Around the Western Alliance States – Week of April 10, 2023

California — Wildfire Homeowner Refunds: As part of his ongoing effort to keep insurance prices fair, Insurance Commissioner Ricardo Lara announced that Kemper Independence Insurance Company has issued over $1.5 million in refunds to thousands of California homeowners after the Department of Insurance found the company overcharged policyholders for wildfire risk. Kemper and its affiliate insurance company, Unitrin Auto and Home Insurance Company, have also agreed to a combined penalty of $617,200 to the state’s General Fund as part of the settlement.

At issue were the companies’ use of wildfire risk scores to establish the price that policyholders paid for insurance. In 2015, the companies introduced new wildfire surcharges based on the property’s Fireline wildfire risk score. Properties with a higher Fireline score paid higher premiums.

The companies changed the pricing system in 2018 without the Department’s knowledge or approval as required by law, resulting in thousands of policyholders being overcharged for insurance.

Since then Commissioner Lara has enforced a new wildfire safety regulation requiring insurance companies to provide policyholders with their property’s risk score and the factors behind it, including a right of appeal for consumers that have hardened their home against wildfire. The Commissioner’s new regulation will also require insurance companies to offer wildfire safety discounts based on the new Safer from Wildfires framework created with other state emergency preparedness agencies. He created this regulation after meeting with thousands of Californians across the state after taking office in 2019.

“Fair pricing of insurance is a fundamental part of California’s consumer protection laws,” said Commissioner Lara. “My actions are aimed at making Californians safer from wildfires while protecting them from excessive costs.”

The companies have reported that 2,402 Kemper homeowners were impacted by the unapproved surcharges and some of those policyholders were overcharged over successive policy terms. Kemper has now refunded all of the overcharges with 10 percent interest compounded annually for a total refund amount of $1,589,113. No Unitrin policyholders were overcharged. As part of the agreed penalty, Kemper is to pay $542,200, and Unitrin is to pay $75,000.

Idaho — Agent Convicted of Fraud: Charlotte Sheppard of Richfield, Idaho was convicted of two felony counts of insurance fraud, for stealing clients’ insurance premium to pay her personal and business bills and obligations. Ms. Sheppard was sentenced to the Idaho Department of Corrections for 10 years, with five years fixed and five years indeterminate.

Ms. Sheppard was first prosecuted and found guilty in Blaine County for grand theft in 2020.  Prior to her prosecution, her employer referred information to the Idaho Department of Insurance for stealing funds from the agency’s fiduciary account. The Department investigated and found that Sheppard had violated Idaho Insurance Code. Concurrent with the court proceedings the Department was taking administrative action to revoke her Insurance License.

In the interim, while awaiting criminal sentencing and administrative penalties, Ms. Sheppard took over management of a second agency in Lincoln County. The Department became aware that she was again misappropriating funds with the new agency. The DOI issued a cease-and-desist order on March 18, 2020, and revoked her license on March 20, 2020.

The Department opened a new investigation and determined that Ms. Sheppard had collected premiums from multiple clients at the second agency but did not apply them to their policies. She diverted the funds for her personal use. Charges were filed in the Fifth Judicial District in Lincoln County, Idaho in October 2020.

“This is one of the most egregious cases I have ever seen,” said Dean L. Cameron, Director of the Idaho Department of Insurance. “Most agents have their clients’ best interests at heart, but Ms. Sheppard is an unfortunate exception. We are grateful to the Lincoln County Prosecutor, Richard Roats, for his assistance with this case and bringing Ms. Sheppard to justice.”

Idaho — Use of Revised Accounting Practices and Procedures Manual and Valuation Manual of the NAIC: This Bulletin provides guidance regarding the version of the NAIC’s Accounting Practices and Procedures Manual to be used by authorized insurers when preparing 2023 quarterly and annual financial statements filed with the Idaho Department of Insurance and the NAIC, pursuant to Idaho Code §§ 41-210(4), 41-335, and 41-336.

Additionally, this Bulletin provides guidance for minimum reserve requirements regarding the version of the NAIC’s Valuation Manual to be used by authorized insurers providing life insurance, accident and health (A&H) insurance, annuity contracts, and deposit-type contracts when calculating reserve amounts to be reported to the Idaho Department of Insurance and the NAIC, pursuant to Idaho Code § 41-612.

Unless otherwise prescribed or permitted, the March 2023 version of the NAIC’s Accounting Practices and Procedures Manual, which applies to the 2023 quarterly and annual financial statements, has been adopted by the Director.

Unless otherwise prescribed or permitted, the January 1, 2023, edition of the NAIC’s Valuation Manual, which applies to the 2023 quarterly and annual financial statements, has been adopted by the Director.

This Bulletin is not new law but is an agency interpretation of existing law, except as authorized by law or as incorporated into a contract. Requests for additional information or other inquiries regarding this Bulletin can be directed to the Company Activities Bureau Chief/Chief Examiner, Eric Fletcher at 208-334-4230 or

Montana — Continuous Glucose Monitoring: The Montana Legislature is looking at a bill that — if passed — will require insurance companies to cover the cost of purchasing continuous glucose monitoring (CGM) devices for people with Type 1 and Type 2 diabetes. The reason is because studies show excellent benefits from such devices for people with Type 1 diabetes and promising effectiveness for Type 2.

The Montana Legislature is seeing broad support from legislators in both parties but House Bill 758. Price is one of the reasons insurance companies and some providers oppose the bill’s passage. Blue Cross Blue Shield of Montana is the state’s largest health insurer and it says it will lose $5 million a year if the bill passes.

GoodRX Health says the annual out of pocket cost for CGMs for a person with diabetes is between $1,000 and $3,000.

Source link: KHN —

Montana — Work Comp Reform Bill: Two work comp reform bills are before the Montana Legislature to increase the total of disability benefits for injured employees. House Bill 923 will increase compensation weekly for temporary and permanent disability from 66 2/3% of the wages to 100%.

Senate Bill 38 will limit the maximum liability for an employer from $155,000 to $350,000 in cases where there is permanent disability, temporary total disability, temporary partial disability and permanent partial disability.

Source link: Business Insurance —

Oregon — State issues a warning on the risks of self-directed IRAs: As more people look for alternative ways to save for retirement, self-directed individual retirement accounts (IRAs) have become increasingly popular. While self-directed IRAs offer investors greater control over their investments, they also come with potential risks and financial losses.

The Division of Financial Regulation (DFR) is urging investors to exercise caution when considering self-directed IRAs. While self-directed IRAs may offer the potential for higher returns, they also come with increased risks, including the possibility of fraudulent schemes, high fees, and volatile performance that can result in financial loss.

Self-directed IRAs allow investors to hold alternative assets, such as real estate, precious metals, private equity, and cryptocurrency within their retirement accounts. This flexibility can be appealing, but it also creates the potential for investors to be exposed to risks they may not fully understand. Self-directed IRA custodians do not evaluate the quality or legitimacy of any investment in the self-directed IRA or its promotors; instead, that responsibility falls solely on the investor.

With a self-directed IRA, investors have sole responsibility for evaluating and understanding the investments in the account. Due to federal laws and regulatory rules related to selling investment products or providing investment advice, most custodians for other types of IRAs limit the holdings in IRA accounts to firm-approved stocks, bonds, mutual funds, and certificates of deposit. However, these limitations do not apply to self-directed IRAs.

Self-directed IRA custodians:

 DO NOT sell investment products or provide investment advice

 DO NOT evaluate the quality or legitimacy of any investment in the self-directed IRA or its promoters

 DO NOT verify the accuracy of any financial information that is provided for an investment in the account

Self-directed IRA custodians are responsible only for holding and administering the assets in the account. Furthermore, most custodial agreements between a self-directed IRA custodian and an investor explicitly state that the self-directed IRA custodian has no responsibility for investment performance.

One of the biggest risks of investing through self-directed IRAs is the increased possibility of fraudulent schemes. These schemes can take many forms, from Ponzi schemes, in which newly invested funds are used to pay other investors in order to hide that the investment is not profitable, to bogus investments in nonexistent assets. Unfortunately, the lack of regulatory oversight in the self-directed IRA space, and lack of vetting performed by the self-directed IRA custodian, can make it difficult for investors to protect themselves from fraudsters.

In addition to the risk of fraud, self-directed IRAs can also come with high fees. These fees can be associated with the alternative assets themselves or with the custodians who hold the assets. Investors should carefully review all fees associated with a self-directed IRA before deciding to invest.

Finally, the performance of alternative assets can be volatile, leading to financial loss. Unlike traditional assets such as stocks and bonds, alternative assets may not have a well-established market, making it difficult to determine their true value. As a result, investors may be left holding assets that are difficult to sell or that have lost value over time.

“Self-directed IRAs can be a useful tool for certain investors, but it’s important to understand the risks involved,” said TK Keen, DFR administrator. “Investors should thoroughly research any alternative assets they plan to hold within their IRA and carefully review all fees associated with their account.”

Investors who are considering a self-directed IRA should consult with a licensed financial advisor to help them evaluate the risks and potential rewards. By taking a careful and informed approach to investing, investors can help protect themselves from potential financial losses.

DFR’s website offers financial services help and our consumer advocates are always available to help people if they believe they have been scammed or been a victim of fraud. Contact the advocates at 888-877-4894 (toll-free).

Washington — Health insurers urged to continue covering preventive services without cost-sharing: Insurance Commissioner Mike Kreidler has sent a letter to Washington health insurers in response to last week’s U.S. District Court ruling on several of the Affordable Care Act’s preventive service benefits, requesting they continue the critical coverage of all recommended preventive services that individuals and families have relied upon since 2010. 

“I’ve urged the health plans doing business in Washington to continue covering all preventive services without cost-sharing for patients,” said Kreidler. “Millions of people rely on this benefit to get affordable coverage of early detection and prevention of serious medical conditions. After 13 years, this coverage has saved lives here in Washington and across the country.”

Kreidler’s office is also exploring all options including legislative solutions.

Last Thursday, a U.S. District Court judge in the Northern District of Texas issued a ruling overturning some of the Affordable Care Act’s most popular preventive service benefits. The plaintiffs argued in Braidwood Management v. Becerra that some of the preventive services they were required to cover with no cost-sharing were unconstitutional and violated their religious rights under federal law.

The ACA requires all health plans to cover preventive services recommended by three different organizations with no cost-sharing:

    The U.S. Preventive Services Task Force

    The Advisory Committee on Immunization Practices

    The Health Resources and Services Administration, based on recommendations of the Women’s Preventive Services Initiative and the Bright Futures Program

This ruling applies to all preventive services recommended by the U.S. Preventive Services Task Force (USPSTF) since March 2010 when the ACA took effect. It also applies to any changes to previously recommended preventive services. It specifically calls out pre-exposure prophylaxis (PrEP), a medication taken to prevent HIV.

In 2018, the Washington state Legislature put several key ACA benefits into state law. The law requires that beginning in 2018, state-regulated health plans must at least provide coverage for the same preventive services required by the ACA, as were in effect on December 31, 2016.  These services must be covered without cost-sharing. 

Recommendations that were made after 2016 could now be subject to cost-sharing, including anxiety screening for children and youth, depression screening for pregnant and postpartum women, and colorectal cancer screening in adults aged 45-49.

The Biden Administration is expected to appeal the ruling.

Washington — Kreidler issues $578,363 in fines for violations in March: Insurance Commissioner Mike Kreidler issued fines in March totaling $578,363 against insurance companies that violated state insurance laws and regulations.

Insurance companies

The Standard Insurance Company, Portland, Ore.; fined $500,000 (order 20-0881 (

    Standard issues disability insurance to the state Health Care Authority for public employees’ benefits and did so using forms that had not been filed with the Insurance Commissioner. As part of the resolution to this matter, the OIC also issued a Technical Assistance Advisory to disability insurers operating in Washington.

Kaiser Foundation Health Plan of Washington, Seattle, Wash.; fined $30,000 (order 23-0048 (

    Kaiser erroneously denied an appeal request and did not use its full legal name on 2022 marketing materials.

Unauthorized insurers

Christian Care Ministry, Melbourne, Fla.; fined $38,363 (order 23-0049 (

    Christian Care Ministry acted as an unauthorized insurer by offering its disability income program in Washington State between 2007 and 2020. The company was also ordered to stop selling insurance in Washington. The total includes a $25,000 fine and $13,363 for taxes, penalties and interest due.

Eusoh, Inc.; fined $20,000 with $10,000 suspended (order 23-0038 (

Eusoh acted as an unauthorized insurer by offering pet insurance online.

About PIA Western Alliance

The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.


More Industry News