No real news here. Fiducerary responsibility, to me the customer? Never , never, certainly not in the cards for the near future either. State insurance people advocates is just another fraud perpertrated on the public. Congressional oversight to watch that the public does not get swindeled by these rich goliaths of insurance. Don't count on help there either, most congressional seats on both sides of the isle are bought and paid for by the insurance, banking, chemical , labor unions and a whole host of special interest groups. None of this is news, all the Washington insiders know all about it and are more than willing to look the other way.
You hav a chance to take a swipe at these grafters in the coming election. Send these do nothing congressional gangsters home to look for anther job.
Vote smart, make sure you are voting for the people advocates
and not just more of the business as usual political hacks.
My vote is without any reservation, going to McCain and Palin.
Both have good records when it comes to standing up for their consituients and have excellent records for reaching across party lines to get things done.

Reply

The article is about STATE insurance rules supporting fiduciary liability for individual insurance salespersons and brokers. Not about the presidential election. The presidential candidates have nothing to do with state courts and Life/Property Insurance reform. If they tell you they do, they are lying (hint to the sarcastic ex-beauty queen from Alaska: you MIGHT be able to do something about it in Juneau, but that's it, because it's a STATE issue).

I would like to hear if someone tries the fiduciary statement suggestions from the writer. Can't imgine it has ever actually happened.

Reply

Insurance agents are either captive agents, ( they are agents for a major company and under contract with that company) or independents. Captive agents have a responsibility to the company and to their policyholders. Independents do not, they usually write with the company that pays the best commission regardless of the risk. The policyholder has no or little knowledge of the company assigned by the agent. The policy holder will receive a binder and if the agent tells the policy holder he is covered when he signs the binder this is a positive sign. If not watch out and check out the company and agent. The insurance department in the state will help you when you contact them. The number and address in on your binder. If a policy holder has any questions about the agent or the company the State Insurance Department should be contacted all within the grace period of the policy, noted on the binder.

Reply

Bluge: another thing...operative words are DID have PAST records of reaching across party lines, etcd." May have been true once upon a time and if this was 2000 I would say, John McCain was a good guy...not any more he has totally sold out and worse, he panders to the religious right bc he knows without them no reasonable or moderate republican can be elected. She is totally about her she only ever reached across party lines when she would gain something for it and then when she did, she would stab her own children and parents in the back ...again, READ THINK use your brain and look at this. DON't DRINK ANYMORE KOOL AID

However, if you truly believe what you said, then I have this wonderful bridge in brooklyn and even better, some land with a view of the alligators in Fla and New Mexico. PLEASE don't do this to our country and our constitution.

Reply

Doug McArthur: You are almost right. Accurate definitions are:
Direct writer, broker and independent agent.

Captive Agent a/k/a exclusive agent a/k/a direct writer: i.e. Sate Farm, Allstate, whenever you have a person who has a franchise like agency where they only do business with one company. They are owned and operated by the agent but are only able to place coverage with that company and any public underwriting facilites, like the assigned risk auto plan in a given state. They must pass their state of residency/operations licensing examination to be licensed, but their "agents" license, which allows them to bind coverage on behalf of that company, (no other agent can write for the direct carriers like State Farm) but the insurance company must designate and certify the indivual as an agent. While they are obviously loyal to the one company. As long as these agents write direct business, they represent the company. BUT if they have been licensed by any state as either a resident or non-resident agent/broker then they still, as all of the aforementioned, have a fiduciary duty to the insured(consumer) except when collecting premiums.

Insurance Broker (usually unique to large urban areas bc of communication limitations that technically are solved by today's technology, but still exist)...An Insurance Broker and for reasons explained below, Independent Insurance Agent represent the insured(client or consumer) in all matters except when collecting premiums then they act on behalf of the insured.

Indendent Insurance Agents stated when insurance brokers in the surburbs and other rural areas needed to have a signed binder of insurance or they would not be able to place coverage. Think about the ancient times a/k/a before the internet. The only way that the agreement between the insurance company and insurance broker could be proven is if the underwriter at the insurance company signed a binder of insurance which gives the "highlights" of the agreement and usually a page back then and that was superceded by the actual insurance policy. (Hey Doug, if you don't know the deal and the main contract points b4 it's bound, fire the agent, that's not permissible and you're right the state insurance dept will help you but 99% of the brokers are hard working knowledgeable people who all could tell you what I say bc it's on the test and whoever you went to should be shot, they're almost as bad as the guy who wrote the original article is) so in order to be able to work out a way that the non city folk could do business, the industry created the indepenent agent who always represents the insured except when collecting premiums and also has agency contracts with multiple insurers. They still have state licenses so there is still and always a fiduciary relationship, regardless of the article but they often used to (not sure if it's still true given the instant communciation we now have) get something called "binding authority" which allows them to place the coverage for a limited period (like 5 or 10 days) within a limited guideline (like only a small limit or large deductible, or no drivers with a speeding ticket or other restrictions) but they still represent the insured, not the carrier and they absolutely have a fiduciary duty to act in the best interest of the insured. WHen it goes wrong? Ask how Spiztzer got Marsh and AIG? The binder issue was also why the WTC coverage was so heavily litigated. The renewal was effective 9/1/01 and we know what happened on 9/11/01, so that's why the binding authority was made within guidelines and with restrictions, so the insurance company could drag in the indepedent agent as a co defendant!!!

Finally will someoneplease explain the difference between Property and Casualty CPCU vs. CLU or life insurance sales? I am really tired and although I apologize for the tutorial, I am an insurance geek, among other things and I never mind when the industry is justifiably maligned but when it's based on incorrect information by a person who is a finance person, not an insurance person, well it's stupid. Also, even b4 law school, I had a responsible job and helped many consumers and corporations with their risks, I always resented being compared to the guys who knew nothing except that while the really smart folks toil away on the Prop/Casualty side of insurance life for 5 to 10% commission or a flat fee...all these guys need to know is First year commission of life insurance is fifty percent to the producing agent...AHA!!! NOW you know why they're so pushy to get you as a client but don't call after unless they have an exciting new product! Sorry, it's why I went to law school, it's an important but thankless job.

Independent Agent: A licensed agent and brok

Reply

Hey Linda,
File a complaint with the Insurance Commissioner in your State.
Send them your proof of time frame from when you had coverage and your payment receipts, they have to pay it. Good luck. An independent retired insurance agent.

Reply

SCREW THOSE INSURANCE COMPANIES FOR I'LL NEVER PAY OUT ANOTHER DIME FOR DISABILITY AND LIFE AGAIN. I HAD BOUGHT HARTFORD'S DISABILITY AND LIFE WHILE I WAS WORKING, THEN I INJURED MYSELF ON THE JOB AND HAD COMPLETELY FORGOTTEN ABOUT MY DISABILITY INSURANCE UNTIL ABOUT A MONTH LATER, WHEN I RECIEVED THE BILL IN THE MAIL. SO I CALLED THEM UP AND INFORMED THEM THAT I WAS NO LONGER ABLE TO WORK AND THAT I WANTED TO PUT IN A CLAIM, WELL TO MAKE A LONG STORY SHORT I WAS DENIED OVER AND OVER AGAIN AND I CAN NOT FIND A LAWYER THAT WILL HELP ME. AS TO THIS DAY I AM PERMANETLY DISABLED AND CANNOT GO BACK TO WORK AND I STILL HAVE NOT RECIEVED A SINGLE PENNY FROM THOSE PEOPLE. SO TO WHOM EVER HAS HARTFORD DISABILITY AND LIFE I SUGGEST YOU CANCEL WITH THEM CAUSE YOU WILL BE THROWING YOUR HARD EARNED MONEY DOWN THE TOILET. FOR YOU WILL NEVER RECIEVE A CENT FROM THEM AS I AM PROOF.

Reply

My HUsband worked for General Electric in Burlington, Ma.,
Martin Marrieta bought them out. My Husband retired in 1994.
His insurance was grandfathered from GE. My Husband had
asked me to call and verify his insurance 3-4 years ago. They told me he had life insurance and at the age of 65 it would reduce 2 1/2 % per month until it reaches 1/3 of the policy. Never going beyond 10,750.00 for life.I don't have a name but the phone #800-7374-9599 , martin marietta.

My Husband passed away on 8/11/08. I've tried both GE and
Martin Marrieta but they both say there is no insurance.

He was born 09/02/38. He worked for RCA,GE,and MM for 17 years in Burlington, Ma Helen Vigliotta

Reply

Mr. Solin is correct in his statement that the insurance agent is not mandated by law to act in a fiduciary capacity as a series 6 or 63 licensed financial broker would. However, Mr. McArthur's comment adds further insight to this matter. Dealing with an independant agent or "broker" truly does increase the chances of finding a variety of products that fit your needs. In the end however, the final decision as to whether the product your agent recommends for you is feasible or not is up to you the consumer.

I have been a multi-state licensed health insurance broker for over 13 years and every day I read more and more "horror" stories that are posted on the Internet regarding health insurance companies not paying claims, refusing to cover specific illnesses and physicians not getting reimbursed for medical services. Unfortunately, insurance companies are driven by profits, not people (albeit they need people to make profits). If the insurance company can find a legal reason not to pay a claim, chances are they will find it, and you the consumer will suffer. However, what most people fail to realize is that there are very few "loopholes" in an insurance policy that give the insurance company an unfair advantage over the consumer. In fact, insurance companies go to great lengths to detail the limitations of their coverage. They even give the policy holder 10-days (a 10-day free look period) to review their policy. Unfortunately, most people put their insurance cards in their wallet and place their policy in a drawer or filing cabinet during their 10-day free look and it usually isn't until they receive a "denial" letter from the insurance company that they take their policy out to really read through it.

The majority of people, who buy their own health insurance, rely heavily on the insurance agent selling the policy to explain the plan's coverage and benefits. This being the case, many individuals who purchase their own health insurance plan can tell you very little about their plan, other than, what they pay in premiums and how much they have to pay to satisfy their deductible.

For many consumers, purchasing a health insurance policy on their own can be an enormous undertaking. Purchasing a health insurance policy is not like buying a car, in that, the buyer knows that the engine and transmission are standard, and that power windows are optional. A health insurance plan is much more ambiguous, and it is often very difficult for the consumer to determine what type of coverage is standard and what other benefits are optional. In my opinion, this is the primary reason that most policy holders don't realize that they do not have coverage for a specific medical treatment until they receive a large bill from the hospital stating that "benefits were denied."

Sure, we all complain about insurance companies, but we do know that they serve a "necessary evil." And, even though purchasing health insurance may be a frustrating, daunting and time consuming task, there are certain things that you can do as a consumer to ensure that you are purchasing the type of health insurance coverage you really need at a fair price.

Dealing with small business owners and the self-employed market, I have come to the realization that it is extremely difficult for people to distinguish between the type of health insurance coverage that they "want" and the benefits they really "need." Recently, I have read various comments on different Blogs advocating health plans that offer 100% coverage (no deductible and no-coinsurance) and, although I agree that those types of plans have a great "curb appeal," I can tell you from personal experience that these plans are not for everyone. Do 100% health plans offer the policy holder greater peace of mind? Probably. But is a 100% health insurance plan something that most consumers really need? Probably not!

In my professional opinion, when you purchase a health insurance plan, you must achieve a balance between four important variables; wants, needs, risk and price. Just like you would do if you were purchasing options for a new car, you have to weigh all these variables before you spend your money. If you are healthy, take no medications and rarely go to the doctor, do you really need a 100% plan with a $5 co-payment for prescription drugs if it costs you $300 dollars more a month?

Is it worth $200 more a month to have a $250 deductible and a $20 brand name/$10 generic Rx co-pay versus an 80/20 plan with a $2,500 deductible that also offers a $20 brand name/$10generic co-pay after you pay a once a year $100 Rx deductible? Wouldn't the 80/20 plan still offer you adequate coverage? Don't you think it would be better to put that extra $200 ($2,400 per year) in your bank account, just in case you may have to pay your $2,500 deductible or buy a $12 Amoxicillin prescription? Isn't it wiser to keep your hard-earned money rather than pay higher premiums to an insurance company?

Yes, there are many ways you can keep more of the money that you would normally give to an insurance company in the form of higher monthly premiums. For example, the federal government encourages consumers to purchase H.S.A. (Health Savings Account) qualified H.D.H.P.'s (High Deductible Health Plans) so they have more control over how their health care dollars are spent. Consumers who purchase an HSA Qualified H.D.H.P. can put extra money aside each year in an interest bearing account so they can use that money to pay for out-of-pocket medical expenses. Even procedures that are not normally covered by insurance companies, like Lasik eye surgery, orthodontics, and alternative medicines become 100% tax deductible. If there are no claims that year the money that was deposited into the tax deferred H.S.A can be rolled over to the next year earning an even higher rate of interest. If there are no significant claims for several years (as is often the case) the insured ends up building a sizeable account that enjoys similar tax benefits as a traditional I.R.A. Most H.S.A. administrators now offer thousands of no load mutual funds to transfer your H.S.A. funds into so you can potentially earn an even higher rate of interest.

In my experience, I believe that individuals who purchase their health plan based on wants rather than needs feel the most defrauded or "ripped-off" by their insurance company and/or insurance agent. In fact, I hear almost identical comments from almost every business owner that I speak to. Comments, such as, "I have to run my business, I don't have time to be sick! "I think I have gone to the doctor 2 times in the last 5 years" and "My insurance company keeps raising my rates and I don't even use my insurance!"

As a business owner myself, I can understand their frustration. So, is there a simple formula that everyone can follow to make health insurance buying easier? Yes! Become an INFORMED consumer. Every time I contact a prospective client or call one of my client referrals, I ask a handful of specific questions that directly relate to the policy that particular individual currently has in their filing cabinet or dresser drawer. You know the policy that they bought to protect them from having to file bankruptcy due to medical debt. That policy they purchased to cover that $500,000 life-saving organ transplant or those 40 chemotherapy treatments that they may have to undergo if they are diagnosed with cancer.

So what do you think happens almost 100% of the time when I ask these individuals "BASIC" questions about their health insurance policy? They do not know the answers! The following is a list of 10 questions that I frequently ask a prospective health insurance client. Let's see how many YOU can answer without looking at your policy.

1. What Insurance Company are you insured with and what is the name of your health insurance plan? (e.g. Blue Cross Blue Shield-"Basic Blue")

2. What is your calendar year deductible and would you have to pay a separate deductible for each family member if everyone in your family became ill at the same time? (e.g. The majority of health plans have a per person yearly deductible, for example, $250, $500, $1,000, or $2,500. However, some plans will only require you to pay a 2 person maximum deductible each year, even if everyone in your family needed extensive medical care.)

3. What is your coinsurance percentage and what dollar amount (stop loss) it is based on? (e.g. A good plan with 80/20 coverage means you pay 20% of some dollar amount. This dollar amount is also known as a stop loss and can vary based on the type of policy you purchase. Stop losses can be as little as $5,000 or $10,000 or as much as $20,000 or there are some policies on the market that have NO stop loss dollar amount.)

4. What is your maximum out of pocket expense per year? (e.g. All deductibles plus all coinsurance percentages plus all applicable access fees or other fees)

5. What is the Lifetime maximum benefit the insurance company will pay if you become seriously ill and does your plan have any "per illness" maximums or caps? (e.g. Some plans may have a $5 million lifetime maximum, but may have a maximum benefit cap of $100,000 per illness. This means that you would have to develop many separate and unrelated life-threatening illnesses costing $100,000 or less to qualify for $5 million of lifetime coverage.)

6. Is your plan a schedule plan, in that it only pays a certain amount for a specific list of procedures? (e.g., Mega Life & Health & Midwest National Life, endorsed by the National Association of the Self-Employed, N.A.S.E. is known for endorsing schedule plans)

7. Does your plan have doctor co-pays and are you limited to a certain number of doctor co-pay visits per year? (e.g. Many plans have a limit of how many times you go to the doctor per year for a co-pay and, quite often the limit is 2-4 visits.)

8. Does your plan offer prescription drug coverage and if it does, do you pay a co-pay for your prescriptions or do you have to meet a separate drug deductible before you receive any benefits and/or do you just have a discount prescription card only? (e.g. Some plans offer you prescription benefits right away, other plans require that you pay a separate drug deductible before you can receive prescription medication for a co-pay. Today, many plans offer no co-pay options and only provide you with a discount prescription card that gives you a 10-20% discount on all prescription medications).

9. Does your plan have any reduction in benefits for organ transplants and if so, what is the maximum your plan will pay if you need an organ transplant? (e.g. Some plans only pay a $100,000 maximum benefit for organ transplants for a procedure that actually costs $350-$500K and this $100,000 maximum may also include reimbursement for expensive anti-rejection medications that must be taken after a transplant. If this is the case, you will often have to pay for all anti-rejection medications out of pocket).

10. Do you have to pay a separate deductible or "access fee" for each hospital admission or for each emergency room visit? (e.g. Some plans, like the Assurant Health's "CoreMed" plan have a separate $750 hospital admission fee that you pay for the first 3 days you are in the hospital. This fee is in addition to your plan deductible. Also, many plans have benefit "caps" or "access fees" for out-patient services, such as, physical therapy, speech therapy, chemotherapy, radiation therapy, etc. Benefit "caps" could be as little as $500 for each out-patient treatment, leaving you a bill for the remaining balance. Access fees are additional fees that you pay per treatment. For example, for each outpatient chemotherapy treatment, you may be required to pay a $250 "access fee" per treatment. So for 40 chemotherapy treatments, you would have to pay 40 x $250 = $10,000. Again, these fees would be charged in addition to your plan deductible).

Now that you've read through the list of questions that I ask a prospective health insurance client, ask yourself how many questions you were able to answer. If you couldn't answer all ten questions don't be discouraged. That doesn't mean that you are not a smart consumer. It may just mean that you dealt with a "bad" insurance agent. So how could you tell if you dealt with a "bad" insurance agent? Because a "great" insurance agent would have taken the time to help you really understand your insurance benefits. A "great" agent spends time asking YOU questions so s/he can understand your insurance needs. A "great" agent recommends health plans based on all four variables; wants, needs, risk and price. A "great" agent gives you enough information to weigh all of your options so you can make an informed purchasing decision. And lastly, a "great" agent looks out for YOUR best interest and NOT the best interest of the insurance company.

So how do you know if you have a "great" agent? Easy, if you were able to answer all 10 questions without looking at your health insurance policy, you have a "great" agent. If you were able to answer the majority of questions, you may have a "good" agent. However, if you were only able to answer a few questions, chances are you have a "bad" agent. Insurance agents are no different than any other professional. There are some insurance agents that really care about the clients they work with, and there are other agents that avoid answering questions and duck client phone calls when a message is left about unpaid claims or skyrocketing health insurance rates.

Remember, your health insurance purchase is just as important as purchasing a house or a car, if not more important. So don't be afraid to ask your insurance agent a lot of questions to make sure that you understand what your health plan does and does not cover. If you don't feel comfortable with the type of coverage that your agent suggests or if you think the price is too high, ask your agent if s/he can select a comparable plan so you can make a side by side comparison before you purchase. And, most importantly, read all of the "fine print" in your health plan brochure and when you receive your policy, take the time to read through your policy during your 10-day free look period.

If you can't understand something, or aren't quite sure what the asterisk (*) next to the benefit description really means in terms of your coverage, call your agent or contact the insurance company to ask for further clarification. Furthermore, take the time to perform your own due diligence. For example, if you research MEGA Life and Health or the Midwest National Life insurance company, endorsed by the National Association for the Self Employed (NASE), you will find that there have been 14 class action lawsuits brought against these companies since 1995. So ask yourself, "Is this a company that I would trust to pay my health insurance claims?

Additionally, find out if your agent is a "captive" agent or an insurance "broker." "Captive" agents can only offer ONE insurance company's products." Independent" agents or insurance "brokers" can offer you a variety of different insurance plans from many different insurance companies. A "captive" agent may recommend a health plan that doesn't exactly meet your needs because that is the only plan s/he can sell. An "independent" agent or insurance "broker" can usually offer you a variety of different insurance products from many quality carriers and can often customize a plan to meet your specific insurance needs and budget.

Over the years, I have developed strong, trusting relationships with my clients because of my insurance expertise and the level of personal service that I provide. This is one of the primary reasons that I do not recommend buying health insurance on the Internet. In my opinion, there are too many variables that Internet insurance buyers do not often take into consideration. I am a firm believer that a health insurance purchase requires the level of expertise and personal attention that only an insurance professional can provide. And, since it does not cost a penny more to purchase your health insurance through an agent or broker, my advice would be to use Ebay and Amazon for your less important purchases and to use a knowledgeable, ethical and reputable independent agent or broker for one of the most important purchases you will ever make....your health insurance policy.

Lastly, if you have any concerns about an insurance company, contact your state's Department of Insurance BEFORE you buy your policy. Your state's Department of Insurance can tell you if the insurance company is registered in your state and can also tell you if there have been any complaints against that company that have been filed by policy holders. If you suspect that your agent is trying to sell you a fraudulent insurance policy, (e.g. you have to become a member of a union to qualify for coverage) or isn't being honest with you, your state's Department of Insurance can also check to see if your agent is licensed and whether or not there has ever been any disciplinary action previously taken against that agent.

In closing, I hope I have given you enough information so you can become an INFORMED insurance consumer. However, I remain convinced that the following words of wisdom still go along way: "If it sounds too good to be true, it probably is!" and "If you only buy on price, you get what you pay for!"

About the Author:

C. Steven Tucker is President of Small Business Insurance Services, Inc., and is a multi-state licensed health insurance broker who has been servicing the small business and self-employed community for over a decade. Mr. Tucker has been interviewed regarding health insurance and insurance in general by The Wall Street Journal, DHL Worldwide, Real Estate Executive Magazine, The Nashville Business Journal
& The Tennessean.

He has also written numerous articles that focus on consumer education, which include, tips on buying health insurance, advice on avoiding health insurance scams, selecting a reputable health insurance agent, questions you should ask before purchasing a policy and other insurance topics.

Many questions regarding health insurance can be found on the FAQ section of his web site. He can be emailed here: steve@sbisvcs.com or call (866) SBIS123 (724-7123)

Author Links:

Blog URL: http://activerain.com/blogsview/77463/Small-Business-Health-Insurance
Business URL: http://www.sbisvcs.com

Reply