Nearly 2,000 students at Nyack College and the college’s Alliance Theological Seminary are among more than 22,000 students statewide and 34 colleges in New York that will receive health insurance refunds from Markel Insurance Co., which reached a settlement with state Attorney General Eric Schneiderman and the Department of Financial Services Superintendent Benjamin Lawsky for overcharging on health plans.
Markel’s student health-insurance plans, college accident insurance plans and sports accident insurance plans didn’t meet legal requirements for minimum “loss ratios,” which led to nearly $3 million in overcharges, according to Schneiderman and Lawsky, whose offices conducted a joint investigation of the company’s practices. State officials determined that Markel created an incentive for brokers to keep loss ratios below the legal minimum by paying improper bonuses to brokers.
Under the settlement, Markel will pay more than $2.75 million in restitution to the students and colleges and a $990,000 penalty to the Department of Financial Services and Attorney General’s Office, which will be split evenly. The average refund for the 22,431 students who will receive one is $107, including 140 at Alliance Theological Seminary and 1,850 at Nyack College. None of the students were at schools in Westchester County. Bard College in Dutchess County had the most affected students — 5,800.
“With the high cost of college already straining family finances across New York, students and parents shouldn’t have to worry about paying even more for health insurance,” Schneiderman said in a statement. “his settlement sends a clear message: Insurance companies, like everyone else, must play by the rules and work together with government to bring down the cost of healthcare.”
A loss ratio is the ratio of the amount paid in claims under a plan compared to the premium charged. In New York, the minimum loss ratio is 65 percent, meaning insurance plans have to pay at least 65 cents of every dollar of a premium on medical care. The purpose of the minimum is to prevent the overcharging of consumers.
The investigation — which was initiated in 2010 — found that Markel paid out far less in claims than was required to meet the 65 percent loss ratio standard in policy years 2007-08, 2009-10 and 2011-12. The colleges where the plan was offered promoted and endorsed the plans. Some colleges required students to enroll unless they could prove they had comparable coverage through their parents or an employer. At least one broker was offered a bonus for keeping the loss ratio below 60 percent.
The company no longer offers student health plans, accident insurance plans and sports accident insurance plans in New York.