Insurance and Economic Development and Real Estate & Retail

Insurers: Session a 'dog': Industry's favored bills bark up the wrong tree

March 6, 2006

The state's insurance industry could use coverage for the lumps it has taken this legislative session.

The three main issues of interest for the Insurance Institute of Indiana, the sector's lobbying arm, all flamed out early. The disappointing performance prompted Marty Wood, the organization's director of public affairs, to proclaim it a near failure.

"I would give this session for insurers a 'D' as in dog. Dog is probably pretty accurate, too," Wood said. "Had we had this kind of session in a year when the Democrats controlled the House, I probably wouldn't have graded it quite as low."

Normally business-friendly Republicans were of no help this year in supporting property and casualty insurers in a bid to charge rates to commercial clients without having to wait for approval from the Indiana Department of Insurance.

Nor did they back an effort to allow insurance companies headquartered in Indiana to expand investment opportunities.

And a measure endorsed by the Insurance Institute to change the way judges are appointed to the state Court of Appeals and Supreme Court never made it to the House floor.

Language removed from Senate Bill 162 would have allowed property and casualty insurers to bypass the Insurance Department when changing rates and avoid what sometimes can be a lengthy wait for approval.

The proposal had the support of the Indiana Economic Development Corp., but could not overcome concerns from independent insurance agents.

"A consumer can decide fairly easily what the rate is that they want to pay," said Mike Chrysler, the IEDC's director of insurance initiatives. "There's no reason to have the Department of Insurance approve those."

The department does not perform rate analysis. It instead contracts with outside actuaries, which creates a delay in the process, Chrysler said. That lag time can cause problems for insurance companies operating in numerous states.

Under Insurance Commissioner Jim Atterholt, whom Gov. Mitch Daniels appointed to the position last February, the lag time has decreased from months to weeks, Wood said. But Atterholt and his staff won't be there forever, noted Wood in explaining the institute's position.

The snag stems from a portion of the language that does not make clear whether changes in coverage, in addition to rate pricing, could avoid the auspices of the Insurance Department. Supporters say the intent is not to include coverage, but the ambiguity was enough to derail the proposal.

The Independent Insurance Agents of Indiana trade association is a vocal critic of the piece of legislation.

"We're very much concerned about form filing and feel that the department plays an important role," said Roger Ronk, executive vice president of the IIAI. "We want to make sure, in anything going forward, they know exactly what they're buying."

For larger corporations with risk managers, the debate might be moot. But it is the agents' job to explain to smaller clients exactly what they are purchasing, Ronk said.

Cutting down on the time it takes to get policies authorized has become critical to insurance companies as they introduce more products tailor-made for certain clientele wanting to save on costs. Because customized policies deviate from standard ones, they may take even longer to get consent.

Sen. Allen Paul, R-Richmond, chairman of the Insurance and Financial Institution Committee, wrote SB 162, which passed the Senate 50-0. The bill proceeded to the House Committee on Insurance, where it ran out of gas.

The language in question could resurface in a summer study committee, Wood said. Neither Paul nor Rep. Mike Ripley, R-Monroe, who chairs the Insurance Committee, returned phone calls to IBJ.

Other issues

HB 1390, written by Ripley, never made it out of the Insurance Committee. The proposal would have loosened restrictions on investments made by insurers and health maintenance organizations.

Insurers are restricted to investing in safe holdings such as real estate and securities. The bill would have increased the percentages insurers are allowed to invest.

The Insurance Institute also backed controversial legislation that would have changed the way Indiana selects and retains Supreme and appellate court judges. House Bill 1419 passed the House Rules and Legislative Procedures Committee on a party-line vote, but House Speaker Brian Bosma stopped the bill from coming to the House floor for debate.

If the bill had passed, the seven members of the judicial selection commission would have been ousted and politicians would have selected new members, with the exception of the chief justice. The new commission also would have decided which judges stay or go, and placed its recommendation next to the judge's name on the ballot.

While the legislation became more partisan than the Insurance Institute envisioned, Wood said, the organization backed the measure because it believes members of the plaintiff's bar dominate the commission.

Smoking bills

One of two bills introduced by senators wanting to help workers get in shape or quit smoking is making its way through the General Assembly.

Senate Bill 117, written by Sen. Beverly Gard, R-Greenfield, would permit an employer to use incentives designed to curb employee tobacco use.

The proposal passed the Senate and the House Committee on Employment and Labor.

Senate Bill 307, conversely, never advanced past the Senate Committee on Health and Provider Services.

Introduced by Sen. Vi Simpson, DEllettsville, the bill would have knocked $100 off the annual health insurance premiums of state employees who completed a wellness program.
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