Nevada placed troubled insurtech Friday Health Plans into receivership last week amid questions about the health plans' financial stability and capital surplus reports.
A press release issued by the state’s division of insurance stated that Nevada Insurance Commissioner Scott Kipper “filed legal action with the Nevada District Court to place Friday Health Plans of Nevada under regulatory supervision (referred to as a receivership) due to growing concerns about the reliability of Friday’s financial reporting to the Division.”
Liz Martins, the public information officer at the Nevada Division of Insurance, told Fierce Healthcare in an email that questions about Friday Health Plan’s bookkeeping sprung from “inconsistent figures and failure to meet reporting deadlines required by Nevada law.”
"There are also concerns regarding the amount of capital reserves and surplus within the company," Martins said. "Insurance companies operating in Nevada must maintain at least a minimum level of capital to ensure that the company has the ability to pay claims and operate effectively.”
All of which Ari Gottlieb, a principal at A2 Strategy Group who closely follows the insurtech industry, called unprecedented.
“This is highly unusual,” Gottlieb told Fierce Healthcare. “I can’t think of a single time in the past five-plus years that we’ve seen this with health insurance. Even the first sentence of the press release about the division petitioning the court to place Friday into receivership: You never see that happen.”
Friday Health Plans could not be reached for comment.
Last week, the insurtech announced that it was shutting down. State insurance regulators in Colorado, Georgia, New Mexico, North Carolina, Oklahoma and Texas—other states where Friday Health Plans operate—barred the insurtech from taking on additional members, citing the company’s financial woes.
That’s the case in Nevada, as well. Gottlieb said that according to public filings, Friday Health Plans in Nevada held $12.6 million in capital surplus for its 2,805 enrollees.
“Friday in Nevada had its second highest capital surplus of Friday plans in states where it operates even though it has the smallest membership,” Gottlieb said. “In Colorado, Friday had an $18 million surplus for 35,000 members.”
Colorado calls that adequate surplus.
“The fact that the Nevada Division of Insurance is calling this out—that there are concerns about this—is actually pretty bad,” said Gottlieb. “If those concerns are well founded, it could actually mean that the other states that Friday operates in, and where they have a more tenuous capital position, it can be even more concerning.”
The Nevada Division of Insurance press release stated that “this action will allow the Commissioner to assume oversight and management of the day‐to‐day operations of the company, while performing a thorough financial analysis."
"Policyholders’ contracts will remain in effect and members will need to continue to pay their premiums in accordance with the terms of their policies to ensure there is no disruption to their coverage," the agency said in the release. "Once the court approves the receivership, the Commissioner will appoint a Special Deputy Receiver (SDR) to communicate with policyholders during the receivership process.”