Feb. 19, 2003 – Mutual of Omaha has announced that it will no longer write new individual health insurance policies in the Virgin Islands or renew existing ones.
Carl Gotts of Gotts and Associates Insurance said the company recently sent him a notice not to write new or renew such policies effective immediately. While he hasn't received official notice from the company on how to deal with existing policies, he said, historically insurance companies do not cancel current policies but rather let them expire.
The problem will be particularly acute for sole proprietors who have no employees, because they usually are not eligible for group plans, Gotts said.
He said people who can qualify for a two-person group will face higher premiums. However, their policies will be better.
All health insurance agencies in the territory wrote policies for Mutual of Omaha, according to Gotts. He said the company offered the best individual health insurance policy available locally.
He said Mutual of Omaha most recently was rated by Weiss Ratings Inc. as A-, which is an excellent rating. Information from Weiss indicates that Mutual of Omaha is among the safest companies to consider.
According to Gotts, Mutual of Omaha's departure leaves the territory with three companies — Clarendon, Atlantic Southern and Amidex — offering individual health insurance coverage. "And there are no new companies on the horizon," he said.
All three companies are ranked far less favorably then Mutual of Omaha by Weiss.
Amidex gets a C-, which indicates that the company offers fair financial security and is currently stable. However, Weiss indicates that in an economic downturn, the company may have difficulty maintaining its financial stability.
Clarendon has a D+ rating. Weiss advised people looking for insurance to seek coverage from a safer company because it has significant financial weaknesses which could get worse in a weak economic climate.
Atlantic Southern holds a D- rating from Weiss. This indicates the company has significant weaknesses that could negatively impact policyholders, particularly in an unfavorable economic climate.
Mutual of Omaha's action is not narrowly targeted at the Virgin Islands. It also will stop writing individual health insurance policies in 36 states and Washington, D.C.
Gotts said that health insurance is no longer an attractive commodity to insurance companies. "It is no longer cost effective. I'm sure it was purely a business decision," he said.
Efforts to obtain more information from Mutual of Omaha were unsuccessful.
Deverita Sturdivant, director of banking and insurance in the Lieutenant Governor's Office, said she was not aware of the Mutual of Omaha situation. But she said the entire nation is facing a health insurance crisis. "It needs to be addressed, perhaps legislatively," she said.
In some locations, pooling arrangements group individual policyholder together for group coverage. Sturdivant said the strategy tends not to work in small areas such as the Virgin Islands because it doesn't spread the risks around sufficiently.
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