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Senators press regulator on $600 million Horizon conversion payment and guaranty coverage for school claims
Summary
Lawmakers asked the Department of Banking and Insurance about oversight of a roughly $600 million payment tied to Horizon Blue Cross Blue Shield’s conversion and whether guaranty associations can help school districts facing legacy claims after insurers went out of business.
Senators questioned Commissioner Justin Zimmerman on May 1 about two related oversight concerns: the roughly $600 million one-time payment tied to Horizon Blue Cross Blue Shield’s change in corporate form and how state guaranty associations may assist public schools facing legacy liability claims where the insurer no longer exists.
On the Horizon payment, Zimmerman said the department conducted an extensive review under chapter law 145 and issued an order that included 11 conditions when it approved Horizon’s conversion to a mutual holding company structure. He said the Department of Treasury, not his agency, is responsible for collecting the funds and that the Department of Banking and Insurance does not have specific plans for how the collected funds are being spent. “To be honest, senator, I'm not sure the status of those funds,” Zimmerman said in response to committee questions; he encouraged senators to consult Treasury for the current status.
On legacy claims involving insolvent insurers and public-school liability after recent statute-of-limitations changes for childhood abuse claims, Zimmerman said the department does not operate the Property-Liability Insurance Guaranty Association (PLIGA) but would assist school districts and legislators in locating records and connecting to the guaranty association when appropriate. He told senators the department will help districts identify paperwork and engage PLIGA when an insurer is insolvent and potentially covered by the guaranty association’s process.
Senators pressed for transparency about the Horizon conversion funds, citing outside analyses that suggested the money had been routed into other uses and concerned that programmatic money has been repurposed in past examples. Zimmerman reiterated the department’s limited role post-order and offered to help coordinate information with Treasury and other agencies.
The committee discussion focused on gaps in visible oversight and the need for more detailed accounting of large, one-time conversion payments and for clarity about which agencies administer or collect those funds and how public institutions can pursue remedies when insurers are insolvent.
