South Carolina insurance cooperative to close; Ninth under Affordable Care Act to fold

A South Carolina health insurer has become the ninth insurance co-operative formed nationwide under the Affordable Care Act to fold.

Consumers’ Choice Health Insurance Co. said October 22, 2015 that it will not sell policies in 2016, a decision that will leave 67,000 individuals and business customers looking for new coverage.

Ray Farmer, director of the South Carolina Department of Insurance, said Consumers’ Choice and state regulators reached a mutual decision to shut down the company’s business. He said the company was in a “financially hazardous condition.”

“I did not have the confidence that this company would be a viable entity throughout the entire year of 2016,” Farmer said.

Consumers’ Choice joins co-operatives in Tennessee, Kentucky and Colorado, among other states, that have shut down for next year, leaving some consumers on the health care overhaul’s public insurance exchanges with fewer options.

Officially called Consumer Operated and Oriented Plans, these non-profit co-ops were devised during the overhaul’s creation in order to inject more competition into insurance markets. They were seen as a fallback option by liberals who wanted a government-run insurance program to compete with corporate insurers that control the market for commercial coverage in the United States.

The federal government provided more than $2 billion in taxpayer-financed loans to help seed the co-ops, and a total of 23 were created. A report released during the summer by the Health and Human Services department’s inspector general’s office said only that only one out of the 23 – the co-op in Maine – made money last year.

Consumers’ Choice said it was hurt, in particular, by smaller-than-expected payments from a provision of the law designed to stabilize premiums while insurers built their business on the new public exchanges. Insurers who incurred higher-than-expected costs were supposed to get help from a program funded by other insurers that had lower-than-expected expenses.

But in 2014, the government collected only $362 million from insurers that did well. Meanwhile, companies with sicker-than-expected patients requested nearly $2.9 billion in payments to help cover their claims. The imbalance meant that insurers would get less than 13 per cent of what they sought.

That led to an “unavoidable outcome” for Consumers’ Choice, CEO Jerry Burgess said in a statement.

Customers who have coverage through that company will keep it for the rest of this year, but they will have to find another plan once open enrolment for 2016 begins next month. Consumers’ Choice said it was making the announcement now so customers could line up new coverage before then.

South Carolina’s individual exchange will now have four insurers offering coverage instead of five. A separate exchange for small businesses will be down to two insurers.

Consumers’ Choice covers about 40 per cent of the 168,000 people who bought coverage on South Carolina’s exchanges.


Business Leaders Gaining on Cybersecurity Risks: Survey

Source: pwc Press Release

  • New tools are helping to transform cybersecurity frameworks, yielding holistic, integrated
    safeguards against cyberattacks
  • Cloud computing has had a significant impact on technology innovation in the past
    decade, and it is increasingly central to secure interconnected digital ecosystems
  • The Internet of Things are expected to increase the stakes for securing cloud-based
    networks as the number of internet connected devices continues to surge to greater than 30
    billion by 2020
  • There was a 38% increase in detected information security incidents, as well as a 24%
    boost in security budgets observed in 2015

Year after year, cyberattacks continue to escalate in frequency, severity and impact. However, prevention, detection methods and cybersecurity innovation are on the rise as forward-leaning business leaders focus on solutions that
reduce cybersecurity risks and improve business performance. The Global State of Information Security® Survey 2016 released today by PwC US in conjunction with CIO and CSO examines how executives are looking towards new innovations and frameworks to improve security and mitigate enterprise risk.

As cyber-risks become increasingly prominent concerns in the C-suite and boardroom, business leaders are increasingly rethinking cybersecurity practices, focusing on a nexus of innovative technologies that can reduce enterprise risks and improve performance. The vast majority of organizations – 91% – have adopted a security framework, or more often, an amalgam of frameworks. These technologies are yielding considerable opportunities to improve cybersecurity and produce holistic, integrated safeguards against cyber-attacks.

“We are seeing more of what we once saw as a risk, being turned into possible solutions,” said David
Burg PwC’s Global and US Advisory Cybersecurity Leader. “For example, many organizations are
embracing advanced authentication as a cloud service in place of solely password based authentication.”

The adapting of traditional cybersecurity measures to an increasingly cloud-based world is an example of this effort with considerable investments being made to develop new network infrastructure capabilities that enable improved intelligence gathering, threat modeling, defense against attacks and incident response. According to the report, 69% of respondents said they use cloud-based security services to help protect sensitive data and ensure privacy and the protection of consumer information.

Connected to the emergence of cloud-based systems, Big Data and the Internet of Things are each ascendant technologies that present a host of cyber challenges and opportunities. In the case of Big Data, often considered a cyber liability, 59% of respondents are leveraging data-powered analytics to enhance security by shifting security away from perimeter-based defenses and enable organizations to put real-time information to use in ways that create real value.

As the number of internet connected devices continues to surge, the Internet of Things will inevitably increase the stakes for securing cloud-based networks. Investment intended to address these issues doubled in 2015, but at this point only 36% of survey respondents have a strategy specifically addressing the Internet of Things.
“There is no one-size-fits-all model for effective cybersecurity. It’s a journey toward a future state that starts with the right mix of technologies, processes, and people skills,” added Burg. “With those components in place, cybersecurity potentially serve as an indispensable ongoing business enabler.”

Over the past three years, the number of organizations that embrace external collaboration has steadily increased. Sixty-five percent of respondents report they are collaborating with others to improve security. As more businesses share more data with an expanding roster of partners and customers, it makes sense that they also would swap intelligence on cybersecurity threats and responses.

“An advanced and enhanced information security program will not only enable companies to better defend against cyberthreats, it will also help create competitive advantages and foster trust among customers and business partners,” said Bob Bragdon, VP/publisher of CSO.

  • Additional notable findings this year include:
    Information security spending increases: Respondents boosted information security spending significantly, reversing last year’s slight drop in security spending. This year respondents boosted their information security budgets by 24% in 2015.
  • Evolving Cybersecurity Roles: 54% of respondents have a CISO in charge of the security program. The most frequently cited reporting structure is the CEO, CIO, Board and CTO, in that order.
  • Increasing Board Involvement: 45% of boards participate in the overall security strategy. This deepening of Board involvement has helped improve security practices in numerous ways.
  • Mobile Payments Going Mainstream: 57% of respondents have adopted mobile payments systems – but the ecosystem continues to rapidly evolve as new partnerships are formed among a constellation of technology, financial, retail and telecommunications firms.
  • Investing in Insurance: Technically adept adversaries will always find new ways to circumvent security safeguards. That’s why many businesses (59%) are purchasing cybersecurity insurance to help mitigate the financial impact of cybercrimes when they do occur.
  • Government Surveillance Impacting Buying Decisions: Purchases in certain countries are either under review (34%) or happening less frequently (22%) as a result of hearing about reports that the government is conducting surveillance on hardware, software and/or services from certain countries.

Clinton announced another Canada policy this week, could affect millions: Pharma

Lost in the noise of her headline-grabbing coming-out against the Keystone XL pipeline, Hillary Clinton announced another Canada-U.S. policy this week that could affect millions of people.

She called for legalizing prescription-pill imports from Canada, becoming the second Democratic presidential candidate to adopt the position and effectively making it party policy in the 2016 election.

Millions of Americans who struggle with high drug prices have purchased cheaper medicine abroad since online pharmacies first opened two decades ago, with Canada pioneering that grey-market industry.

The issue has resurfaced politically as U.S. drug prices experience their biggest jump in years. One company was forced to back down last week amid news that a life-saving medicine had increased overnight from $13.50 to $750 per pill.

The same pill is available from a Canadian online pharmacy for $5.28. It’s generally illegal for Americans to buy and import that medicine, but the law is rarely enforced.

Now Clinton wants to normalize the practice.

“If the medicine you need costs less in Canada, you should be able to buy it from Canada _ or any other country that meets our safety standards,” she told an Iowa audience the same day she announced her long-awaited pipeline position.

“When I was privileged to represent upstate New York (as a senator)… every week there would be buses of American seniors going over to Canada, to buy drugs that were American-manufactured, drugs that were invented by American companies, for a much cheaper price over the border.

“That makes no sense at all, folks … I don’t want you to have to drive to Canada. So you can order them online.”

She became the latest candidate to endorse that policy. As he presented a bill this month, socialist Sen. Bernie Sanders reminded people that he helped spread word of cheaper drugs in Canada, in 1999 when he took a busload of seniors on a cross-border trip to the pharmacy.

“I will never forget the tears in the eyes of women who were able to buy the breast cancer drug tamoxifen at one-10th of the price that they were paying in the U.S.,” Sanders said.

“If we can import lettuce and tomatoes from Mexico, there is absolutely no reason why we cannot import safe and affordable prescription drugs from Canada.”

The issue cuts across partisan lines. There’s a similar Senate bill from Republican John McCain. Republican Mike Huckabee is campaigning on the idea. A survey from the Kaiser foundation said 72 per cent of Americans support buying prescription drugs from Canada. The proportion was higher among Republicans.

Congress even passed a law allowing importation in 2000 _ but the president, Clinton’s husband, gutted it. George W. Bush and Barack Obama both campaigned on a policy change _ it never happened.

The pharmaceutical industry has considerable pull in Washington.

It spent US$229 million lobbying Congress last year, according to the transparency site Open Secrets, and it donated $50 million in the 2012 election. For the sake of comparison, that last sum is almost as much as all the national spending allowed for political parties in Canada’s current election.

As their shares dipped slightly this week, the industry blasted Clinton’s speech and argued her policies would hurt companies that create new drugs.

She laid out other proposals including ending certain tax breaks, creating spending targets for research, and a $250-a-month limit on out-of-pocket expenses under insurance plans.

She accused the industry of anti-competitive behaviour and price-gouging, citing the controversial 5,000-per-cent price increase in the drug Daraprim.

Her plan proposes a crackdown on one factor believed to be driving high prices: collusion.

Like Sanders, she wants to curb the practice dubbed “pay to delay” _ where drug makers pay off generic rivals to keep them from bringing cheaper alternatives to market. U.S. federal regulators have punished companies over that practice on different occasions this year alone, and Sanders proposes far more severe penalties, including stripping companies of exclusivity rights over a drug.

But how would that affect Canadians?

One health-policy researcher worries it could hurt them by causing supply shortages and driving up prices.

“The giant sucking sound that would empty our pharmacies into the U.S. would be heard across the country,” said Amir Attaran, a health-policy researcher at the University of Ottawa.

“The drug shortages … in Canada … would be massive.”

A prominent health economist is less worried. A supply crisis would be far likelier in a major outbreak or a terrorist attack, said Steve Morgan of the University of British Columbia.

But he agreed online pharmacies wouldn’t solve the price problem for Americans.

He proposes a single-payer pharmaceutical system for Canada _ and for the U.S., he says, greater government management would improve the system.

Right now, U.S. prices are mostly fictitious, he says. Patients with insurance providers get discounts negotiated in secret. Others use online coupons.

The net result is a system designed to make everyone pay the maximum they can afford. And those without access to insurance or discounts could be out of luck.

With a better-managed system, he said, “you would just eliminate all these games.”



America’s burgeoning drone industry is being threatened by liability risks

Last month, the Federal Aviation Administration approved its 1,000th commercial drone permit, 998 more than it granted last year at this time.

For many in the nascent commercial drone industry, that momentum bodes well for an industry expected to generate billions of dollars in economic impact over the next ten years, particularly after a more cohesive set of commercial drone regulations is put in place by the FAA next year. But as commercial drones move toward ubiquity, the industry still faces a major obstacle in assessing and appraising drone-related liability and adequately insuring both drones and the companies that use them.

“You’ve got this new emerging industry and there’s a lot of regulatory uncertainty and there’s a lot of companies with liability concerns,” says Lisa Ellman, a drone policy expert and co-chair of the Unmanned Aircraft Systems Group at the Washington D.C. offices of law firm Hogan Lovells. “Liability tends to be the first thing that comes to mind for someone developing a new business.”

A report released last month by UK insurance house Lloyd’s details just how challenging insuring the drone industry may become in the years ahead. The report cites “patchy regulatory regimes” and “poor enforcement” among the key risks facing the drone industry—risks that exist beyond the control of drone manufacturers or operators themselves.

Pricing risk in the absence of strong regulatory frameworks and enforcement mechanisms could prove troublesome, the report says. And, that’s before you delve into issues like third-party liability for a technology where risks range from broken windows or roof damage to major aviation catastrophes.

All of this grows increasingly important in the U.S. as the Federal Aviation Administration moves closer to issuing a brand new set of broad commercial drone regulations. Those regulations could go a long way towards helping insurers price risk in the commercial drone space.

The industry expects those regulations to make it much easier for companies and individuals to operate drones for commercial purposes, potentially putting thousands upon thousands of new unmanned aircraft into U.S. skies. This new development could leave insurers scrambling to figure out how to effectively (and fairly) cover drone risk in an emerging market that offers little meaningful data and risk metrics.

“Unfortunately, there are big questions and not enough answers,” says Tom Karol, a general counsel for the National Association of Mutual Insurance Companies (NAMIC). “There needs to be more clarity on how people will use these, and what will be allowed and won’t be allowed is a big issue.”

U.S. insurers and regulators do have some insurance models they can use as examples when crafting legal and policy rules. The European Union has turned to a page in its larger civil aviation code to require that drones larger than 20 kilograms, or roughly 44 pounds, meet a minimum third-party liability requirement based on the mass of the aircraft (though given that many drones weigh in at far less than 20 kilograms, the regulation stops short of being an insurance mandate).

Transport Canada, the country’s civil aviation authority, has gone one step further. While authorities there have eased some restrictions on commercial drones, they also require professional drone operators to obtain $100,000 in liability insurance for drones of any size. This unusual requirement likely serves to keep some less-than-professional pilots from taking to the sky for commercial purposes, but it’s not yet clear if (or how such) a requirement might impact Canada’s commercial drone industry.

Recent reports of “close calls” between drones and commercial aviation in the U.S. (as well as a rash of incidents in which drones have crashed into crowds at sporting events) have only served to heighten awareness of drone-related risks. Drone service companies like Measurehave emerged as firewalls between companies and potential drone risks, providing proper regulatory permits, experienced pilots, and a liability buffer between clients and the drone operators.

However, until the insurance industry and regulators can figure out a fair and consistent way of insuring both drone service companies and businesses that operate drones themselves, the U.S. commercial drone industry could find itself unable to take off even after the FAA issues its final commercial drone regulations next year, Ellman says. “The insurance industry itself is grappling with a lot of these issues, and how all this plays out is integral for the future of the industry.”

Progressive Insurance to test mobile app version of Snapshot device

Progressive Insurance is getting ready to begin a test of the mobile app version of its Snapshot device.

The Mayfield Village-based insurance giant announced the mobile app pilot will launch in mid-September “with select customers across the country.” It said a Boston company, Censio, is developing the software for the app, which will “automatically monitor and measure drivers’ data — such as time of day, mileage and hard braking — to potentially earn a discount on auto insurance through Progressive’s program.”

At the end of each trip, Progressive said, “the mobile app will give drivers personalized information, including a one to five star rating, a data summary, a map of their drive, and tailored driving tips, to help them improve their score.”

New Snapshot customers will have the option to use either the Snapshot app, available for both iOS and Android operating systems, or the traditional telematics device, Progressive said.

Last year, Censio won a competition Progressive held with 11 companies to create the app. Following the customer pilot this year, Progressive and Censio “will apply learnings and real customer feedback to the final app, which will come to market starting in 2016,” according to the release.

 Since introducing the device in 2008, Progressive said, it has collected more than 14 billion miles of driving data.

GEICO teams on standby for Hurricane Ignacio

HONOLULU–(BUSINESS WIRE)–GEICO’s Catastrophe Response (CAT) Team, which includes auto damage adjusters, is on standby waiting to assist the local community and policyholders in the event that Hurricane Ignacio makes landfall in Hawaii.

“GEICO will be reaching out to the public on TV, local radio and social media so residents receive the most current claims information affecting their area.”

GEICO urges policyholders to report any losses as early as possible on the GEICO mobile app, or by logging onto GEICO’s Claims Center or calling 1-800-841-3000.

Commercial vehicle policyholders can file a claim by calling 1-866-509-9444. Claims can be filed as soon as storm damage affects property, and the claims will be processed immediately and resolved as quickly as possible.

Tim Dayton, head of GEICO’s operations in Hawaii, urges policyholders to take the necessary steps to protect their families and to follow the directions of local officials. In addition, features severe weather safe driving tips as well as links to trusted weather and disaster preparedness resources.

GEICO officials say that additional information is available at GEICO’s online Catastrophe Center with preparedness tips, links to other important hurricane information and weather sites, and immediate claims handling capabilities.

Adds Dayton, “GEICO will be reaching out to the public on TV, local radio and social media so residents receive the most current claims information affecting their area.”

GEICO (Government Employees Insurance Company) is a member of the Berkshire Hathaway family of companies and is the second-largest private passenger auto insurance company in the United States. GEICO, which was founded in 1936, provides millions of auto insurance quotes to U.S. drivers annually. The company is pleased to serve more than 13 million private passenger customers, insuring more than 22 million vehicles (auto & cycle).

Using GEICO’s online service center, policyholders can purchase policies, make policy changes, report claims and print insurance ID cards. Policyholders can also connect to GEICO through the GEICO App, reach a representative over the phone or visit aGEICO local agent.

GEICO also provides insurance quotes on motorcycles, all-terrain vehicles (ATVs), travel trailers and motorhomes (RVs). Coverage for boats, life, homes and apartments is written by non-affiliated insurance companies and is secured through the GEICO Insurance Agency, Inc. Commercial auto insurance and personal umbrella protection are also available.

For more information, go to


GEICO Communications
To view GEICO’s Blog:

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