Dan, carriers use all kinds of legal "tricks" to amortize acquisition costs. Otherwise they would never be able to pay 150% FYC on life insurance.
Commissions are the biggest share of acquisition and that is what is spread out over 3 years with most carriers.
I don't know if Ocare has anything to say about amortized costs, but I doubt it. Carriers have all kinds of games they can play.
In the health business cash flow underwriting is the most common. It is much easier to do when interest earnings are higher than they are now, but it is possible for carriers to have an underwriting loss but offset that loss and even turn it into a profit depending on cash flow and excess earnings.
Premium credits from HHS/CMS/IRS are supposed to be monthly but that remains to be seen. I would not be surprised to see carriers floating premiums on the deadbeats for 60 - 90 days until the govt forks over the money.
This entire premium game is an administrative nightmare and carriers that are more heavily invested in the subsidized premium market had better have the reserves to play that game.
The reinsurance fund is not like traditional quota share treaties. The govt will hold on to that money as long as possible and wait on year end results plus runoff. I do not expect the checks to go out for 2014 until the 2nd quarter of 2015. Even then, checks bear no relation to losses, only to market share.
Commissions are the biggest share of acquisition and that is what is spread out over 3 years with most carriers.
I don't know if Ocare has anything to say about amortized costs, but I doubt it. Carriers have all kinds of games they can play.
In the health business cash flow underwriting is the most common. It is much easier to do when interest earnings are higher than they are now, but it is possible for carriers to have an underwriting loss but offset that loss and even turn it into a profit depending on cash flow and excess earnings.
Premium credits from HHS/CMS/IRS are supposed to be monthly but that remains to be seen. I would not be surprised to see carriers floating premiums on the deadbeats for 60 - 90 days until the govt forks over the money.
This entire premium game is an administrative nightmare and carriers that are more heavily invested in the subsidized premium market had better have the reserves to play that game.
The reinsurance fund is not like traditional quota share treaties. The govt will hold on to that money as long as possible and wait on year end results plus runoff. I do not expect the checks to go out for 2014 until the 2nd quarter of 2015. Even then, checks bear no relation to losses, only to market share.
