California Insurance Commissioner Steve Poizner has issued final pay-as-you-drive regulations, which will enable insurers to offer consumers another auto insurance option, allowing rates to be based on actual miles driven as opposed to estimated miles driven. Commissioner Poizner originally proposed pay-as-you-drive regulations in September 2008.Poizner originally proposed the pay-as-you-drive regulations last summer to make a new, more mileage-accurate auto insurance option available for California consumers. The regulations were last revised in August 2009. Revisions made to the regulations in August are reflected in the final regulations.
The regulations also allow insurers to offer discounts to drivers who opt to purchase a mileage verification policy. Any auto insurance program, including a pay-as-you-drive program, must be approved by Poizner before being placed on the market for consumers to purchase.
If a driver elects to purchase a pay-as-you-drive policy, the insurer would verify the driver's miles through a variety of methods, including odometer readings taken by the insurer or its agents or vendors, auto repair dealers, smog check stations, self-reporting by the policyholder or a technological device placed in the consumer's vehicle. The final regulations explicitly prohibit insurers from gathering location data from consumers for automobile rating purposes through the addition of a technological device. The regulations would not affect existing multipurpose devices such as GM's Onstar system or the use of a technological device as part of an emergency roadside assistance program.
The final regulations incorporate changes based on feedback from consumer groups, the insurance industry and other interested parties. The primary changes from the initially proposed regulations to the final, submitted regulations include:
Last August, the Environmental Defense Fund estimated that if 30% of Californians participate in pay-as-you-drive coverage, California could avoid 55 million tons of CO2 emissions between 2009 and 2020, which is the equivalent of taking 10 million cars off the road. This would save 5.5 billion gallons of gasoline and save Californians $40 billion dollars in car-related expenses. Additionally, the California Air Resources Board has recommended the adoption of pay-as-you-drive as one of the means to meet future climate change gas reduction targets.
The final regulations will go into effect pending approval by the Office of Administrative Law, which has 30 days to approve the regulations. As soon as regulations are in effect, which could be as soon as October 2009, insurance companies may apply to offer pay-as-you-drive plans. Pending the Commissioner's approval of a pay-as-you-drive insurance plan submitted to the Department, consumers will be able to purchase a pay-as-you-drive policy.
The owner of a Hauppauge, New York contracting company was arrested Aug. 27 for lying about the number of people who worked for him so he could lower the cost of his company’s workers’ compensation insurance, the New York State Insurance Department reported.The office of Suffolk County District Attorney Thomas Spota arrested John Rusnak, 48, of Syosset for workers’ comp fraud. Rusnak is the owner of Colt Contracting Corp.
Francis Hunt, an investigator with the Insurance Department’s Frauds Bureau, said Rusnak is accused of defrauding the state Insurance Fund of $104,000 in lost workers’ comp premiums by concealing the payroll of eight workers.
Rusnak could be sentenced to up to four years in prison if he is convicted. A hearing will be held in Suffolk County Court.
Ohio Department of Insurance Director Mary Jo Hudson announced that a Franklin County Grand Jury indicted Luther Watts, Lysandrous Mullins, Jr., and Patricia Irene Mullins on eight counts of insurance fraud each. Watts and Mullins, Jr. are residents of Columbus whileMullins resides in Harts, West Virginia.
In May 2006, the Ohio Department of Insurance, the Delaware County Sheriff’s Office, the West Virginia State Police and the West Virginia Office of the Insurance Commissioner began investigating the three individuals as they had filed a significant number of insurance claims. Claims filed included acts of arson, theft, auto accidents and disability / personal injury claims.
The investigation revealed the three suspects would purchase vehicles from local car dealerships using fraudulent documents and employment information, and would take out credit disability insurance. Shortly after obtaining vehicles, the suspects would then contact the insurance carrier and report they were injured and/or disabled. In order to maximize the length of time the insurance company would have to pay on the vehicle, the suspects would alter disability forms obtained from their provider and submit them to the insurance carriers.
The three individuals are scheduled to be arraigned on Sept. 9.
As Hurricane Jimena made landfall in Mexico, signaling the advent of hurricane season, a new analysis of property insurance trends sheds light on the effects of regulation in the aftermath of natural disasters.In "Catastrophes and Performance in Property Insurance," a policy report from the Independent Institute, economists Patricia Born and Barbara Klimaszewski-Blettner reveal that post-disaster property insurance regulation actually drives up the prices it purports to control. Drawing data from the National Association of Insurance Commissioners, and the Swiss Re Sigma reports, the scholars argue that strict regulatory environments induce higher losses from unexpected catastrophes, as firms are unable to adjust prices in light of changing conditions. Notably, commercial insurers experience less loss following catastrophes than the homeowners insurance market due to greater flexibility and fewer constraints.
The authors demonstrate that in states such as Florida, regulations that include premium limitations or exit restrictions can cause severe market distortions that may result in "an inadequate supply of insurance coverage." When restrictions on premium adjustments are enforced, insurers "may choose to exit the market if rates are not adequate to maintain solvency. This, in turn, prompts regulators to impose exit restrictions or cancellation bans." Addressing wide variations in state-level regulation, Born and Klimaszewski-Blettner dissect the phenomenon of "regulatory chain reactions," in which one intervention seems to establish the "necessity" for more government action. This snowball effect actually exposes taxpayers and consumers to greater risk when disaster hits.
Considering the staggering losses by insurers in 2005 -- $45 billion for Hurricane Katrina alone -- the authors propose several reform measures to protect both insurers and policyholders. They propose deregulating prices and a reform of residual market solutions "with emphasis on allowing market forces to operate more freely in responding to the insurance needs." In considering low-income people in affected areas who are unable to move or afford coverage, they suggest that even direct state subsidization of premiums is preferable (but hardly ideal) to keeping premiums artificially low, while cautioning that "incentive-incompatible subsidization of premiums -- for example, for new buildings in high risk areas" -- must be avoided.
A study of agent compensation and management practices for property/casualty insurance companies is being conducted by Ward Group.This study will be conducted from Sept. 1 – Oct. 15, 2009 and results will be distributed by December 1, 2009. Participants are invited to attend a webinar presentation on the study’s findings conducted by Ward Group in December.
To participate or to request more information on the survey, contact Vince Albers at valbers@wardinc.com.
A recent analysis of the latest government data by the American Insurance Association (AIA) shows that auto and traffic safety efforts over the past 40 years have significantly reduced the number of accident-related injuries and fatalities.
State Compensation Insurance Fund announced that it will extend credit to policyholders who have suffered a financial loss or business disruption caused by several wildfires that are ravaging parts of Northern and Southern California. State Fund has more than 100,000 policyholders in the areas.The fires are spread from as far north as Siskiyou County to Riverside County in Southern California.
By Tuesday, there were seven major fires across the state. The devastation was more severe in the Station Fire which so far has destroyed 18 residences and consumed 121,762 acres in Los Angeles County. Another fire which ravaged 63 homes and businesses near Auburn, was 80 percent contained by Tuesday afternoon.
During a press conference on Tuesday at a command center in Southern California, Gov. Arnold Schwarzenegger declared a state of emergency in San Bernardino County in the wake of two major fires that have led to the evacuation of Oak Glen as well as hundreds of other evacuations in nearby Yucaipa.
State Fund has set up dedicated customer service lines to provide assistance to Southern California policyholders whose operations were impacted. Policyholders are encouraged to contact State Fund's Customer Service Center at (800) 388-0902 to make arrangements for September 2009 payroll reports and payments. This program will be offered to employers through a series of newspaper announcements and mailings to all State Fund policyholders in the affected area.
Citing an "unacceptable" loss of life, the Transportation Safety Board (TSB) has launched an in-depth investigation into the safety of small fishing vessels across Canada."The grim reality is that the fishing industry is averaging one death per month," said Marcel Ayeko, TSB's director of Marine Investigations. "Sixty people have died in accidents over the past five years, and we need to find out why."
As an independent government agency, the TSB conducts dozens of full investigations into marine accidents every year. These result in public reports that contain a host of conclusions, concerns, and safety recommendations, but Ayeko said the problem is bigger than any one event. This study, he added, is expected to be the first to provide an overall view of the situation across the country. "We'll talk to everyone: vessel owners and operators, fishing associations, government, unions, and - above all - the fishermen," Ayeko continued.
"We already know there are systemic issues," he said, noting that small fishing vessels have the highest rate of marine accidents in Canada. With over 200 incidents reported to the TSB annually, "these issues need to be formally identified - to the regulators, the industry, and the fishermen themselves - so that we can improve safety and reverse this tragic trend."
The study will also look at the risks and challenges experienced by members of the fishing community when they set out for a day's work and will be released to the public and industry stakeholders when completed. To help with this, historical data and case studies of selected accidents in Canada will be analyzed, as will occurrences from other nations, including the United States, the United Kingdom and several Nordic countries. "The further in-depth we go," said Ayeko, "the more solid facts we'll uncover to help make the fishing industry safer."
Since 1992, the TSB has made 42 recommendations aimed at improving fishing vessel safety, and it has repeatedly drawn attention to critical safety issues that contribute to accidents. These include vessel stability, structural integrity, unsafe operating procedures, the use of lifesaving equipment, and the impact of fishery resource management plans and practices on the overall safety of fishing vessels.
With Hurricane Jimena heading toward Baja, and September being one of the more active months of "Hurricane Season" each year, CSA Travel Protection compiled and offers 10 facts of U.S. hurricane trivia.
Storms are full of surprises, and while experts predict near-normal activity this hurricane season, there are potential mishaps that can happen even if a storm doesn't make an appearance on a trip. Anticipating the unexpected - such as medical emergencies, flight delays, identity theft or a natural disaster at home before leaving - and covering it with travel insurance will protect travelers from surprises. Travelers can find out more about CSA and travel insurance by contacting their travel agent.
This kind of story is likely to play out in coming years as owners of life/health agencies look for a way to access capital, find a buyer so they can retire, or both. About 26% of all life/health and property/casualty agents are self-employed, according to the U.S. Bureau of Labor Statistics.
Many life/health don’t have succession plans in place or know what their agencies are worth, said Chris Greis, president and founder of Leaders Partners Inc. Some principals plan to work until they drop, he said, or look for a young producer to come in and take over. Both of these plans are fraught with risk, he said.
The California life agency, Time Financial, was sold to an insurance wholesaler, but at the time of the sale the buyer and seller didn’t know the value of the business, said Kate Kinkade, Time’s president.
Measuring a life/health agency’s worth isn’t as simple as applying EBITDA or (earnings before interest, taxes, depreciation and amortization) as you can in valuing a P/C agency. Life/health agencies require a holistic view — evaluating the quality of the firm’s contractual relationships, market conduct record, insurance carriers and the kinds of retailers and brokers with which it works.
“What’s Your Agency Worth?” also features a sidebar containing three experts’ advice on selling a life/health agency.
September’s Other Highlights:
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The bill (S. 1536) – Avoiding Life-Endangering and Reckless Texting by Drivers (ALERT Drivers) Act – was prompted in part by studies by Virginia Tech and the University of Utah, which found that drivers were much more likely to crash if texting while driving, according to Sen. Charles Schumer, D-NY, one of four sponsors of the legislation. These studies found that texting was more distracting to drivers than using a hand-held cellular telephone or being intoxicated.
Currently, texting while driving is banned in the District of Columbia and 14 states, including Alaska, California, Minneapolis, New Jersey and Virginia. Maryland's ban takes effect Oct. 1. The New York legislature recently passed such a measure and sent it to the governor for signature. This federal bill would require other states to write laws prohibiting text messaging by drivers or risk losing 25 percent of their annual federal highway money. States would have two years to enact such laws.
Firefighters and residences in the greater Los Angeles area are in a race against time, as a quick-moving wildfire has almost doubled in size and is threatening 10,000 homes as of Monday afternoon.Fire officials have ordered mandatory evacuations for residents of the 10,000 homes under threat. The city of Los Angeles today issued a mandatory evacuation order for an area of Sunland-Tujunga bordering the Angeles National Forest from roughly Alpine Way on the north to Haines Canyon Avenue on the east.
According to one fire spokesman, The Station Fire had increased to 85,576 acres as of Monday morning. The blaze is only 5 percent contained while being fueled by dry air and protected by the steep terrain in and around the Angeles National Forest.
Officials are keeping a close eye on the blaze, which is being aided by warm temperatures and low humidity, as it creeps closer to the Mount Wilson Observatory. The facility holds 20 television and radio transmission towers along with fire and police communication equipment.
Tragically, two firefighters died Sunday when their vehicle went down a steep enbankment as they were battling the Station Fire.
Officials identified the dead as Capt. Tedmund Hall, 47, and Spc. Arnaldo Quinones, 35.
"Our hearts are heavy as we are tragically reminded of the sacrifices our firefighters and their families make daily to keep us safe," California Governor Arnold Schwarzenegger said in a statement issued Sunday. "This is a devastating day for firefighters everywhere, and Maria and I join all Californians in expressing our gratitude and sadness. Our hearts go out to their loved ones."
Florida Insurance Commissioner Kevin McCarty has issued an Immediate Final Order to Peck & Peck Inc. (Peck & Peck), Green Cross Managed Health (Green Cross) and Depawix Health Resources Inc. (Depawix) to immediately cease and desist transacting the unauthorized marketing and selling of health insurance.
HealthMarkets Inc. announced that its subsidiary insurance companies will focus solely on marketing its ancillary vision, dental and related specialty plans in Massachusetts and discontinue marketing health insurance products in the state after Sept. 30.The company worked with the offices of the Massachusetts Division of Insurance Commissioner and the Massachusetts Attorney General to resolve all matters related to regulatory issues with the Division of Insurance dating back to 2003, and to litigation brought by the Attorney General’s office dating back to 2004. HealthMarkets stated that given the unique environment regarding health insurance in Massachusetts, marketing only ancillary products, underwritten by its subsidiary insurance companies, is the best business strategy going forward.
This decision has no impact on the company’s marketing efforts outside the state of Massachusetts.
HealthMarkets subsidiaries have approximately 27,000 health insurance members in Massachusetts, and will continue to service those members and administer the health insurance plans currently in-force in the state, consistent with the terms of the settlement agreements.
As a result of the voluntary agreements, the company will make payments totaling $15 million to the Commonwealth of Massachusetts, from which $11.25 million will be used by the Attorney General’s office to provide restitution or other relief to Massachusetts residents who meet certain criteria and $750,000 will be used for attorney’s fees and related costs. The payment includes a $3 million civil penalty and the company will be implementing a claims reassessment program under the terms of the agreement with the Division of Insurance. In addition, the companies have previously paid amounts of more than $2.1 million in claims remediation in Massachusetts since litigation commenced.
National Interstate Insurance Company has added a consignment coverage endorsement to its recreational vehicle product line.Most RV insurance policies list RV consignment as an excluded usage, meaning that when an RV owner places their unit for sale on a consignment lot, physical damage coverages are removed. In addition, RVs are seldom, if ever, insured under the dealership's policies.
National Interstate offers a portfolio of specialty products for recreational vehicle owners. The company is rated "A" (Excellent) VIII by A.M. Best Company. To learn more about National Interstate's consignment coverage, contact Jason Sinkovitz at 800-929-1500, or email: Jason.Sinkovitz@NATL.com.
Proponents of health reform say they want a government-run health insurer to give people more choice in how they are insured. Industry opponents say there is plenty of choice in the existing market, which includes hundreds of insurance companies across the United States.Also, in BestWeek Europe, Belgian insurer Fortis has reported a group net profit after minority interests of 886 million euros (780.6 million pounds) for the first half of 2009, showing a marked recovery from the same period of 2008, when it made a profit of just 25 million euros. This was driven by a number of events related to the closing of the transactions with BNP Paribas, the Belgian State and Fortis Bank, as well as a net-of-tax charge of 301 million euros related to the legal dispute with Fortis Capital Co. Ltd., the company said.
The death of Sen. Edward Kennedy, beyond its tragic weight for his friends, constituents and public admirers, further highlights a basic math problem that his Democratic colleagues in the Senate have been facing, according to an article in BestWeek U.S./Canada. It takes one vote away from Democrats, dropping the number they can muster to 59 — not a filibuster-proof majority. But the truth is, they never experienced filibuster freedom.
BestWeek is published by A.M. Best Co. for insurance professionals. To subscribe, visit www.ambest.com/sales/BestWeek, or e-mail your request to customer_service@ambest.com.
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