National Association of Insurance Commissioners Repudiates Annual Reunderwriting
A committee of the National Association of Insurance Commissioners yesterday "repudiated" the practice of annually reunderwriting individual health insurance policies in response to concerns that "states would be unprepared to protect consumers from being singled out for rate increases based on their health," the Wall Street Journal reports. The committee also dropped the practice as a "possible solution to soaring health insurance rates." Steven Larsen, head of the NAIC committee on health insurance and managed care, called reunderwriting "fundamentally unfair" and said that the committee plans to send a letter to state insurance officials nationwide "urging them to reexamine their laws regarding such a practice." Indiana Insurance Commissioner Sally McCarty said that reunderwriting "seems to fly in the face of the basic premise of insurance, which is to share the risk." However, according to supporters of reunderwriting, the practice "limits rate increases for the healthiest customers and encourages them to remain insured" and helps "keep rates lower for sicker policyholders" in the long term. Most states and the federal government do not have laws that prohibit reunderwriting, Sen. Bob Graham (D-Fla.) this summer plans to introduce legislation to ban the practice (Terhune, Wall Street Journal, 6/12).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.