Update on World Corporation Insurance and American Republic Insurance

We received several online inquiries in related to the Celtic Insurance Company offer to take over certain coverage formerly offered by World Corporation Insurance and American Republic Insurance. The move may affect more than 2,000 individual health insurance policy holders in Florida. Our Universal Health Insurance Blog and Inside Health Policy covered the withdrawal of and the resulting criticism of federal health reform law that has triggered some insurance companies to stop offering coverage to customers.

A conversion package was reportedly mailed to policyholders offering a switch to Celtic Insurance without medical underwriting. A copy of the sample conversion offer document indicates that World Corporation Insurance and American Republic Insurance policyholders were offered the full range of Celtic Insurance major medical insurance products available in Florida. The guaranteed issue offer expires December 31, 2011. Neither the premium rates nor the coverage details for Celtic Insurance are the same as the former policies by World or American Republic.

The questions we received centered on the two issues of: 1) Can we help with the conversion? and 2) Can applicants apply online here? Conversion applications in 2011 must follow the specific procedures in the conversion offer. Applicants who wish to take advantage of the guaranteed issue coverage offer before December 31, 2011 should not make an online application here. This may not be important to healthy applicants without prior medical history who may apply for medically underwritten coverage at any site of their choice.

While OnlineAdviser offers assistance to any applicant of a U.S. commercial insurance plan, the procedures devised by Celtic Insurance Company for this specific offer are meant to be a direct application process. We do not believe that Celtic Insurance Company intended to use independent agents for the guaranteed issue conversion applications. For 2012, any of the Celtic Insurance products available in Florida can be applied for online but the applications are subject to medical underwriting.

One user asked whether the guaranteed conversion applications will be pooled with medically underwritten applications for purposes of renewal rates. We do not have clarification from Celtic Insurance at this time. We generally believe that renewal rates in medically underwritten health plans rise more slowly in the first few policy years than the rates of guaranteed issue policies.

Meanwhile A.M. Best Company has revised the outlook of World Corporation Insurance and American Republic Insurance from stable to negative citing the loss of almost half of the company's premium volume. The financial strength rating of A- (Excellent) was affirmed for the company. This financial rating is higher than the B++ Celtic Insurance Company's rating. In general, insurance companies more heavily impacted by the MLR rules of the health reform law are considered to be under greater financial strain than other insurance companies that are able to maintain higher profit ratios by paying out lower levels of claims.

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