Imerica Placed In Rehabilitation
Over the last few years, we’ve been skeptical enough about Imerica to avoid selling their policies to our clients in Colorado. They started offering policies in 2003. Then in 2006, they stopped issuing new policies, but continued to maintain their existing policies. In 2007, they once again began selling individual health insurance policies in Colorado, often at prices that were significantly lower than other major carriers were offering on similar plans. The on again, off again nature of the company, combined with the too-good-to-be-true premiums were both red flags, and now it looks like things have taken a turn for the worse for Imerica.
As of November 18th, 2009, Imerica has been placed in Rehabilitation, and is no longer issuing new policies. During this process, the Arkansas Insurance Commission will be overseeing the day to day operations of Imerica, and for now, claims will continue to be paid. If it is determined that Imerica can be rehabilitated, they will continue to do business under the rehabilitation plan. If not, Imerica would be liquidated, and policyholder claims not paid by Imerica would become the responsibility of the life and health insurance guaranty funds in the states where Imerica was licensed. In Colorado, this group is known as the Life and Health Insurance Protection Assocation (LHIPA). LHIPA has a maximum benefit of $500,000 for major medical insurance, which is significantly lower than most of the benefit maximums offered on private health insurance policies in Colorado (including Imerica, which offered policies with lifetime maximums ranging from $2 million to $8 million).
If you currently have a policy with Imerica and are in reasonably good health, you may be able to qualify for a policy with another carrier. This will involve medical underwriting, but we can help you determine whether there is a company that would work for you, based on your medical history. If you are in very good health, changing to another carrier will be a relatively easy process. Please contact us if you have questions about switching to a new carrier, or if you would like to compare other options that are available in Colorado.
Louise:
I admire you for holding back from selling the too-good-to-be-true policies.
I am curious if you did any research on Imerica, in addition to scrutinizing the premiums.
Do you have any idea as to the number of policies they sold in Colorado?
Ceasing issung new policies should be an omen that premiums will escalate, as no new blood is entering the pool.
Do you have any information on premium increases in between the time they ceased issuing policies, and started again?
Don Levit
Don,
Initially, it was just the low premiums that seemed like a red flag to us. But then when Imerica stopped selling policies the first time, that sealed the deal. When they returned to the market, we decided that the on-again off-again business practices just didn’t seem conducive to a trustworthy insurer-insured relationship, and didn’t recommend their policies to our clients.
I do not know how many policies they sold in Colorado or across the country, but I’m sure we’ll hear more about this situation as the rehabilitation process continues.
Don,
When Imerica re-entered the market, it seemed as though it was too much of a rush, not much planning. It reminded me of other carriers that did the same thing in the past, like States General, Empire Fire and Marine, etc.
I don’t think it was much of an accident either. I don’t think they necessarily planned to fail. But I think carriers like this see a good opportunity to make some quick money and exit. You can see it in every stage of how they enter the market. From how they raise capital, to the sales structure, aggressive underwriting, policy design, and aggressive pricing.
It’s like seeing a dog try to run through a door with a stick that’s just too wide. Maybe it wasn’t so obvious the stick was too wide the first time, but the next dog you see try to run through that same door with the same stick… it doesn’t matter if it’s a different dog, it won’ work.
I’m curious about how many clients this keeps happening to though. Of the Imerica clients in Colorado, I wonder how many have previously been with carriers like States General or Empire Fire and Marine. Some people just can’t pass up a good deal, no matter what the risk.