What’s in the news?

What’s In the News on InsuranceNewsNet.com

A crumbling insurance empire, big data and the end of the pandemic.

[Editor’s Note: These are some of the major stories to which we are devoting ongoing coverage on InsuranceNewsNet.com]

Regulators try to clean up Greg Lindberg’s broken insurance empire

by John Hilton

The mysterious inner workings of the receivership process are details that no insurance agent wants to be forced to learn.

If they do require that education, it likely means they have clients with policies in limbo. Bobby Cogdell found himself in that situation after Bankers Life Insurance Co. ended up in a receivership overseen by the North Carolina Department of Insurance.

Bankers Life is one of four insurers owned by troubled billionaire Greg Lindberg. After three years of the rehabilitation process, Cogdell said he is getting frustrated for his clients.

Cogdell, who runs Cogdell Insurance Agency in Lexington, Tenn., matched “about 30” clients with policies sold by Lindberg’s Bankers Life.

North Carolina regulators allowed hardship withdrawals, with approval, and a onetime $10,000 payment upon request. His clients need more than that, Cogdell said, citing an 80-year-old policyholder with a history of cancer who has $250,000 tied up in a Bankers Life annuity contract.

“At this rate, the only way they’re going to get [their money] now is by dying, and to win by dying is not winning at all,” Cogdell said.

Lindberg’s four insurers — Bankers Life, Southland National Insurance Corp., Southland National Reinsurance Corp. and Colorado Bankers Life Insurance Co. — have more than 262,000 policyholders combined, state insurance regulators have said. Only Southland had been referred to liquidation as this issue went to press. Regulators were expected to petition the court to place Bankers Life in liquidation in July, according to a source with the insurance department. Liquidation proceedings must happen for policyholders to access guaranty association funds, a backstop that reimburses policyholders up to $300,000 in most states.

Of the nearly 84,000 Southland policyholders, all but two are expected to receive their full policy value, thanks to state guaranty associations. The two policyholders owed more than that will be covered up to $300,000, court documents say.

Greg Lindberg

Mansions, money and prison

Lindberg won a big court victory in June, when a federal appeals court tossed out his convictions on federal funds bribery and honest services fraud due to judicial error. Lindberg is two years into a seven-year prison sentence. The appeals court ordered that he be retried, although the government can still appeal that ruling.

A May court victory should help. A North Carolina judge ordered Lindberg to cede control of his private companies to a special board that would use them to salvage the four financially troubled insurers. Court documents describe “hundreds” of affiliated companies covered by the ruling.

Lindberg’s legal issues began with an alleged promise to donate millions of dollars to the North Carolina Republican Party. In exchange, Lindberg was to receive more favorable treatment of Global Bankers Insurance Group by regulators, investigators allege.

In March 2020, Lindberg was found guilty of conspiracy to commit honest services wire fraud and bribery.

Cracks in Lindberg’s business empire emerged well before he was indicted. The Yale University graduate came to the insurance industry after establishing Eli Global, a private equity firm. In 2014, Eli Global made its first insurance acquisition, when it purchased a burial-policy insurer based in Alabama.

In the ensuing two years, Lindberg acquired more insurers and grouped them together as the Global Bankers Insurance Group. Insurance profits soared and ultimately enabled Lindberg to funnel $2 billion to Eli Global, according to a Wall Street Journal report.

That made North Carolina regulators nervous. They feared Lindberg was not reserving enough funds in his insurers to be able to make the payments due to the policyholders.

To read more on this story, visit bit.ly/lindberg2022

How will ‘The Great Unwinding’ impact health insurance?

Insurers grapple with big data privacy hurdles

by Susan Rupe

The COVID-19 pandemic led to a swath of public health declarations and emergency coverage mandates as officials tried to get a handle on the crisis. Those moves were always meant to be temporary, and now the time has come for them to be gone.

The Great Unwinding is how the Centers for Medicare & Medicaid Services refers to that difficult process. According to an analysis by the Kaiser Family Foundation, an estimated 5.3 million to 14.2 million people could lose their Medicaid coverage when the COVID-19 public health emergency ends.

Under the public health emergency declaration, more Americans became eligible for Medicaid. In addition, states were required to provide continuous coverage for those who were enrolled in Medicaid on or after March 18, 2020.

Further complicating the Medicaid unwinding is the fact that each individual state will develop its own time frames and approach for unwinding the Medicaid continuous coverage requirements, Kinda Serafi, Manatt Health partner, told InsuranceNewsNet. In addition, the states have up to 12 months to re-enroll the impacted Medicaid recipients.

“The potential for coverage loss is really significant,” she said. “And it’s for a number of reasons. It’s because many people haven’t had their coverage renewed in over two years, they haven’t updated their contact information with their state Medicaid agencies, and so they might have moved, they might have changed their phone number. Then when states go to reach out to them to renew, they’re not going to be able to find them.”

There will be “a huge volume” of renewals at the end of this public health emergency, Serafi said, adding, “And depending on how fast or slow a state takes to sort of move through the backlog of pending renewals — that will really determine whether we’re going to see a significant and disproportionate loss of coverage.”

To read more on this story, visit bit.ly/unwinding2022

by John Hilton

It’s no secret that insurers fancy Big Data and all the possibilities it represents. The ability to market and price products with pinpoint accuracy brings the promise of an industry revolution.

But it also comes with baggage that concerns both consumer advocates and regulators. Specifically, discrimination and invasion of privacy. Those concerns are being debated by regulators and legislators across the country.

The expanding efforts for data privacy regulation are seeing major developments on three main fronts:

• Legislators in five states passed data privacy laws, and nearly two dozen states are working on similar efforts. California sprinted out of the gate first with the “gold standard” in data privacy protections, as one law firm put it, but other states are taking a more business-friendly approach. Especially where financial services is concerned.

• The National Association of Insurance Commissioners created an entirely new committee, the H Committee, to study data, technology and cybersecurity issues. It is the first letter committee created by the NAIC since 2004. • A bipartisan group of House and Senate members released a draft proposal earlier this month for a national data privacy bill, called the American Data Privacy and Protection Act, which aims to establish a framework for better protecting consumer data privacy and security.

Not surprisingly, the most activity is taking place at the state level. Legislators in Utah and Connecticut passed new data privacy laws, while Colorado and Virginia passed versions last summer. But unlike California’s, these laws exempt financial institutions, explained Drew G. Wegner of Cooley, an international law firm based in Palo Alto, Calif. The laws “effectively exempt almost all insurance carriers,” Wegner added.

California passed the first data privacy law, which contains the broadest consumer protections. The state passed two separate laws: the California Consumer Privacy Act, which took effect on Jan. 1, 2020, and the California Privacy Rights Act, passed in November 2020 and taking effect on Jan. 1, 2023.

In a second significant departure from the California standard, new data privacy laws in Utah, Virginia, Colorado and Connecticut do not include a private right to sue. California allows lawsuits, but limits damages to $750 per violation proven in court.

“This is where the plaintiff attorneys got quite excited,” said Heidi Lawson, partner at Cooley and formerly an insurance underwriter. “If you insure 100,000 people in California, and you violated the law consistently … that definitely adds up very, very quickly to an incredibly high amount straight out of the gate.”

It is a significant priority for financial services to avoid a “patchwork” of different laws across state boundaries coast to coast, Lawson explained. Often what happens is companies will “default to the strictest standard,” she added.

To read more on this story, visit bit.ly/dataprivacy2022

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@ innfeedback.com. Follow him on Twitter @INNJohnH.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.

A Platform That Offers an Endless Supply of Qualified Referrals

Today’s consumers are more aware of the need for estate planning.* Life experiences, such as millennials acting as caregivers both for children and for parents during a pandemic, and baby boomers preparing to pass down wealth, have created a greater demand for these services. As a result, estate planning seminars are achieving record-high attendance numbers — which is great news for estate planning attorneys, but how is it relevant to financial professionals?

Once clients take the step to work with an estate planning attorney, the process can reveal a client’s lack of asset protection and retirement income planning. Many estate planning clients don’t know how the estate plan they are creating will be carried out. They need someone who has financial skills and expertise, who has access to products that can accumulate and preserve wealth, and who can ensure they leave the legacy they envision. Being able to tie in the financial planning component to ensure the success of an estate plan is oftentimes the most important goal and outcome a consumer wants.

Just imagine a mom and dad whose estate plan stipulates they want their child to inherit a million dollars. If the parents’ assets had been in the market the past two months and they had died while the market is down, that million might become $800K — and that’s not what the mom and dad wanted. So, how do we guarantee those results?

When most people do an estate plan, they don’t know how it’s going to be carried out on a financial or investment basis. So, for the client to have the best result, they need to know exactly what is going to occur if and when certain things happen in their life.

While integrating retirement planning with estate planning is a top-of-mind concern today, M&O Marketing encountered this need nearly 15 years ago. They then put a solution in place that’s been helping financial advisors and estate planning attorneys collaborate for the good of their clients ever since.

Working With Attorneys Who Understand the Benefits of Life Insurance and Annuities Around 2007, in the process of doing business with estate planning attorneys, M&O discovered that many were selling fixed indexed annuities. The attorneys explained the only way they could carry out their clients’ wishes was with guaranteed products like life insurance and annuities.

That said, they weren’t financial planners and didn’t have any desire to be. But as the “original fiduciaries,” they were just doing what was best for their clients and saw the importance of being able to provide financial services when asked.

Of particular interest? The attorneys recognized that the products and services producers and advisors offered were good for clients.

It was at that point M&O realized they needed to bring attorneys and financial professionals together — sometimes literally under one roof — to provide comprehensive services and deliver financial recommendations to provide a better and more complete solution for their clients. Thus, the Attorney Collaborative Network (ACN), a unique referral platform, was born. If advisors don’t already have an attorney they work with — or even if they do — the ACN can facilitate additional business through a synergistic partnership.

Enhancing the Value of the Firm Before M&O rolled out the ACN, many attorneys were referring clients to organizations they didn’t have any true relationship with — organizations that were completely separate from their law practices. While this external relationship could maybe help the client, having someone within the firm or an advisor who would be an extension of the law firm would help guarantee the results the client desires to coordinate his or her estate.

Having someone in your office whom you have a good working relationship with — and who has a strong back office to provide support and product access — is not only more convenient for the client but also increases a firm’s annuity production and/or AUM.

From Zero to a Half-Billion AUM in 6 Years Whether a financial professional had an office in a law firm, or an attorney had one in the financial firm, or they arrived at some other arrangement, it wasn’t long before the ACN was producing success story after success story. One especially interesting situation involved an advisor just entering the business. He made himself available at least once a week to meet with law firm client referrals. Over six years, he was able to grow his AUM from zero to nearly $500,000,000.

Of course, not everyone who is a part of the ACN has this type of result, but the impact on an advisor’s practice is directly related to how committed they are to leveraging the ACN.

Collaborate and Grow As a contracted agent with M&O, you have access to the ACN. Agents who make themselves available, maintain a great professional relationship with the attorneys, and provide clients the services they need while delivering an experience that meets or exceeds expectations may never have to look for qualified prospects ever again. That is the power of M&O’s Attorney Collaborative Network.

Attorneys meeting with the estate planning clients do their typical review and due diligence, or “issue spotting,” to get to the root of a problem. The ACN trains these attorneys to ask specific fact-finding questions, such as whether the client has an existing financial advisor. Almost everyone has someone, but the relationship with that advisor or the type of service being offered, may leave an opening for a new advisor to come in and provide a better experience. The gaps the attorney has identified in the client’s current plan and the favorable introductions to the financial advisor through the ACN often lead to new business. Consequently, the attorney’s firm is thriving with happy clients who are in a much better place — from both a legal and financial standpoint.

This is truly a win for all: financial advisor, attorney and client.

Joining Forces ... Delivering Better Client Outcomes Today’s pre-retirees and retirees face a number of retirement and estate planning challenges, including:

Asset protection.

Individual financial responsibility. Optimizing government benefits.

Planning for health care and longterm care.

Legal protection for the mass affluent and middle class.

While attorneys may recognize that retirement planning should be integrated into their services to help address the bigger picture of a client’s financial life, many don’t have the time or proper licensure to accomplish that on their own.

Attorneys could hire an employee to provide the service, but finding the right candidate takes time and money. With the aid of the Attorney Collaborative Network, however, an attorney is able to work in collaboration with a knowledgeable, experienced financial professional in a mutually beneficial arrangement.

Financial professionals who join the ACN also benefit from M&O’s expertise in the ethical requirements of doing this type of business, as well as their ability to identify attorneys who make a great fit, so the financial professional can serve client referrals with confidence and ease.

By pairing an attorney and financial advisor, the ACN can create a unique value proposition for the client that helps them overcome challenges and ensures their financial wishes become reality.

To learn more about how the Attorney Collaborative Network can help you create a never-ending pipeline of qualified prospects for your financial services practice, visit AttorneyCollabNetwork.com