Council on Information Technology
Dr. Rodney C. Dubois
The Council on Insurance met on December 3, 2005 in St. Louis following the November 2005 Board of Trustees meeting. The Council reviewed the interim six month administrator financials and is reporting the following:
- The Cost Stabilization Reserve (CSR) currently has a balance of $2,736,000.
- The Dividend on Deposit (DOD) currently has a balance of $3,605,000.
- The estimated positive margin for the first six months of the policy year is $1,462,000 and there is also approximately $161,000 of interest income.
- Participation in the Life and Health program remains steady insuring 53% of all active, associate and student members totaling 6,666 policies:
- Term Life31.8%
- Disability27.7%
- Professional overhead13.4%
- Major Medical9%
- The Professional Liability Program has 3,875 members insured.
- The Business Office Program continues to grow increasing participation by 9% or 636 members insured. The BOP program is experiencing a loss ratio of 101% as a result of the recent Hurricanes. This is the first year the program has experienced a high loss ratio.
The Council completed the request for proposal process for administrator of the endorsed insurance programs. JLT was recommended to be retained and has already been approved by the Board. The Council is recommending a new 20 Year Level Term Life Insurance Plan be approved. In addition, the Council is recommending approval to increase the limit of life insurance be increased from $1 million to $2 million for members. The Council is also recommending that the complimentary life insurance provided to orthodontic residents be increased from $30,000 to $100,000. There is no cost to the AAO.
The Council reviewed the new Medicare Part D regulations. JLT Services has been directed to contact all members aged 64 and over that are participating in the AAO Medical Plan to explain the regulation and impact on the current program. The Council in conjunction with JLT will develop an article for publication discussing the new Medicare regulations. All members (including non-insureds) may contact JLT Services regarding the new Medicare Part D regulations.
The Council discussed the most recent Major Medical financial numbers to determine the need to increase premiums during a conference call on January 26, 2006. New York Life's annual trend factor (medical care inflation) is 14%. NYLIC's actuarial analysis indicates that the Medical Plan's loss experience in addition to the trend factor warrants a rate increase of 9.7% effective April 1, 2006. This includes a 1% margin. After discussion with staff, NYLIC and JLT Services, the Council recommends an adjustment of 15% for the $1,500 and $2,500 Traditional deductible plans and 5% for all other plan options. This recommendation results in an aggregate increase of 8%.