EDITOR'S NOTE: The Daily Insurer will resume publishing on Monday, Jan. 5. Happy New Year's!

Christmas Holiday Crashes Claim 24 Lives

Traffic crashes across Georgia over the 102-hour Christmas holiday travel period claimed the lives of 24 people. The holiday period began Christmas Eve at 6 p.m. and ended at midnight Sunday.

The final holiday period count was 3,325 traffic crashes, 868 injuries, and 24 traffic deaths. There were 24 fatal crashes. The estimates for the weekend had been for 2,945 crashes, 1,494 injuries, and 19 deaths.

For the second straight holiday travel period, drizzle over parts of the state kept roads wet and contributed to a higher than expected number of traffic crashes.

The next holiday travel period is the 102-hour New Year's period that begins at 6 p.m. New Year's Eve and ends at midnight Sunday Jan. 4, 2009.

The Georgia State Patrol holiday traffic counts are conducted each year for the Memorial Day, July Fourth, Labor Day, Thanksgiving, Christmas, and New Year's holiday travel periods.

Former Agent Sentenced in Scam

California Insurance Commissioner Steve Poizner announced the conviction and sentencing of former insurance broker-agent Alfred Fontanilla Abad, 65, of Lakewood, on one felony count of grand theft and one felony count of attempted bribery of an executive officer.

Abad pled guilty to both changes in Los Angeles Superior Court and was sentenced to 3 years formal probation, 270 days of electronic monitoring and ordered to perform 120 hours of community service. Additionally, Abad was ordered to pay full restitution in the amount of $17,829.75.

According to California Department of Insurance (CDI) investigators, a commercial business client of Abad's paid him approximately $14,000 in 2005 for its' professional and liability insurance overage. The business was a personnel temp agency and the owner had been a long time client of Abad's. After not receiving a policy and getting the run around from Abad when she questioned him about not receiving her policy, the victim contacted the insurance company that Abad had placed her coverage with in the past.

The insurance company representative told the victim that there was not a policy in force for her business. When she again contacted Abad and continued to get the run around, she went to his office and he told her that he had not placed the insurance. She complained to the insurance company who then filed a complaint with CDI.

During the course of the investigation, Abad confessed to the CDI investigator that he did not forward the insurance premiums to the insurance company, but instead kept the funds. During Abad's confession to the investigator, he offered the investigator a portion of anticipated future commissions if the investigator could "make this case go away".

Gevity Renews Comp Agreement with AIG

Gevity, a professional employer organization (PEO) that provides HR services to businesses nationwide, announced that the company has renewed its 2009 workers' compensation insurance agreement with member companies of American International Group (AIG) Commercial Insurance.

Consistent with 2008, Gevity will maintain a $1 million per occurrence deductible and will make monthly payments to AIG for program costs and estimated future claims costs in the form of loss collateral funds, which will be approximately $17 million lower in 2009.

2008 Proves Costly for Insured CAT Losses

Guy Carpenter & Company has published 2008 Catastrophe Update, a briefing about the catastrophe reinsurance marketplace in 2008.

The briefing, available on www.GCCapitalIdeas.com, Guy Carpenter’s new intellectual capital Web site, states that the high frequency and severity of Atlantic hurricanes in 2008, coupled with other weather-related and man-made losses, placed the year among the costliest on record for insured catastrophe losses.

The record-setting Atlantic hurricane season – especially Ike and Gustav – is the big story and the primary driver of insured losses in 2008,” said Chris Klein, global head of Business Intelligence, Guy Carpenter. “At the same time, one should not overlook the role that other events, such as the China earthquake, California wildfires, and man-made catastrophes, played in making this an especially active year.”

The 10-year moving average of insured catastrophe losses costs continued to rise in 2008, increasing by 7 percent over 2007 – from $35.5 billion to $38 billion. Overall, the 2008 hurricane season produced a record number of consecutive storms striking the United States, ranking as one of the most active seasons in the 64 years since comprehensive records began. Other notable storms of 2008 included Hurricane Dolly in Texas, Tropical Storm Fay in Florida, and Tropical Storm Hanna in the Carolinas.

Other noteworthy weather-related events in 2008 included Windstorm Emma – causing insured losses of $1.3 billion – which affected northern and eastern regions of Europe, with Germany the hardest hit. The year’s largest and most costly earthquake hit the Chinese province of Sichuan in May, killing more than 85,000 people. Though only a fraction of the loss is insured, it is likely to represent one of the highest insured losses in China’s history.

In the United States, in addition to hurricane activity, flooding and wildfires triggered significant losses in 2008. May and June storms in the Midwest led to severe flooding, inundating up to 40,000 homes and businesses. Insurance Services Office’s (ISO) Property Claim Services® (PCS) unit estimates insured losses from the floods at $725 million. Wildfires in Southern California, meanwhile, destroyed around 980 homes, triggering an EQECAT-estimated total property loss of up to $500 million.

The year 2008 was also an unusually active year for man-made catastrophe losses. Losses in the mining, energy, and steel industries were particularly large in 2008. Claims were exacerbated by the impact of record high commodity prices on business interruption cover.

Will the U.S. Collapse in Late 2010?

According to a Wall Street Journal report, for a decade now, Russian scholar Igor Panarin has been forecasting that the United States will fall apart in 2010.

As Panarin sees it, "There's a 55-45 percent chance right now that disintegration will occur." "One could rejoice in that process," he added. "But if we're talking reasonably, it's not the best scenario — for Russia."

Panarin, a former KGB analyst, is dean of the Russian Foreign Ministry's academy for future diplomats.

According to Panarin, mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will split into six pieces — with Alaska reverting to Russian control.

To view the article, visit: online.wsj.com/article/SB123051100709638419.html

Natural Disasters in '08 Kill More Than 220,000

According to reinsurer Munich Re, natural disasters killed more than 220,000 people in 2008, making it one of the most devastating years on record.

Although the number of natural disasters was lower than in 2007, the catastrophes taking place proved to be more destructive in terms of the number of victims and the financial cost of the damage caused.

The top destructive force was Cyclone Nargis, which battered Myanmar in May to kill more than 135,000 people, and the earthquake that shook China's Sichuan province the same month which left 70,000 dead, 18,000 missing and almost five million without homes.

California to Ban Texting While Driving

California will become the sixth state this Thursday to ban texting while driving.

A bill making it illegal to write, send or read a text message while driving becomes law on Jan. 1 in the Golden State. The ban on texting while driving is a follow-up to a couple of bills that took effect last July 1. One allows adult motorists to use only handsfree devices when talking on cell phones, while the other prohibits drivers under age 18 from using any cell phone or electronic message device while driving.

The new law makes it clear that texting, not just using a hand-held cell phone to talk, is a no-no for adult drivers. It also makes texting by a driver under 18 a primary offense that can result in a traffic stop. The earlier law required another violation before an officer could pull over a minor for operating a cell phone.

Under the new bill, texting while driving may result in a $20 fine for a first offense and a $50 fine for subsequent violations, but various fees could be tacked on to those penalties.

The five other states to ban texting while driving are Washington, Alaska, Louisiana, Minnesota and New Jersey.

New Yorker Trucks on to Work Comp Fraud

A 49-year-old Madison County, New York man who claimed a job-related injury left him unable to work was arrested after investigators discovered that he was continuing to work as a truck driver.

Ronald Tornatore, of Canastota, was arrested and charged with insurance fraud, offering a false instrument for filing and perjury.

Investigators said Tornatore accepted $33,325 in workers’ compensation benefits after claiming a knee injury he suffered in 2005 prevented him from working. Tornatore submitted documentation and presented testimony before the Workers’ Compensation Board claiming that he had not worked in any capacity since his injury. However, investigators found that he had continued to work as a truck driver.

If he is convicted, Tornatore could be sentenced to up to seven years in prison.

Allstate Looks at Top Spots for Teen Driver Deaths

Some have called New Year’s Eve “amateur hour” on the roads. That couldn’t be more true for teen drivers, who, even if they haven’t been drinking, lack experience behind the wheel.

At the conclusion of its Home for the Holidays public awareness and policy campaign, Allstate Insurance Company has released study results identifying the deadliest hotspots for teen drivers on New Year’s Eve and New Year’s Day.

The Allstate Holiday Teen Driving Hotspots study found that the 10 deadliest hotspots among the nation’s 50 largest metro areas from New Year’s Eve through New Year’s Day includes cities from coast to coast. What each area has in common is that over the past eight years they have among the highest fatal crash rates for teen drivers over the New Year’s holiday.

According to the study, among the nation’s 50 largest metropolitan areas (a central city and its surrounding counties), the deadliest hotspots for fatal teen crashes those two days are:

• Jacksonville, Fla.
• Columbus, Ohio
• Richmond, Va.
• Birmingham, Ala.
• Orlando
• Phoenix
• Las Vegas
• Philadelphia
• Sacramento, Calif.
• St. Louis

Car crashes are the No. 1 killer of American teens. More than 5,000 teens die on American roads every year, according to the Insurance Institute for Highway Safety.

The Holiday Teen Driving Hotspots study examines recent federal crash statistics, Allstate claims data on teen collisions, and U.S. Census Bureau statistics to score metro areas across the nation on rates of fatal crashes involving teen drivers during the holidays. The study was conducted by Allstate in conjunction with Sperling’s BestPlaces www.bestplaces.net, a Portland, Ore., research firm specializing in demographic studies and analysis.

A more detailed breakdown on the study results – including other market and state comparisons – can be found at media.allstate.com; click on press kits located on the left.

Florida OIR Seeks Action Against Conseco Life

The Florida Office of Insurance Regulation (Office) has ordered the Conseco Life Insurance Co. (Conseco Life) to show cause to the Office why it should not suspend or revoke the company’s license, based on allegations of mismanagement.

In addition to the allegation of mismanagement, the Order to Show Cause also alleges that Conseco Life misled Florida consumers and withheld from the Office information vital to performance of its regulatory duties.

Over a three-year period, from 2006 to present, Conseco Life is alleged to have misled policyholders by issuing annual statements to them that failed to indicate that their Lifetrend policies were under-funded or that Conseco believed policyholders should be paying additional expenses or costs related to their policies.

The Office alleges further that Conseco Life failed to notify the Office that the administrative system on which the Lifetrend products were administered was deficient in that it did not fully support the analysis or calculation required to compare the cash surrender value to the applicable guaranteed values.

The Order also alleges that Conseco Life knew for at least three years that the Lifetrend product was not being properly administered but took no known action to correct the problem.

Florida consumers had relied on representations that the cost for their policies would be serviced by earnings on the policy and that no additional contribution would be necessary after they had possessed their policies for eight years.

About 5,000 Conseco Life policyholders in Florida were first notified in letters the company sent Oct. 27 explaining that there would be an increase in their “monthly cost of insurance rates and expense charges.” About 4,500 of the policyholders also were told that their policies were under-funded. Conseco Life sent an additional letter Nov. 3 notifying policyholders that they needed to submit payments for the “shortfall” no later than Jan. 3, 2009.

At the urging of the Office and other regulators, Conseco indicated that it would send a letter on Dec. 18 to all of its Florida policyholders advising them to disregard all previous notices sent to them about their Lifetrend policy and that they will continue to receive the full benefits of their policies while the matter is under review. Conseco Life will suspend implementation of its process for collecting additional premiums for the Lifetrend product.

The policies at issue are part of a book of business assumed by Conseco Life in the 1990s when it acquired Philadelphia Life Insurance Company and Massachusetts General Life Insurance Company.

The Office is continuing to investigate Conseco Life’s business practices based on information it has received related to the company’s Lifetrend product.

Conseco has 21 days to contest the Order by filing a petition with the Office for a hearing at the Division of Administrative Hearings.

Conn. Woman Smiling After Jury Returns Verdict

A Connecticut woman is smiling after a Bridgeport jury awarded her more than $198,000 when she claimed a dentist gave what her attorney labeled "horse teeth."

According to the case report, Marvalyn Foster sued Stamford dentist Darren Martinez because he reportedly promised her a "big, beautiful Hollywood celebrity smile." Foster wanted Martinez to give her a permanent bridge to replace a false tooth.

According to her attorney, however, Foster awoke from the procedure to realize that Martinez extracted three teeth and made a large bridge that resembled horse teeth.

The jury deliberated two hours before coming back with its verdict Monday.

New Yorker Nabbed in Workers' Comp Scam

A Dutchess County, New York man, arrested on charges of workers’ compensation fraud, was allegedly found to be working at an uninsured automobile repair shop at the time of his arrest in an investigation begun by the New York State Insurance Fund.

Nelson Ramos, 42, of Beacon, faces felony charges of violating the Workers’ Compensation Law and falsifying business records following his arrest by the Colonie Police Department.

Investigators from NYSIF Division of Confidential Investigations said Ramos began receiving workers’ comp benefits for a work-related injury in 2006, and that he went back to work at some point in 2007 while allegedly returning forms to NYSIF indicating he was unemployed.

The investigation revealed that Ramos allegedly had been collecting benefits while working for TCL automobile repair shop near his residence in Beacon. Authorities said TLC was closed for a brief period and faced fines as a result of the investigation for failure to have workers’ comp insurance. TLC subsequently reopened after fulfilling workers’ comp compliance requirements.

Investigators said Ramos collected $17,639 to which he was not entitled while claiming he was unable to work due to an injury he suffered while employed by Penzetta Plumbing and Heating, Inc., in March 2006. As a result of his arrest, investigators estimated the potential future savings on his claim to be $242,000.

Best: P/C Industry Sees Major Net Income Drop

The U.S. property/casualty industry’s net income after taxes fell 85% to $7.3 billion during the first nine months of 2008 as insurers felt the one-two punch of deteriorating underwriting results and lower investment gains, according to an A.M. Best report.

As a result of deteriorating underwriting and investment results, the U.S. property/casualty industry’s after-tax return on equity (return on surplus), which measures the industry’s overall after-tax profitability from underwriting and investment activity, receded to 1.4% for the nine month period ended Sept. 30, 2008; down from 9.5% posted during the same period of 2007.

• Net premiums written fell 0.6% to $339.3 billion, driven by ongoing competition and “soft” market conditions in almost all lines of business and geographic areas.
• As a result of challenging market conditions, including continued price softening, sizeable and frequent weather-related losses and the impact of significant losses reported by mortgage and financial guaranty insurers, the overall statutory combined ratio increased to 105.1 in the first nine months of 2008.
• Excluding the impact of groups within the A.M. Best Co. mortgage and financial guaranty composites, the U.S. property/casualty industry posted an underwriting loss of $10.9 billion and recorded a combined ratio of 102.8 during the first nine months of 2008.
• The U.S. property/casualty industry’s policyholder surplus declined $36.8 billion, or 7.0%, for the 12 months ended Sept. 30, 2008.

• The industry’s investment results continued to be pressured through the first three quarters of the year, driven by the challenges stemming from the dislocations in the financial markets along with the low interest rate environment.
• The personal lines segment’s underwriting results deteriorated significantly through third quarter 2008 with a reported combined ratio of 104.9, compared to 95.7 through the same period of 2007.
• The commercial lines segment’s combined ratio deteriorated 13.2 percentage points to 105.4 for the first nine months of 2008, driven in part by extensive underwriting losses for mortgage and financial guaranty insurers.
• The U.S reinsurance segment’s combined ratio increased to 104.9 during the first nine months of 2008, up 10.3 points from 94.6 during the same period of 2007.
• With three quarters down and one to go, the U.S. property/casualty industry is on pace to report its first year-end underwriting loss since 2005, breaking its two-year consecutive streak of recording an underwriting profit.

BestWeek subscribers can download a PDF copy of all full special reports or a combination of the report and all related spreadsheet files of the report data at no charge at www.bestweek.com.

Nonsubscribers can visit www.bestweek.com for pricing information or call customer service for more information at (908) 439-2200, ext. 5742.

EDITOR'S NOTE: The Daily Insurer will resume publishing on Friday, Dec. 26. Merry Christmas!

Bay Area Arsonist Striking Portable Toilets

A San Francisco area arsonist has a strange target for setting fires.

According to authorities in the Bay Area, an arsonist targeting portable toilets in San Francisco's Russian Hill neighborhood has struck a 12th time. A plastic outhouse used by construction workers was found set on fire Tuesday at about 12:45 a.m. near the intersection of Union and Taylor streets, the latest in a series of incidents that started last month.

The fire department had earlier noted at least seven similar arson incidents, but revised the count to 12, all in the vicinity of Russian Hill.

A number of the portable toilets have burned to the ground to date.

AIA: FTC Orders for Study are Unneeded

The Federal Trade Commission’s (FTC) decision to order insurance companies to provide a wide array of consumers’ personal information in connection with a study of credit-based insurance scores and homeowners insurance is unnecessary, costly and risks consumers’ privacy, according to the American Insurance Association (AIA).

“We are disappointed the FTC chose this route, despite the industry’s good faith efforts to work cooperatively to find a sensible, secure, and cost effective alternative to provide the data the FTC says it needs to conduct its study,” said David Snyder, AIA vice president and assistant general counsel. “The use of a ‘compulsory process’ does not allay our serious concerns about the handling and protection of massive amounts of consumer data.”

In July 2007, the FTC released a study – completed without demanding information from insurers – of automobile insurance and credit-based insurance scores, which further confirmed the efficacy, objectivity, consumer benefits, and risk-based value of such scores. The orders issued today to the country’s top nine homeowners insurance companies, by market share, are seeking data to help complete a study of credit-based insurance scores and homeowners insurance, as required by Fair and Accurate Credit Transactions Act of 2003.

“The use of credit-based insurance scores benefits a vast majority of consumers and is one of the tools that enable insurers to provide sound pricing models. We’re confident the FTC, just as they found in their auto study, will learn the same thing in this latest examination,” added Snyder. According to the AIA, the FTC has demanded information far beyond what is needed, and often data insurers do not even collect, to complete their study of homeowners insurance and credit-based insurance scores.

“Consumers should be very concerned that the FTC has ordered companies to hand over such a vast amount of data, including items like a policyholders social security number and mortgage information, with few assurances as to how that data will be analyzed, handled, stored and used. We will be watching this process as it plays out to do our best to ensure that company and consumer interests are protected,” added Snyder.

Calif. Fire Victims Have Limited Time for Claims

California homeowners, renters and business owners who suffered damages in the November wildfires have less than a month left to apply for disaster assistance, said state and federal officials.

"January 20, 2009, is the last day applications will be accepted for the Federal Emergency Management Agency's (FEMA) Individual Assistance program," said Mark Neveau, federal coordinating officer. Loan applications to the U.S. Small Business Administration (SBA) for disaster-related losses to real and personal property must be submitted by Jan. 21, 2009.

Federal and state disaster recovery officials urge those who have not applied, to do so as soon as possible by calling the toll-free application and help number 1-800-621-3362 (FEMA) (TTY 1-800-462-7585) or register online at www.fema.gov. After the Jan. 20 application deadline, FEMA's toll-free phone lines will still be available to help people who have already registered.

"Even if you have insurance and believe all your losses are covered, we urge you to register if you've had wildfire damages. If you find some losses weren't covered, it will be too late to apply for federal-state assistance after January 20, 2009," said Tom Maruyama, deputy state coordinating officer.

Settlement Announced in Alleged Claims Violations

California Insurance Commissioner Steve Poizner announced a $750,000 settlement with American Bankers Life Insurance Company for alleged claims handling violations.

Violations include offering unreasonably low claims payments, failing to inform customers of their right to contact the Department of Insurance when a claim was denied, and unlawful delays in claim handling.

In May 2007, Poizner formally issued an order to show cause against American Bankers Life Insurance Company. A CDI Market Conduct Examination in 2004 and 2005 reviewed 357 files and uncovered 172 violations - about a 50 percent error ratio. Another CDI exam discovered additional violations including using unfiled rates on some policies, and utilizing inconsistent methods to evaluate dwelling values. The Department alleges that the pattern and frequency of violations indicate a general business practice of claims handling violations, resulting in a $750,000 monetary settlement.

This company has faced enforcement actions following two prior Market Conduct Examinations. Following their 1999 exam, American Bankers Life Insurance Company paid a $250,000 penalty. They paid a $500,000 penalty following their exam in 1997.

Electronic copies of the settlement, order and pleading for American Bankers Life Insurance Company are available on the Department of Insurance Web site.

Minnesota Apartment Fire Proves Total Loss

A Monday afternoon fire in Burnsville, Minnesota has left nearly 200 residents of an apartment complex homeless. Firefighters remained on the scene to put out hot spots in the building, which did not have sprinkler systems.

According to authorities, the huge fire began during the afternoon at the Burncliff Manor Apartments. None of the residents were injured, however all 64 units of the complex were destroyed.

Investigators say the cause of the fire is not known.

N.Y. Department Reminds Renters of Insurance

Unlike most homeowners, renters have a choice when it comes to purchasing insurance. While homeowners insurance is usually a requirement for a mortgage, renter’s insurance is an option many consumers forego on the assumption that it is an unneeded additional expense.

“Unfortunately, there are many misconceptions about renter’s insurance and too many renters go without it. Renters need to understand that they face many of the same potential risks that homeowners face in connection with personal property and potential liability for accidents at home,” said New York Insurance Department Superintendent Eric Dinallo.

Among the most common misconceptions:

• “Renter’s insurance is too expensive, and I already have enough bills to pay.” The fact is that most average renter’s insurance policies cost between $15 and $30 a month. The cost of replacing all of an individual’s personal possessions, or being liable for an accident at home, would likely cost much more.

• “My landlord has insurance, so I’m already protected.” Your landlord likely has insurance for structural damage to the building and might even be protected against damage caused by tenants. However, that does not protect your personal property, nor does it protect you from being liable for something like an injury to a visitor who trips and falls while inside your apartment.

The Insurance Department offers these tips for consumers considering renter’s insurance:

How much renter’s insurance do you need?

Talk to your insurance agent about the property you want to protect and the hazards you want to protect against. Your agent can give you specifics based on the type of policy you should consider. The agent can help with such issues as which hazards are included in different policies, how you should determine the value of personal property, what optional coverages are available, and how much liability coverage is included.

Can you get a discount on renter’s insurance if your residence has particular safety features, like a burglar alarm?

Many insurers will reduce premiums if you have fire or burglar alarms, fire extinguishers, sprinkler systems and/or deadbolts on exterior doors. Some companies might also offer discounts if you have more than one policy with them.

Could owning a pet cause your premium to be higher?

Certain municipalities require that owners of select breeds of pets have insurance policies to cover damages and/or injuries caused by the animal. This liability might be covered under a standard renter’s insurance policy, but some insurance companies might require the purchase of additional coverage.

Does renter’s insurance only cover you when you’re at home?

Many policies do not limit protection to home-based situations. For example, insured personal property is often covered if it is stolen by someone who breaks into your car, or if it is damaged while not inside your home.

Is personal liability included?

A renter’s insurance policy covers your property and your personal legal liability for injuries to others while they are in your home.

Will you receive additional living expenses if you have to live somewhere else while your apartment is being repaired?

Many renter’s policies will cover the cost of additional living expenses if there is damage to the property you are renting and you must live elsewhere while the property is being repaired.

More Information

Additional consumer information on renter’s insurance may be found at the following site: http://www.ins.state.ny.us/hmonindx.htm.

Student Gets Schooled in Workers' Comp Fraud

A Cortland County, New York woman attending college full time allegedly received more than $31,000 in illegally gained workers’ compensation benefits by lying about her status as a student in a case of fraud against the New York State Insurance Fund.

Tara Horton, 27, of Cortland, faces felony charges of perjury and fraudulent practices in violation of the Workers’ Compensation Law following her arrest by Syracuse police on Dec. 12.

Investigators said Horton was receiving benefits for a work-related injury at the time of her arrest. Horton filed a claim for workers’ comp after she reported a back injury in 2006 while working as a youth developmental aide for the New York State Office of Children and Family Services.

According to authorities, Horton returned to college as a full time student at Tompkins Cortland Community College while continuing to collect benefits, but allegedly denied to a Workers’ Compensation Law judge that she was attending school either as a part time or full time student.

Horton allegedly received $31,554 in illegal benefits while attending school. Investigators estimated potential future savings in her claim to be $313,042 as a result of her arrest.

Cincinnati Ins. Appoints Watkins Ins. for Policies

Cincinnati Financial Corp. announced that its lead property casualty subsidiary, The Cincinnati Insurance Company, appointed Watkins Insurance Group, with locations in Austin and Marble Falls, Texas, as the first independent agency in that state to market its policies.

Cincinnati Insurance executives initiated the relationship at the company's headquarters, welcoming agency representatives Patrick Watkins, president, and Mike Mosley, vice president.

Kenneth Stecher, president and chief executive officer, said, "With a healthy premium-to-surplus ratio that is less than 0.9-to-1, our capacity and desire to grow remain very strong. Agents in our current and future states tell us they are eager to bring their commercial clients Cincinnati's industry-leading claims service, broad coverages, highly competitive multi- year policies and solid financial strength. With our entry into Texas, Cincinnati Insurance will be actively marketing its policies in 35 states, expanding our opportunities and geographical footprint in the west where we opened New Mexico and Washington in 2007, Utah in 2000, Idaho in 1999 and Montana in 1998. After our Texas operation is underway, we will look next at appointing agencies in Colorado and Wyoming."

J.F. Scherer, executive vice president, commented, "The company expects to appoint five more agencies in Austin, Dallas and Waco over the coming weeks and add at least 10 more in 2009, with our first Texas policies effective January 1, 2009. The interior areas of the state selected for activation have a population of approximately 7.7 million.

"As we build our relationships and grow with Texas agents over the coming years, we will increase our premium revenues while also further spreading our risk beyond the Midwest and Southeast states that have traditionally accounted for the bulk of our business. To provide Texas agents with local support, our experienced marketing representatives Sean Givler and Shawn Murphy already have relocated to Austin and Dallas. As our business builds, we will supplement this local presence, adding another marketing representative to serve the Dallas/Fort Worth market and field associates to provide claims, loss control, premium audit and other services in the region."

Scottsdale Insurance, The Co-operators Team Up

Scottsdale Insurance Company (www.scottsdaleins.com), an excess and surplus lines insurer, recently launched a partnership with The Co-operators, a Canadian-owned, mutli-product insurer, to assist them in expanding their commercial lines portfolio and to give Scottsdale exposure to the Canadian market.

Scottsdale Insurance is providing The Co-operators with training and assistance in developing a number of classes of business, adapting them for the Canadian market and acting as reinsurer. The Co-operators will do all the underwriting and claim handling.

The deal was finalized in October and The Co-operators has already begun to write business under the agreement.

Dallas-Based Firm Unveils New Claims Practice

Dallas-based law firm Baron & Budd P.C. announced the creation of a dedicated insurance claims practice to be headed by shareholder Bruce Steckler.

The practice has been established to assist home and business owners in negotiating property insurance claims initially related to Hurricane Ike in the firm's home state of Texas and Hurricane Gustav in Louisiana.

Steckler, a veteran civil justice attorney, became interested in helping businesses and homeowners affected by catastrophic events following the losses experienced by his own family in Galveston, Texas.

While Texas' most destructive hurricane devastated Galveston County on Sept. 12, 2008, flooding over 100,000 homes, most property owners are only now discovering the full extent of the damages and estimating the true cost of rebuilding.

With an influx of new lawsuits expected to be filed early in the new year, Baron & Budd is employing independent claims adjusters to thoroughly assess homes and buildings (including offices, churches, commercial and retail buildings, etc.) and advising clients on how to contest tactics commonly used by insurance companies to avoid paying legitimate claims, including: denial of covered claims; ambiguous policy exclusions; attempts to blame the damage on excluded causes; underpayment due to computerized data sources; undervalued claims when solely obvious damage is considered; and unreasonable delays in investigating and evaluating damages.

"Contrary to the businesses in Louisiana and southeast Texas that are battling both hurricane damages and a difficult economy, the country's insurance companies are flush with assets," said Russell Budd, founder and managing shareholder of Baron & Budd. "The assets of the top ten insurance companies in this country exceed the GDP of every nation in the world except for two. Yet, too often, it requires legal action to force them to uphold their fiduciary responsibilities to their policyholders."

Baron & Budd is partnering with Louisiana-based Kanner & Whitely LLC, which recently won a Hurricane Katrina insurance dispute on behalf of a parish school district after four years and has been successful in achieving substantial increases for their clients over the initial offer they received from their insurance companies.

Brown & Brown Purchases Louisiana Agency

C. Roy Bridges, regional executive vice president of Brown & Brown Inc., Tommy Huval, responsible for Brown & Brown Inc.'s operations in Louisiana and other southeastern states, and James Bradford, Brian Duke and Martin Heyman, principals of Insurance 1 Inc., of Alexandria, Louisiana, announce the asset acquisition of Insurance 1 Inc. by a subsidiary of Brown & Brown Inc.

With annualized revenues of approximately $800,000, Insurance 1 Inc. focuses on property & casualty, as well as health & life insurance for individuals and businesses in Louisiana. Bradford, Duke, Heyman and their staff will continue at their current location as a specialty division of Brown & Brown's existing Lafayette operation, under the leadership of Mark Romero.

TDI Notes November Enforcement Actions

The Texas Department of Insurance announced enforcement actions taken by Commissioner Mike Geeslin that became final during November.

The actions include five license revocations and fines and restitution totaling $180,029. Copies of Commissioner’s orders may be obtained by contacting TDI’s Chief Clerk’s Office.

An order imposing disciplinary measures becomes final 20 days after the agent or insurance company has received notice of the order unless a motion for rehearing is filed within that period. A motion for rehearing stays the finality of an order until the Commissioner of Insurance acts upon the motion or upon the operation of law. Commissioner's orders are subject to appeal to state district court.

FINAL DISCIPLINARY ORDERS

Campos, Luis Lira of Plano
Order Number: 080956
Date of Order: 11/14/2008
Order Final In: November
Action Taken: $1,500 fine; Must complete 30 hours of continuing education
Violation: Failed to comply with continuing education requirements

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Fitzhenry, Mitchell Ray of Houston
Order Number: 080983
Date of Order: 11/25/2008
Order Final In: November
Action Taken: $5,000 fine; $2,263 restitution
Violation: Acted as an agent for unauthorized entities; Materially misrepresented terms and conditions of an insurance policy

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Golter, Darryl of Pasadena
Order Number: 080931
Date of Order: 11/6/2008
Order Final In: November
Action Taken: General Life, Accident and Health License and General Property and Casualty License revoked
Violation: Engaged in fraudulent or dishonest conduct; Misappropriated or converted money belonging to an insurer or insured

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Harrison, Frank Boyd of Selma
Order Number: 080939
Date of Order: 11/7/2008
Order Final In: November
Action Taken: General Life, Accident and Health License revoked
Violation: Felony conviction, securities fraud

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Lone Star Title, Inc. of Grapevine
Order Number: 080936
Date of Order: 11/7/2008
Order Final In: November
Action Taken: Title Insurance Agent's License revoked
Violation: Failed to maintain separate and distinct accounting of escorw funds; Misapplication of fiduciary property; Failed to comply with prior Commissioner's Order

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Morgan, Matthew Jason of Houston
Order Number: 080982
Date of Order: 11/25/2008
Order Final In: November
Action Taken: $138,594 restitution; General Property and Casualty License revoked
Violation: Engaged in fraudulent or dishonest acts or practices; Misappropriated or converted money belonging to an insurer or insured

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National Interstate Insurance Company of Richfield, OH
Order Number: 080946
Date of Order: 11/10/2008
Order Final In: November
Action Taken: $10,000 fine
Violation: Failed to file credit scoring model with TDI

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Norris, John Michael of Keller
Order Number: 080955
Date of Order: 11/14/2008
Order Final In: November
Action Taken: $1,500 fine; Must complete 15 hours of continuing education
Violation: Failed to comply with continuing education requirements

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Olvera, Alma Graciela of Brownsville
Order Number: 080947
Date of Order: 11/10/2008
Order Final In: November
Action Taken: $1,500 fine
Violation: Failed to comply with continuing education requirements

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Payne, Altheron L. of San Angelo
Order Number: 080945
Date of Order: 11/10/2008
Order Final In: November
Action Taken: $2,250 fine; Must complete 15 hours of continuing education
Violation: Failed to comply with continuing education requirements

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Reiling, Frances Caroline of Fort Worth
Order Number: 080938
Date of Order: 11/7/2008
Order Final In: November
Action Taken: $1,900 fine; Must complete 18 hours of continuing education
Violation: Failed to comply with continuing education requirements

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Treybig, Sheila Michelle of Bay City
Order Number: 080932
Date of Order: 11/6/2008
Order Final In: November
Action Taken: $12,522 restitution; General Life, Accident and Health License and General Property and Casualty License revoked
Violation: Engaged in fraudulent or dishonest acts or practices; Misappropriated or converted money belonging to an insurer or insured

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Urbano, Pricilla of Brownsville
Order Number: 080937
Date of Order: 11/7/2008
Order Final In: November
Action Taken: $1,500 fine
Violation: Failed to comply with continuing education requirements

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Wootton, Stephen Douglas of Madison, NC
Order Number: 080981
Date of Order: 11/25/2008
Order Final In: November
Action Taken: $1,500 fine; Must complete 15 hours of continuing education
Violation: Failed to comply with continuing education requirements

New Yorker Branches Out to Work Comp Fraud

An Erie County, New York man who claimed to be injured lifting a heavy entry guide in his former occupation is allegedly the subject of a half dozen workers’ compensation fraud surveillance videos showing him strong enough to cut down trees.

Jonathan G. Stiegler, 46, of Blasdell, faces felony charges of offering a false instrument for filing, insurance fraud, grand larceny and violation of the Workers’ Compensation Law following his arrest by New York State Police earlier this month.

Investigators from the New York State Insurance Fund Division of Confidential Investigations said surveillance allegedly showed Stiegler self-employed as a tree cutter on no fewer than six occasions between September 2006 and May 2007 doing business under the name Stiegler’s Tree Service.

Stiegler was receiving workers’ comp benefits for a work-related injury at that time of his arrest. In 2004, he claimed he sprained his lower back while working as a stand builder for Republic Engineered Products when lifting a stand entry guide to install a rest bar. Since then, he allegedly returned signed statements to NYSIF indicating he had not returned to work.

Investigators said surveillance showed Stiegler receiving payment of $550 on at least one occasion for cutting trees at a private residence. As a result of his arrest, the potential future savings on Stiegler’s claim was estimated to be $202,813.

Former Life Agent Arrested in Scam of Elderly

California Insurance Commissioner Steve Poizner announced the arrest of a former life insurance agent for allegedly stealing $100,000 from an 83-year old woman.

Ian Max Henriquez, 42, of Los Angeles, was arrested and charged with three felony counts including grand theft, identity theft and theft from an elder. Bail is set at $150,000.

It is alleged that in January 2008, Henriquez illegally completed life insurance company surrender documents, forging the signature of his 83-year old client in order to obtain $100,000 from the client's life annuity policy.

When the victim had stopped receiving her annuity policy statements, she notified her son-in-law. Her son-in-law contacted the insurance company who informed him that the mailing address for his mother-in-law had been changed and that a $100,000 check had been issued in her name against her annuity policy. Her son-in-law drove to the new mailing address and discovered that it was Henriquez's residence. He then filed a complaint with the Department of Insurance. Upon receipt of the complaint, the Department opened an investigation, during the course of which Henriquez admitted to investigators that he had forged the victim's signature and deposited her money into a business account for personal use.

Shortly after Henriquez's scheme was discovered, his licenses expired and were not renewed.

If convicted on all counts, Henriquez faces a maximum of 10 years in state prison.

UPDATE: Bridge Collapse Kills 1; Some Injured

A bridge collapse Friday morning at the Atlanta Botanical Garden has left one person dead and more than a dozen people injured.

According to authorities, initial reports claimed that at least 17 construction workers were injured and were being transported to area hospitals. At least seven victims were reportedly in critical condition.

The construction workers were in the middle of pouring concrete on a canopy area of a pedestrian bridge at the gardens when the bridge collapsed.

Kentucky Man Nabbed in Workers' Comp Scam

A Boone County, Kentucky man already in prison on federal charges related to unlawful harboring and employment of illegal aliens has pleaded guilty to an insurance fraud charge after lying to his workers’ compensation carrier about the number of employees at his construction business.

Robert O. Pratt, 49, of Hebron, has been serving an 18-month sentence on the federal charges and will be released to a federal halfway house on Jan. 9.

In the workers’ comp fraud case investigated by DOI, Pratt paid premiums to Kentucky Employers’ Mutual Insurance (KEMI) during 2003-2004 for workers’ comp coverage but reportedly underreported the number of employees at his Florence business, Pratt’s Quality Construction.

He pleaded guilty in Boone Circuit Court to one felony count of insurance fraud and was ordered to pay restitution of $12,546.16 to KEMI and a fine of $2,155.16 to the DOI Fraud Division for investigative costs. The court also ordered Pratt to pay a fine of $1,000, a $30 monthly supervision fee, and $150 in court costs.

Pratt was sentenced to five years on the insurance fraud charge and granted probation.

Judge Taken to the Cleaners on Lawsuit

A District of Columbia judge will not get a new trial in his attempt to sue his dry cleaners for $54 million over a lost pair of pants.

An appeals court has rejected the request of Judge Roy L. Pearson to overturn a 2007 ruling that prohibited him damages.

According to Pearson, Custom Cleaners did not live up to its promise of "Satisfaction Guaranteed."

Three appellate judges all came to the conclusion that Pearson failed to show the store's advertising amounted to fraud and said his claim defied logic.

Pearson can still request the entire nine-judge appellate court review the case or appeal to the U.S. Supreme Court.

CRC Insurance Services Acquiring TAPCO

CRC Insurance Services Inc., the wholesale insurance subsidiary of BB&T Corporation principal subsidiary Branch Banking and Trust Company, today plans to acquire TAPCO Underwriters Inc.

Burlington, N.C.-based TAPCO Underwriters is a managing general agency specializing in high-volume, middle-market excess and surplus insurance lines. The 25-year-old company also operates regional offices in Clearwater, Fla., and Manassas, Va.

Birmingham-based CRC, with approximately $3 billion in premiums in 2007, is the largest wholesale property and casualty insurance broker in the nation. TAPCO will operate as a division of CRC managing general agency Southern Cross Underwriters. The transaction is expected to be completed Dec. 31.

TAPCO uses a proprietary underwriting technology model and call center to quote and bind a high volume of business on the phone in five minutes or less.

TAPCO last year provided more than 500,000 telephone quotes to 20,000 agents and producers, placing more than $200 million in premiums.

TAPCO has binding authority for more than 1,000 classes of business, including all types of general liability; general, specialty and artisan contractor; property; vacant property and builder's risk; and dwelling/homeowners, among other lines.

The company was founded in 1983 by Tapley O. Johnson Jr. with just three employees. It has grown to five offices employing 175 people, servicing 8,000 agencies and writing in 16 states and Washington, D.C.

Founded in 1976, the CRC division specializes in small- and middle-market accounts, including property and casualty coverage for coastal homeowners and marine exposures.

Founded in 1982, CRC has 26 offices and 865 employees across the country. It was acquired by BB&T in 2002.

Markel, J.C. Stevens Team on Small Cranes

Markel Insurance Co., a division of Markel Corporation, announced a renewed commitment to its partnership with J.C. Stevens Inc. (JCS) to administer a tailored insurance program for small crane companies and to work with the crane companies' local agents to arrange an appropriate insurance program for them.

"Small crane operations represent a very specialized market with unique needs for insurance coverage. Without the expertise of a knowledgeable advisor, small crane companies can carry exposures that are potentially detrimental to the continued success of their business,' stated Megan Rose, program manager at JCS. "Together, Markel and JCS bring the experience required to address this specialty market," she added.

Frank Noyes, executive underwriter at Markel Insurance Company commented, "It is important that we work closely with our agency partners to develop a full range of coverages for the benefit of our insureds. For instance, many small crane clients are unaware that they can get riggers on-hook coverage endorsed onto their general liability policy to protect the load while it is being lifted."

Since 2005, Markel and JCS have targeted small crane businesses that lift signs, trusses, HVAC units, and other building materials. Together, they provide a one-stop shop for general liability, excess liability, and auto insurance, and can turn around quotes in one day.

Their combined experience can be a benefit to crane rental companies, both with and without operators, and to general contractors with crane exposures that are not covered under their general liability policy.

Fitch: U.S. P/C Outlook Stays Negative for 2009

The U.S. property/casualty industry is enduring tremendous challenges in 2008 as underwriting and investment losses have promoted a sharp decline in earnings and a material reduction in industry capital.

In a new report, Fitch discusses its current rating outlook, key items currently affecting market performance, and projections for 2009.

Industry statutory profitability in 2008 is projected to decline by over 80% from the prior year due largely to less favorable accident year underwriting results, sharply higher catastrophe related claims, and investment losses tied to declining equity markets and widening spreads in non-government bonds.

Results are not expected to improve significantly in 2009 as revenue growth is expected to remain relatively flat with premium rates anticipated at best to stabilize in most lines following a period of significant price declines in recent years. Underwriting results are also not anticipated to greatly improve as accident year loss ratios excluding catastrophes continue to increase and benefits from favorable loss reserve development lessen. Earnings will also be adversely affected by material realized investment losses in the near term.

To access this Special report, 'Review & Outlook 2008-2009 -US Property/Casualty Insurance' visit www.fitchratings.com under Financial Institutions > Insurance > Special Reports

Aon Takes Lead with California Contractor Program

Aon Corp. announced its involvement in the development and passing of AB 2738, a law that will reportedly dramatically affect wrap-up construction programs in California.

"In its initial form, AB 2738 promised to harshly affect wrap-ups and contractual indemnity clauses," said George Dale, executive vice president, Aon Residential. "As the only broker at the negotiating table, Aon worked alongside lawmakers and the California Building Industry Association to protect and advance the position of our clients by ensuring the final legislation reflected a more balanced view."

While the new legislation goes into effect Jan. 1, 2009, any new construction projects contracted ahead of time are required to meet the contractual disclosures and defense duty provisions required by AB 2738.

The law significantly alters the defense duty paradigm for construction defect claims and ensures that builder-controlled insurance policies are fair, equitable and include adequate limits to protect trade contractors and consumers in construction defect situations. AB 2738 is primarily focused on residential projects, although the legislation also includes requirements for non-residential projects and contractors.

"This bill gives builders the opportunity to revisit and redraft agreements they have in place with trade contractors, in light of the current economic environment," Dale added. "The crucial first step is a thorough review of the entire risk transfer structure between the homebuilder and the trade contractor, followed by an evaluation of claims experience and assessment of how the wrap-up programs were structured."

New York Revokes 75 Agent Licenses

Seventy-five insurance agents, brokers and other producers can no longer sell insurance in New York.

Their insurance licenses were revoked or surrendered during the first six months of 2008 because they violated State Insurance Law or regulations, Insurance Superintendent Eric Dinallo announced. An insurance license is necessary to legally transact any insurance business in the State.

In addition, 225 producers, including agents, brokers, adjusters and service contract providers were fined more than $530,000 in the same period after they admitted or were found guilty after an administrative hearing of various violations of the State Insurance Law or regulations.

Among those whose licenses were revoked or who signed an agreement with the Department agreeing to give up their licenses with the full force and effect of a revocation, and the reasons for the actions, are:

• U.S. Group Medical Administrators, Frank Winston, Tarrytown: Collected more than $900,000 in premiums that was not remitted to the insurance companies or accounted for;

• James Gard, Lake Peekskill: Collected premium money from an applicant for life insurance and never remitted the premium. He led the clients to believe they had life insurance for over a year, when, in fact, they did not. He also collected $35,000 from the same clients, did not invest it as directed and kept the money in his own account for more than two years;

• Kevin James Dunn, Jr., Staten Island: Forged a client’s signature to fraudulently obtain $100,000. He failed to cooperate with the Department’s investigation and did not notify the Department of his new business address;

• Philip Nociforo, Sound Beach: Violated regulations designed to inform consumers of the cost of replacing life insurance policies. He also had a felony conviction for grand larceny, misappropriated $50,559 in insurance premiums and failed to respond to the Department;

• Fox Brokerage, Inc., and Michael B. Fox, Brooklyn: Admitted to commingling premium and operating expense accounts and issuing 137 premium checks totaling $84,552.69 that were dishonored by the bank. He failed to notify the Department within 30 days that he was arrested in Kings County;

• Michael Trummer, Salamanca: Submitted 33 applications for insurance that were neither requested nor authorized by the proposed insureds. He also failed to cooperate with the Department Michael Trummer, Salamanca: Submitted 33 applications for insurance that were neither requested nor authorized by the proposed insureds. He also failed to cooperate with the Department’’s investigation; and

• Robert Regina, West Islip: Stole money from 11 of his clients. He attempted to cover up the thefts by making unauthorized charges to the credit cards of other clients. He was terminated for cause from Allstate for attempting to cheat them out of overtime money.

The fines resulted from various violations of the Insurance Law and regulations, including:

• Allowing unlicensed individuals to work as independent adjusters. Independent adjusters handle claims for insurance companies. Licensing ensures they are knowledgeable and fair;

• Replacing annuities without proper disclosure. Consumers buy annuities in order to get a guaranteed income for life or a fixed period. They may not be aware of the hidden costs of replacing an annuity and other factors that should be considered when replacing an annuity. Insurance Law requires various disclosures so consumers can be fully informed when making this important decision;

• Acting as a service contract provider without obtaining an approval of registration. Service contract providers must register with the Department in order to assure the faithful performance of their obligations;

• Hampering and impeding the Department Hampering and impeding the Department’s investigation;

• Issuing dishonored checks and commingling funds in a fiduciary account;

• Failing to report administrative actions taken against the licensee by another jurisdiction or governmental agency; and

• Charging service fees without a proper agreement.

Avizent: New Challenges Require Cost Savings

The volatile, uncertain economy and historical upheaval in some segments of the insurance industry are creating new challenges for corporations and public entities seeking ways to effectively control costs associated with workers’ compensation, and auto and general liability programs, according to Avizent executives.

“The marketplace is forcing companies to find new partners, become more cost-conscious and to develop innovative ways to reduce expenses,” said Lori Daugherty, president and CEO of Avizent. “While there are many issues to address in 2009, saving money is really the key challenge for our customers. They are looking to us to come up with ways to control costs on claims, so that more money can go to their bottom line.”

According to company executives, the factors affecting cost and creating challenges for self-insured companies will include:

1. The immediate hardening of the insurance market, and resulting issues with capacity and rising premiums,
2. Ongoing changes and transitions in the third party administrator (TPA) marketplace, and
3. Demand for higher levels of customer service due to reductions in staffing and a greater need for a more consultative approach to client customized programs.

Working in collaboration with existing customers, Avizent’s management team identified the solutions that will help self-insured companies effectively manage their workers’ comp and liability programs.

• Develop group captive programs. Through Avizent’s alternative risk solutions, small to mid-size companies and associations can form a captive insurance program – an option usually only feasible for larger Fortune 1000 companies. Avizent’s model combines the claims management services of an expert TPA and an easy-to-access captive structure with the willingness to bear part of the financial risk – an approach that can lower claim costs and return premium dollars to the employer when losses are low.
• Create comprehensive and integrated risk management programs. Avizent brings its clients TPAs, along with its own alternative risk division, and specialty services, including U.S. longshore and harborworkers’ claims management (workers’ comp services for the maritime industry), and a full-service managed care program with a PPO network focused specifically on workers’ comp.
• Ensure technology is maximized to increase efficiencies and lower costs. Most TPAs today utilize legacy systems, creating a host of issues ranging from slow processing times and difficulties adding the latest regulatory requirements, to difficulties moving data between vendors. Avizent is one of the only major TPAs to offer a single-platform client server application using the latest Microsoft® .NET Smart Client technology. In October, Avizent announced the release of its new VISUAL Claims Studio (VCS) claims administration system. VCS is a Windows-based, client-server application designed to process, manage, analyze and report claims data throughout the lifecycle of a claim.