TDI Notes May Enforcement Actions

The Texas Department of Insurance announced enforcement actions taken by Commissioner Mike Geeslin that became final during May. The actions include six license revocations, a license denial and fines and restitution totaling $77,232.

Copies of Geeslin’s orders may be obtained by contacting TDI’s Public Information Office. Only final orders are listed. An order imposing disciplinary measures becomes final 20 days after the agent or insurance company has received notice of the order unless a motion for rehearing is filed within that period. A motion for rehearing stays the finality of an order until the Commissioner of Insurance acts upon the motion or upon the operation of law. Commissioner's orders are subject to appeal to state district court.

TEXAS DEPARTMENT OF INSURANCE

FINAL DISCIPLINARY ORDERS MAY 2008

Adams, Robert Walker Jr of Galveston
Order Number: 080417
Date of Order: 5/9/2008
Order Final In: May
Action Taken: $1,500 fine
Violation: Failed to comply with continuing education requirements

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AIG Casualty Company of New York, NY
Order Number: 080462
Date of Order: 5/22/2008
Order Final In: May
Action Taken: $10,000 fine; Must file credit scoring model
Violation: Failed to file credit scoring models used to underwrite and rate risks

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Baldwin, William Lewis Jr of Dallas
Order Number: 080418
Date of Order: 5/9/2008
Order Final In: May
Action Taken: $900 fine; Must complete 11.5 hours of continuing education
Violation: Failed to comply with continuing education requirements

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Burciaga, Larry of El Paso
Order Number: 080419
Date of Order: 5/9/2008
Order Final In: May
Action Taken: $1,500 fine: Must complete 30 hours of continuing education
Violation: Failed to comply with continuing education requirements

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Cambridge Integrated Services Group, Inc. of Carrollton
Order Number: 080428
Date of Order: 5/13/2008
Order Final In: May
Action Taken: $8,000 fine
Violation: Failed to timely pay independent review organization fees

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Cutting-Church, Tami Lynn of Conroe
Order Number: 080424
Date of Order: 5/9/2008
Order Final In: May
Action Taken: Escrow Officer Licenses revoked
Violation: Engaged in fraudulent or dishonest acts or practices; Witheld money belonging to another person

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Espalin, Jason Gilbert of San Antonio
Order Number: 080420
Date of Order: 5/9/2008
Order Final In: May
Action Taken: $1,500 fine
Violation: Failed to comply with continuing education requirements

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Ewing, Boyd of Frisco, and Dallas
Order Number: 080446
Date of Order: 5/15/2008
Order Final In: May
Action Taken: $14,000 fine; Cease and Desist Unauthorized Activity
Violation: Unauthorized insurance

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Gracy Title Company, L.C. of Austin
Order Number: 080429
Date of Order: 5/13/2008
Order Final In: May
Action Taken: $20,000 fine
Violation: Allowed attorneys who were not licensed escrow officers to close transactions for which an insured closing letter had been issued

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Kosadnar, Stephen Joseph of Athens
Order Number: 080468
Date of Order: 5/28/2008
Order Final In: May
Action Taken: $3,000 fine
Violation: Advertising violation

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Mujica, Maria Del Refugio of San Antonio
Order Number: 080421
Date of Order: 5/9/2008
Order Final In: May
Action Taken: $2,032 restitution; General Life, Accident and Health License and General Property and Casualty License revoked
Violation: Engaged in fraudulent or dishonest acts or practices

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Occupational Health Systems LLP of Houston
Order Number: 080422
Date of Order: 5/9/2008
Order Final In: May
Action Taken: $2,400 fine
Violation: Taught continuing education courses without valid course certifications

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Palombo, Raymond Thomas of Riverside, California
Order Number: 080450
Date of Order: 5/16/2008
Order Final In: May
Action Taken: General Life, Accident, and Health License revoked
Violation: Engaged in fraudulent or dishonest acts or practices

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Sanchez, Leticia of Dallas
Order Number: 080423
Date of Order: 5/9/2008
Order Final In: May
Action Taken: Limited Lines License revoked; General Property and Casualty License application denied
Violation: Engaged in fraudulent or dishonest acts or practices; Committed criminal acts involving dishonesty directly related to licensed profession

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Southern County Mutual Insurance Company of Dallas
Order Number: 080445
Date of Order: 5/15/2008
Order Final In: May
Action Taken: $10,000 fine; Must file all credit scoring models
Violation: Engaged in unfair practices; Failed to file credit scoring models with TDI

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Toledo Bend Title of Hemphill
Order Number: 080470
Date of Order: 5/28/2008
Order Final In: May
Action Taken: $2,400 fine
Violation: Failed to timely remit title insurance policy guaranty fees

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Vann, James Howard of Harlingen
Order Number: 080453
Date of Order: 5/16/2008
Order Final In: May
Action Taken: General Life, Accident and Health License revoked
Violation: Engaged in fraudulent or dishonest acts or practices

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Wright, John Robert of Grand Prairie
Order Number: 080449
Date of Order: 5/15/2008
Order Final In: May
Action Taken: Escrow Officer License revoked
Violation: Failed to comply with Commissioner’s Order

FEMA Adds New Flood Risk Maps for Texas County

The U.S. Department of Homeland Security's Federal Emergency Management Agency (FEMA) is presenting draft flood risk maps to communities in Karnes County, Texas. The maps will help county officials and local residents identify known flood risks and will be used for insurance and development decisions.

The preliminary maps revise and update information on the existence and severity of flood hazards in every community in Karnes County as well as unincorporated areas. The maps are based on detailed ground elevation models, decades of rainfall and storm gauge information and current topographic data.

"Flooding is the most common disaster in the U.S. and I urge Karnes County residents to look at the preliminary maps and be familiar with flood risks in their community," said William Peterson, FEMA regional administrator. "These maps can help residents make informed decisions about flood insurance and flood protection."

Residents and property owners who believe the flood maps contain errors have from July 2, 2008 to Sept. 30, 2008 to appeal by submitting scientific or technical information. Appeals are submitted through communities to FEMA. Once all appeals are resolved, FEMA will notify communities, insurance companies and residents of the effective date of the final maps.

Floodplain administrators in each community have copies of the maps available for public viewing. Information about the maps is available at www.fema.gov/plan/prevent/fhm/bfe.

When the flood maps are finalized and effective, some flood insurance policy holders may see changes in their policies. Peterson recommends that all policyholders contact their insurance agent or company to ensure that they have adequate coverage and that policies account for new flood risk information. More information on flood insurance is available at www.floodsmart.gov.

Prosecutor Honored for Efforts to Fight Fraud

A national insurance and consumer-protection alliance has presented its inaugural “Prosecutor of the Year Award” to a veteran of the Los Angeles County District Attorney’s Office.

Albert MacKenzie, deputy-in-charge of the fraud interdiction program, received the award from the Coalition Against Insurance Fraud at a ceremony in Washington, D.C. Lauded by the fraud fighting community for prosecutorial innovation and ingenuity, MacKenzie was one of seven nominees selected from a pool of local, state and federal prosecutors.

District Attorney Steve Cooley piloted the fraud interdiction program in 2004 with MacKenzie at its helm. The program, based on a concept developed by the seasoned prosecutor, supplants traditional, sometimes cumbersome methods of investigation with more aggressive and tactical procedures that combat systemic fraud.

Dennis Jay, executive director for the Coalition Against Insurance Fraud, said prosecutors are vital links in the fight against insurance fraud. Founded in 1993, the Coalition Against Insurance Fraud is a non-profit alliance of insurance companies, consumer groups and government agencies that fight all forms of insurance fraud.

Fiserv to Sell Majority Interest in Insurance Biz

Fiserv Inc., a provider of information technology services to the financial and insurance industries, has signed a definitive agreement with Trident IV, a private equity fund managed by Stone Point Capital LLC, in which Trident will invest approximately $205 million in equity and $335 million in debt to acquire a 51 percent majority interest in Fiserv’s insurance businesses.

Fiserv expects to receive approximately $510 million in net after-tax proceeds and to retain a 49 percent equity interest in Fiserv Insurance Solutions. The transaction is anticipated to close in July 2008, subject to regulatory approval and other customary closing conditions. The transaction will include nearly all aspects of Fiserv’s insurance segment. The current management team and employee base will continue with the company, which will be known as Fiserv Insurance Solutions Inc.

Stone Point Capital and its predecessor operations have a 20-year history of investing in the global insurance and financial services industries. Stone Point Capital primarily targets investments in the insurance and financial services industries, including insurance underwriting, distribution and services, benefits and healthcare, asset management and retirement savings, and banking and depository institutions.

Fiserv expects to receive approximately $510 million of net transaction proceeds and expects slight 2008 earnings dilution of less than 1 percent, or $0.02 to $0.03 per share depending upon reinvestment of the net proceeds. In connection with the sale, Fiserv also affirmed its 2008 adjusted earnings per share guidance range of $3.28 to $3.40 from continuing operations. Fiserv expects the transaction to be accretive to its long-term revenue, earnings and margin growth rates.

Upon closing the transaction, Fiserv will no longer consolidate revenue and expenses from Fiserv Insurance Solutions. Due to the sale of its majority interest, the company will report its 49 percent share of net earnings in Fiserv Insurance Solutions on a single income statement line item, which is anticipated to begin in Fiserv’s third quarter earnings announcement.

AIA Applauds N.Y. Gov. for Signing Coastal/Flex Bill

New York Gov. David Paterson has signed into law a comprehensive bill (A.11693/S.8624) designed to address the state's coastal homeowners’ insurance market and reinstate flex rating for private passenger automobile insurance throughout the state. The bill, which was passed by both houses of the New York State Legislature last week, was supported by the American Insurance Association (AIA).

“AIA commends Senator Jim Seward and Assemblyman Joe Morelle for introducing, and Governor Paterson for signing, this important piece of legislation,” said Gary Henning, AIA Northeast Region assistant vice president. “Increasing the availability of homeowners’ insurance along the coast and encouraging greater competition in the private passenger auto insurance market will ultimately provide better products and more choices for New York State consumers.”

Under the bill, the New York Property Insurance Underwriting Association (NYPIUA) will be made permanent, a move designed to provide greater stability in the residual market, according to Henning. In addition, NYPIUA will be allowed to offer a more expansive type of coverage to homeowners throughout the state.

A special advisory panel on homeowners' insurance and catastrophe coverage will also be reinstated, having originally been convened in 1996. The advisory panel is required to report back to the legislature by Nov. 30, 2009, and annually thereafter, on ways to improve the homeowners' insurance marketplace for both insurers and consumers. The second part of the bill reinstates flex rating for automobile insurance, which had previously been in effect in New York from 1995 to 2001. Under the bill, carriers will be allowed unlimited flexes downward and two flexes upward annually, within a 5% rating band.

“Reinstatement of flex rating for private passenger automobile insurance has been one of the insurance industry’s priorities in New York over the last seven years,” said Henning. “Flex rating will allow carriers to react more quickly to market conditions. The residual market should decrease. New products will be developed. All of this will ultimately benefit New York State drivers.”

The flex provisions take effect on Jan. 1, 2009; the rest of the bill takes effect immediately.

“AIA believes this bill represents another positive step towards modernizing the New York State insurance market,” concluded Henning.

UPDATE: Former AIG Chief Executive Breaks Bank

Former AIG Chief Executive Officer Martin Sullivan can throw a few extra hamburgers on the grill this Fourth of July.

AIG has agreed to give Sullivan, 53, around $47 million in severance and long-term compensation.

Sullivan, who was replaced by Robert Willumstad last month, will receive $15 million in severance pay, a bonus of $4 million and equity and long-term cash awards valued at about $28 million, the New York-based company said in its regulatory filing.

During Sullivan's tenure as CEO, the company reportedly lost 46 percent of its market value.

So much for getting paid for a job well done.

Give us your opinion...should Sullivan have gotten $47 million in compensation?

Brown & Brown Purchases Taylor Benefit Services

Jim Henderson, vice chairman and COO of Brown & Brown Inc., and Ronald Taylor, president and CEO of Taylor Benefit Services Inc., of Atlanta, Georgia, announced the asset acquisition of Taylor Benefit Services and Neonatal Consultation Services Inc. by a subsidiary of Brown & Brown Inc.

Taylor Benefit Services provides solutions and consulting services for controlling catastrophic financial risks to health plans across the country. In addition to Taylor Benefit Services' HMO reinsurance and managed transplant programs, Neonatal Consultation Services has developed a proprietary Web site that can be used as a one-stop resource for case managing high-risk infants.

"We believe the addition of Ron Taylor and his practice will bring us unparalleled expertise to this niche market and add some strong capabilities to help our managed care clients better predict and control their catastrophic risk. We look forward to their active participation in our ongoing growth and continued success," Henderson said.

Taylor added, "We believe joining Brown & Brown will allow us to provide an increased level of service to our customers, while providing our employees with greater opportunities for future growth and rewards."

GEICO Unveils New Michigan Auto Rate Plan

GEICO is introducing a new auto insurance rate plan that is expected to deliver insurance savings to many Michigan drivers.

“GEICO is pleased to release a new rating plan that will offer the opportunity for millions of Michigan drivers to compare and save on their auto insurance premiums,” said Mary Zarcone, regional vice president of GEICO’s Midwest operations. “As one of the largest and fastest growing auto insurance companies in the Unites States, GEICO stands ready to meet the insurance needs of the good people of Michigan.”

Zarcone continued, “In addition, we are introducing a number of new discounts with the plan that rewards good drivers. Simply go to www.geico.com to obtain a free rate quote.”

The changes will go into effect on July 3 for new policyholders and Oct. 1 for renewal policies.

Overall premium changes for individual motorists will vary based upon factors such as coverages purchased, geographic area, type of vehicle, risk characteristics, and other discounts for which they qualify.

Massachusetts AG Settles with Insurer

Massachusetts Attorney General Martha Coakley’s Office has reached a settlement with Rhode Island-based Factory Mutual Insurance Company (FM Global) resolving allegations that FM Global’s premium reporting practices enabled Boston-based insurance broker William Gallagher Associates Insurance Brokers Inc. to pad its customers’ insurance premiums with undisclosed fees.

The Attorney General’s Office filed a lawsuit against WGA on Dec. 19, 2007, in Suffolk Superior Court, alleging that WGA defrauded its customers by charging undisclosed fees.

According to the complaint, at WGA’s request, FM Global confirmed premium amounts to premium finance companies that included WGA’s undisclosed fees. These confirmations enabled WGA to obtain financing agreements that hid over $2 million in unauthorized fees from WGA’s customers. A premium finance company is a lending institution that finances insurance premiums for policyholders, allowing policyholders to pay annual premiums on a monthly basis.

Under the terms of the settlement reached with FM Global, which was filed Monday in Suffolk Superior Court, FM Global will not report premium amounts to premium finance companies that include brokerage fees, will make premium information available to customers, and will pay $28,000 to the Attorney General’s Local Consumer Aid Program.

Under the terms of the Consent Judgement the Attorney General’s Office obtained in December 2007, WGA agreed to return over three million dollars to customers, pay $925,000 to the Commonwealth, submit to a binding audit, and adopt transparent fee practices. The audit is expected to be completed this summer.

8.5M Judgement Obtained Against Company

Florida Attorney General Bill McCollum announced that his office has obtained a final judgment for $8.5 million against two owners of a company that was reportedly selling insurance-like products to senior Floridians, but failed to pay most claims.

The company stopped writing business in Florida after the Attorney General filed this lawsuit. Marc Orth and Thomas Muldoon, the two principals of Homeward Bound Services of North America Inc. were ordered by a Leon County Circuit Court judge to pay $8.5 million in civil damages, of which more than $250,000 will be available for consumer restitution. The case was litigated by the Attorney General’s Economic Crimes Division.

An investigation by the Attorney General’s Economic Crimes Division revealed that Homeward Bound targeted senior citizens, selling policies for personal care services. The policies were intended to pay for a specified number of hours contracted for basic care services which included meal preparation, bathing, laundry, house cleaning, etc. The company had been selling policies in Florida since 2004 and reportedly routinely failed to pay for the promised services, often leaving a heavy financial burden on its elderly customers and depriving them of the much needed services.

The company was originally investigated by the Florida Department of Financial Services for selling a discount medical plan. However, Homeward Bound reportedly changed its contract, thus avoiding regulation under the insurance code. The Economic Crimes Division launched its investigation into the company in March 2007 after receiving complaints from several health care providers and senior citizens. The lawsuit was filed in May 2007 and alleged that the company subcontracted to local providers but routinely failed to pay them for the services provided to consumers.

Under Florida’s Unfair and Deceptive Trade Practice Act, the Homeward Bound officers, Orth and Muldoon are personally liable for actions of the company.

Both men reportedly admitted in court that they knew the advertising was false and that employees had been directed to provide false information about claims payments to consumers. Homeward Bound was not named in the final judgment because it entered bankruptcy during the course of the proceedings and has no ability to pay.

RIMS Canada Conference Set for Toronto

The 33rd Annual Risk and Insurance Management Society (RIMS) Canada Conference will take place on Sept. 21-24 in Toronto, Ontario. More than 1,500 risk professionals and industry partners are expected to attend. The conference is hosted by RIMS Ontario Chapter.

“RIMS Canada Conference is one of the largest annual conferences for risk practitioners in the world that gathers risk executives from every province and territory of Canada,” says Nancy Chambers, Canada Conference co-chair and director of risk management at Ontario College of Art & Design.

“The Exchange: Where Great Ideas Come Together” is the theme for this year’s conference. “For four days, RIMS Canada Conference will provide risk professionals with top-notch educational offerings and an environment that encourages the exchange of great ideas within the Canadian risk community. We are committed to providing attendees with a variety of forums that will foster relationships with all facets of the industry,” adds Susan Meltzer, RIMS Canada Conference co-chair and assistant vice president of risk management at Aviva Canada Inc.

This year’s event boasts some 20 educational sessions, a record-setting 80+ exhibitors and networking events galore. Featured speakers at RIMS Canada Conference include:

· Stephen Lewis, co-director for AIDS Free World and former Canadian Ambassador to the United Nations;
· Robert Kennedy, Jr., Environmental Activist and Attorney, speaking on “Our Environmental Destiny”;
· Joanna Makomaski, risk manager at Enbridge Gas Distribution Inc. and co-author of “Enterprise Risk Management for Dummies”, speaking on “Finally—ERM Made Easy: ERM for Dummies Has Evolved!”;
· Gert Cruywagen, author and group risk manager at Sappi Limited, speaking on “Jungle Risk Management—Risk Lessons from the African Bush”;
· and Dr. Ann Cavoukian, commissioner of Ontario’s Office of Information and Privacy, speaking on “Minimize Risk—Maximize Protection and Gain, A Competitive Advantage: Privacy is Good for Business”.

The conference also features panel sessions comprised of risk managers and industry experts in order to provide a multi-faceted perspective. Topics include the “Canadian Business Leaders Forum”, which will provide attendees with an opportunity to hear from business leaders in Canada how they achieved unparalleled success; “China: Danger and Opportunity”, which will focus on Canadian corporations doing business in China; and the “International Risk Manager Panel”, sponsored by the International Federation of Risk and Insurance Management Associations Inc. (IFRIMA), which will identify the dominant issues within worldwide organizations and the approach that each of the panelists have adopted for proactive risk management.

Panel speakers include executives at Aon Asia Pacific; Association of Risk Management in Japan; Aviva Canada; Canada China Business Council; Canadian Litigation Counsel; Canadian Tire Corporation Limited; The Harmonie Group; IFRIMA; Jones Lang LaSalle Incorporated; Lang Michener LLP; and McCague Peacock Borlack McInnis & Lloyd LLP.

Other sessions include “Privacy and Network Liability: What’s Your Exposure”, “Risk Management and the Media: The Importance of the Crisis Communication Plan”, “Sustainability and Risk Management”, in addition to traditional risk management topics.

Other speakers include executives at AIG Environmental; Aon Reed Stenhouse, Inc.; ArcelorMittal Dofasco; Association of Workers Compensation Board of Canada; Bank of Montreal; Bell Canada Enterprises; CAE, Inc.; Canadian Airports Reciprocal Insurance Exchange; City of Calgary; Cott Corporation; Crawford Risk Management Services; Cunningham Lindsey Canada Limited; The Delphi Group; Dion Durrell and Associates; Dolden Wallace Folick LLP; Edmonton Airports; Ellis Don Corporation; Executive Risk Insurance Services; Hudson’s Bay Company; LIU Canada; Marsh Canada Limited; Nova Scotia School Insurance Exchange; Rio Tinto Alcan; Scotiabank; ShawCor Ltd.; Technical Standards and Safety Authority; TELUS Corporation; Willis North America; YMCA for Greater Toronto; York University; and Zurich Insurance Company.

Attendees are also invited to race their peers to the finish line at the fifth annual McGannon Foundation 5K Fun Run / Walk, jointly sponsored by RIMS Canada Council and FM Global. Proceeds from the event will benefit the William H. McGannon Foundation, dedicated to providing resources and grants to advance risk management in Canada. Other networking events include an opening reception, Black and White Gala, Exhibitor Champagne Reception and Exhibit Hall coffee breaks and luncheons.

The early bird registration deadline for RIMS Canada Conference is Aug. 1. Online registration ends Sept. 12. Complete details on RIMS Canada Conference are available at http://conference.RIMScanada.org.

Former Louisiana Agent Arrested for Theft

A former Lafayette insurance agent has been arrested, issued a cease and desist order, license revocation and fine notice for alleged misappropriation of funds and felony theft.

Jenifer Leigh Leger, 36, was arrested by State Police and served by Department of Insurance Fraud Section Investigators with an order to cease and desist from conducting the business of insurance in Louisiana, revocation of her license and a $5,000 fine notice for allegedly failing to remit to an insurance company over $13,400 in funds and forging a signature on a document related to an insurance transaction.

Department records show that Leger was issued an individual agent license in February 2005, which reportedly lapsed in April 2008 and was not reinstated.

Conning: P/C Loss Reserves Position Fell in '07

While the property/casualty industry still appears to have strong reserves, overall its position began to deteriorate in 2007, according to a new study by Conning Research and Consulting Inc.

"The property/casualty industry's reserve position began to deteriorate slightly in 2007, when compared with our prior analyses," said Stephan Christiansen, director of research at Conning Research & Consulting. "Reserves for the most recent ten accident years appear even stronger than last year, under reasonable assumptions of continuing inflation and claims settlement patterns. However, with a closer look at reserves aged more than ten years -- the so-called 'tail' -- we see a need for additional strengthening in some lines of business, particularly in the reserves carried for those older years."

The Conning Research study, "Property-Casualty Loss Reserves: Thinner, but Is the Tail Getting Fatter?" analyzes statutory data from Schedule P in an ongoing annual process.

"Despite over $15 billion in releases in reserves over the past two years, the most recent accident years -- 2004-2007 -- still appear to be redundant," said Christiansen. "At the same time, adverse development for the 'tail' of accident years -- those more than ten years old or prior to 1998 -- amounted to $6 billion in 2007. The emergence of adverse development in older years is persistent, and the percentage of loss reserves carried in accident years five years and older has been increasing. The combination of recent net releases and continuing adverse development suggest that the advantageous part of the reserve cycle may be about to run out, and the industry may soon face the need for reserve strengthening once again."

"Property-Casualty Loss Reserves: Thinner, but Is the Tail Getting Fatter?" is available for purchase from Conning Research & Consulting, by calling (888) 707-1177 or by visiting the company's Web site at www.conningresearch.com.

NIP Group Publishes Survey on Transport Market

NIP Group Inc. has published the results of a survey it commissioned to benchmark changes in the availability and rates in the transportation insurance marketplace.

Conducted by Focal Point Marketing, the first ever Transportation Insurance Pricing Survey (TIPS™) was issued last month to the nation’s leading transportation insurance brokers, wholesalers and underwriters representing thousands of account placements.

The survey confirms what market participants have known for a while now, that prices are generally falling between 10 to 20% across the board, even for the most difficult to place risks. All transportation market segments have excess underwriting capacity with the availability of insurance significantly increasing in the last year. In addition, the softening of the market has resulted in underwriting standards being relaxed.

The survey revealed that excess capacity and intensifying competition has been partly fueled by the entry of standard insurers into the transportation market in pursuit of premium volume. These insurers are seeking above average transportation risks and charging rates significantly below specialty transportation insurers to gain market share. Historically, this “generalist rotation” has occurred in the middle to late stages of the soft market cycle.

For small accounts (those with premiums of $75K or less), 60% of brokers responded that premiums are down as much as 20%. Results were similar for medium (premiums of $75-250K) and large size accounts (premiums greater than $250K), though some larger accounts experienced premiums drop up to 40%.

The survey also measured premium changes across 10 different transportation segments including:

Trucking Operations		Intermodal Carriers
Messenger/Courier Services		Ambulance/Paratransit
School Bus Contractors		Bulk Transportation
Airport Ground Transportation		Charter/Tour Bus Operators
Specialized Carriers & Riggers		Limousine Services

The largest decreases in rates were seen by brokers insuring general trucking operations. With the current market conditions, it seems that intense competition among carriers is driving down rate levels.

Participants were also asked to comment on premiums by coverage type including Auto Liability, Auto Physical Damage, Motor Truck Cargo and Warehousemans’ Legal, Workers’ Compensation, Umbrella Liability and Owner/Operator programs. The vast majority report premium decreases for these coverage lines of between 10-20%, though some have indicated that they have experienced slight increases for select lines of coverage.

“We intend to repeat the survey quarterly to track the movement in the TIPS™ index over time,” said Richard Augustyn, CEO of NIP Group Inc. “We believe that TIPS™ serves a dual purpose first to track rate movements for the large transportation insurance market and second to offer a leading indicator of the direction of rates in the general commercial insurance marketplace.”

“NIP Group possesses an unequaled depth of knowledge in a number of key specialty markets, particularly transportation related exposures. This survey is yet another example of how we leverage our expertise to deliver value added services,” said Lawrence Dunn, CFO of the company.

Detailed results can be downloaded online at: http://www.nipgroup.com/programs_home.html.

AIA Backs Privatization of W.V. Work Comp Market

The workers’ compensation market in West Virginia officially opened up to private carriers today, according to the American Insurance Association (AIA), which applauded the efforts of Gov. Manchin and the West Virginia Legislature for delivering on their promise of "getting the state out of the workers’ compensation business" by enacting the provisions found in S.B. 1004 which was signed into law in February 2005.

"Today, after years of planning and preparation, the West Virginia’s workers’ compensation system will be taking the final step in its transition from a state-run monopoly to a free-market system. Already, twenty-five private carriers have filed paperwork to provide workers’ compensation insurance in the Mountain State. Other states that have privatized their workers' compensation markets have increased competition and enhanced their insurance environment, with many carriers competing for business and thereby offering employers many choices of where to direct their business," stated Tammy Velasquez, AIA vice president and director of state affairs.

Following adoption of S.B. 1004, West Virginia took the first step by converting its monopolistic state fund into a "private mutual company" entitled BrickStreet in 2006. With over two years of essentially having a monopoly, BrickStreet will now have to compete with private insurance carriers. This privatization process is based on a model used by Nevada, in which old fund liabilities are walled off and secured while the successor company writes new business. This approach has been successful in Nevada which has seen a number of carriers entering the market.

"West Virginia’s shift to private competition leaves only four states that continue to provide workers’ compensation insurance through monopolistic state funds," stated Velasquez. "Insurance Commissioner Cline has noted that West Virginia’s rates have already declined by 30.3 percent during this transition period. We are hopeful that West Virginia’s actions will increase interest in privatization in the remaining states -- North Dakota, Ohio, Washington, and Wyoming," Velasquez added. "In fact, North Dakota already has a study committee looking at this possibility," concluded Velasquez.

The American Insurance Association has provided technical assistance to the Department of Insurance since the beginning of West Virginia’s conversion, starting with enactment of legislation in early 2005. AIA will continue to work with the department in order to facilitate a smooth transition that will benefit employers across West Virginia and to encourage further steps to improve the benefit delivery system.