Tuesday, March 3, 2009

NEWS UPDATES

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Monday, March 2, 2009

Florida OIR Unveils '09 Freedom to Travel Report

Florida Insurance Commissioner Kevin McCarty has submitted the 2009 Freedom to Travel Report to legislative leaders detailing the Office of Insurance Regulation's (Office) efforts to implement the "Freedom to Travel Act."

Passed in 2006 and codified into law at Section 626.9541(1)(dd), Florida Statutes, the legislation placed strict limitations on insurance companies' ability to deny or increase premiums for life insurance based on foreign travel.


The 2009 report to the President of the Florida Senate and to the Speaker of the House of Representatives documents a decline in the number of instances and companies that have denied or limited coverage based on foreign travel plans. The report also outlines the Office's enforcement efforts. Since the 2008 Freedom to Travel Report, the Office has fined two companies a total of $310,000 for noncompliance with the statute.

The law states that an insurer may not refuse to issue life insurance to; refuse to continue the life insurance of; or limit the amount, extent, or kind of life insurance coverage available to an individual based solely on the individual's past lawful foreign travel experiences or future travel plans.

The report also names 93 insurance companies that ask travel-related questions on at least one of their life insurance applications. The data call, sent to 493 insurance entities authorized to write life insurance or annuities in Florida, allowed the Office to survey one million life insurance applications.

The Office found evidence that five companies had violated Section 626.9541(1)(dd) regarding the treatment of foreign travel. Pending the outcome of further investigation, it is likely that these companies could be fined under the statute.

IIABNY Asked for Alternative Disclosure Proposal

At a recent meeting between executives of the Independent Insurance Agents & Brokers of New York Inc. and New York State Insurance Department, the department officials asked IIABNY to provide an alternative producer compensation disclosure proposal that the trade association believes would be more workable for producers. IIABNY was the first producer trade group to meet with the department regarding the NYSID's compensation draft proposal.

The meeting, described by IIABNY Chair Neal Sullivan, as "open and positive," tackled the department’s compensation proposal on Feb. 19. Sullivan and Kermit Brooks, first deputy superintendent, NYSID, led their respective teams during the discussions aimed at conveying IIABNY’s concerns about the controversial draft regulation.

During the NYSID-IIABNY meeting, Brooks indicated that a working group representing industry stakeholders would begin its review of the proposal in March. “It appears that the department is not in support of simply a voluntary disclosure, and IIABNY is engaged with them to rework the language,” says Sullivan.

“As a result of our conversation, we have been asked to develop an alternate proposal and submit it to the department for consideration,” states IIABNY President & CEO Richard Poppa, in a Feb. 26 e-mail broadcast to its member agencies and posted at www.iiabny.org.

However, the e-mail message pointed out that, “It is quite apparent that the department intends to issue a regulation requiring mandatory disclosure.” IIABNY’s intent is to create an alternate proposal whose “requirements are general in nature and don’t impose unnecessary costs or burdens upon agents or brokers and, ultimately, consumers.”

Although the Insurance Department’s draft does not restrict profit sharing or other compensation, IIABNY and others are particularly concerned with the broad definition of compensation and the form and method of disclosure.

IIABNY is also working with a broad range of life, health and property and casualty industry groups on this issue, which includes the Professional Insurance Agents of New York State Inc., New York Insurance Association Inc. and the American Insurance Association, to name a few.

AIG to Form General Insurance Holding Company

American International Group Inc. (AIG) announced that it intends to form a General Insurance holding company, including its Commercial Insurance Group, Foreign General unit, and other property and casualty operations, to be called AIU Holdings Inc., with a board of directors, management team and brand distinct from AIG.

The establishment of AIU Holdings Inc. will reportedly assist AIG in preparing for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions.

When formed, AIU Holdings Inc. will be a franchise with more than 44,000 employees and 500 products and services serving 40 million commercial and individual customers in 130 countries and jurisdictions.

Government Bailout for AIG Continues

Officials from American International Group Inc. reported Monday they had arrived at a revised rescue plan with the U.S. government.

After previously receiving a commitment from the government for $150 billion, the insurer will reportedly receive up to a $30 billion equity line in the latest round of assistance.

This news come after the fact that AIG reported Monday a $62 billion quarterly loss. The company blamed the losses on the continued deterioration in the credit markets and charges related to its restructuring.

The company's loss for the full year rings in at $99 billion. That is after the company reported a profit in 2007 of more than $9 billion.

One of the goals of the reworked bailout plan is to assist AIG's financial position by, among other things, decreasing the interest it gives the government on its loans.

The Treasury Department in turn will exchange its existing $40 billion preferred shares stake for shares that more closely look like common stock.

ACE Europe Unveils Sprinkler Coverage

ACE Europe announced the launch of ACE Protect, a new property coverage aimed at companies which have installed sprinkler fire extinguishing systems in their premises.

ACE Protect offers training and risk management advice which is provided by ACE’s team of Risk Engineers. In addition, direct access to emergency sprinkler leakage remediation services is available through BELFOR, experts in the reduction and control of damage following the leakage of water from sprinkler systems.

ACE Protect provides clients with a suite of covers, including automatic cover for damage caused by any accidental leakage of their sprinkler system. The policy will also pay for costs involved with the re-charging of systems if they have discharged or leaked accidentally.