CT governor mulls the $2B question: grace period on premiums?

With Congress reaching the outline of an agreement on Tuesday for a $2 trillion bailout and stimulus package, Gov. Ned Lamont’s administration is looking for another source of relief for cash-strapped businesses and residents during the coronavirus outbreak — a grace period on insurance premiums that could keep as much as $2 billion in the pockets of policyholders in each of the coming two months.

Some carriers have proactively announced mitigation measures for policyholders, including Berkshire Hathaway subsidiary Geico which as of 2017 was the largest auto insurance underwriter in Connecticut. Geico pledged not to cancel any policies through the end of April while offering “maximum flexibility” for customers that need it.

In his role as commissioner of the Connecticut Insurance Department, Andrew Mais extended a formal request to carriers to allow a 60-day grace period on payments spanning all types of coverage, to include health, life and the gamut of property and casualty insurance to include auto and home.

Mais acted a week after his counterpart in California, with Georgia, West Virginia and Wisconsin among the states that have taken similar steps.

Pressed Wednesday afternoon in Hartford on whether he is considering any outright order requiring carriers to suspend premium collections from beleaguered customers demonstrating the need, Lamont responded he has considered such a step while stopping short of any commitment to do so.

“We got the commissioner to start putting pressure on the health insurance companies — just like utilities, just like banks, just like landlords,” Lamont said. “[We are] doing everything we can to defer this and allow the people of Connecticut to work their way through the next three or four months.”

‘Insurance capital of the world’

Under the proposal framed by Mais, policyholders would still be on the hook for any amounts due, to be remitted at the end of any grace periods allowed by insurance carriers whether in lump sum or on a payment schedule.

“A grace period will allow policyholders who may need help due to circumstances beyond their control additional time to pay and avoid a coverage lapse or cancellation,” Mais was quoted saying in a Tuesday press release.

Mais extended his forbearance request to the other institutions that receive revenue from insurance carriers, without stating whether that would extend to taxes that carriers pay to state government. In a tandem bulletin on Tuesday, Mais extended some filing deadlines for insurance companies in Connecticut.

In 2017, insurance carriers collected nearly $24 billion in premiums in Connecticut for both personal and commercial lines of business, according to the most recent tally published by the state insurance department, averaging out to nearly $130 a month for every resident that year.

Prudential is the dominant underwriter, with the New Jersey-based giant accounting for nearly 40 percent of premiums collected in Connecticut through its life insurance, annuity and property and casualty offerings, at $9.3 billion in 2017. Hartford-based Aetna was a distant second that year with premium collections approaching $2 billion, with the carrier now owned by Rhode Island-based CVS Health.

“Prudential recognizes the financial challenges some of our customers are faced with in these uncertain times,” stated Prudential spokesperson Andrew Simonelli. “If any of our policyholders are experiencing difficulties making premium payments as a result of COVID-19, we encourage them to reach out.”

In recent years, the state has seen increased numbers of corporations underwriting their own health insurance costs independent of traditional carriers, while utilizing outside companies to manage claims and other administrative functions.

The Connecticut Insurance Department’s duties include both ensuring protections for policyholders as well as monitoring the solvency of the carriers admitted to sell insurance in the state, with nearly 1,450 licensed to do so as of 2017.

As the self-styled “insurance capital of the world,” Connecticut hosts the headquarters of several major carriers in addition to Aetna, to include Bloomfield-based Cigna, The Hartford Financial Services Group, and the Stamford-based General Reinsurance subsidiary of Berkshire Hathaway.

Other national carriers with significant operations in the state include Anthem, UnitedHealthcare, The Travelers and Voya, and the state is home to a plethora of smaller, specialty carriers like the New Haven-based Knights of Columbus and W.R. Berkley in Greenwich.

Anthem, the largest underwriter of health insurance in Connecticut, is handling payment extension requests on a case-by-case basis, a spokesperson indicated Wednesday.

“We will continue to be a partner with the state and public officials as we work together to protect public health and provide both access to care and peace of mind,” stated Anthem spokesperson Colin Manning.

Alex.Soule@scni.com; 203-842-2545; @casoulman