MPC Meets in New Orleans

Despite the President's Day storm that blanketed much of the East Coast with snow, the Members' Participation Council held its first meeting of 2003 in New Orleans, La., on February 17-19. The following are summaries of task force insolvency reports presented during the meeting:

  Staff Contact - Sean McKenna Bankers Commercial Life Insurance Company (Tex.) & Statesman National Life Insurance Company (Tex.)

Paul Peterson (NOLHGA staff contact for the BCL task force) updated attendees on the status of the few remaining issues involving these estates. The dispute with the special deputy receiver regarding guaranty association premiums offsetting administrative expenses has been resolved in both insolvencies, and a settlement has been reached with American Capitol regarding the final enhancement to guaranty associations involved in the Statesman estate. An order authorizing a third dividend payment from Statesman to the Arkansas, Louisiana, Oklahoma, and Texas guaranty associations has been filed. Both estates are expected to close in the second quarter of 2003.

Task Force Chairs - William Falck (BCL) & Neil Rucksdashel (Statesman);   Staff Contact - Paul Peterson Diamond Benefits Life Insurance Company (Ariz.)/Life Assurance Company of Pennsylvania (Pa.)

Tad Rhodes (Okla.), chair of the Litigation Review Task Force for these insolvencies, gave attendees a brief history of the DBL and LACOP insolvencies and also provided an update on litigation related to the DBL estate. A ruling against the DBL receiver was handed down in September 2002, and the defendants in that case have sued for reimbursement of $3.3 million in attorney's fees. The receiver consulted with the Litigation Review Task Force and is now appealing the ruling; the appeal process could take four to five years. A distribution from LACOP is anticipated in the near future, once final asset totals are determined.

  Staff Contact - Paul Peterson Reliance Insurance Companies (Pa.)

Task Force Chair Tad Rhodes (Okla.) reported that guaranty association billing for claims continues on a monthly basis. The estate is averaging approximately 300 claims per month, most of which are for occupational accident policies. The task force also received a status report on the liquidator's lawsuits and claims against officers and directors, auditors, actuaries, the holding company, and others.

Task Force Chair - Tad Rhodes;   Staff Contact - Unison International Life Insurance Company (Okla.)

Task Force Chair Bart Boles (Tex.) briefed attendees on the history of this insolvency and on the status of efforts to wind down the estate. Task Force Legal Counsel Joel Glover (Rothgerber, Johnson & Lyons) explained the details of the November 8, 2002, Termination Order, which created an Office of the Assistant Receiver (OAR) to complete post-closing tasks and allocated $127,000 to this office. At the end of three years and the completion of all the post-closing tasks, the OAR will distribute the remaining balance to the Unison creditors and make one final report to the court. In the meantime, the OAR is required to make annual reports to NOLHGA and to notify NOLHGA in advance of making any distribution over $20,000.

Task Force Chair - Bart Boles;   Staff Contact - Bill O'Sullivan

Patient-Directed Health Care, Asset Recovery & More Addressed at MPC Meeting

The MPC meeting in New Orleans featured a number of presentations in addition to the task force reports mentioned above. Ronald Bachman of PricewaterhouseCoopers spoke to attendees about the growing popularity of defined-contribution health plans, which are also called consumer-driven health care or patient-directed health care. These plans, which are designed to increase the "transparency" of health-care costs and give plan participants more control over managing their own health care expenses, are offered by employers as an alternative to traditional health insurance plans. However, Bachman predicted that the plans will eventually feature an insured component.

In other presentations, Jack Falkenbach (Del.) updated attendees on the work of the Asset Recovery Project Working Group, which recently added new members Linda Becker (Kans.) and Meg Melusen (NOLHGA staff); they replace Jim Beckstrom and Bill O'Sullivan, respectively. MPC Chair William Falck (Fla.) reported that the Guaranty Association Plan of Operations Working Group met on February 18; the group will soon begin analyzing the plans of operations submitted by guaranty associations in an effort to update the NOLHGA Model Plan of Operation.

In his Financial Services Modernization Update, Peter Gallanis (NOLHGA president) reported that the House Financial Services Committee recently published an ambitious work plan for the coming congressional session, including a large number of hearings relating to insurance regulation regulation (see below). It is also possible that a bill on optional federal chartering of insurers will be introduced to Congress this year.

  Staff Contact - Sean McKenna

House Financial Services Committee Oversight Plan Now Available

A copy of the oversight plan of the House Committee on Financial Services, which NOLHGA President Peter Gallanis referred to in his Update on Financial Services Modernization at the MPC meeting in New Orleans, is available for viewing and downloading on the NOLHGA Web site (www.nolhga.com). The PDF document, which details the committee's agenda for the 108th Congress, is located in the "Special Reports" section of the password-protected extranet. Users will have to log in to access the report.

  Staff Contact - Sean McKenna