them.

10-26-2009, 06:07 AM	#5 (permalink)
Derwood Who You Crappin? Location: Everywhere and Nowhere	Isn't the larger problem that the big players in the insurance business more or less collude with one another by sharing information and artificially setting prices? In other words, we have the exact opposite of competition

11-03-2009, 08:18 AM	#9 (permalink)
ASU2003 immoral minority Location: Back in Ohio	But why would United Health - Texas offer a lower premium than United Health - Georgia? Why would a large national insurance comapny compete against themselves? And then what would happen if nobody bought from United Health - New York because salaries are higher there and doctors charge more, meaning higher premiums?

11-06-2009, 08:20 AM	#18 (permalink)
Derwood Who You Crappin? Location: Everywhere and Nowhere	maybe this has been asked before (and maybe it's a non-issue), but would insurance companies all up and relocate to whichever state gives them the best tax incentives? If so, what does that do to the cities/towns whose local economies/employment base are tied to those relocating companies?