Friday, October 31, 2008

Obama Making Inroads in the Insurance Industry

Democratic Sen. Barack Obama appears to be making inroads among professionals in the heavily Republican insurance industry, according to a poll conducted by BestWeek U.S./Canada.

In the final pre-election online survey of nearly 1,000 industry professionals, the Illinois senator gained 8.7 percentage points in favorability from his standing in mid-September.

The survey showed Republican John McCain still held a 54.5% to 42.3% lead over Obama, but that was down from the 64.1% support McCain showed in BestWeeks prior poll, conducted Sept. 5 through Sept. 9. Just 2% said they remained undecided, while 1.6% were not voting for either of the major party candidates.

In the latest online poll, conducted Oct. 22 to Oct. 28, 11.4% of respondents reported that they had changed their minds about their choice of presidential candidates over the course of the campaign. Obama picked up the lions share of vote-switchers, with 63%, compared with McCains 28.7%.

The selection of Alaska Gov. Sarah Palin as running mate may have played a role in industry defections from McCain. Many of those who offered written explanations on the matter mentioned Palin as part of the reason for switching their vote to Obama.

Also, in BestWeek Europe:

In spite of the financial meltdown in capital markets, China may be in position to lead growth in the global insurance business. Because of the early stage of development and low penetration level in Chinas insurance market, continuous premium growth is expected.

Also, on A.M. Bests Election News Web site:

Five state insurance commissioner offices are up for grabs in the November general election. At least three of those states will see new faces, as the incumbents are not running again. Visit www.ambest.com/electionnews for the latest election news, survey results, candidate information and audio. Ongoing election results will be posted on the site Nov. 4.

Also in BestWeek U.S./Canada:

Several industry giants saw third quarter profits fall. Earnings tracker is a capsulized look at recent financial postings by insurers, reinsurers and brokers.

And in both editions of BestWeek:

As of the close of the U.S. market on Thursday, Oct. 30, the AMBG stood at 674.51, a one-week decrease of 1.15%.

BestWeek is published by A.M. Best Co. for insurance professionals. To subscribe, call A.M. Bests customer service department at (908) 439-2200, ext. 5742, or e-mail your request to customer_service@ambest.com.

Work Comp Costs Growing for P&C Insurers

Workers' compensation medical expense costs are growing at a rate far exceeding the increases in group health costs, and this will be a critical issue for property/casualty insurers and actuaries, attendees at the recent Casualty Loss Reserve Seminar were told.

Peter Rauner, president, RMS Solutions Inc. gave an overview of the significance of the workers' comp insurance market, explaining that workers' comp is the largest commercial line and the largest source of industry loss reserves among property/casualty insurers.

He framed the issue by describing how medical expenses are a large and growing portion of workers' comp benefits. According to NCCI data, in 1986, medical expenses accounted for 45% of the total claim costs, with indemnity accounting for 55%. In 2006, medical expenses had grown to 59% of the total workers compensation claim costs. In addition, workers' comp medical severities are growing at a rate well above the medical CPI growth rate.

“Over the last eight years, workers' compensation medical costs have nearly doubled, from about $13.5 billion in 1999 to over $25 billion in 2007 -- that’s staggering,” Rauner declared.

Rauner outlined some of the factors driving medical costs on a macro level, such as inflation, economic growth, provider consolidation, and lifestyle factors like increasing obesity and diabetes.

“The increasing medical costs trends are a very real concern to the property/casualty industry,” he stated. “The spiraling costs will not only impact workers' compensation insurance, but also the industry as a whole.”

William Miller, senior vice president and Actuary, ACE USA explained how workers' comp medical costs compared to group health costs. While they utilize essentially the same resources, there are major differences, which are driven by coverages and policy terms, political and regulatory pressures, and the duration of medical payout.

“While group health includes disincentives for overutilization, workers compensation has no coinsurance payment by the injured worker,” explained Miller. “Utilization is one of the primary reasons that worker' compensation costs are rising so dramatically.”

Miller used an NCCI study to drive home his point. The study looked directly at utilization for 12 injuries and compared services provided within three months of injury. It was found that workers' comp costs were 71% more than group health costs across the 12 injuries, driven primarily by increased office visits and physical therapy.

“Workers' compensation injuries result in more intense and costly treatments earlier on than under group health,” said Miller.

Miller encouraged the actuaries in attendance to use their analytical skills to help design efficient workers' comp medical coverages.

“Use predictive modeling to find which doctors are providing the best outcomes for getting workers back to work and staying at work,” urged Miller, as he outlined the keys to containing utilization. He also cited medical fee schedules, utilization reviews, managed provider networks, and pharmacy benefit management programs as keys to an ideal workers' compensation medical system.

Erik Johnson, consultant and actuary, Aon Global Risk Consulting, moderated the session, which was organized by the CAS Committee on Health Care Issues. The Seminar is jointly sponsored by the Casualty Actuarial Society and American Academy of Actuaries.

Family Sues Following Rollercoaster Accident

A California family is suing New York City after their loved one, Keith Shirasawa, fractured his neck and died following a ride on Coney Island's Cyclone rollercoaster.

According to the family, the city neglected to keep the landmark ride safe. Shirasawa rode on the coaster in July of 2007 and fractured his neck on the initial 85-foot drop. He later died from complications following surgery.

Lawyers for the amusement park said the accident happened as a result of a malfunction that resulted in the Cyclone dropping too fast, and that has since been corrected.

N.Y. Man Arrested for Arson on Apartment Building

A 28-year-old Cohoes, New York man who reportedly fell behind on the mortgage payments for a four-unit apartment building he owns on Sherman Avenue in Albany was arrested for setting fire to the structure just hours after his tenants left the building.

Kerry Bennett was charged with arson and insurance fraud. The arrest followed an investigation into the June 7 fire by Albany police and fire investigators, the office of District Attorney David Soares and the Frauds Bureau of the New York State Insurance Department. Fire investigators said evidence at the scene led them to believe the fire was intentionally set.

Bennett was arraigned before City Court Judge Rachel Kretzer and remanded to Saratoga County Jail where he was being held for grand larceny in an unrelated case.

According to Investigator Jaclyn Oreshan of the Insurance Department’s Frauds Bureau, Bennett is accused of setting the fire and trying to defraud State Farm Insurance Company out of more than $50,000, the amount of the insurance claim he filed after the fire at 243 Sherman Ave.

Investigators said that video from a security camera mounted on an adjacent building showed that Bennett was the last person known to be in the house before the fire started. Tenants living in one second floor apartment left the building earlier in the day. The other three apartments were unoccupied.

The late-night fire engulfed the entire top floor of the building and damaged an adjacent home at 241 Sherman Ave., which is also owned by Bennett.

If convicted, Bennett could be sentenced to up to 15 years in prison.

Thursday, October 30, 2008

RIMS Looks at Impact from Possible Calif. Quake

Risk Management Solutions (RMS) announced the results of a study analyzing the impact of a major earthquake on the Hayward Fault.

The study marks the anniversary of the 1868 Hayward Earthquake -- which ruptured the southern section of the fault 140 years ago this month -- and was conducted in collaboration with research seismologists led by the U.S. Geological Survey.

Results revealed that a magnitude 6.8 earthquake rupturing the Southern Hayward Fault today -- based on San Francisco Bay Area's 2008 population and property exposures -- would result in economic losses of between $112-$122 billion, of which $11-13 billion would be insured. The study also revealed that a magnitude 7.0 earthquake rupturing the entire length of the Hayward Fault would result in economic losses between $210-$235 billion, with only up to $30 billion likely to be insured.

The Hayward Earthquake occurred on Oct. 21, 1868, rupturing a section of the fault from Fremont to just north of Oakland and causing extensive damage to the small farming communities along the fault. Strong ground shaking and liquefaction also destroyed unreinforced masonry buildings in Oakland and San Francisco.

"More than seven million people now live in the fault zone and surrounding areas -- over 25 times the population at the time of the 1868 earthquake," said Dr. Patricia Grossi, senior research scientist at RMS. "As the southern section of the fault has ruptured, on average, every 140 years for the past 700 years, this particular anniversary highlights the need to continue investing in both short and long-term mitigation as well as preparedness initiatives before the next event occurs."

RMS' loss estimates reflect insurance payments for residential and commercial earthquake coverage, as well as coverage for urban fires that would most likely break out following a major earthquake on the Hayward Fault. They also account for the effects of 'loss amplification,' including economic demand surge (shortages of builders and materials), repair delay inflation (rain damage), claims inflation (difficulties in insurer's policing claims costs), and insurance coverage expansion.

"The impact of a major earthquake on the Hayward Fault is beyond what has been experienced in recent California history, with less than 15% of the losses likely to be covered by insurance," stated Mary Lou Zoback, vice president for earthquake risk applications at RMS. "This is in notable contrast to Hurricane Katrina, for which about 55% of the total economic loss was covered by insurance payments."

She added: "While there has been an enormous public investment in mitigating the impacts to infrastructure of a major Bay Area earthquake over the past twenty years, many residential and commercial buildings remain vulnerable. The low level of earthquake insurance coverage means the massive cost of a Hayward Fault earthquake would largely be borne by the residents and businesses in the area, making rebuilding much more expensive and difficult."

Copies of the RMS special report "1868 Hayward Earthquake: 140-Year Retrospective" are available free of charge at: http://www.rms.com/Publications/1868_Hayward_Earthquake_Retrospective.pdf

La. Bridge Collapse Kills 1, Injures Several

A bridge collapse over Lake Pontchartrain in Louisiana Thursday afternoon left one construction worker dead and several injured.

According to authorities, a piece of the new Twin Span Bridge over Lake Pontchartrain collapsed around 12:30 p.m. on a portion of the new bridge approximately 3 miles from the St. Tammany Parish side of the lake. The water where the workers fell into is reportedly some 8 to 10 feet deep.

The Twin Span project started in the summer of 2006 and is slated for completion in 2011. The westbound span -- from Slidell to New Orleans -- is scheduled to open to traffic in mid- to late 2009.

The former Twin Span, which has been carrying traffic since the 1960s, sustained major damage during Hurricane Katrina in 2005 and will be taken down.

N.Y. Auto Mechanic Parked for WC Fraud

A Buffalo area man who went back to work as an auto mechanic was hit with workers’ compensation fraud charges following his arrest by New York State Police for allegedly defrauding the New York State Insurance Fund.

James R. Delaney, 43, of, Tonawanda, N.Y., Erie County, faces felony charges including grand larceny, insurance fraud, perjury and violating the Workers’ Compensation Law.

Delaney was arrested Oct. 28, following a joint investigation by NYSIF’s Division of Confidential Investigations, the New York State Insurance Fund Frauds Bureau, the Workers’ Compensation Board Fraud Inspector General’s Office and the State Police Special Investigation Unit.

Investigators said Delaney was employed as an automotive mechanic for Davidson Automotive Inc., at 234 Woodward Ave, Tonawanda, in 1998 when he injured his lower back while lifting a transmission from the floor onto a transmission jack.

A recent investigation revealed that in August 2005 and again in January and February of 2006, Delaney allegedly worked beyond the limits of his disability as an auto mechanic for Bill’s Automotive, in Buffalo, NY, while collecting workers’ comp benefits from NYSIF.

During a Workers’ Compensation Board hearing, investigators said Delany allegedly lied under oath about not working since the time of his injury.

Investigators said Delany collected $3,900 in benefits he should not have received and, as a result of his arrest, estimated the potential future savings on his claim to be more than $49,900.

Sinking Home Values Could Prompt Bad Decisions

Facing declining home values, Californians may be dangerously opting to underinsure their homes, according to a statewide poll.

More than a quarter of the 800 people randomly interviewed in a poll commissioned by the Insurance Information Network of California indicated that they believed they should reduce the amount of insurance on their home because its value had declined.

According to the random statewide survey, 26 percent of Californians believe they should reduce their insurance coverage because the resale value of their home has dropped.

This is a financially dangerous myth, said IINC Executive Director Candysse Miller. Just because the resale value of your home may have declined does not mean that the cost to rebuild it has also dropped and that should be your target.

Forty-three percent of those surveyed disagreed with the statement, My home value has dropped over the last couple of years and therefore I can or should reduce my insurance policy coverage. Still, a troubling number of respondents agreed with the comment, Miller said.

To protect your investment, you should consult your insurance company or agent each year and review any changes that may increase the replacement value of your home or property, Miller said. This includes remodeling projects and major purchases.

In a related question, respondents fared much better when asked for the best strategies for saving money on insurance.

Thirty-five percent smartly suggested comparison shopping multiple insurance companies, while another 30 percent said that buying both auto and home policies from one company would reduce their insurance costs both proven techniques for managing household insurance costs.

Meanwhile, another 7 percent suggested reducing policy limits or increasing deductibles. While increasing deductibles can cut costs, policyholders should carefully evaluate their insurance needs before reducing policy limits, Miller said.

The poll was conducted for IINC by Public Opinion Strategies Sept. 21st 24th with a margin of error of 3.46 percent.

Fla. Commissioner Accepts NCCI Rate Filing

Florida Insurance Commissioner Kevin McCarty has issued a final order approving the National Council on Compensation Insurance's (NCCI) amended rate filing for workers' compensation insurance rates that will become effective Jan. 1. The rate decrease marks the sixth consecutive drop in worker’s comp rates since 2003, the year the Florida Legislature passed sweeping reforms of the workers’ comp system.

However, the rate decrease does not contemplate potential increases that could result from the Oct. 23 Florida Supreme Court decision in the Murray v. Mariner case. That ruling interprets attorney fees provisions in the workers’ comp statute.

In an Oct. 15 order, McCarty requested the NCCI to make an amended filing to reduce the rates of workers' comp insurance in Florida by 18.6 percent, an additional 4.5 percent reduction from the originally proposed 14.1 percent decrease. The final 18.6 percent reduction is estimated to produce a savings of more than $610 million for Florida employers.

With this rate change, the cumulative overall statewide average rate decrease since 2003 will be more than 60 percent.

The overall average rate impact at an industry group level will be as follows:

Percent Change

Industry Group 1/1/09 Filing Cumulative 10/1/03–1/1/09
Manufacturing -19.8 -58.0
Contracting -19.2 -61.2
Office and Clerical -20.6 -60.9
Goods and Services -18.9 -60.7
Miscellaneous -13.6 -59.4
TOTAL -18.6 -60.5

In addition, the approved decrease of 18.6 percent now is the largest one-year decrease on record, following the two previous largest decreases – 18.4 percent for 2008 and 15.7 percent for 2007. The last six filings represent the largest consecutive cumulative decrease on record in Florida workers’ comp rates – dating back to 1965.

In requesting the NCCI to amend its filing, McCarty cited disagreements with the methodology the NCCI used to calculate the profit factors and trend factors. Trend factors incorporate changes in wages, paid losses and claim frequency.

Prior to the legislative reforms, Florida consistently ranked No. 1 or No. 2 in the country for the highest workers’ comp rates; however, post-reform Florida has dropped out of the top 10 rankings.

The NCCI, which produces and files rates for insurers in many states, said the rate decline was primarily due to a significant drop in claims frequency and a reduction in the costs of claims.

The workers’ comp reform law instituted provisions for enhanced fraud compliance and revised permanent and temporary disability definitions. It also set new parameters for attorney and physician compensation and improved dispute resolution procedures, in addition to making many other improvements to the system.

The Office expects the NCCI to make a new filing in support of the rate impact that it (NCCI) believes will result from the Murray case.

NAIC Accepts Applications for 2009 Program

The National Association of Insurance Commissioners (NAIC) is now accepting applications for its 2009 Consumer Liaison Program.

“Consumer representatives play a valuable role in helping us achieve our primary goals of consumer protection and education,” said NAIC President and Kansas Insurance Commissioner Sandy Praeger. “This program provides a structured way to integrate consumer viewpoints into our regulatory discussions — and we encourage anyone interested in making a difference to apply.”

Established in 1992, the Consumer Liaison Program promotes consumer representation and interaction with NAIC members by providing funding for qualified consumer representatives to participate in NAIC meetings. In order to qualify for funding, a candidate must:

  • Commit to representing the consumer interest in insurance regulation;
  • Represent a non-profit organization;
  • Fully participate in NAIC national meetings and related conference calls;
  • Demonstrate expertise and experience on insurance-related issues addressed by the NAIC;
  • Be free of obligations or commitments to an industry that conflict with his/her responsibilities to represent consumer interests; and
  • Require NAIC funding in order to fully participate in NAIC national meetings and conference calls.

In addition, consumer organizations that do not want or need to request funding may apply for an unfunded consumer representative position. The NAIC defines a consumer organization as a national, state or local organization that serves to protect the interests of consumers as they relate to the regulation of insurance.

Application forms and required documentation for funded and unfunded representatives, along with additional information about the NAIC’s Consumer Liaison Program, are available at www.naic.org/consumer_participation.htm.

The application deadline is Dec. 31, 2008. All applicants are required to complete the application and attach the relevant requested documents. Applicants will be notified in early February 2009 regarding their selection as a funded or unfunded consumer representative.

Las Vegas to Host Insurance Law Conference

Just over a month after the Nevada Supreme Court allowed 700 homeowners to join a lawsuit against developers for allegedly defective exterior stucco -- attorneys, insurers, risk managers, construction experts and judges from around the country will gather here for a three-day conference on construction defect claims and insurance coverage.

"The Comprehensive Construction Defect Claims & Coverage Conference" will take place Nov. 5, 6 & 7 at the Mandalay Bay Resort & Casino.

Among the more than 50 speakers will be Las Vegas Judicial District Court Judge Allan Earl. Judge Earl will be joined by retired California Judge Jonathan Cannon, now with JAMS, and attorneys from California and Indiana to provide an overview of national litigation sparked by construction defect claims.

Appearing on an ethics panel will be Jeffrey Stempel, professor of law at the William S. Boyd School of Law at the University of Nevada Las Vegas. Professor Stempel will be joined by Professor James Fisher of the Southwestern Law School in Los Angeles.

Attorneys from Texas, Washington, D.C., New York, Philadelphia, Illinois, Maryland, Florida, Connecticut, Massachusetts, Indiana, Wisconsin and Nevada will cover the gamut when it comes to construction defects litigation and insurance: special risks posed by construction companies; professional liability for construction managers; pollution liability risks; determining applicable state law; builder risks; the right to repair; allocation; trigger of coverage; business risk exclusions; ethical concerns; additional insureds; wrap ups; residential construction coverage; bankruptcy; claims relating to so-called "green buildings," and much more.

Companies represented at the event include insurance companies, builders, building and environmental specialists, litigation support services, and claims management services.

The chairing panel comprises Paul Amirata of AXA Insurance Company of New York, Thomas Myers of Andrews Myers Coulter & Cohen, P.C. of Houston, Tracy Alan Sax of Sax Doernberger & Vita, P.C. of Hamden, Conn., and George Yaron of Yaron & Associates of San Francisco.

"The chairing panel has assembled a faculty that is highly experienced and diverse, bringing national perspectives from the courtroom, the construction site, the insurance company, the settlement table, the laboratory, and the law school," said Tom Hagy with BVR Legal, host of the event.

For full details visit http://www.BVRLegal.com and click on "Live Conferences." Contact Customer Service at 888-287-8258 or CustomerService@bvresources.com. Discounts are available for multiple attendees, corporations, government agencies and paralegals. Sitting judges or special masters attendee free. The program is fully accredited for continuing legal education.

Wednesday, October 29, 2008

N.Y. Man Charged in Insurance Fraud Scheme

A 31-year-old Warren County, New York man accused of fraudulently collecting more than $100,000 in disability benefit payments was arrested following an investigation by the New York State Insurance Department’s Frauds Bureau.

Ricky J. McFarlane Jr., of Lake Luzerne, was charged with insurance fraud, grand larceny and falsifying business records after he was arrested by New York State Police at Hadley.

Frauds Bureau Investigator Jaclyn Oreshan said McFarlane claimed he was physically unable to work after slipping and falling down a flight of stairs while employed at a pulp and paper mill in 2003. However, Oreshan said investigators discovered that McFarlane later engaged in construction work while collecting disability benefits from PMA Insurance. He is alleged to have advised PMA several times that he was unable to work during the five years he received benefits.

McFarlane, who was released in his own recognizance, is scheduled to appear for a hearing Nov. 5 in Warren County Court.

If McFarlane is convicted, he could be sentenced to up to 15 years in prison.

Texas A&M Settles Bonfire Lawsuit for $2.1M

Texas A&M University has agreed to settle a lawsuit that emerged from the collapse of a bonfire tower almost a decade ago.

The university will pay $2.1 million to finalize the suit after families of four students who were killed and several who were injured sued both the university and contractors hired to assist building the tower.

In all, 12 people were killed and dozens were injured when the tower collapsed in November of 1999 prior to the school's annual football game with rival Texas.

Since the accident, the bonfire has taken place off campus through students and alumni.

N.C. Commissioner Approves WC Rate Filing

North Carolina Insurance Commissioner Jim Long announced the approval of the workers' compensation rate filing from the North Carolina Rate Bureau, the organization that represents the state's workers compensation insurance companies.

The filing requested a 4.4 percent decrease in the voluntary market and a 3.8 percent decreased in the assigned risk markets. The rate decreases will go into effect on April 1, 2009.

The decreases will save businesses approximately $65.5 million. The average rate for workers' comp in the voluntary market is now estimated to be 2.17 percent of payroll.

Agent Convicted of Stealing from Policyholders

California Insurance Commissioner Steve Poizner announced the conviction of insurance broker Angelina Granillo, 42, of Anaheim, for two counts of grand theft.

Granillo was sentenced to five years summary probation, ordered to serve 180 days in county jail or perform 120 days of community labor, and to pay fines, penalties and restitution up to $80,000.

According to CDI investigators, from May 2004 to February 2005, Granillo, owner of Angelina Granillo Insurance Services Inc., with office locations in Bellflower, East Los Angeles, and Anaheim, accepted premium payments of at least $4,292 for the purpose of securing homeowners insurance policies.

The investigation determined that while in the process of closing escrow, one victim requested that the escrow company obtain her homeowners coverage from Granillo. The escrow company then submitted the payment directly to Granillo, who provided a bogus Certificate of Insurance. When the victim failed to receive a renewal notice for her insurance, she contacted the insurance company listed on the Certificate of Insurance and was informed that they had no record of ever receiving an application or premiums on her behalf and never issued a policy. This victim was exposed to a potential loss for over a year due to the Granillo's failure to provide coverage.

Another victim provided premium payments totaling $1,802 payable to Granillo for a homeowner's policy. A few months after receiving the premiums, Granillo placed coverage with the California FAIR Plan, with a premium amount of only $249, nearly $1,600 less than the premiums Granillo collected from the victim. Granillo pocketed the difference and exposed the homeowner to a potential loss during the time he was not covered. This victim became aware of the problem when he was notified by his lender that his coverage with the FAIR Plan did not provide the liability coverage required by the lender. Both victims filed complaints with CDI. CDI promptly launched an investigation following receipt of the complaints.

Prosecutors working along side CDI obtained Granillo's bank records for the period of January 2005 to March 2008. These bank records revealed that in addition to the above victims who filed complaints with CDI, Granillo collected premiums from at least 17 other consumers' and failed to place coverage or provide refunds.

Currently, the Los Angeles City Attorney's Office and CDI's Investigation Division are working jointly to finalize the total restitution amount, which the court has ordered Granillo to pay. It is anticipated the restitution amount will be between $60,000 and $80,000.

Medical Providers Abuse N.Y. Health Program

Twenty medical providers submitted inflated claims to the New York State Health Insurance Program (NYSHIP) after they inappropriately waived out-of-pocket costs for state and local government employees, costing the state nearly $14 million, according to a report released by State Comptroller Thomas DiNapoli.

To date, the New York State Insurance Department and the New York State Department of Civil Service have recovered more than $9 million in over-billings and fines from five of the providers.

The Comptroller’s office conducts regular audits of NYSHIP, which is administered by the Department of Civil Service. Auditors initiated a series of audits in 2007 examining the practices of individual medical providers and have uncovered widespread problems.

DiNapoli’s auditors examined 22 providers that were not participating providers in the Empire Plan, the primary health insurance plan for state and local employees. These providers received reimbursement rates up to 80 percent higher than participating providers. When Empire Plan members receive services from a non-participating provider, they are responsible for paying a larger portion of their medical bill.

Auditors found that 20 of the 22 providers were routinely waiving out-of-pocket costs for patients and passing those costs onto the state by submitting inflated bills to the Empire Plan. These providers apparently waived the fees to attract patients who would not otherwise pay higher costs to see non-participating providers. In addition, this practice allowed providers to remain non-participating providers and collect significantly higher reimbursement rates. Patients were generally unaware that providers were billing the state at a higher rate or that the providers did not participate in the Empire Plan.

Under New York State law, submitting an insurance claim with false information may constitute insurance fraud.

The Comptroller’s office previously referred six of the providers to the Insurance Department after those audits were completed, and is now referring the other 14. To date, the Insurance Department has received more than $9 million in refunds and $78,551 in fines from five providers. Four providers have agreed to stop waiving out-of-pocket costs, reimburse the state for overpayments and pay civil fines. The four also have signed agreements to become participating providers in the Empire Plan. The providers are:

  • Endoscopy Center of Long Island, which reimbursed the state $3,135,834 and paid a civil penalty of $31,358;
  • Capital Region Ambulatory Surgery Center, Albany, which paid $2,225,015 in reimbursement and $22,250 in fines;
  • Digestive Health Center of Huntington, Huntington, which repaid $1,332,120 and paid $13,321 in fines; and
  • Day Op of North Nassau, Great Neck, which repaid $1,162,232 and paid a fine of $11,622.

One facility, Day-Op Center of Long Island Inc., Mineola, repaid the state $1.165 million, but has not agreed to discontinue its practice of waiving out-of-pocket expenses and may still be subject to further enforcement action. The other 15 providers identified in the audits are still under review.

Other DiNapoli audits of NYSHIP have found that individual providers have billed for services not provided or submitted duplicate bills, as well as other billing problems.

DiNapoli’s auditors are also working with the New York State Insurance Department’s Frauds Bureau and United Healthcare, which administers the Empire Plan, to recover any overpayments from providers who have submitted inflated bills. Additional audits of NYSHIP are currently underway.

For a copy of the report visit:
http://www.osc.state.ny.us/audits/allaudits/093008/08s130.pdf

Tuesday, October 28, 2008

Citi Communications Has Videos to Drop WC Costs

Citi Communications, which helps organizations slash workers’ compensation and general liability claims by educating employees through customized videos, has been launched by E.G. Bowman Co., a minority-owned insurance broker and loss-control consulting firm.

Citi Communications combines the firm’s years of experience helping clients reduce losses with its in-house expertise in video production. Its customized programs can be tailored for both nationwide and regional use.

Video—always available on employees’ computers—continually reinforces key safety messages and procedures. Videos and training are organization-specific, so they’re meaningful to employees, unlike generic safety films. E.G. Bowman has a staff of experienced loss control professionals with credentials up to the PhD level.

“Today, now more than ever, companies are constantly looking for new ways to cut premium costs and save money,” said Harry Ennevor, president and CEO. “By lowering the number of claims today and thus cutting premiums tomorrow, entities will realize both immediate and long-term benefits.”

In business for more than 55 years and licensed in all 50 states, E.G. Bowman, based on Wall Street, has helped a wide variety of multinational Fortune 500 corporations, small businesses, nonprofits, and government agencies reduce claims and lower premiums.

For more information about Citi Communications, visit www.egbowman.com and click on the “Citi Communications” link on the left of the homepage or contact Jeff Lin, sales director, at jlin@egbowman.com or at 212-425-8150.

Study Says Customer Service Tops for Policyholders

Despite a high level of public scrutiny and industry focus on premiums, customer service overshadows price as the most important driver of satisfaction among auto and home insurance policyholders in Canada, according to the J.D. Power and Associates 2008 Canadian Home and Auto Insurance Customer Satisfaction Study.

The inaugural study measures auto and home insurance policyholder experiences with their primary insurers. Customer satisfaction is measured for both auto and home insurance providers across five factors: customer service; price/premium; policy offerings; billing/payment; and claims.

The study finds that customer service accounts for 38 percent of satisfaction among home insurance policyholders, while price/premium accounts for only 17 percent. Even among auto insurance policyholders, where premiums are higher and price sensitivity is greater, customer service remains the most important driver—making up 28 percent of customer satisfaction, compared with 25 percent accounted for by price/premium.


Auto Insurance Rankings and Findings:

State Farm ranks highest in customer satisfaction among private full-coverage automotive insurance providers1 with a score of 757 on a 1,000-point scale, performing particularly well in customer service and billing/payment. Belairdirect (749) and Johnson Insurance (736) follow in the rankings.

The study finds that among policyholders who have filed a claim with their primary auto insurer in the past three years, the importance of claim handling increases considerably to account for 41 percent of overall satisfaction.

The study also finds that customer satisfaction benefits an insurer’s bottom line, as satisfied policyholders are more likely to renew their policy and to recommend their insurer to family and friends. Auto insurance customers who say they are "delighted" (providing ratings of 10 on a 10-point scale) with their insurer report making an average of six positive recommendations during the past 12 months, while "dissatisfied" policyholders (providing ratings of 4 or less) report making 12 negative comments about their insurer during the same period, on average.

Home Insurance Rankings:

Among home insurance providers, 2 BCAA ranks highest with a score of 812, and performs particularly well in four of the five factors driving satisfaction: customer service; price/premium; policy offerings; and billing/payment. SSQ General (787) and Belairdirect (777) follow BCAA in the rankings.

The 2008 Canadian Home and Auto Insurance Customer Satisfaction Study is based on responses from 8,965 auto insurance policyholders and 5,687 home insurance policyholders. The study was fielded through a nationally representative online survey in August 2008.

Texas Nonfatal Injuries, Illnesses Hits 5-Year Low

A total of 252,784 nonfatal injuries and illnesses were reported by private industry workplaces in Texas during 2007.

The resulting rate of 3.4 cases per 100 equivalent full-time employees marks a five-year low. The rate of injuries and illnesses reflects a 15% decrease from 4.0 in 2003, when data collection began under the North American Industry Classification System (NAICS). The Texas rate is below the national rate of 4.2 for 2007; the national rate for 2006 was 4.4.

The 2007 injury and illness data are the latest available from the Survey of Occupational Injuries and Illnesses conducted by the Texas Department of Insurance, Division of Workers’ Compensation (TDI-DWC) in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics (BLS). The occupational injury and illness rates are based on a statistical sample of approximately 10,000 private employers in Texas.

Workplace injury and illness rates vary widely among private sector industries.

  • The goods producing industries reported an overall 7% decrease from 2006. Within this group, mining showed the largest decrease (29%) of all sectors, matching the rate in 2003 and 2004. Manufacturing slightly decreased from 2006 and is down by 17% from 2003. Meanwhile, construction remained the same and the industry maintained a 14% decrease from 2003.
  • The service providing industries also showed a decrease of almost 6% from 2006. Health care and social assistance reported the largest decrease (20%).
  • In 2007, the manufacturing, wholesale trade, transportation and warehousing, utilities, financial activities, educational services and health care and social assistance (7 of 16) sectors experienced their lowest nonfatal injury and illness rate in the last five years (since collecting the data under NAICS).

Workplace injury and illness rates varied among the major industries with the 10 highest rates in 2007.

  • Wood product manufacturing (7.1) recorded a notable 17% increase from 2006 (5.9) and beverage and tobacco product manufacturing (6.6) experienced a slight increase (6.4). These two industries replaced transportation equipment manufacturing (5.0), which had a significant 26% decrease from 2006; and furniture and related product manufacturing (5.6), which experienced a substantial 22% decrease.
  • The remaining industries also experienced decreases from 2006. The largest decreases were in air transportation (13%) followed by nursing and residential care facilities (10%).
  • Within the goods producing group, industries that experienced the highest rates were primary metal manufacturing (7.2), wood product manufacturing (7.1) beverage and tobacco product manufacturing (6.6), food production (6.5) and animal production (6.5).
  • Air transportation (10.5) and couriers and messengers (10.2) continued to report the highest rates in all industries, followed by warehousing and storage (7.4).

In November, the TDI-DWC will release more in-depth case and demographic data about the 2007 injury and illness rates. Additional Texas fatal and nonfatal occupational injury and illness data are available by contacting the TDI-DWC’s Safety Information Systems at 512-804-4651 or injurystatistics@tdi.state.tx.us.

Details about the national BLS injury and illness data can be found at http://www.bls.gov/iif/oshsum.htm.

RIMS, Ernst & Young Launch Risk Insights

The Risk and Insurance Management Society (RIMS) and Ernst & Young present Risk Insights, a series of articles that provide insight into various risk management and insurance-related issues. The white paper series is available at no cost as a benefit to RIMS members.

“RIMS is pleased to work with Ernst & Young on these publications that are intended to help RIMS members stay on the cutting edge of the rapidly evolving risk management discipline,” says W. Michael McDonald, member of RIMS board of directors and vice president of risk management at Quality Distribution, Inc.

This first issue of Risk Insights, “Proving Your Insurance Claim,” focuses on the complexities of proving a company’s claim from catastrophic loss. The article explores common elements of the process and offers suggestions for successfully proving claims and expediting the recovery process.

Future white papers in the series will cover topics such as “Getting Out From Behind the Desk—The RIMS Professional Growth Model,” “Global Property and Business Interruption Claims” and “Enterprise Risk Management—What ‘They’ Are Not Telling You,” among others.

“We are honored to work with RIMS to develop these informative reports for its members,” says Allen Melton, partner and Americas practice peader at Ernst & Young’s Insurance Claims Services practice. “It is our goal that each issue of Risk Insights provides readers with new ideas to address the most relevant issues and challenges facing the risk community today.”

The first issue of Risk Insights is available to RIMS members at www.RIMS.org/RiskInsights.

N.J. Chamber, High Point Note New Partnership

New Jersey Chamber of Commerce President Joan Verplanck and High Point Safety and Insurance Management Corp. President Jim Tignanelli announced the formation of a new auto insurance partnership.

Under the new Chamber Auto Insurance Program ("CAIP"), employees of Chamber member companies, a total population of 500,000, are now eligible for specially discounted personal auto insurance policies to be sold by High Point.

Companies are experiencing an increasing demand for voluntary employee benefits from employees. The Chamber and High Point will market this new benefit to member companies through a number of cooperative efforts including direct mail, Web site promotion, worksite enrollment, and Chamber events.

Employees wishing to get a quote for their personal auto insurance can call High Point Auto Insurance (www.highpointins.com) at 1-800-801-0977, which has been specifically reserved for chamber member company employees.

IIABNY Warns Agencies About Computer Risks

The Independent Insurance Agents & Brokers of New York Inc. has alerted its members to a High-Risk Cyber Security Advisory that may cause certain Microsoft systems to become vulnerable to a computer virus.

The advisory, issued late last week by the New York State Office of Cyber Security and Critical Infrastructure Coordination (CSCIC), cautions businesses, government entities and home users. IIABNY’s member agency warning came in the form of an e-mail message sent across the state as well as a Web site posting at www.iiabny.org.

According to CSCIC’s advisory, “A new vulnerability has been discovered in the Microsoft Server Service that could allow a remote attacker to take complete control of the vulnerable system.” The advisory also warned that, “The attacker could then install programs; view, change, or delete data; or create new accounts with full privileges.” Microsoft on Oct. 24 updated the CSCIC advisory, identifying the “attacker” as a Trojan virus.

Possibly affected are the following Microsoft systems:

* Windows 2000
* Windows XP
* Windows Server 2003
* Windows Vista
* Windows Server 2008

Kathy Glahn, IIABNY assistant vice president of Information Systems, is concerned that member agencies could “accidentally pass on the virus, placing sensitive and proprietary information at risk.” Glahn suggests that IIABNY members visit the security section on the Web site of the Agents Council for Technology.

Established by the Big “I,” ACT provides technology information for agencies and brokerages, while collaborating with companies, vendors, user groups and other associations. Access ACT's secutity section page by visiting http://www.iiaba.net/na/16_AgentsCouncilForTechnology/NA20070710103244?ContentPreference=NA&ActiveState=AZ&ContentLevel1=ACT&ContentLevel2=&ContentLevel3=&ActiveTab=NA&StartRow=0

The CSCIC Web site offers this high-risk advisory, in its entirety, including technical recommendations and further Microsoft references. Visit http://www.cscic.state.ny.us/advisories/2008/2008-034b.cfm .

Calif. Fire Safe Council, Farmers Host Workshop

No costumes or knocking on doors required instead, make plans to join the California Fire Safe Council, Farmers Insurance, and an array of interesting speakers on Thursday, Oct. 30, for the Together is Better fire prevention/preparedness workshop.

The FREE event is planned for 9:30 a.m. to 2:30 p.m. at the Westin Hotel, 191 N. Los Robles Ave., in Pasadena.

Homeowners who live anywhere in the Wildland Urban Interface areas -- in, close to or near forest and fire dangers -- are welcome to attend.

We are offering a lot of good information to help homeowners safeguard their homes from fire, noted Margaret Grayson, executive director of the California Fire Safe Council. Homeowners will learn more about new fire-resistant building materials and fire-safe landscaping with native and/or non-invasive plants; get to know some amazing local Fire Safe Council folks from communities around Pasadena; and find out ways to improve their communitys insurability.

Speakers at the workshop include:

  • Mike McIntyre, District Ranger, Angeles National Forest
  • Tony Neece, Mount Wilson Fire Safe Council
  • Steve Quarles, US Cooperative Extension on fire retardant building materials
  • Candace Iskowitz, Institute for Business & Home Safety
  • Valerie Borel, (UC Cooperative Extension), Fire Safe Landscaping
  • A special presentation to Wolfgang Knaur who will relate a personal story about the founders of the Horizon Hills Fire Safe Council

We will also have a panel of Farmers Agents who will discuss preparing your home for insurance; evacuation routes and important papers you need to take with you, and how to file a claim, noted Bill Matlock, Farmers California state executive.

Although you dont have to dress up, you DO need to reserve your space for this special event. Lunch will be served to all attendees and door prizes will be given away.

To reserve space(s) contact Allisia Shetler by email at: allisiashetler1@verizon.net.

FEMA Completes 97% of Inspections Following Ike

Inspectors contracted by the Federal Emergency Management Agency (FEMA) are making great progress toward completing inspections of Texas homes damaged or destroyed by Hurricane Ike. To date they have completed more than 350,000 inspections, or 97 percent of the requests submitted by homeowners and renters.

Damage inspections are free and generally take 30 to 45 minutes. They are conducted by FEMA contract inspectors who have construction and/or appraisal expertise and receive disaster-specific training. Each inspector wears official photo identification.

Inspectors document the damage but do not determine the resident's eligibility for disaster assistance. They check for damage to the building structure and its systems, major appliances and any damaged septic systems and wells. Residents should tell the inspector about other important losses such as clothing, medical equipment, tools needed for a trade and educational materials. Inspectors then relay this information to FEMA.

Disaster assistance may include grants to help pay for temporary housing, essential home repairs or other serious disaster-related expenses not covered by insurance or other sources.

Applicants are reminded to keep the contact information on their applications current so an inspector can reach them. To update their information, applicants should call FEMA's Helpline, 1-800-621-FEMA (3362) or TTY 1-800-462-7585.

Idaho Bridge Collapse Injures 14 Workers

A bridge collapse Monday afternoon in Nampa, Idaho injured 14 construction workers.

According to officials, the construction workers received minor injuries, including broken bones as they were pouring concrete. Authorities reported that the bridge's support structure, which may have been up to 30 feet high, collapsed.

The Occupational Safety and Health Administration is investigating the collapse along with the Idaho Transportation Department.

The $8.5 million project began in late September to replace the I-84 overpasses at Robinson Boulevard and Black Cat Road as part of the I-84 widening project from Meridian to Nampa. The workers are from a construction company in Spokane, Wash.

New York Painter Cited for Work Comp Fraud

A Suffolk County, New York man used what he portrayed to be a small painting business as a facade to allegedly cover up a larger painting operation that cheated the New York State Insurance Fund out of thousands of dollars in workers’ compensation premium.

Detective from the Suffolk County District Attorney’s Office arrested Jorge Fernando Lupercio, 39, of E. Hampton, N.Y., charging him with violating the Workers’ Comp. Law as a felony.

Investigators said Lupercio used the business name Fernando’s Painting to purchase a workers’ comp policy from NYSIF for a small company. Lupercio then allegedly formed another, larger operation, doing business as Fernando’s Painting Inc., while failing to disclose the full extent of his business sales and payroll to NYSIF auditors. As a result, Lupercio allegedly defrauded NYSIF of approximately $50,000 in unpaid premium.

According to investigators, Lupercio allegedly used the original workers comp policy as proof of coverage for the larger painting business, while being charged substantially less by NYSIF. He had no workers’ comp insurance for the larger business.

Electric Insurance Co. Appoints New Agents

Electric Insurance Company, a national provider of auto, homeowners, condominium, and renters insurance, has appointed eight new independent agents for the marketing of its personal lines insurance products in the United states.

The agencies named are: San Corporation dba Novakoff Insurance and Southwest Insurance Brokers, Phoenix, Arizona; Affiliated Insurance Service Corporation, Philadelphia, Pennsylvania; Gallaher Insurance Group, Mexico, Missouri; Arizona Federal Insurance Solutions, Gilbert, Arizona; Premier Insurance Group LLC, Denver, Colorado; James L. Smith Insurance Agency, Pittsburgh, PA; and Sweet & Sons, Inc., Pittsburgh, Pennsylvania.

These appointments allow us to provide our personal lines products to a larger geographic area, said Michael Mucher, vice president, Sales and Marketing, Electric Insurance. Their experience in their local insurance market provides great value to their clients and makes them a good fit for Electric Insurances personal lines insurance products. We will continue to recruit and appoint select agents in the United States so that we can provide our unsurpassed customer service and claims management to a greater number of customers.

This is an excellent time for an agency to partner with Electric Insurance, added Daniel Friehs, vice president, Personal Insurance Services, The Daniel & Henry Company, St. Louis, MO, and member of the Electric Insurance Company National Agency Council. As a partner and National Agency Council Representative, I have seen tremendous flexibility and willingness to listen to their agency partners needs, and to take action. Electric Insurance is committed to ease of doing business, quality products, excellent claims service and financial stability. We welcome our newly appointed peer agents and look forward to their feedback to the council.

For further information, visit www.electricinsurance.com .

Texas Fire Claims Increase

Unattended cooking is the number one most preventable cause of house fires in Texas, according to a survey of 50 fire departments across the state.

The study, conducted by Allstate Insurance Company, asked Texas fire chiefs and marshals for the most common everyday activities leading to house fires and simple steps people can do to make their homes more fire-safe.

According to the survey, the top three home fire-starters in Texas are:

1. Leaving cooking food and burning candles unattended
2. Overloading electrical outlets and misusing extension cords
3. Discarding cigarettes improperly

The Allstate survey also revealed incorrect light bulb wattage in lamps, dirty lint filters in dryers and keeping matches and lighters in reach of children as forgotten fire dangers.
The number of Allstate insured Texas homes damaged by non-weather related fires have jumped 7 percent so far this year when compared with the same period last year. Daylight-saving time ends this weekend. The state's second largest homeowner insurer is asking consumers to think safety when setting back clocks and changing smoke detector batteries Saturday night.

According to the survey, stoves, candles and space heaters are household items that are the most common sources of fires. The study also found fires most frequently start in the kitchen followed by the bedroom.

Monday, October 27, 2008

General Star Drives on with Taxi Liability Program

General Star Management Company announced the launch of its primary commercial auto Taxi Liability program which will be initially available in the states of Colorado, Virginia and New Jersey.

The program will be offered through AequiCap Program Administrators and its affiliate, TransPro Solutions Inc., both of which are headquartered in Fort Lauderdale, Florida. Expansion of the program to additional states through AequiCap and TransPro is planned for the near future.

Coverage will be written on an admitted basis through General Star National Insurance Company, which is rated A++ (Superior) by A.M. Best Company and carries a AAA Insurance Financial Strength Rating from Standard & Poors.

The launch of the Taxi Liability program expands General Stars reach into a new segment of the auto market, while providing needed security to the market, said Patricia Roberts, president and CEO of General Star.

For more information, contact AequiCap at 800 417-4583 or 954-493-6565.

AIA: P/C Insurers Don't Seek Aid Via Treasury CPP

Evan Greenberg, chairman and CEO of ACE Group and Chairman of the American Insurance Association (AIA) issued the following statement as the U.S. Treasury Department deliberates on if it will include insurance companies under the Capital Purchase Program (CPP) that is part of the $700 billion emergency economic stabilization package approved by Congress. The CPP was created to inject capital into credit markets and to prevent counterparty failure of such a magnitude as to pose a systemic risk to the financial system.

Congress established the CPP under the Troubled Asset Relief Program (TARP) to purchase preferred shares in banks and other savings institutions as a means to recapitalize and strengthen their financial position.

We have surveyed our Board of Directors and the substantial majority of the insurers represented by AIA do not support the inclusion of property-casualty insurers in Treasury's Capital Purchase Program. If made available, they will not elect to participate.

Those members believe that, as property-casualty insurance writers, they are well-capitalized and well-positioned to weather the current financial market crisis without the assistance of the CPP announced by Treasury.

As a result, the property-casualty insurers who are members of AIA strongly prefer to compete in the private market and the substantial majority will elect not to participate in the CPP."

Attorney: Many Floridians Still Await Claims Money

On the third anniversary of Hurricane Wilma, many Florida homeowners and condominium associations have yet to be paid for insurance claims. Natural disaster attorney Alan Garfinkel of the law firm of Katzman Garfinkel Rosenbaum advises that it's still not too late to file an original claim from the storm.

"The statute of limitations on filing a lawsuit for unreimbursed insurance claims is five years from the date of the disaster," said Garfinkel. "Many homeowners and associations still may have legitimate claims to make from Wilma, but may be afraid to do so fearing their premiums will spike or they'll be dropped altogether. These fears are unfounded because state law and administrative regulations forbid an insurance company from not renewing or cancelling policies when the insurance claim results from an act of God, and from selectively raising rates."

On Oct. 24, 2005, Hurricane Wilma slammed into Florida's Southwest coast and tore a path through Florida exiting between Ft. Pierce and Ft. Lauderdale, causing billions of dollars in damage. According to Garfinkel, some insurance companies routinely denied claims or purposely valued losses less than the hurricane deductible.

"Some insurance companies went out of their way to delay and deny legitimate claims, forcing homeowners and associations to go to court to enforce their rights," said Garfinkel. "Meanwhile, three years after the storm, roofs still have holes, ceilings have leaks and many hard working people have been pinched paying for temporary repairs out of their own pocket. With the economy the way it is, they could use that money now."

Katzman Garfinkel Rosenbaum was co-counsel with the law firm of Greenberg Traurig in the Vantage View vs. QBE Insurance Corporation case, which recently resulted in a $1.5 million dollar jury verdict to the association for hurricane-related damages.

Attorney Dan Rosenbaum, a senior partner in the law firm, won an $8.1 million Federal Court Jury Verdict against QBE last year. The firm faces QBE again in another Federal Court trial in the next few weeks.

Garfinkel said despite the challenges some property owners have had collecting money from their insurance companies, that should not stop anyone who thinks the insurance company did not fully pay or refused to pay their claim. This is true even for those owners and associations who have previously received insurance proceeds (and cashed their checks) so long as they did not sign a separate release.

"They have nothing to lose," said Garfinkel. "We will come out with construction experts and do an assessment. If we think Hurricane Wilma or any other storm was responsible for property damage and they were not fairly compensated by their insurance company, we'll file a claim at no cost to the property owner or association."

For more information call 800-393-1529 or visit www.askthefirm.com.

RRS Insures $22M San Francisco Project

Redevelopment Risk Services LLC (RRS), a business insurance brokerage specializing in environmental risk protection, has been selected to provide insurance services for the $22 million reclamation of the former Schlage Lock manufacturing facility in San Francisco.

This property and facility insurance enables the developer, Brownfield Partners LLC, to undertake the liability transfer, environmental remediation, demolition and site preparation of the blighted 13-acre Schlage site in the south section of The City along Highway 101 near Monster (formerly Candlestick) Park.

"Our ability to create and provision a complete environmental insurance package gave Brownfield Partners the ability to undertake the project as well as the confidence that their financial assets are protected during this complicated and multi-faceted environmental clean-up process," said Melanie Nesterenko, RRS partner.

Ultimately being developed into a 650-acre multi-family residential and commercial area by Universal Paragon Corporation, the former Schalge Lock property had fallen into disrepair as multiple attempts to reclaim the site had failed.

AIG Unveils New EPL Coverage

The AIG Companies® have introduced AIG PassportSM for Employment Practices Liability (EPL), a service for U.S.- or Canada-based multinational companies to facilitate purchasing locally admitted EPL insurance to cover international operations and subsidiaries.

AIG Passport for Employment Practices Liability delivers EPL coverage for a wide variety of claims commonly brought by employees, such as lawsuits alleging wrongful dismissal, termination, retaliation, sexual harassment, libel, slander, humiliation, defamation and wrongful failure to employ or promote. The policy covers the company and the individuals typically named in these suits, including directors and officers.

AIG Passport for EPL is currently available to address risks in 26 foreign jurisdictions. Foreign EPL policies written through AIG Passport are issued by the locally licensed AIG Company, in compliance with local laws and regulations. Claims are handled by local AIG claims examiners, who are supported by a home country claims management team. AIG Passport for EPL is available for new and renewal business.

For more information on AIG Passport, contact AIGPassport@aig.com or visit www.aigpassport.com.

Fireman's Fund Offers New Equipment Coverage

Firemans Fund has introduced equipment breakdown insurance which protects against short circuits and power surges to mechanical breakdown, motor burnout, and boiler damage under one policy.

While combines and tractors are typically protected by property insurance, other specialized farm equipment is often left out. Equipment breakdown insurance offers protection from a broad range of exposures, including mechanical equipment, electrical distribution systems, heating and cooling systems, electronic systems and communication equipment, and boiler and pressure vessels.

Equipment breakdown insurance covers the physical and financial damage associated with breakdowns, including:

  • Direct property loss covers the cost to repair or replace the damaged equipment
  • Business income replaces income lost due to a total or partial business interruption following equipment breakdown
  • Service interruption income coverage for interruptions due to loss of electricity and other services caused by equipment breakdown
  • Extra expenses pays the extra costs to sustain normal operations, such as jobbing work out or renting equipment
  • Expediting expenses covers other expenses incurred to limit the loss of business restoration

This coverage is a new protection for a wide range of agricultural operations from crop farms and livestock ranches, to orchards, vineyards, and affluent hobby farms.

N.Y. Woman Arrested in Work Comp Scam

A 49-year-old Nassau County, New York woman was arrested for fraudulently collecting $20,000 in workers’ compensation benefits, the New York State Insurance Department reported.

Maria Escobar, of Valley Stream, was charged with fraudulent practices following her arrest by the Suffolk County District Attorney’s office.

According to Francis Hunt of the Insurance Department’s Frauds Bureau, Escobar collected workers’ comp benefits from the New York State Insurance Fund after claiming she suffered burns, as well as leg and back injuries, while employed as a hotel attendant in 2003. She is charged with accepting the benefits while operating Tieras Centro Americano, a restaurant in Jamaica, Queens.

If she is convicted, she could be sentenced to up to four years in prison.

Money Worries Keeping People Awake at Night

Some 92 percent of employees say financial worries are keeping them up at night, according to a poll released by ComPsych Corporation.

Employees were asked: Do financial worries keep you up at night? If so, what is your biggest concern?
  • 30 percent said the cost of living.
  • 29 percent said credit card debt.
  • 14 percent said mortgage payment.
  • 13 percent said retirement account.
  • 3 percent said kids' tuition.
  • 3 percent said health care costs.
  • 8 percent said they are not worried.

As the largest EAP (Employee Assistance Program), our increased call volume has been a reflection of the financial stressors faced by U.S. employees, said Dr. Richard Chaifetz, chairman and CEO of ComPsych. Companies are realizing the impact of financial uncertainties upon their workers, and are proactively promoting support services such as EAPs with financial and legal guidance to help employees cope.

For more information, visit www.compsych.com.

Sunday, October 26, 2008

Commissioner Rejects WCIRB's 16% Increase

Rejecting the Workers Compensation Insurance Rating Bureau's (WCIRB) call for a 16 percent increase in the benchmark for determining workers compensation costs, California Insurance Commissioner Steve Poizner accepted a more moderate 5 percent increase to reflect higher medical and claims adjustment costs to the system.

"Last year, experts predicted that loss adjustment expenses would increase dramatically. They did not," said Poizner. "This year, experts have predicted accelerating increases in medical costs. Given the accuracy of past forecasts, I will wait for clear and compelling data confirming such increases before significantly increasing the Workers Compensation Claims Cost Benchmark."

In an effort to more accurately define the estimated change in claim costs that develop in the workers' comp system, the "Pure Premium Advisory Rate" has been renamed the "Workers Compensation Claims Cost Benchmark." This term will be used in the future as it more accurately describes its role in the workers comp pricing system.

While the Department has no authority to set workers compensation rates, the Commissioner did advise workers compensation insurance companies to be cautious if they seek to adjust rates.

"Despite this adjustment to the Claims Cost Benchmark, it is clear that insurance companies remain profitable in California and still have room to reduce the premiums they charge," said Poizner. "Insurers should work with their employer customers to control the cost of workers' compensation insurance and help California businesses to remain financially healthy and competitive. While I have no control over workers' compensation insurance rates, I nevertheless encourage employers to work with their insurance agents and brokers to shop for the best prices."

Including today's adjustment, the Workers Compensation Claims Cost Benchmark has fallen 63.4 percent since its high in 2003.

In May 2008, Poizner, citing forecasted marketplace stability, did not issue an interim pure premium rate advisory - the first time in six years an interim pure premium rate advisory was not issued by a California insurance commissioner.

In January 2008, Poizner recommended no change in workers' comp insurance rates based upon his review of the data provided by WCIRB at that time.

In 2007, the commissioner called for a 14.2 percent decrease in workers' comp pure premium rates.

Also in 2007, Poizner ordered various reforms to reduce rates by improving workplace safety and the accuracy of rate forecasting. To date, WCIRB has:

  • Hired external actuaries to review its pure premium rate methodology - it is now utilizing more modern techniques;
  • Formed a task force to overhaul its experience rating system, which had gone unmodified for more than 12 years - CDI will hold a workshop, including public comment, in February 2009 to formally review a report on improving the experience rating system.

Copy of proposed decision and final decision.