The first suit, which involves corporate-owned life insurance (COLI), was brought by the Public Service Company of New Mexico against Kidder Peabody, four insurance companies (Connecticut Mutual/Mass Mutual, General American, Equitable, New England Life/Met) and several individuals. The utility is charging "material misrepresentation of fact" and failure "to disclose material facts" on a wide number of issues, including commission payments that were significantly higher than represented, use of computer illustrations not representative of the policies actually sold, failure to disclose that the policies purchased would not perform as represented (and that there were better policies on the market), failure to properly illustrate performance variables that affected the insurance program, and use of improperly licensed agents. The damages being requested by the utility are substantial.

The other lawsuits involve 403(b) annuities and were brought by the New York law firm of Milberg Weiss Bershad Hynes & Lerach, a law firm known for developing suits against insurers (e.g., "vanishing premium" suits). The lawsuits accuse several insurance companies (Nationwide, American Express, American United Life, SunAmerica) of "deceiving and defrauding consumers" by exposing them to unnecessarily high fees to cover commissions to agents in the sale of annuities for 403(b) tax-qualified plans. The suits also claim that using the tax-deferred aspect of annuities as "the primary justification for the extra layer of fees" is a sham, since any investment in a qualified plan is tax deferred. Certification as class actions is pending. Stay tuned...the focus appears to be on insurers with high fees/commissions and both MetLife and VALIC, both reportedly high-fee companies, have so far escaped similar suits.

AGENTS ONLINE - According to IVANS, the demand from agents for Internet access to company information is increasing. Citing Single Entry Multiple-Company Interface (SEMCI) as "very important," the recent IVANS survey indicated that 74% of the agencies polled had Internet access, with only 8% saying they had no plans for Internet access in the future.

NEW TWIST - In yet another new Y2K twist, Best's Review reports that many Americans who are dependent on prescription drugs are concerned that a Y2K computer glitch could cut them off from their medicines. As a result, patients want to receive extra refills before 1/1/2000, but health insurers are concerned about the impact that hoarding drugs could have on costs, as well as on the supply and delivery of pharmaceuticals.

"CFP LITE" - The CFP Board of Standards has given the rumored "CFP Lite" a real name...Associate CFP. Don't expect "CFP Heavy" designees to be thrilled. Many are concerned it will dilute the credibility of the CFP designation.

INDUSTRY UPS AND DOWNS - A recent study by Weiss Ratings, Inc. reports that the "net profits of U.S. life and health insurers fell from $25.6 billion in 1997 to $21.7 billion in 1998, representing a 15.5% drop that reverses three years of double- digit gains." Nearly all product lines experienced declining profits in 1998, with group health suffering an outright loss. Another finding: Insurance companies have boosted their total junk bond holdings to 39.7 cents in junk bonds per dollar of capital, up from 35 cents in 1997. Despite these findings, S&P is predicting a stable outlook for U.S. life insurers as a whole. The same isn't true for the U.S. P&C industry, which S&P tags with "a continued negative near-term outlook."

WILLIE SUTTON WAS WRONG - Apparently the money is really in insurance companies and charitable organizations. The FBI has "probable cause to believe" that Martin R. Frankel defrauded as much as $3 billion (yes, billion) from insurance companies and a religious charity. Mr. Frankel, a high-school dropout from Toledo, Ohio, was unavailable for comment at press time...his last big purchase was reported to be jet fuel.

STILL CLIMBING - According to ABR Information Research, both HMO and non-HMO health insurance premiums grew over 7% from May 1998 to May 1999.

WHICH BRINGS US TO - Maybe it's just us, but we think it's crazy to take a program with "precarious finances" (Medicare) and add a new benefit (prescription drugs) that is estimated to cost $118 billion in its first decade and to sharply escalate in cost after that. If budget surplus is available for health-care purposes, why not help the million of Americans without ANY health insurance purchase coverage through a tax credit or deduction?

NAME CHANGE CHANGE - The National Association of Life Underwriters (NALU) had previously announced that, pending member approval, it would change its name to the National Association of Insurance and Financial Professionals (NAIFP). That name change has now been changed to the National Association of Insurance and Financial Advisors (NAIFA). We sure like the new acronym better!

NASDAQ GOING PUBLIC - That's the word from NASD chairman Frank Zarb, who revealed plans to spin the Nasdaq stock market off from the rest of the NASD in an initial public offering as early as next year. IPO proceeds would be spent on technology in order to expand the electronic Nasdaq market around the world. The NASD has already announced plans to launch a version of its Nasdaq market in Japan (http://www.nasdaq-japan.com) and has also registered domain names for Nasdaq markets in Hong Kong, China, Brazil, India and Germany.

TEMPERATURE IS RISING - We reported concerns about LTC pricing in the 6/15 E-News. Now we've learned of two additional lawsuits filed in Florida and North Dakota over LTC premiums that have increased as much as 700%, even though the products were promoted as having level premiums. Regulators are also coming under fire for approving the sale of these plans that now appear to be underfunded.

DIRTY LAUNDRY - The Treasury and DEA are warning insurance companies that they may become the next target of money- laundering efforts by overseas drug lords. Insurers have been advised to be on the lookout for suspicious activities that include cash payments for insurance premiums, requests for "10- day free look" refunds and payments from abroad.

MEDICAL BIG BROTHER - Healthcare providers can now access the Web at Officemed.com and have eligibility data on over 86,000,000 insured Americans...for a fee, of course. Scary, huh?

WHILE WE'RE ON THE SUBJECT - Privacy issues have the potential to derail the H.R. 10 financial services legislation. Democrats want a privacy provision that would allow consumers to stop banks, brokerages and insurance companies from sharing their personal information with both affiliated and outside companies. Republicans would allow consumers to block the sale of personal data to outside companies, but not from sharing it with affiliated companies under the same parent corporation.

THE FIGHT IS ON - With the Justice Department's approval of Aetna's acquisition of Prudential HealthCare, the AMA has vowed to continue its fight against the merger, arguing that a monopoly would be created in some states that could hurt patient care. Speaking of monopolies, isn't that one of the primary concerns about doctors forming a union?

GOOD MORNING, VIETNAM - Manulife Financial and Allianz have become the first wholly foreign-owned life insurance companies to be allowed to do business in the Socialist Republic of Vietnam.