Kentucky Office of Insurance Set to Meet Industry Challenges

As a Florida resident who chose to return to Kentucky during my first try at retirement (a decision that drew puzzled looks from many), I appreciate many things about the Commonwealth—the natural beauty, the quality of life and the wealth of potential.

One of the traits I value most in Kentuckians is a certain resilience—an optimistic attitude that better days are coming if we just persevere. Fortunately for me in my new role as executive director of the Office of Insurance, this attitude has remained alive through the ups and downs of the various insurance markets.

We have a saying in Kentucky—if you don’t like the weather, stick around for 10 minutes because it will change. Unfortunately, those meteorological changes aren’t always pleasant, and the weather has caused serious upheaval in the property and casualty market for the past few years.

In 2002, for example, Kentucky led the nation in insured-property losses caused by natural catastrophes with $885 million in claims. While the Commonwealth strives to be first in the nation in many things—basketball comes to mind—this was a distinction we certainly did not seek and were eager to relinquish.

By the time I became insurance executive director, we were beginning to see a stabilization of personal line premiums. Rate increases are still coming in, but we are seeing much smaller increases, and some companies are maintaining the course.

The workers’ comp market in Kentucky, as in other states, has gotten media attention recently. One of the large self-insureds, AIK Comp, asked the state in June to allow it to assess its members as much as $49 million to offset losses and build up a reserve.

As of this writing, Gov. Ernie Fletcher and other state officials continue to evaluate the workers’ comp situation to determine if changes are needed in how the state regulates self-insureds. Several agencies are examining this issue with the top priority being the protection of injured workers and ensuring that their claims are paid.

Which brings us to health insurance. After struggling through reform efforts in the 1990s, we are hearing from companies expressing interest in returning to the Kentucky market. The choices for individuals—limited to only Anthem and Humana for years after initial reform efforts—now have grown to seven plus Kentucky Access, the state-run program for people who are unable to get insurance in the traditional market. We are seeing signs of interest in the small group market, too, which causes us to be optimistic.

One of the health-related issues I am most excited about is Gov. Fletcher’s initiative, “A Doctor’s Prescription for a Healthy Kentucky.” Gov. Fletcher and Health and Family Services Cabinet Secretary Jim Holsinger, both physicians, are leading an effort to educate and empower Kentucky residents to make healthy and responsible lifestyle choices. In addition, the Office of Insurance and other agencies are joining in a comprehensive approach to look closely at state-provided services and regulations to remove any unnecessary barriers.

The passage of HB 650 during the last legislative session was one of the first steps in this initiative. This law will reduce administrative costs for companies, which should have a direct impact on premiums and give consumers more choices. Requirements for company reporting have been changed to make the Kentucky market more like that of the nation as a whole. This should foster more competition since companies have been telling us they are looking for uniformity.

The Health and Family Services Cabinet is working with Gov. Fletcher and the Office of Insurance to convene a meeting with insurers interested in returning to the Kentucky health insurance market. We hope to learn what efforts we can make to strengthen competition while continuing our commitment to protect consumers. The Governor’s “Get Healthy Kentucky” plan includes a number of other initiatives, including improving access to nursing home care, modernizing Medicaid and increasing law enforcement efforts to combat the abuse of prescription drugs. The Get Healthy Kentucky! Initiative was unveiled in July and will include ways to get Kentuckians moving toward healthier lifestyles. Reducing the problem of obesity will be a primary focus, as well as reducing smoking and the use of illegal drugs, increasing immunizations, and access to dental and pre-natal care.

As we continue the tightrope walk between maintaining a stable, competitive marketplace and protecting the consumer, I am reminded of Kentucky weather—gloomy and threatening one minute and sunny and pleasant the next. Both the weather and the insurance market require a watchful eye. I am grateful to those who have come before me and am ready to take my turn at facing these challenges.

Martin Koetters is the executive director of Kentucky’s Office of Insurance.

Topics Workers' Compensation Kentucky