Tuesday, September 30, 2008

N.C. Committee Looks at Health of Beach Plan

A North Carolina joint legislative study committee began long-overdue hearings today regarding the financial health of the state’s Beach Plan, according to the American Insurance Association (AIA).

“The North Carolina Beach Plan is one major hurricane away from financial disaster,” said Raymond Farmer, AIA assistant vice president, Southeast Region. “Today’s initial hearing by a legislative study committee is the first step in what we hope will be a thorough examination of North Carolina’s hurricane risk and the financial implications for both the private and residual markets.”

The North Carolina Insurance Underwriting Association, known as the Beach Plan, has experienced unprecedented growth in recent years in both its insured exposure and policy count throughout the 18-county coastal area it covers. This growth has called into question whether the Beach Plan’s rates are adequate to build up sufficient reserves in preparation for a major storm. Once those reserves plus the Beach Plan’s reinsurance is exhausted to pay claims, all private insurers writing property coverage in the state are assessed to cover any shortfall.

According to risk modeling firm AIR Worldwide, North Carolina has $133 billion in insured coastal exposure, representing 9 percent of the state’s total insured value. The Beach Plan’s insured exposure now exceeds over half of the state’s entire coastal exposure: $69.8 billion as of June, with over 153,000 policies in force, and a probable maximum loss of almost $4 billion, but with reserves and reinsurance totaling only $2.5 billion.

“After a major storm there would likely be significant assessments on private insurers, and the only option for recouping those assessments is through the ratemaking process,” said Farmer. “Depending on the size of the storm, that scenario could put the health of the private market at risk, not to mention that non-coastal residents will be subsidizing the coast. AIA will look to the Study Committee to ask the hard questions regarding the Beach Plan’s ability, under its current structure, to pay for a major storm, and what reforms the Legislature should consider to put it on a strong financial footing.”

The study committee will report its findings to the Legislature by the end of this year.

CSC Unveils New Product for P/C Insurers

CSC has introduced a Java Platform Enterprise Edition (Java EE) compatible solution for policy administration that provides platform and database flexibility. The company is offering the new software, POINT IN J, to property and casualty (P&C) insurers that want an integrated, open systems platform to improve efficiency and help speed new products to market.

Scott McNealy, chairman and co-founder of Sun Microsystems, and Ray August, president of CSC's Property & Casualty Insurance Division, unveiled the system today to nearly 1,000 insurance carriers, industry analysts, and technology and business executives at CSC's Connect 2008 Conference in Lake Buena Vista, Fla.

"Sun, a leading innovator that introduced Java technology in 1995, continues to be one of CSC's most strategic teammates as we serve financial services clients who are looking for ways to advance and streamline their businesses now more than ever," said Jim Cook, president of CSC's Financial Services Sector.

CSC developed POINT IN J in Java, one of the most popular programming languages, and teamed with Sun to certify the new solution on the Sun Solaris Operating System. POINT IN J will be available for deployment by the end of the year.

"While many smaller vendors have made the move to modern platforms, CSC's decision to build one of the most widely used policy administration systems ever sold on Java technology underscores the demand for legacy migration," said Chad Hersh, principal, Insurance, Novarica. "The availability of a modern, end-to-end solution from a vendor like CSC will certainly catch the attention of carriers."

The POINT IN J and POINT IN policy administration systems support end-to-end P&C insurance processing for all U.S. states and all lines of coverage. CSC will continue to support and maintain both versions through its Continuous Delivery software upgrades, which give insurers incremental updates as soon as they become available. In addition, POINT IN's integrated components are compatible with POINT IN J.

Blue Roof Assists Texans Following Ike

Federal help is available for eligible homeowners in Texas whose residences suffered roof damage as a result of Hurricane Ike.

Operation Blue Roof, funded through the Federal Emergency Management Agency (FEMA), is managed by the U.S. Army Corps of Engineers. Under the program authorized for the disaster recovery, Corps contractors install plastic sheeting as a temporary solution that allows individuals to remain in their residence until they can make more permanent repairs.

The property must be a primary residence or a permanently occupied rental property. Vacation rental properties are not eligible.

"This program is helping some East Texans remain in their homes while they explore permanent repair options," said State Coordinating Officer Joan Haun.

The number to call is 1-888-ROOF-BLU, 1-888-766-3258. To date, more than 700 Blue Roofs have been installed.

"There is no cost to the homeowner for this program and approved contractors will all have proper identification and paperwork," said FEMA Federal Coordinating Officer Sandy Coachman. "Unfortunately, we have heard reports that there may be unscrupulous people trying to take advantage."

United Insurance Finalizes FMG Merger

United Insurance Holding Corp., an underwriter of homeowners and selected small business insurance in the state of Florida, has successfully completed its merger with FMG Acquisition Corp. The vote to approve the merger took place yesterday at FMGs special meeting of stockholders, and the merger was closed and declared effective later that day.

United will continue to trade on the OTCBB under the symbols FMGQ, FMGQW, and FMGQU until a new symbol is issued.

N.Y., Bermuda Regulators Ink Arrangement

New York State Insurance Superintendent Eric Dinallo and Matthew Elderfield, CEO of the Bermuda Monetary Authority (BMA), Bermuda's financial regulator, have signed a memorandum of understanding (MoU) allowing for closer cooperation between the two regulatory bodies. The mandates of both agencies include insurance regulation.

The MoU establishes a formal basis for consultation, cooperation and coordination between BMA and the New York State Insurance Department (NYSID), and provides for the exchange of information relevant to each authority's supervisory, regulatory and examination responsibilities.

Under the MoU, either regulator may request assistance from the other, including obtaining information on a regulated person or entity. Either regulator may provide the other with investigative assistance with respect to companies and persons engaged in the business of insurance, including questioning or taking testimony and conducting inspections and investigations.

The MoU commits the Bermuda and New York regulators to cooperating with each other in the interest of fulfilling their respective regulatory mandates and functions.

Recently, the Department entered into similar MoUs with the insurance regulators of Germany and Taiwan, and is close to executing arrangements with other regulatory authorities.

Monday, September 29, 2008

Calif. Commissioner Reacts to Work Comp Bills

California Insurance Commissioner Steve Poizner issued the following statement regarding Governor Arnold Schwarzenegger's signing of Senate Bill (SB) 1145 (Machado, D-Linden) and Assembly Bill (AB) 1874 (Coto, D-San Jose), which help reform the State Compensation Insurance Fund (SCIF), one of the largest workers' compensation insurance companies in the country and California's workers' comp insurer of last resort,.

"California's employers and employees both depend on a healthy workers' compensation insurance marketplace, and reforming SCIF is key to helping maintain that competitive marketplace," said Poizner. "SCIF was cooperative during this process and has been diligently working with CDI to address a number of concerns as we help them restructure for the 21st century."

After working with SCIF on this legislation, the California Department of Insurance (CDI) urged the Governor to sign SB 1145 and AB 1874. Copies of the letters are attached.

CDI has been heavily involved in improving the performance of SCIF, including a top-down review of the institution. These bills are part of that larger effort.

SB 1145 would facilitate the transformation of SCIF into a modern operation with the executive talent necessary to run such an establishment. SB 1145 reforms SCIF by allowing the appointment of additional executive staff to provide expertise needed for its effective, efficient management. The bill also subjects SCIF board meetings to the Bagley-Keene Open Meeting Act and the California Public Records Act, recognizing it as a public enterprise.

AB 1874 introduces significant changes to SCIF's board of directors, which is still structured as it was when it was established 70 years ago. AB 1874 increases the number of board members, commensurate with similar-sized organizations, to allow for appropriate governance. It also requires reasonable qualifications for board members and provides for remuneration consistent with those qualifications and time commitment to the organization.

The bill brings greater accountability to the SCIF board by establishing training requirements for board members, and requiring board members to take active governing roles or be subject to replacement. Finally, AB 1874 creates conflict of interest requirements for board members.

AXIS Reinsurance Gets Nod for Canada Business

AXIS Capital Holdings Limited announced that AXIS Reinsurance Company, one of its U.S. operating subsidiaries, has been authorized by the Office of the Superintendent of Financial Institutions Canada (OSFI) to operate as a branch insurer underwriting property and casualty insurance and reinsurance business in Canada.

Dennis Reding, COO of AXIS Capital, commented: We are looking forward to bringing our specialized capabilities in both insurance and reinsurance to bear as we establish our branch in Canada. This branch will be instrumental in advancing our long-term commitment to provide customized coverage solutions for both local and multinational clients.

For further information on the new operations, e-mail: darin.scanzano@axiscapital.com

Typhoon Jangmi Makes Landfall in Taiwan

According to catastrophe risk modeling firm AIR Worldwide, for the second time this month and the fourth time this year, a severe typhoon has struck Taiwan.

Typhoon Jangmi made landfall as a borderline Category 3/4 storm near the coastal town of Ilan in eastern Taiwan at 3:40 p.m. local time (0740 UTC). Maximum sustained winds at landfall reached 130 mph, with higher gusts.

“Jangmi, which had been a Category 4 typhoon a day earlier had weakened by the time it reached the island,” said Dr. Peter Sousounis, senior research scientist at AIR Worldwide. “According to Taiwan’s Central Weather Bureau, maximum recorded rainfall ranged from 605 millimeters (24 inches) to 1073 millimeters (42 inches), depending on location.”

Near the capital of Tapei, trees were uprooted and building scaffolding blown off. Typhoon Jangmi, which means “rose” in Korean, is expected to weaken significantly due to the rugged terrain of Taiwan. According to the Joint Warning Typhoon Center, the storm will likely make a second landfall in Fujian Province, China on Monday evening before changing course toward Japan.

“On average, about two typhoons affect Taiwan each year,” continued Dr. Sousounis. “The high activity in Taiwan this season is related to the strong westward steering and residual La Nina Conditions that have persisted in this part of the world. Typhoon Sinlaku, which hit Taiwan earlier this month, caused extensive flooding, landslides and crop damage. Overall, the tropical cyclone season in the Northwest Pacific in is on track to be less active than average.”

AIR continues to monitor the typhoon and will provide additional information as warranted.

XL, JGS Partner on Homeowner Insurance

XL Insurance, XL Capital Ltd's global insurance operations, announced an agreement with program administrator JGS Insurance to offer stand-alone environmental insurance coverage to members of JGS Insurance's Preferred Property Program, a risk purchasing group of condominium, homeowners and community associations.

According to Rich Corbett, head of XL Insurance's Global Environmental Insurance unit: "XL Insurance is known for providing industry-specific underwriting expertise and insurance programs that help our clients manage their most complex risks. We're pleased to partner with a firm like JGS Insurance whose expertise and client commitment complement our own."

"Many commercial insurance buyers don't realize that their general liability (GL) insurance offers very limited or no environmental coverage at all," said Kenneth Hager, President of the Preferred Property Program. "We are pleased to be able to offer tailored environmental coverage from one of the market's leading environmental insurance providers. This allows our clients to enhance their environmental risk management efforts and steer clear of costly cleanup and legal expenses."

Corbett added: "Community and homeowner associations may also find themselves liable for pollution incidents that can result from using pesticides and fertilizers for lawn maintenance, storing pool chemicals, various construction activities and other property management activities. Pollution incidents occur less frequently than other loss events, but when they do occur they often carry an expensive price tag."

XL Insurance's environmental policy, underwritten by Greenwich Insurance Company, provides coverage for remediation expense, bodily injury and property damage, and legal defense for pollution conditions resulting at or from the insured location. Greenwich Insurance Company is one of the member insurers of the XL Capital Ltd group of companies.

Calif. Commissioner Reacts to Signing of AB 2044

California Insurance Commissioner Steve Poizner issued a statement following Gov. Arnold Schwarzenegger's signing of AB 2044 by Assemblyman Michael Duvall (R-Yorba Linda). The bill, sponsored by the Department of Insurance, establishes a citation program for minor violations of the Insurance Code.

"This bill creates a new way for the Department to enhance consumer protections and encourage producers to follow the letter of the law," said Poizner. "I want to thank Assemblyman Duvall for his hard work in making this bill a reality."

Poizner's office wrote a letter urging the Governor to sign the bill on Sept. 2. A copy of the letter is attached.

When dealing with producers who have committed minor violations of the Insurance Code, the Department has three options: take formal legal action, issue a verbal or written warning, or take no action. This provision allows the Department to issue citations and small, pre-determined fines. This would permit discipline that is more rigorous than a warning, but less time and cost consuming than a full-dress legal proceeding, and provides greater consumer protection than what the current, less flexible statutes offer. Minor violations include, but are not limited to, failure to display a producer license number in advertisements, failure to report a changed background status to the Department in a timely manner, and minor misstatements on a license application or renewal. The newly-established fines range from $200 to $500.

Survey: Teens Get Driving Habits From Parents

State Farm® released the findings of a national survey revealing that parents unknowingly may be contributing to teens' risky driving behaviors by not practicing what they preach. To help reduce teen driver vehicle crashes, the No. 1 killer of U.S. teens, State Farm conducted the survey to learn more about how parents approach their driver's education roles.

State Farm Claims data from the past five years show that October averages the highest number of teen auto insurance claims. According to State Farm, an increase in the number of 16- and 17-year-old driver claims* involving injury or collision can be expected to jump nearly 20 percent in October as compared to other months.

Key findings from the parent survey show that in many instances the majority of parents are not following the safe driving advice they give to their teens, possibly setting dangerous examples for young, inexperienced drivers:

* 65 percent of parents talk on cell phones at least sometimes while driving; however 94 percent restrict their teens from doing the same;
* 68 percent of parents are in a hurry at least sometimes when they drive;
* 65 percent of parents drive when they are tired at least sometimes;

The parent survey is a follow-up to the 2007 National Young Driver Survey, conducted by State Farm and The Children's Hospital of Philadelphia® (CHOP), which examined driving through the eyes of teens and found that they drive under dangerous conditions -- while fatigued, talking on cell phones, and with multiple passengers.

More specifically:

* 89 percent of teens said they see their peers talking on cell phones while driving at least sometimes;
* 91 percent of teens see their peers driving in a hurry at least sometimes;
* 75 percent of teens said they see their peers drive when they are tired at least sometimes.

"We are asking parents to be aware that their teens are watching and learning from their behaviors," said Laurette Stiles, vice president of Strategic Resources for State Farm. "State Farm is committed to working with parents to ensure their teens develop safe, smart driving behaviors. We will again join Congress in support of National Teen Driver Safety Week, Oct. 19- 25, to encourage parents, as well as young drivers, lawmakers and educators to work together to change risky driving behaviors and help save lives."

The parent survey also found that parents would have liked more information or advice on teaching their teens to drive. For example:

-- Half of parents would have liked more information on helping their teens avoid distractions

-- One out of three could have used more advice on freeway driving, nighttime driving and road rage

-- One fourth would have liked information on ways to help their teen avoid drinking and driving.

* This data was collected by adjusting for unequal numbers of days per month and excludes comprehensive, uninsured and underinsured claims.

Saturday, September 27, 2008

Senate Says Yes to Flood Insurance Extension

The Senate on Saturday approved final congressional backing for legislation that will extend the U.S. flood insurance program until March 6, 2009. The House of Representatives had passed the measure earlier in the week.

The measure, which must get the backing of President George W. Bush, would allow lawmarkers more time to attempt to resolve disputes over reforming the program, which is looking at debt to the tune of $18 billion.

The short-term extension stops the National Flood Insurance Program from expiring as scheduled on Tuesday.

Friday, September 26, 2008

N.Y. Man Arrested in Auto Fraud Scheme

A 39-year-old Bronx, New York man who reported his 2003 Cadillac Escalade SUV stolen was arrested Sept. 18 after investigators found a surveillance video contradicting his claim, the New York State Insurance Department reported.

Paul W. Lewis was arrested on charges of attempted grand larceny, insurance fraud, offering a false instrument for filing and falsely reporting an incident. If convicted, he could be sentenced to up to seven years in prison.

According to Investigator Anthony Gonzalez of the Insurance Department’s Frauds Bureau, Lewis told police his car was stolen from where he parked it on the 2400 block of Webb Avenue in the Bronx on May 21. Lewis later filed a theft report with Geico Insurance Company, the insurer of the vehicle, which was valued at $25,000.

The SUV was discovered the day after Lewis filed the reports. It was found burning in a residential area in the 200 block of 144th Street in Queens.

Gonzalez said investigators found no evidence of a forced entry into the car. He said investigators located a surveillance video of the location where Lewis claimed he had parked the vehicle. Gonzalez said the video showed that the vehicle had not been parked in the Bronx as Lewis had claimed.

OneBeacon Unveils New Hospital Coverage

OneBeacon Professional Partners, a member of OneBeacon Insurance Group, announced a new professional liability solution for hospitals seeking flexible and creative risk management.

Among the product's specialized protection and features are: a broad definition of claim and incident triggers; a policy form that includes defense outside of the limits of coverage; punitive damages coverage; insured vicarious liability coverage for medical services by nonemployed practitioners; flexible deductible/retention options; built-in sublimits for evacuation expense and legal/media expense; and much more. In addition, it features nontraditional structures such as: multiyear policies; stretched aggregates; loss-sensitive placements and manuscript policy forms.

Tailored risk management services are another key feature of this powerful solution.

For more information about OneBeacon Professional Partners' Hospital Professional Liability solution, visit www.onebeaconpro.com > Products > Medical Malpractice > Hospital Professional Liability.

Calif. Residents Nabbed for Wildfire Claim Fraud

California Insurance Commissioner Steve Poizner announced the arrests of two individuals for allegedly fraudulent insurance claims made in the aftermath of the 2007 Southern California wildfires.

Iraj Bassir, 58, of Escondido and his companion, Maria Lourdes Solis Castillo, 49, of Encinitas were arrested on felony insurance fraud charges and attempted grand theft, also a felony. Search warrants related to the case were executed as well.

Bassir reportedly claimed loss of personal property, and expenses for lodging and pet boarding stemming from damage done to his Escondido home in October 2007. Bassir submitted more than $17,000 in damage to his shed and landscaping, as well as expenses for ash and soot clean-up.

Bassir also claimed more than $46,000 in losses from property loaded into a 1990 Ford Bronco, which burned. He and Castillo told Liberty Mutual these losses included a $10,000 Persian rug, a $15,000 Rolex watch, two computers, a 46-inch plasma TV, a Vitamex blender, and camcorder.

It was further stated by Bassir that he incurred $10,800 in lodging at the Sunburst Guest Home, a residential care facility in Encinitas. In addition, he also alleged that his German shepherd and Persian cat incurred more than $3,770 in boarding costs.

Further investigation, evidence and witness statements revealed numerous inconsistencies with claims made by Bassir and Castillo, who have had a long-term relationship. For example, items allegedly lost in the fire appear not to have been purchased by Bassir or Castillo, and the pet center listed for boarding did not exist.

Bassir also reportedly said he did not know who owned the Sunburst Guest Home, although he was listed as the property owner and Castillo presented a rental agreement for the premises signed by herself and Bassir when the facility applied for its license with the state's Department of Social Services. Bassir reportedly stated to Liberty Mutual that he was neither disabled nor in need of assistance when he resided at the residential care home; Castillo claimed that Bassir was ill and in need of care. Furthermore, California did not license the facility to have any residents until 10 days after Bassir claimed he began his lodging.

Travelers Assisting Hurricane Ike Victims in Texas

To help ease the recovery process for customers living on the Texas coast, Travelers will offer payment relief to customers impacted by Hurricane Ike through its Disaster Relief Billing Plan.

By implementing the Disaster Relief Billing Plan, Travelers will continue to insure impacted policyholders who are temporarily unable to make insurance payments. Disaster Relief Billing is available for those who reside in counties designated as disaster areas, sustained hurricane damage to their property, or were otherwise affected by the hurricane.

Our primary concern is with the well-being of the families living on the Texas coast, said Marlyss Gage, senior vice president for Travelers Enterprise Underwriting. We hope that offering a Disaster Relief Billing Plan takes one thing off of the minds of individuals who are focused on getting their lives back to normal as quickly as possible.

Customers can also work out temporary payment arrangements by contacting their Travelers insurance representative or independent agent. Travelers business insurance customers can call 800.252.2268 for assistance, and Travelers personal insurance customers can call 877.872.4708.

Thursday, September 25, 2008

Family Sues Disneyland Following Dog Attack

An Illinois family has sued Disneyland, stating that their four-year-old daughter was mauled by a dog at the park's petting zoo two years ago.

Filed in Orange County Superior Court, the suit claims that the German shepherd-Labrador retriever mix attacked the at the time two-year-old and left her permanently scarred.

Lena Dickerson was reportedly bitten several times on the face by the animal. The family, which lived in Valencia, Calif. at the time of the attack, has since moved to Illinois.

According to reports, a Disneyland employee adopted the 6-year-old dog from the Orange County Animal Shelter and brought it to Disneyland two weeks before the attack. The lawsuit goes on to say that the dog was situated on a box in the Big Thunder petting zoo while a park employee held its leash and invited children to pet it.

The lawsuit is seeking unspecified punitive damages and reimbursement for the Dickerson family's medical costs and the trauma it endured.

FEMA, Missouri Officials Crack Down on Fraud

The Federal Emergency Management Agency (FEMA) and Missouri's State Emergency Management Agency (SEMA) are working to identify a small percentage of disaster assistance applicants who have been trying to cash in on the misfortune of others.

"As of last Friday, state and federal agencies have paid out nearly $8 million in grants and loans to those who have suffered damage due to the storms that affected our state from June to mid August,” said State Coordinating Officer Ronald Reynolds.

"Most people who apply for funds do so honestly," said Federal Coordinating Officer Michael Karl, "but every now and then a person tries to take undue advantage of the disaster assistance system."

"A number of methods are used to detect fraud," said Karl. "An automated-system cross checks information with other agencies and insurance companies to weed out duplicate applications. Field inspections are then conducted to verify losses and damages."

Making false statements to a FEMA inspector is a prosecutable offense under Title 18 of the United States Code. Potential cases of fraud or misuse are referred to the U.S. Justice Department for prosecution. Penalties for felony offenses can be severe.

People who made a mistake when reporting damage or may have misrepresented their losses have the opportunity to cancel their claim. Individuals may call the Helpline at 1-800-621-FEMA (3362) or TTY: 1-800-462-7585 (for the speech and hearing impaired) to withdraw or correct an application and prevent prosecution.

Those who suspect abuse of disaster assistance programs, report it to the fraud hotline: 1-800-323-8603.

N.Y. Man's Accident Story Doesn't Pan Out

A Tompkins County, New York man who collected an $1,188 insurance payment for damage to his car reportedly caused by hitting a deer was arrested for insurance fraud when authorities charged the damage actually occurred when he struck a pedestrian and a house in Syracuse.

Robert E. Jones, 49, of Freeville, was arrested by Investigator Mark Howard of the New York State Insurance Department’s Frauds Bureau, assisted by the Criminal Investigation Division of the Tompkins County Sheriff’s Department.

Howard said Progressive Insurance Company paid Jones for damage to the passenger side of his car after he filed an accident report claiming he struck a deer on March 30. Progressive asked the Insurance Department to investigate after the company received a second accident report for the same car. Filed by the Syracuse Police Department, the second report identified Jones as the driver in a March 29 accident involving a pedestrian.

Police said the pedestrian had been a passenger in Jones’s car and was injured after she got out of the vehicle and Jones tried to drive away, striking her and the house. The woman was treated for an ankle injury. Jones was charged with assault and leaving the scene of the accident.

If he is convicted of the separate charge of insurance fraud, Jones could be sentenced to up to four years in prison.

IIHS Notes 11 Vehicles for Highest Safety Award

Four small cars, two midsize cars, two midsize SUVs, one large luxury car, one small pickup, and a midsize convertible are the latest winners of the Insurance Institute for Highway Safety's TOP SAFETY PICK award.

Winners afford superior overall crash protection among the vehicles in their classes. To qualify, a vehicle must earn the highest rating of good in the Institute's front, side, and rear tests. It also must be equipped with electronic stability control.

"Criteria to win are tough because TOP SAFETY PICK is intended to drive continued improvements such as good crash test ratings and rapid addition of electronic stability control, which is standard equipment on 9 of the 11 new winners," says Institute president Adrian Lund. "Recognizing vehicles at the head of the class for safety helps consumers distinguish the best overall choices without having to sort through multiple test results."

Winners by vehicle class

  • Small cars: 2009 Honda Civic with optional electronic stability control, 2009 Mitsubishi Lancer with optional electronic stability control, 2008-09 Scion xB, and 2009 Volkswagen Rabbit
  • Midsize cars: 2009 Volkswagen Jetta and 2009 Volkswagen Passat
  • Large luxury car: 2009 Lincoln MKS
  • Midsize SUVs: 2009 Ford Flex and 2009 Honda Pilot
  • Small pickup: 2009 Toyota Tacoma
  • Midsize convertible: 2009 Volkswagen Eos

Driving Distractions Impact Texas Teens

The top driving distraction for Texas teens is talking on cell phones, followed by playing with the radio and having other teens in the car distracting the driver. This according to Allstate Insurance Company's Roadwatch Snapshot -- a one-day, real world look at teen driving habits aimed at raising awareness about the dangers of distracted driving.

For the Roadwatch Snapshot, student volunteers from 20 schools across Texas spent a half hour, the afternoon of Sept. 18, near the exit of their student parking lot, tallying up the number of drivers engaged in distracted behavior while leaving school. The result -- a tally of 1,124 distractions that included kids driving with their legs and jumping from moving vehicles.

Distracting Data

Distracted Driving Behavior/Frequency
Talking on cell phone 293
Turning on radio/high radio volume 247
Passengers distracting driver 232
Text messaging 147
Eating or drinking 95
Other distractions 91
Putting on makeup 19

"Motor vehicle crashes are the number one killer of teens with driver error contributing to 87 percent of all teen accidents," said Rhonda Young, an Allstate agent in Abilene. "By raising awareness about the dangers of distractions through Roadwatch, Allstate and our teen volunteers hope to save lives."

Simple activities such as talking on a cell phone, texting and switching radio stations can significantly impair a teen's ability to react quickly to changing traffic conditions. A recent survey by the National Highway Traffic Safety Administration (NHTSA) also found fatal crashes involving teen drivers are much more likely to happen when other teenagers are in the car.

Focus on the Road

During back to school time, Allstate reminds teens to back off the accelerator and reduce potentially deadly driving distractions that can contribute to driver error.

-- Remember the road: Think before dialing and driving. In a recent
survey, more than 55 percent of teens say they make and answer cell
phone calls while driving. If it is absolutely necessary to make a
call, use a hands-free device and stay focused on the road.
-- Don't be a multi-tasking motorist: Make adjustments to things like
mirrors and the radio before putting the car in drive. Also, plan your
day accordingly so that driving time is not meal time.
-- Be aware of backseat dangers: Limit the number of passengers in the
car. A recent study shows 44 percent of teens said they drive more
safely without friends in the car.
-- Speak up: 70 percent of teens have felt unsafe when someone else was
driving, but only 45 percent said they would speak up if someone was
driving in a way that made them scared or uncomfortable.
-- Parents matter: 89 percent of teens said their parents are influential
in encouraging safer driving.

To help teens stay safer this school year, parents can initiate a conversation about smart driving using Allstate's Parent-Teen Driving Contract, http://www.allstate.com\teen. The contract helps set guidelines for smart driving and consequences for not living up to those expectations.

The Roadwatch Snapshot was conducted in the following Texas cities and/or surrounding areas:

-- Abilene
-- Amarillo
-- Austin
-- Corpus Christi
-- Dallas/Fort Worth
-- El Paso
-- Lubbock
-- San Antonio
-- Victoria
-- Waco

Wednesday, September 24, 2008

Calif. Man Sentenced to Prison for Fraud

Llorente SIU, a Contract SIU service provider, reported the investigation and conviction of Jose Luis Garcia for fraudulent workers' compensation claims.

Garcia, a 43-year-old male from Inglewood, California, was sentenced on Sept. 15 in Los Angeles Superior Court to three years in state prison for insurance fraud and was ordered to pay a total of $82,500 in restitution to three major insurance carriers.

Alleging that he was unable to work because of back injuries sustained with three different employers, Garcia misrepresented his condition to treating physicians. While under oath at his deposition, he testified that he had not been gainfully employed between January and October 2006 due to his back pain.

However, Llorente SIU specialists developed evidence that confirmed not only had Garcia been working, but also that he had earned at least $35,700 during the period of his temporary disability.

Los Angeles County Deputy District Attorney Kathy Ratliff charged Garcia in a 21-count felony indictment. Choosing a court trial, Garcia was convicted on Aug. 22, 2008, and remanded for sentencing.

Mass. Man Indicted for False Auto Filings

An Essex County, Massachusetts Grand Jury returned indictments against a Peabody man in connection with filing false motor vehicle insurance and personal property claims, forgery of a police report, larceny, and filing false police reports with the Beverly Police Department.

Tyler Parrish, 31, was charged with Larceny over $250 (4 counts), Motor Vehicle Insurance Fraud (2 counts), Filing a False Police Report (3 counts), Attempted Larceny, Forgery, Uttering, and Insurance Fraud.

In April 2008, the Attorney General’s Office began an investigation after the matter had been referred by the Massachusetts Insurance Fraud Bureau (IFB). In July 2007, Parrish added rental insurance coverage to his Arbella Mutual Insurance Company (Arbella) policy for his personal motor vehicle. Investigators learned that Parrish reportedly then called Arbella an hour later stating that he had been in an accident between his car and another motor vehicle. A few days later, prior to his vehicle being repaired, authorities allege that Parrish filed a fraudulent vandalism claim with Arbella, and a false police report with the Beverly Police Department for vandalism that occurred on his vehicle.

Arbella referred this case to the IFB, who then conducted an investigation and discovered that Parrish had allegedly misreported the time of the motor vehicle accident in order to gain a rental car. Investigators from the IFB discovered that Parrish had vandalized his vehicle in an attempt to have it deemed a total loss. The matter was then referred to the Attorney General’s Office.

Investigators then began a review of Parrish’s past claims with insurance companies and banks and discovered that in May 2007, Parrish filed a false report claiming an engagement ring he had purchased was stolen on his way to a dinner. Parrish allegedly submitted a forged Salem Police Department police report in order to support his fraudulent insurance claim for the engagement ring. Investigators also discovered that on two separate occasions Parrish falsely reported that his ATM card had also been stolen and that the thieves had made withdrawals on his bank accounts.

Parrish is scheduled to be arraigned in Essex Superior Court on Oct. 22.

Not All Texans May Be Covered from Ike

Many Texans, who suffered losses due to Hurricane Ike, are covered by their insurance. Even the best coverage may not cover every need, which is why state, federal and non-profit programs are made available.

When most individual losses are covered by insurance, the Federal Emergency Management Agency (FEMA) may send a letter stating that the applicant is not currently eligible for federal disaster assistance. That letter can mean several things.

"This letter does not necessarily mean that an applicant is being denied assistance," said Federal Coordinating Officer Sandy Coachman. "It may mean that FEMA does not have all the information needed to make a decision regarding the applicant's disaster aid. In addition, even well-insured applicants may be eligible for other forms of assistance."

There are a number of reasons why applicants may receive ineligibility letters including:

  • Information proving occupancy or ownership of the damaged property has not been verified;
  • Proof of identity has not been verified;
  • Insurance settlement documents not received or reviewed by FEMA.

Applicants should read their individual letters carefully and take action on items identified in the letter to qualify for assistance. If there are any questions, confusion or doubts about the letter, contact FEMA at 1-800-621-FEMA (3362) or TTY: 1-800-462-7585. Be sure to have your FEMA registration number available.

Applicants with insurance should contact their insurance company and ask for a settlement letter detailing exactly what is covered under their claim. They should mail insurance settlement information to FEMA, Individuals & Households Program, and National Processing Service Center, P.O. Box 10055, Hyattsville, MD 20782-7055 or fax to-1-800-827-8112. Be sure to include your FEMA registration number on the documents.

FEMA cannot provide money to individuals or households for losses covered by insurance. However, the individual may be eligible to be reimbursed for disaster expenses not covered by insurance. Applicants are advised to return the completed U. S. Small Business Administration loan application. Filling out the loan application is a necessary step if applicants are to be considered for some other forms of disaster assistance.

Applicants who wish to appeal a decision may do so in writing within 60 days from the date of the decision or date of the denial letter. Guidelines for appeals can be found in the Applicant's Handbook sent to everyone who registers with FEMA.

Oak Street Funding Gives Agents More Options

Insurance agents and brokers nationwide can now access critical operating and growth capital, from two new services from Oak Street Fundingpurchasing commissions and lending against commissions from insurance carriers with a Financial Stability Rating® of A or higher from Demotech.

"Our success comes from developing innovative lending products that meet the needs of insurance professionals and never overleveraging clients, said Rick Dennen, CEO of Oak Street Funding, which pioneered commission-based lending.

Carriers that have earned top ratings from Demotech deserve our trust and so do the agents and brokers who represent them, according to Dennen. Responsible lending is not about sizeits about financial stability. Demotech, a Columbus, Ohio-based financial analysis and actuarial services firm, helps level the playing field by offering Financial Stability Ratings® to insurers of all sizes.

As another means of helping agents generate cash to achieve business and personal financial goals, Oak Street is purchasing renewal commissions for long-term care, Medicare supplement, whole life, term life and specified disease policies. After years of building and nurturing relationships with clients, agencies and brokerage firms can now leverage the value of their books of business, said Dennen. He added that the funds can be used for personal and financial goals, anything from acquiring another agency and investing in technology to paying for college and taking a dream vacation. After receiving the funds, agencies maintain relationships with clients, who dont need to know that renewal commissions have been sold.

Oak Street uses proprietary software to evaluate past persistency and performance of the agencys accountsto maximize the value of its book of business. The value is also determined by reviewing the carriers A.M. Best ratings. Agencies can sell all or some of their books of business. Oak Street will work with an agency to determine what optionpurchase or loan--best meets its needs.

For more information, visit www.oakstreetfunding.com.

Fla. Commissioner: Leave Regulation to the States

Florida Insurance Commissioner Kevin McCarty on Wednesday released the following comments in response to recent opinions offered, in the wake of the financial issues of the American International Group (AIG), that insurance regulation should be moved to the federal level.

McCarty believes that insurance regulation has been successful at the state level and should remain as a state regulatory function.

“I am very concerned and deeply troubled by U.S. Treasury Secretary Henry Paulson’s comments on Sunday’s NBC program Meet the Press as well as by comments from various trade associations suggesting that the current AIG saga reinforces the need for a federal office to regulate insurance companies.

“Mr. Paulson has done a heroic job of stabilizing the financial markets in recent weeks; however, the facts of the matter regarding the AIG crisis clearly highlight that the state-based system of insurance regulation employed in the United States has actually worked in this case – as it has in the past and will in the future – to lessen the systemic impact of financial distress in the world financial markets.

“In fact, despite the staggering $85 billion price tag for the AIG bailout, the current plan put in place by Treasury would never have worked at all had it not been for the fact that the state-based system of insurance regulation ensured that the insurance operating companies at the very core of AIG’s operations – not its current problems – were solvent and financially strong entities, fully capable of paying policyholder claims. As such, these operating companies have significant market value, as ongoing concerns, when they are sold to repay the Treasury investment. Without the diligent oversight of state insurance regulators, the bailout price tag would have been much, much higher.

“As my colleague Kansas Insurance Commissioner and National Association of Insurance Commissioners President Sandy Praeger said last week in a statement from the NAIC, we need to carefully look at all the facts behind the AIG debacle:
  • American International Group Inc. is a financial holding company that owns 71 U.S.-based insurance entities. Those entities all are financially sound and fully able to pay claims presented by policyholders and claimants.
  • The problems that arose occurred as a result of business decisions made by a non-insurance part of this massive conglomerate; these entities were regulated either by a U.S. federal regulator, the Office of Thrift Supervision, for the U.S. financial holding company, or by an “integrated financial regulator,” in the case of the non-U.S. entity. Simply put, the non-insurance entities wrote more risk than they could fund when the financial markets soured over the last year. The insurance companies were not involved in these business decisions; and, as a result of this important difference, the assets of the insurance companies – under the supervision of state insurance regulators – remain intact and almost completely unaffected.
  • Even throughout the AIG financial holding company’s liquidity crisis, consumers remained protected by state insurance regulatory rules that prevented the parent company from simply raiding capital from its profitable and well-capitalized insurance subsidiaries.
“Undoubtedly, careful study of what went wrong and how to prevent it from happening again will continue for decades. A critical review exercise must be undertaken with dispassionate objectivity.

“Currently there is a sentiment developing that an approach that views all parts of these complicated firms as one single entity with a common source of capital would be preferred to the current system of functional regulation.

“Notice, though, that under the proposed system, the hundreds of thousands of policyholders who rely on AIG insurance companies would have been at significant risk as all of the insurance assets would have been co-mingled to pay for the damage created by the non-insurance entities.

“With clear objectivity, the study of the current AIG crisis will, I am sure, demonstrate that the state-based system of insurance regulation provides for a framework in which insurance companies operate in a financially prudent manner and in which policyholders can rely on the promises made in the insurance contracts they buy. The needs, demographics and business environments of each state are different. That is, insurance is largely a local market as it pertains to policyholders and the promises they purchase.

“Being able to closely watch and understand the unique characteristics in each state is why the regulation of insurance companies should remain where it is; residing in a competent state-based system that is continually evolving and modernizing to reflect changing conditions.”

Confie Seguros Purchases West Coast Auto

Confie Seguros, a provider of auto insurance with an emphasis on serving Hispanic consumers, has acquired auto insurance brokerage West Coast Auto Insurance Services. The acquisition broadens Confie Seguros' presence throughout California and places it on track to become the leading national insurance distribution company primarily focused on the needs of Hispanic consumers.

The Confie Seguros management team has developed a growth strategy to build a company that caters to the Hispanic market. Funding for future acquisitions will be provided by commitments from private equity firm Genstar Capital, and the company management team, for $75 million, as well as a bank facility with expected capacity in excess of $200 million.

With nearly $300 million of capital commitments, Confie Seguros expects to build a national distribution company focusing on eight to 10 of the most densely populated Hispanic markets, including California, Arizona, Florida, Texas, Illinois, and Nevada. With the acquisition of West Coast, Confie Seguros now has an annual run-rate of $75 million in revenues, well over 300,000 customers, $250 million in annual written premiums, and over 80 retail brokerage stores throughout California.

Confie Seguros California, led by COO Joe Waked, plans to complete the integration of West Coast by the end of 2008.

Earlier this year, Confie Seguros partnered with Westline (now Confie Seguros California), one the largest distributors of non-standard auto insurance products throughout California. Confie Seguros California offers its products through three brokerage operations: South Coast Auto Insurance, Solo Insurance, and Freeway Insurance.

Travelers Unveils New Offers for Boat Repairers

Specialty boat repairers involved in woodworking, deck and hull repair, engine maintenance, canvas and sail repair and many other marine services face the challenge of obtaining affordable insurance that addresses both their marine and non-marine exposures in a seamless fashion.

Travelers has announced several substantial enhancements to its Shipwright policy which combines marine general liability, ship repairers legal liability and miscellaneous property coverage in a single policy for this specialty market.

Travelers Shipwright improvements include broadened eligibility along with options for increased property and liability limits, workboat coverage and lower deductibles. Now available for boat repairers with revenues up to $500,000, the Shipwright policy offers new optional features not usually available to specialty boat repairers, such as:

  • Liability limits up to $5 million per occurrence and in the aggregate;
  • Miscellaneous property coverage limits up to $30,000 for tools and supplies;
  • Optional deductibles as low as $1,000 for Marine General Liability/Ship Repairers Legal Liability (MGL/SRLL); and
  • Workboat coverage on broad All Risks terms.

The higher liability limits are being offered in response to the changing work environment. These boat repairers often have modest gross receipts and can have difficulty obtaining the higher liability limits that many boatyards and marinas now insist upon, said Chris Cooke, marine liabilities practice leader at Travelers Ocean Marine. Where a $1 million liability limit might have been adequate a few years ago, $2 million or more is now often required to start work. The new Shipwright policy makes getting these higher limits both simple and affordable.

The availability of workboat coverage is another key enhancement. Depending on the type of work performed, boat repairers often need a boat themselves.

Shipwright is available to employee-owned or owner-operated boat repairers and marine contractors that are primarily involved in marine repair work, have been loss-free for at least three years and have gross receipts up to $500,000. For more information about this product, contact your local independent agent or Travelers representative.

SceneExchange Being Offered By Companies

Workmen’s Auto Insurance Company, ARI Insurance Companies, and Crum & Forster have signed on to offer SceneExchange, Scene Genesis’ Web portal that lets insureds choose an autobody shop for convenient, high-quality repair of their damaged vehicle.

Claims representatives at these firms give customers the option to use SceneExchange. If the customer chooses it, an independent appraiser will promptly inspect the vehicle and send the estimate and digital photographs to SceneExchange.

“It’s extremely simple for my adjusters to use, and reduces cycle time while increasing cost-effectiveness,” states Patrick Cusack, ARI’s vice president of claims.

SceneExchange then alerts participating local body shops, which view the appraisal and compete for the business based on turnaround time and service. The vehicle owner goes online to review the shops’ proposals and information about their training and warranty policies, and check ratings from other SceneExchange customers who’ve used the shop.

“These companies have shown real leadership by utilizing this completely new way to leverage the Web to simplify claim handling and put the customer in the driver’s seat in the repair process,” said Scene Genesis CEO Ian Cunningham.

Insurers boost customer satisfaction by giving insureds control over the repair process. And the Web process and social-media aspect appeal to many people who expect to obtain virtually any service online, he added.

Crum & Forster and Workmen’s Auto Insurance Group are utilizing SceneExchange in Florida now. Crum & Forster and ARI Insurance Companies are currently offering the exchange to insureds in New Jersey. Beginning in October, Iowa, Illinois and Missouri will be going online with SceneExchange.

Tuesday, September 23, 2008

AIG Inks Definitive Deal with the Fed

American International Group Inc. (AIG) has signed a definitive agreement with the Federal Reserve Bank of New York for a two-year, $85 billion revolving credit facility.

Interest will accrue at a rate based on 3-month LIBOR plus 8.50%. The facility provides for an initial gross commitment fee of 2% of the total facility on the closing date. AIG will also pay a commitment fee on undrawn amounts at the rate of 8.50% per annum. Interest and the commitment fees are generally payable through an increase in the outstanding balance under the facility.

AIG is required to repay the facility from, among other things, the proceeds of certain asset sales and issuances of debt or equity securities. These mandatory repayments permanently reduce the amount available to be borrowed under the facility.

Under the agreement, AIG will issue a new series of Convertible Participating Serial Preferred Stock to a trust that will hold the Preferred Stock for the benefit of the United States Treasury. The Preferred Stock will be entitled to participate in any dividends paid on the common stock, with the payments attributable to the Preferred Stock being approximately, but not in excess of, 79.9% of the aggregate dividends paid. The Preferred Stock will vote with the common stock on all matters, and will hold approximately, but not in excess of, 79.9% of the aggregate voting power. The Preferred Stock will be convertible into common stock following a special shareholders meeting to amend AIGs restated certificate of incorporation.

Borrowings under the facility are conditioned on the Federal Reserve Bank of New York being reasonably satisfied with, among other things, AIGs corporate governance. The facility contains customary affirmative and negative covenants, including a requirement to maintain a minimum amount of liquidity and a requirement to use reasonable efforts to cause the composition of the Board of Directors of AIG to be satisfactory to the trust holding the Preferred Stock within 10 days after the establishment of the trust.

AIG Chairman and Chief Executive Officer Edward Liddy said, AIG made an exhaustive effort to address its liquidity needs through private sector financing, but was unable to do so in the current environment. This facility was the companys best alternative. We are pleased to have finalized the terms of the facility, and are already developing a plan to sell assets, repay the facility and emerge as a smaller but profitable company. Importantly, AIGs insurance subsidiaries remain strong, liquid and well-capitalized.

The facility will be secured by a pledge of the capital stock and assets of certain of AIGs subsidiaries, subject to exclusions for certain property the pledge of which is not permitted by AIG debt instruments, as well as exclusions of assets of regulated subsidiaries, assets of foreign subsidiaries and assets of special purpose vehicles.

Co-Owner of Calif. Agency Takes Plea Bargin Deal

Jerry Young, the president and co-owner of California-based Pelican Bay Insurance, faces up to a year in jail after taking a plea bargin in an insurance fraud case that began some five years ago.

Young was originally hit with 29 felony counts for insurance fraud, but plea bargained down to a misdemeanor accessory charge. He will be sentenced this December.

Young and one of his employees allegedly lied to customers about coverage, issued false proof of insurance, forged documents and pocketed insurance premiums. Young offered a no contest plea on behalf of his agency in relation to the amended misdemeanor charge of being an accessory to the crime at a preliminary hearing Monday.

Young, his wife, who is co-owner of the agency, and the employee, Page Castro, were all arrested in March of last year following an investigation by several departments, including the Department of Insurance. Young's wife was not named in the charges due to lack of proof she did anything wrong. The couple owned and operated the agency that was originally known as the Fraser, Yamor, Jacob and Young Insurance Agency.

Young and his wife fired Castro, who also faces possible jail time when sentenced, back in 2003.

N.Y. Police Officer Arrested for Fraudulent Claim

A Nassau County, New York man employed as an MTA police officer was arrested Sept. 12 for filing a fraudulent $28,375 insurance claim for a diamond ring that he reported missing but was actually being worn by his fiancée.

John V. Barnett, 40, of Franklin Square, was arraigned in Queens County Court following his arrest by Investigator Rosalind Thomas of the New York State Insurance Department’s Frauds Bureau, assisted by New York City police.

Barnett faces a single felony count of insurance fraud. If convicted, he could be sentenced to seven years in prison. He was released on his own recognizance pending a future court hearing.

According to Thomas, Barnett purchased the diamond for approximately $15,000 in July 2006 under a promotional program sponsored by USAA, an insurance company that serves current and former military personnel. A lieutenant commander in the U.S. Navy Reserve, Barnett had the stone set into a $2,200 18 karat gold setting. He then insured the ring with USAA in December 2006 for $28,375.

Barnett reported the ring missing in 2007. He filed a claim with USAA, telling the insurer he lost the ring while going to a jeweler to have it cleaned.

Investigators later tracked Barnett’s fiancée – who was not implicated in the case -- and photographed the ring on her finger.

Dorman Schedules P/C Seminars for this Fall

Dorman Consulting Associates' two product related seminars for the property & casualty industry have each been scheduled in Atlanta, Chicago and Scottsdale this Fall.

More than 7,700 employees from over 765 P/C companies and managing general agencies from around the world have already attended these two seminars. Both seminars are designed for anyone involved with the underwriting, development, design, pricing, management or marketing of any P/C product in both personal and commercial lines.

The 2 1/2 day Product Management Skills and Techniques seminar teaches the methods used by the most successful P/C product managers and shows how to manage a profitable product. This program will be offered in Atlanta on Oct. 15-17, Chicago on Nov. 5-7 and Scottsdale on Dec. 10-12. Information and registrations are available at www.dormanconsulting.com/seminars/product-management

The two day Pricing and Rate Making in Plain English seminar teaches the pricing skills and rate making concepts that let individuals do their own pricing, or support and understand their company's actuaries. This program will be held in Atlanta on Oct. 20-21, Chicago on Nov. 10-11 and Scottsdale on Dec. 15-16. Information and registrations are available at www.dormanconsulting.com/seminars/pricing-and-rate-making

Both seminars are taught by company owner Richard Dorman, a nationally recognized insurance marketing and pricing consultant. Dorman is a frequent industry speaker and has consulted with over 165 P/C companies and MGA's during the company's 22 years of business.

The company's Web site www.dormanconsulting.com provides complete details on both seminars including the full outline of each program, scheduled dates, cost and locations.

In addition, individuals can register for either seminar on the web. Full details and free brochures can also be obtained from Dorman Consulting Associates by phone (216)-464-5678, fax (216)-464-2727, or mail at One Haverhill Court, Beachwood, Ohio 44122.

Meadowbrook Notes Gustav, Ike Claim Activity

Michigan-based Meadowbrook Insurance Group Inc. has reported preliminary claim activity resulting from Hurricanes Gustav and Ike.

The claims reported from Hurricane Gustav are primarily limited to Louisiana. Currently, the company has approximately $1.4 million of known claims. Of the $1.4 million related to Gustav, approximately $1.3 million is attributable to properties insured by ProCentury Corporation and its subsidiaries.

At this time, the potential claims from Hurricane Ike are not as certain due to the broad geographic area impacted by the storm and the fact that power and telephone services have not been fully restored to these areas. The company currently has over $1.0 million of known claims, all attributable to properties insured by ProCentury Corporation and its subsidiaries. The company believes that a number of claims related to Hurricane Ike exist but have not yet been reported.

Meadowbrook purchases catastrophe reinsurance protection for aggregate claims above its retention of $750,000 and ProCentury and its subsidiaries purchase catastrophe reinsurance protection for aggregate claims above its retention of $4.0 million.

Madison to Join Higginbotham & Associates

Madison Benefits Group, a Houston-based employee benefits brokerage and consulting firm, announced plans to join forces with Higginbotham & Associates, a national insurance brokerage firm.

The new partnership expands Madison Benefit's current service offerings by adding personal and commercial property and casualty coverage lines and risk management services to its already extensive portfolio.

The alliance forms one of the largest independent brokerage firms in Texas, with a combined staff of more than 310 employees and 11 statewide offices.

Under the terms of the agreement, the company will continue doing business under the name "Madison Benefits Group." As part of the deal, senior management from Madison Benefits will become principal shareholders in the newly formed entity and current staff will play a vital role in the company's continued growth.

For more information about Madison Benefits, visit http://www.madisonbenefits.net. For more information about Higginbotham & Associates, visit http://www.higginbotham.net.

Council Hails Progress on International Markets

The Council of Insurance Agents & Brokers told the International Trade Commission (ITC) today that great progress has been made in opening foreign markets to U.S. insurance intermediaries, but barriers still exist that impede their ability to provide services and products needed by clients around the world.

At a hearing before the ITC, Michael Moran, executive vice president of Aon Risk Services, testified on behalf of The Council. He said the emergence of a strong distribution network will drive the development of the insurance industry in China, India and the Middle East and will help those countries and regions realize the benefits of a strong insurance market.

“A strong insurance market efficiently transfers risk as well as facilitates asset accumulation, resource and infrastructure development,” Moran said.

The hearing was held in response to a request by U.S. Trade Representative Susan C. Schwab that the ITC investigate and prepare a report on the operations of certain foreign markets relating to property/casualty insurance services. In a June 9 letter, Schwab asked the ITC to examine factors affecting supply and demand in these markets; the nature and extent of cross-border trade and affiliate sales in the global market for p/c insurance; and policies and practices that affect U.S. firms’ access to, and competitiveness in, foreign markets.

Moran said despite gains, barriers to U.S. intermediaries remain. For example, he said, some countries still restrict foreign ownership. India currently allows foreign brokers to own only 26 percent of a brokerage in the country.

In China, local brokers are held to a lower standard of corporate governance than foreign firms, and local companies are audited less stringently than foreign companies. Moran said that often leads to local companies acting in ways that don’t reflect well on the industry and puts foreign firms at a competitive disadvantage.

The Council supports efforts to harmonize treatment of local and foreign brokers. Although opening markets to foreign entities is a priority, The Council said it is critical that the regulations promote a competitive market and that regulations be transparent and applied evenly across the marketplace, promoting the role of brokers and ensuring professional standards.

The Council also stressed the importance of being able to place master policies for clients with international risks in multi-jurisdictions. Many countries restrict cross-border placement by requiring the risk to be covered by local carriers, which defeats the purpose of global policies, particularly if the local market is limited in coverages it can handle.

Monday, September 22, 2008

Rohrbach Autopsy Yields No Clues

Authorities have no new answers in the death of North Carolina insurance investigator Sallie Rohrbach following the release of an autopsy.

The 44-year-old was allegedly killed back in May by Michael Howell, the owner of Dilworth Insurance Agency in Charlotte.

The body was reportedly so badly decomposed, that officials cannot say with certainty how Rohrbach died.

Rohrbach's body, which had to be identified by dental records, was discovered just over the border in York County, S.C. She was reportedly in Charlotte at the time of her death investigating Howell's agency.

RIMS Opposes H.R. 6969 Taxing Legislation

The Risk and Insurance Management Society, Inc. (RIMS) announced its opposition to legislation disallowing tax deductions for reinsurance premiums paid to foreign affiliates that exceed the industry average for each line of property and casualty insurance business. The legislation, H.R. 6969, was introduced on Friday by Rep. Richard E. Neal, D-Mass., a senior member of the U.S. House of Representatives Committee on Ways and Means (dailyinsurer.blogspot.com/2008/09/coalition-applauds-bill-to-level.html).

“RIMS opposes any legislation that would result in negative implications for the global reinsurance marketplace and U.S. businesses that rely on this market,” said Terry Fleming, member of RIMS board of directors and director of the division of risk management for Montgomery County, Maryland. “It is RIMS belief that a free and fair marketplace fosters a healthy and competitive climate for reinsurance while at the same time assures more available and affordable property and casualty insurance.”

Under the current tax code, the law permits insurers to deduct reinsurance premiums paid to affiliate foreign reinsurers without any limitations. The legislation would place an artificial cap on the deduction, potentially causing market disruptions. Over the years, non-U.S. reinsurers have served as an important backstop ensuring the availability of insurance, particularly in areas prone to natural disasters. RIMS opposed similar legislation in 2001 and 2007.

Tax Relief for Some Impacted by TS Fay

Floridians in disaster-declared counties affected by Tropical Storm Fay may be eligible for various forms of tax relief that could ease the distress of some losses.

Following severe storms and flooding on Aug. 18, Baker, Brevard, Collier, Duval, Glades, Hendry, Jefferson, Lake, Lee, Leon, Marion, Nassau, Okeechobee, Orange, Polk, St. Lucie, Seminole, Volusia and Wakulla counties were designated as presidential disaster areas that qualify for Individual Assistance. As a result, the U.S. Internal Revenue Service (IRS) is postponing until Nov. 17 certain deadlines for taxpayers who reside or have a business in the disaster areas. The postponement applies to return filing, tax payment and certain other time-sensitive acts otherwise due between Aug. 18, 2008 and Nov. 17, 2008.

In addition, the IRS will waive the "failure to deposit" penalties for employment and excise deposits due on or after Aug. 18 and on or before Sept. 2, as long as the deposits were made by Sept. 2. Disaster assistance grants received by applicants are not subject to income taxation and have no bearing on a person's Social Security or welfare benefits.

Taxpayers may also qualify to receive refunds from their 2007 taxes because of deductible disaster-related losses from this presidentially declared disaster. It is important to save all receipts related to disaster expenses. Details can be found on the IRS Web site, www.IRS.gov by launching a search for "Florida Tropical Storm Fay" or by calling the agency's disaster helpline, 800-TAX-FORM (1-800-829-3676) to order a copy of appropriate instructions.

Casualty losses for tax purposes generally are based on the decrease in fair market value of the property as a result of the disaster minus any insurance payments or other reimbursements received. The IRS will ask for the latest tax return, estimates of repairs, before and after photographs, appraisals or any other loss documentation.

Property owners affected by the disaster should also check with their local property appraiser about the possibility of claiming a reduction in the taxable value of property destroyed or damaged as a result of the disaster.

Hospital Employees Fired Over Injury Photos

A pair of University of New Mexico hospital employees were fired for reportedly using their cell phone cameras to snap photos of injured patients at the hospital.

The photos — mainly close-ups of injuries being treated in the Albuquerque hospital's emergency room in recent months — were then shown on an employee's private MySpace page.

Some hospital employees who reportedly did not report the action were also disciplined in some manner.

The photos came to light after a hospital supervisor received an anonymous tip about them and began an investigation. The patients in the photos could not be informed that their images had been taken because their faces and personal identifying features had been removed from the photos.

Officials said the hospital is treating the matter as an employment issue and law enforcement has not been contacted. There is also no word on whether any lawsuits will be filed.

The use of cell phone cameras in hospitals have caused breaches of patient privacy or questions about such violations in several states in recent years, including California, Arizona and South Dakota.