In brief: The former executive of a company in charge of public housing authorities' insurance coverages has been indicted for $8M in fraud.

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Richard P. Zachmann, of Aurora, Illinois, was charged with 12 counts of wire fraud by a federal grand jury. The U.S. attorney's office says he'll be arraigned at a later date.

Zachmann was the vice president of Life Associates, Inc. and controlled the company's operations from 2001 to 2008. The firm administered employee pension plans and group life insurance programs for more than 100 public housing authorities in 21 states, including Illinois.

Between 2002 and 2009, the mutual holding company for those plans, Principal Mutual Holding Company of Iowa, converted to a publicly-traded company, which paid out lucrative proceeds to the pension and insurance programs as a result. Zachmann pocketed those proceeds, authorities say, rather than passing them through to the insured as required by law.

Federal authorities say he converted about $8.3 million of those proceeds to his and his wife's names, their businesses, and other ventures he owned or partially owned in order to hide the money from the firm's board and accountants.

Summing up

If convicted, Zachmann faces up to 240 years in prison and fines up to $3 million over and above the $8.6 million being requested by the prosecutor.

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In brief: Millions of Americans could be receiving insurance rebate checks this summer.

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Federal law now mandates that health insurers spend at least 80% of the premiums they collect on healthcare claims or quality improvement efforts. Any plans that exceeded this limit last year (2011) must refund the difference to customers by August 1 of this year.

The amounts will vary by plans and states, but a total of about $1.3 billion may be heading to Americans everywhere. Most rebates will be up to $500. These may or may not be in the form of a check, as insurers are given the option of using the rebate to pay for future premiums, which would mean slightly larger paychecks for many instead.

Summing up

The initial $1.3B figure is from Kaiser, who is estimating based on preliminary data. Concrete numbers will likely be known by June.

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In brief: Pennsylvania Insurance Commissioner Mike Consedine has approved the merger of Harleysville Mutual and Nationwide Mutual Insurance.

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The merger includes plans by Nationwide to keep Harleysville services, offices and employees intact while expanding its offerings and stability. A special meeting later this month will see a membership vote to approve the merger.

Policyholders will become members of Nationwide Mutual under the merger and those who hold publicly-held shares of Harleysville Group will be paid $60 per share.

For a period of three years, Nationwide is restricted from closing or ceasing business activity in any Harleysville corporate office in PA without the IC's approval.

Summing up

Harleysville will continue writing business under their brand for two years, underwritten by Nationwide.

_{Photo credits: Harleysville PR}

In brief: Indian insurance companies are seeing record amounts of fraud, eating into earnings.

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Insurers are seeing about 9% of the total industry's size in dollars being lost to fraud. The problem is described as an "epidemic" by officials in India, who say that most of the illegal activity is in the life insurance sector.

Indiaforensic, a company that specializes in studying and abating fraud in insurance, has identified the most common types of fraudulent activity leading to false claims and wrongful payouts.

Common scams include insurance agents and industry insiders issuing back-dated or false paperwork for those recently deceased or diagnosed with terminal illnesses, then cashing in either personally or in collusion with family members on those false documents.

Summing up

To combat the situation, the industry itself claims these frauds are over-rated and India's investigative teams often just "follow the money" in payouts to find the culprits.

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In brief: Insurers are seeing heavy losses after February's deadly tornadoes make the second year in a row for big storm losses.

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Last year's April tornadoes ripped through the country and this year's February storms have been even worse, gaining comparisons to the Super Outbreak storms of 1974.

These storms mean heavy losses for insurers, who were just recovering from big losses from the past several years. This year's storm system that raged through the Eastern and Mid-western U.S. are likely some of the worst in history.

Losses are expected to approach those of 2011, which were more than $2 billion.

Summing up

Insurers are reeling and likely to ask for or create hikes in storm-prone areas.

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In brief: More than a decade after its filing, a federal judge has set a trial date for a lawsuit stemming from scams that looted more than $200 million from insurance companies.

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In 2001, things came crashing down on Martin Frankel after his pyramid scheme collapsed and revealed insurance scams spanning five states, two continents, and a fake Vatican-associated charity.

Seeing the imminent collapse of his scheme, Frankel set fire to one of his two mansions and fled to Germany where he was eventually arrested, extradited to the U.S. and then plead guilty to 24 counts of fraud and racketeering in federal court. His remaining assets, which included 21 cars, an airplane, another mansion, and hundreds of diamonds were auctioned to pay restitution to the insurance companies bilked of an estimated $200 million.

A new lawsuit was filed in 2002 against monies paid into a fake charity Frankel allegedly created that may have been tied to the Vatican and the Catholic Church. The suit has since dropped the Vatican from its defendant's list, but is now going to move forward after a Mississippi-based federal judge set a trial date for April of 2013.

Summing up

The cusp of the allegations is that Frankel made a deal with the charity's operator, Monsignor Emilio Colagiovanni, to use the charity and its Vatican-based account to vouch for Frankel's new charity in exchange for $5 million to use as he wished. Colagiovanni plead guilty to conspiracy charges in 2002 and was fined, but not jailed for his involvement.

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In brief: American International Group received more bailouts in 2008 than any other company, but has now reported a $19.8 billion profit in the fourth quarter of last year - largely due to tax-related accounting.

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Without the accounting adjustment, AIG posts a $1.6B operating earnings report, compared to $2.2B in losses last year. The company has been inconsistent with its profits and losses, however, being up as much as down since the U.S. government's takeover (now owning 76%) in 2008.

CEO Robert Benmosche says the company is attempting to pay back loans and bailouts to buy out government shares, though many believe that the true cost of the bailout of AIG may never be revealed.

The last quarter gains the company posted for 2011 are almost entirely due to tax deferments, which reduced the company's liabilities to near-zero.

The rest of AIG's profits are almost all in insurance divisions, including its Asian arms of AIA and MetLife as well as Thai insurer Chartis.

Summing up

AIG's mortgage-related units, including its Mortgage Guaranty insurance unit, continue to post losses.

_{Photo credits: AIG Press}

Three insurance agents based in Florida and New York were charged with fraud in obtaining more than $100 million in life insurance policies.

The scheme involved using straw buyers to obtain the policies and then selling those policies to investors. The agents charged, Michael Binday of New York, James Kevin Kergil also of New York, and Mark Resnick of Florida, were charged with several counts of conspiracy, fraud, and obstruction of justice by the U.S. attorney in Manhattan, Preet Bharara.

The charges carry up to 80 years in prison. All three agents plead not guilty to the charges after voluntarily submitting themselves to authorities. They are currently out on bail pending trial.

The case will continue in the U.S. District Court in the Southern District of New York.

In brief: Pet insurance is becoming a necessity for many Americans who find sudden veterinarian bills to be budget-breaking.

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It seems wasteful that while many Americans are worried about the high cost of health insurance for humans, others are looking at paying nearly equal sums to insure their pets. Yet for a certain demographic of pet owner, insurance is a family affair and their family includes pets.

Many procedures that were not available for pets a few years ago are now routine, but still costly. The new, but growing arena of pet insurance is finding innovative ways to cover pets so their owners can have peace of mind.

Yet pitfalls remain common in this largely unregulated industry. Pet insurance revenues topped $302 million in 2009 and is likely to double to past $753 million by 2014. But many plans do not cover the more costly problems pets can encounter and many plans have an annual or lifetime cap that they will not pay beyond, leaving some pet owners in the lurch to cover bills despite having insurance.

The favorite plans for many pet owners are the "collective" style cooperatives wherein pateents' owners pay an annual retainer to a vet and receive most standard and some emergency services as part of that retainer, paying out of pocket only for serious needs.

Some comprehensive major medical plans even cover pre-existing conditions and hereditary diseases for as much as $37 per month for dogs and $24 per month for cats. Other plans offer high deductible options and policies for foreseeable procedures that vary by species, breed and age.

Summing up

In short, shop around and read the fine print before signing up and paying for a pet insurance plan.

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In brief: The Connecticut Department of Consumer Protection has announced an agreement with Metropolitan Life Insurance to provide protections to current and former customers whose personal information was made public.

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The agreement will provide those whose personal information was accidentally made public when a spreadsheet was posted to the Internet by a MetLife employee in 2009.

The company took responsibility for the data breach and provided free credit monitoring and identity theft services to those affected.

"The company acted voluntarily to correct the mistake of its employee and to protect its customers," Connecticut Attorney General Jepsen said. "But this agreement reinforces the need to make clear to anyone in possession of personally identifiable information about their legal requirements to protect it and ensure that it is not made publicly available."

MetLife will pay $10,000 into a fund which will be used to reimburse the state's investigative and enforcement costs and to pay reimbursements to consumers who paid for their own security freezes or monitoring.

Summing up

MetLife is also enhancing employee training policies regarding data integrity and security.

_{Photo credits: Metropolitan Life}