American Family remains in South Dakota health insurance market 

Contact:  Mark Johnston at 773-3212 or Steve Witmer with American Family at 608-242-4100 X 32121

PIERRE – As a direct result of the risk pool legislation passed by the South Dakota Legislature last week, American Family Mutual Insurance Company today notified Gov. Mike Rounds and the Division of Insurance that the company would continue to accept new individual major medical health insurance customers in South Dakota.

“We believe a risk pool funded primarily by all health insurance providers is the fairest, most equitable approach to providing access to health insurance for at-risk residents,” says Jack Salzwedel, American Family’s vice president of life and health. “A plan that spreads the costs among all providers and a much larger customer base – rather than a few individual providers and their policyholders – stabilizes the health insurance market for all consumers.”

Gov. Mike Rounds praises American Family on their decision. “We are pleased that the decision by American Family to remain in South Dakota has been made.  This could only have happened by strong legislative leadership and a willingness to pass this critical legislation.”

In 2002, American Family lost $1.2 million on state-required basic and standard policies. Individual health insurers in South Dakota have been required to accept all applicants – including high-risk individuals.

The company today rescinded the notice filed in April that it would stop accepting individual major medical health insurance applications effective Aug. 1.

“The basic and standard health insurance system was simply too costly,” says Salzwedel.  “American Family could not continue to ask our other health insurance customers to subsidize high-risk customers through substantial rate increases. We commend the actions by the Governor and the Legislature to work out a solution that equitably spreads the risks – and the costs – among the insurance providers and the state.”

American Family is the second-largest insurer of autos and homes in South Dakota. The planned Aug. 1 action would not have affected the company’s other insurance and financial services.