One Quarter of U.S. Insurers Behind Schedule in Preparing for Year 2000greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Infoseek news March 29 1999 <:)=
PALM BEACH GARDENS, Fla.--(BW HealthWire)--March 29, 1999--In a new survey of Y2K preparedness, 253 of 984 insurance companies, or 25.7%, have made inadequate progress, according to results released today by Weiss Ratings, Inc., the only independent insurance company rating agency. Of those, 118, or 12.0%, were assigned a Y2K grade of "Below Average," while 135, or 13.7%, were rated "Low."
The Weiss Y2K survey, mailed on December 30, 1998 to 5,453 insurance companies and HMOs, asked 13 questions about each company's timeline for completing various milestones in the Y2K remediation and testing process. Weiss then evaluated the actual or expected completion dates for critical tasks, using, as a reference point, standards established in September 1998 by the National Association of Insurance Commissioners (NAIC).
"To find one quarter of the survey respondents behind schedule is very disconcerting," commented Martin D. Weiss, Ph.D., chairman of Weiss Ratings, Inc. "However, I am even more concerned about the group that did not respond to the survey. It is highly probable that an even greater percentage of these non-respondents are behind schedule, given the tendency for better-prepared companies to come forward more readily."
Companies receiving a "Low" Y2K progress rating include: -- Teachers Insurance & Annuity Association of America (N.Y.) -- State Farm Mutual Automobile Insurance Company (Ill.) -- Lincoln National Life Insurance Company (Ind.)
On the other end of the spectrum, 82 companies, or 8.3%, reported data that Weiss interpreted as an indication of "High" progress in their Y2K preparations. The remaining 649, representing 66.0% of respondents, indicated a level of progress that was deemed "Average," reflecting adequate preparations at this time.
Companies receiving a "High" Y2K grade include: -- Royal Maccabees Life Insurance Company (Mich.) -- Nationwide Life & Annuity Insurance Company (Ohio) -- Security-Connecticut Life Insurance Company (Conn.)
Weiss advises consumers and analysts to judge the Y2K ratings in the context of a company's overall financial strength. An insurer with abundant capital resources is better equipped to remedy its Y2K problems today and cope with any consequences after the year 2000. In contrast, an insurer with apparent deficiencies in both its Y2K progress and its financial stability may be at serious risk.
Weiss Attributes Y2K Problems to Inefficiencies of State Regulation
"Based on some of the expected Y2K completion dates we've seen, it appears that many insurance companies are not even aware of regulators' timelines for fixing and testing their computer systems," said Dr. Weiss. "At the very minimum, the insurance commissioners should collect -- and disclose to the public -- current data on the status of each insurer registered in their state."
Unlike the banking industry, where federal regulators have mounted an aggressive national Y2K effort, the insurance industry is regulated by individual state departments, each of which is giving varying degrees of attention to the Y2K problem.
Both consumers and regulators have expressed growing concerns that ill-prepared insurance companies may be unable to properly process claims, track customer accounts, and disburse annuity payments after January 1, 2000. In order to help quell these concerns and protect consumers from doing business with ill-prepared companies, the Weiss Y2K Ratings are currently available to consumers for $15 per company.
Consumers may acquire both a Weiss Y2K Rating and a Weiss Safety Rating on a financial institution by calling 1-800-289-9222. If a Y2K Rating is not available, consumers will receive a Weiss Safety Rating, plus specific information on how to contact the Year 2000 project manager or financial officer at their insurance company.
Weiss publishes financial safety and Y2K readiness ratings on insurers, banks, and S&Ls. The accuracy of its ratings has been favorably reviewed by the U.S. General Accounting Office (GAO) as well as national consumer organizations. It is the only major rating agency that receives no compensation from the companies it rates. For more information, visit the Weiss Ratings web site at www.weissratings.com.
Note to editors: Ratings on specific insurance companies and HMOs are available upon request along with a blank copy of the Weiss Y2K survey.
-- Sysman (email@example.com), March 29, 1999
Snip from article:
" It is the only major rating agency that receives no compensation from the companies it rates."
This is extremely important to remember. Companies like Standard and Poors and Dunn and Bradstreet are beholding to MANY entities which make some of their ratings suspect.
-- Ray (firstname.lastname@example.org), March 29, 1999.