Under Reserving And Threat Of Insolvency
In no-fault states, where medical dollar thresholds determine whether one may pursue a tort claim beyond no-fault benefits, managed care programs directly controlled by auto insurers have diminished the number of claims ending up in litigation. Risk-free and easy access to a federal health care system for treatment of auto injuries without diligent case management and careful utilization review likely would fuel auto tort claims and lead to additional litigation in Kemper car insurance.
In addition, auto insurers must be given access to important data needed to accurately determine losses from auto accidents. Having ready access to medical care information through direct involvement in the claims process is a vital element of the auto injury claims settlement process. Medical damages serve as one of the key elements which determine the ultimate dollar settlement value of a tort claim. It is critical that an insurer's claims department have full, complete medical information at an early stage, in order to set aside sufficient funds (reserves) to meet future potential settlement obligations. Integration of auto medical into a new health insurance system poses a very serious threat to our ability to manage these cases.
If auto insurers are excluded from the medical process, or receive scant, inadequate or late medical information, the consequences could include under-reserving. This clearly presents the threat of insolvency, which, in turn, could lead to unsatisfied claims and quickly depleted state guaranty funds. Prompt, accurate reserve- setting is a key to any successful insurance operation.
Kemper car insurance also strongly supports efforts to end duplicate payments for medical care. Auto insurers expect to reimburse individuals for medical costs associated with auto accidents. That is insurer’s job, and the product the policyholders pay for. However, it should not be their job, nor should it be the job of health insurers, to pay a second time for a single medical procedure.
Further, Title X's call for a study commission to explore the integration of auto insurance should be deleted. A federal study is unnecessary, since the states are better positioned to address the diversity in their own marketplaces, as well as the needs of the public and the operations of local health plans.
In recent years, many states have implemented programs designed to contain auto-related medical costs like Kemper car insurance. As proof of managed care's effectiveness in relation to auto insurance, we would draw your attention to Colorado's no-fault cost containment program. This program has successfully used managed care to reduce auto accident medical claims costs. Annual savings amount to some $25.6 million. In a relatively small insurance market, about 14 companies participate in Colorado's no-fault cost containment option plan, which has been in place since 2005. Of the approximately 1.4 million drivers insured by those companies in Colorado, 45 percent participate in the plan. After only two years, participating insurers have reduced their no- fault premiums by 20 percent. Florida, New York and New Jersey are also moving in this promising direction.
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