The new owner of Ability Insurance Co. of Omaha is taking steps under supervision by the State of Nebraska toward fixing its finances and improving its service to policyholders, Nebraska Insurance Director Bruce Ramge said.
Among those working with the new owner is Shane Osborn, the former state treasurer of Nebraska who is running for the U.S. Senate. He is a director, treasurer and chairman of Ability's investment committee.
Ability, which sells long-term care insurance, has been sued in several states, including South Dakota and Iowa, over denial of claims by its policyholders.
The Argus Leader newspaper of Sioux Falls, S.D., reported recently that South Dakota Gov. Dennis Daugaard is reviewing the state's procedures for investigating consumer complaints about insurance companies because of hundreds of complaints — 650 last year and more than 850 in 2011 — about denied claims.
Ramge's office placed Ability under supervision in December because losses damaged its ability to pay claims. Ability lost $21.3 million in the 12 months leading up to Sept. 30, 2012.
Under the Nebraska Insurance Department's order, Ability cannot write new business, pay dividends, withdraw money from its bank accounts, grant pay raises and take other financial steps without approval by the department.
The new owner, Advantage Capital Partners, took control in February, bringing in new investors as well as Osborn as a board member.
Since supervision began, Ramge said, Ability has updated and improved its operations, added to its capital and upgraded its staff, and is continuing to make progress.
Ramge said Ability has introduced an improvement process to measure its performance and revised its claims operation, including internal and external reviews of claims denials. Customer satisfaction has improved and litigation has decreased, he said, although the state department is still monitoring its progress.
Kenneth King of Pleasantville, N.Y., is Ability's CEO and owner of Advantage Capital Partners. King said Thursday that the company is cooperating fully with the state's supervisors.
“We've done an enormous amount to help stabilize the company,” King said. “There have been some unfortunate things in the past. I think we're on the road to restoring its credibility and being responsive to the policyholders and making the company successful and strong for everybody in the future. We're very excited.”
He said Ability's new management is “building on some of the successes recently. We've got a lot of good things going on, and first and foremost for the policyholders is making sure that we've got the financial strength to meet the policyholders' needs in the future. I think we've taken the right steps to do that.”
Osborn, who is a licensed insurance agent and has an actuary degree, said Thursday that he introduced King's group last summer as a prospective buyer of Ability in an effort to preserve the company and its 40 jobs in the state.
State law required Nebraska representation on the purchaser's board, and Osborn's experience qualified him to hold that position, Ramge said. Osborn served on the state's investment committee when he was treasurer from 2007 to 2011.
Nationally, several long-term care insurance companies have had financial problems because policyholders made more claims and collected payments longer than expected. Premiums based on the inaccurate claims projections fell short, resulting in losses and depleting the companies' financial reserves.
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