Sunday, November 4, 2001

Insurance commissioner
cautions against paying
TRG premiums

Federal investigations find flaws
in the insurance marketing company's
financing and business plan

By Lyn Danninger

A federal investigation into TRG Marketing LLC, a company related to insolvent health insurer Hawaii Health Alliance, has revealed there are no records to support premiums charged by the firm, according to the state Insurance Division.

Moreover, the U.S. Department of Labor could not find evidence the company made any calculations to determine the amount of claims that would normally be expected to arrive and be paid by the company in the future, the division said. These so-called incurred but not reported claims must be calculated by insurers and money reserved to pay future claims.

There could be as many as 300 to 400 people in Hawaii who have been paying premiums to Indiana-based TRG, said state Insurance Commissioner Wayne Metcalf.

The preliminary audit conducted by the U.S. Department of Labor showed that TRG marketed its plan to 795 employers in 33 states and covered approximately 5,500 employees.

When Hawaii Health Alliance was seized by the Insurance Division in October 2000, company President Darren Larson sent a letter to the plan's members offering alternate insurance coverage through TRG.

A number of states, including Hawaii, together have asked TRG to post a bond of between $5 million and $6 million within a week to cover anticipated claims.

Metcalf said it is unlikely TRG will be able to come up with the money to cover the claims.

While a notice alerting TRG members to call the Insurance Division was sent to those who had claims against Hawaii Health Alliance, Metcalf is concerned there may be some TRG policyholders who are still paying premiums to the company.

"The outlook for TRG's future is very uncertain, given the amount of capital that it is required to raise in such a short period," he said. "Hawaii consumers would be well advised to reconsider paying any additional premiums until TRG can demonstrate its ability to meet its financial obligations."

In January, Metcalf got a court order to liquidate Hawaii Health Alliance. But TRG never applied with the Hawaii Insurance Division for a license to sell insurance in Hawaii.

Metcalf said Hawaii is now part of the investigation into TRG's activities.

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