Different from our Agenda Magazine, which contains original articles and commentary on the insurance industry, our "El Blog" is the place to visit for current news and information. We search publications from across the country to bring you the latest articles impacting your business. You are encouraged to post your comments on the news stories presented here.

Friday, November 30, 2007

Most Illegal Immigrants Near or Below Poverty Line, Study Shows

By Mike Sunnucks
Business Journal of Phoenix

A new study released Thursday shows illegal immigrants in Arizona and elsewhere in the U.S. are toiling at the bottom rungs of the economic ladder.

The report by the Center for Immigration Studies found:

73 percent of Arizona's illegal immigrants and their U.S.-born children are living in poverty or near poverty.

The average household income for illegal immigrants in Arizona is $34,800, compared with $68,800 for citizens.

69 percent of illegal immigrants in Arizona do not have health insurance.

32 percent of Arizona households headed by illegal immigrants receive some kind of government welfare assistance (usually aid for dependent children born in the U.S.).

The Arizona numbers are similar to those in California and nationally.

Most illegal immigrants move to Arizona, California and Texas from extreme poverty in Mexico and Latin America. They often work in low-paying, labor-intensive jobs in construction, food service, landscaping and agriculture.

The CIS report estimates there are more than 11 million illegal immigrants in the U.S., including 579,000 in Arizona, 2.8 million in California and 1.7 million in Texas.

From: Business Journal of Phoenix (www.bizjournals.com)

Bermuda Insurance Association Says Companies Create U.S. Jobs

According to the Association of Bermuda Insurers and Reinsurers (ABIR), International insurance and reinsurance companies based on the island employ over 9,000 Americans and indirectly generate an estimated 95,045 jobs in the US.

ABIR's study, "Analysis of the US Economic Impact of Bermuda Based Insurers and Reinsurers," found that "US operations of Bermuda's 23 major insurance carriers employ approximately 9,600 Americans. In addition, the industry estimated that 14,287 jobs in the US finance, real estate and insurance brokerage sectors, among others, were indirectly created by Bermuda firms in 2005."

The report also indicated that "because these are generally high paying industries, the insurance sector also generates a large induced effect across a variety of mostly service industries leading to the creation of an additional 80,755 jobs," and contributed approximately $92.5 billion to the US GDP from 2002 to 2005.

"Bermuda firms accounted for $28.1 billion in 2005," said the study, "but given their role in reinsurance and property and catastrophe lines, they (Bermuda firms) may account for as much as $96 billion of the gross output for the U.S. insurance market."

Many of Bermuda's carriers specialize in catastrophe insurance coverage, and have "funneled billions of dollars of property insurance claims payments to homeowners and businesses in the wake of natural disasters such as Hurricane Katrina," said the bulletin. "These dollars have helped stabilize regional economies by helping victims of natural disasters in hard-hit coastal regions rebuild and return to work."

It also noted that "Bermuda firms play a key role in supporting American farmers. A major portion of the crop insurance coverage in the Great Plains and Midwestern states comes from Bermuda."

A copy of the report is available at: http://www.abir.bm/downloads/ABIREconomicImpact.pdf.
The report was authored by GSP Consulting, a Pittsburgh-based economic policy research practice established in 2001 that serves public and private organizations.

Source: Association of Bermuda Insurers and Reinsurers (www.abir.bm)

From: Claims Journal (www.claimsjournal.com)

Personal Lines Profits May Dip In 2008, Says S&P

Personal lines insurers’ recent hefty profit trend will falter in 2008 as prices continue to soften, Standard & Poor’s Rating Services predicts.

The firm, n its U.S. personal lines outlook report, aid it does not believe “the sizable profit margins of the recent past will continue because of intense rate competition, especially in the auto market…”

S&P said competition and less available new business growth will also reduce profits, s carriers may be tempted to discount product offerings and loosen terms and conditions to maintain their competitive positions and market shares, as they did during the last soft market from 1987-2001.

For the current year, the rating firm said it foresees personal lines will show “strong, resilient profitability, and a combined ratio of about 94-to-96 in spite of increased competition.

S&P attributed the positive results to prudent risk management, enhanced enterprise risk management practices, and greater pricing and underwriting discipline--stemming from better technology and use of data to understand and mitigate exposure.

Capitalization is strong, S&P said, because of several hard market years coupled with low catastrophic activity for the past two years.

“Solid investment and liquidity positions stemming from robust balance sheets and conservative financial management practices have also boosted capital,” the report noted.

The firm noted that price cuts for auto coverage were more frequent in the past year, partly because of declines in accident frequency and smaller accident severity trends.

In 2008, the analysis, by Neil Stein predicts “net written premiums experiencing low single-digit growth, at best.”

The report finds the personal lines sector overall to be sufficiently capitalized, with companies’ investment portfolios in “excellent shape,” and S&P said it expects “sector liquidity to remain strong for the foreseeable future.”

Examining the auto line, the report said larger carriers are far better positioned competitively than smaller regional ones.

It noted that the top-15 auto carriers own about 75 percent of the market, and says their scale and geographic diversification enable them to price, underwrite and manage reserves more effectively than small carriers.

S&P said larger auto carriers' investments in technology over the past several years are also enabling much faster ERM implementation.

Although companies will be challenged to maintain top-line growth in the coming year, S&P said it expects short-term profitability to remain healthy through the end of 2007 and into 2008
For the homeowners line, the report said if catastrophe trends remain close to historical norms in 2008, operating performance for homeowners carriers will most likely be solid.

However, S&P said it believes the U.S. housing market's slump, which began early in the summer and shows no signs of abating, could weaken results.

New residential construction and home ownership had facilitated steady new premium growth. Slowed construction activity and falling home prices could hurt bottom- and top-line growth and reduce the segment's earnings at least through 2008.

The report also examined markets, impacts of legislation and other factors in Florida, Louisiana, Massachusetts, Mississippi and New York.

From: NU Online News Service (www.nationalunderwriter.com)

Thursday, November 29, 2007

Study: Illegal Immigrants Make Up 12 Percent of Arizona Work Force

By Mike Sunnucks
Phoenix Business Journal

A study released Thursday estimates there are 579,000 illegal immigrants in Arizona, who make up 65 percent of the state's foreign-born population and 12 percent of the state's work force.

Arizona's total population is 6.2 million, according to the U.S. Census Bureau.

The study by the Center of Immigration Studies estimates there are 37 million legal and illegal immigrants in the U.S. and 894,000 in Arizona.

The CIS study shows more illegals in Arizona than in New York with 552,000 and Illinois at 480,000. CIS reports 11.3 million illegal immigrants in the U.S. including 2.9 million in California, 1 million in Florida and 1.7 million in Texas.

The study also found that the average household income of illegal immigrants in Arizona is $35,000 per year versus $69,000 for natives. Sixty-nine percent of illegals in Arizona and 55 percent of those nationally are at or near the poverty level.

Also, 69 percent of Arizona's undocumented immigrants do not have health insurance and with their children account for 37 percent of the state's uninsured population.

The study looked at Census, welfare, education and economic data nationally and at the state level.

From: Phoenix Business Journal (www.bizjournals.com)

CA Insurance Commissioner Poizner: No Change To Pure Premium Rate

California Insurance Commissioner Steve Poizner announced yesterday that he would make no change to the average workers' comp pure premium rate for policies renewing and incepting on or after Jan. 1, 2008. In a news release, Poizner said that insurers had realized a 70 % reduction in costs since 2003, savings that they should be able to pass on to employers in the form of lower premiums. Poizner said that, in his opinion, premiums are "still too high."

This is the first time since the implementation of the reforms that a commissioner has held the line on rates. Commissioner Poizner approved a rate decrease of 14.2 % for July 2007.

This announcement appears to be an indication that workers' comp costs within the post reform environment are stabilizing, especially the cost of claims. The Bureau recommended a 5.2 % increase for January after a series of steady reductions during the last three years.

"The commissioner is seeing loss costs in the pure premium reflect the bottom line of system savings up to this point. If we see any changes to the permanent disability schedule...we may have to take a closer look," says one industry insider. The Division of Workers' Compensation said earlier that it would make changes to the PDRS in March 2008, a move that many observers predict will increase system costs.

Poizner noted in his order that "California insurers' record-low loss ratios ... [are] far lower than what insurers are experiencing in the rest of the country. A change in pure premium rates, without further current data, is not warranted in light of the substantial profitability the workers' compensation insurance industry is experiencing in California."

For a copy of the commissioner's decision and order, please go to the "Resources" section of our website: www.wcexec.com.

From: Workers' Comp Executive (www.wcexec.com)

Survey: 22,700-Plus Wildfire Insurance Claims Filed in Calif.

The Insurance Information Network of California has confirmed that at least 22,700 claims filed from October's Southern California fire and wind storms. The tally includes at least 2,000 insurance claims for damage stemming from the wind storms that fueled wildfires nearly a month ago. The organization estimates that insurers will pay at least $1.6 billion for wind and fire damage to homes, farms, vehicles and businesses.

"Although the wildfires did not burn as many homes as the firestorms of 2003, they have already resulted in a greater number of insurance claims," IINC said. "This was likely caused by the mass evacuation of San Diego County, which resulted in increased claims for additional living expenses. Homeowner policies often pay for hotel costs prompted by a mandatory evacuation."

Based on the survey data, IINC said wildfires that burned many of the same areas in 2003 resulted in more losses. The 2003 fires burned more than 3,600 homes and resulted in 19,100 insurance claims worth more than $2.2 billion after inflationary adjustments.

At 2,900 homes lost and $2.4 billion in insurance claims paid in 2005 dollars, the Oakland Hills fire remains at this point the most destructive single brushfire in California history.

IINC is a non-profit, non-lobbying insurance trade association dedicated to helping consumers understand insurance and safety issues. For more information on the fires, visit www.iinc.org.

Source: Insurance Information Network of California (www.iinc.org)

From: Insurance Journal (www.insurancejournal.com)

Wednesday, November 28, 2007

CA Insurance Commissioner Steve Poizner Announces a 70% Decrease in Insurers' Workers' Comp Costs

Insurance Commissioner Steve Poizner announced today that the workers’ compensation insurance market is enjoying historically high profitability. The workers’ compensation reforms of 2003 have resulted in dramatic decreases in costs and increases in profitability for insurers. Commissioner Poizner also determined that based upon his department’s extensive review and analysis, there should be no change to the workers’ compensation Pure Premium Rates.

“It’s great news that California’s workers’ compensation insurers are enjoying a robust market and extraordinary profitability,” said Commissioner Poizner. “Costs to insurers have plummeted 70% since 2003. This represents a tremendous savings that should allow insurers to give businesses additional relief in the form of lower rates. It is clear that the runaway cost of claims to insurers has stabilized. This stability, coupled with a competitive marketplace, should allow insurers to lower premiums that I believe are still too high. Businesses must also benefit from the decrease in costs to the system. Based on my assessment of the current market, I have determined that there should be no change to the Pure Premium Rates.”

Twice each year the Commissioner assesses the state of the workers’ compensation system and issues a pure premium advisory rate. While many insurers use this as a benchmark, they are not required to follow the recommendation. The actual rates charged to employers by insurers, as filed with the Department of Insurance, decreased by 55% since January 2003.

From: California Department of Insurance (www.insurance.ca.gov)

FEMA: Decreasing Temperatures, Increasing Flood Risks for Western Residents

Winter brings more than just cold temperatures. It also brings an increased flood risk and the Federal Emergency Management Agency (FEMA) is warning residents of Idaho to prepare now -- well ahead of rising waters. This year, predictions for La Nina call for an even wetter-than-average 2007-2008 winter season in parts of the Northwestern United States, including California, Idaho, Washington, Oregon, Nevada and Montana. The time to prepare for this year's rainy season and possible flooding is now.

"Recovering after a flood can be overwhelming. With flood insurance, you have the financial support to get back on your feet as quickly as possible," said David Maurstad, assistant administrator of mitigation and federal insurance administrator for FEMA. "Too often, people mistakenly think flood damage is covered by a homeowners policy. Flood coverage must be purchased separately, and there is typically a 30-day waiting period before a new flood insurance policy becomes effective."

Many residents may face an even greater risk of flooding this year due to summer wildfires. After a wildfire, the charred ground where vegetation has burned away cannot easily absorb rainwater, increasing the risk of flooding for a number of years. Properties directly affected by fires and those located below burn areas are most at risk, including properties located outside of high-risk flood areas.

FEMA has a checklist of tips for homeowners available at www.FloodSmart.gov or by dialing 800-427-2419.

Flood insurance is available through approximately 90 insurance companies in more than 20,300 participating communities nationwide.

Source: Federal Emergency Management Agency (www.fema.gov)

From: Insurance Journal (www.insurancejournal.com)

Calif. October Fires Set A Claims Record

The October windstorms and wildfires that caused an estimated $1.6 billion insured loss in California have produced more claims than 2003, the state’s last record year for blazes, an industry group said.

Insurance Information Network of California said a survey of the insurance industry has confirmed at least 22,700 claims filed from the Southern California fires and windstorms.

This compares with 19,100 claims in 2003 when 3,600 homes were burned for a loss of $2.2 billion after inflationary adjustments.

IINC said this year’s tally includes at least 2,000 insurance claims for damage stemming from the windstorms that fueled wildfires nearly a month ago.

The nonprofit trade group noted that while the wildfires did not burn as many homes as the firestorms of 2003, the reason they likely caused a greater number of insurance claims was because of the mass evacuation of San Diego County, which resulted in increased claims for additional living expenses.

Homeowner policies often pay for hotel costs prompted by a mandatory evacuation, IINC noted.

Working in partnership with the Insurance Information Institute to review claims data, IINC projects that insurers will pay at least $1.6 billion for wind and fire damage to homes, farms, vehicles and businesses.

IINC said that with 2,900 homes lost and $2.4 billion in insurance claims paid in 2005 dollars, the Oakland Hills fire remains at this point the most destructive single brushfire in California history.

More information on the fires is on the IINC Web site at www.iinc.org.

IINC had no immediate estimate concerning the fires that ravaged the Malibu area this week forcing 10,000 persons to flee the area.

Candysse Miller, IINC executive director said by e-mail that, “It's currently too early to estimate the total losses from the Corral (Malibu) fire, which was just brought under control today, though insured losses on the 53 homes lost and more than 30 damaged will clearly be in the millions of dollars.”

From: NU Online News Service (www.nationalunderwriter.com)

Tuesday, November 27, 2007

Calif. State Fund Holds Line On 2008 Rates

California's State Compensation Insurance Fund has announced the filing of its Jan. 1, 2008, rating plan, making no change in the average collectible rate level. SCIF held the line on rates despite the Workers' Compensation Insurance Rating Bureau's filed recommendation for a 5.2 percent average rate increase effective January 1.

State Fund's rating plan adopted the Workers Compensation Insurance Bureau's recommended changes in individual class loss costs. Individual employers will therefore see differences in their pricing due to changes in their classification loss costs, experience modifications, and other changes in rating plan features. Overall, however State Fund's average collectible rate level will be unchanged.

Small employers (premiums between $1,000 and $59,999) with superior safety records will continue to receive a 10 percent workplace safety credit. "Small businesses are crucial to the California economy. State Fund is pleased to be able to reward these employers for maintaining safe workplaces," said State Fund President Janet Frank.

"Employers are enjoying the benefit of a healthy, competitive workers' compensation market that is directly attributable to passage of the Governor's reform legislation in 2004, SB 899, and earlier 2003 reform legislation, AB 227 and SB 228," she continued. "State Fund's rate filing reflects our role as a carrier of choice for many employers, as well as the safety net for any employer needing workers' compensation insurance in California."

State Fund's rate level remains 55 percent below pre-reform 2003 rate levels. The new rates will apply to new and renewal workers' compensation policies with an effective date on or after Jan. 1, 2008.

For more information, visit www.scif.com.

Source: State Compensation Insurance Fund (www.scif.com)

From: Insurance Journal (www.insurancejournal.com)

Calif. Commissioner Files Uninsured Motorist Ballot Initiative

By Patricia-Anne Tom
Insurance Journal

Proving rumors true, California Insurance Commissioner Steve Poizner has filed a draft ballot initiative with the state Attorney General's office designed to reduce the number of uninsured motorists on state roads and highways by imposing fines.

The voter initiative, dubbed the "Uninsured Motorists Law Enforcement Act of 2008," suggests that:

�Law enforcements officers should remove front and rear license plates from a vehicle if the driver cannot provide evidence of financial responsibility (proper insurance coverage) and valid vehicle registration;

�The officer shall provide the driver with a pamphlet encouraging the driver to comply with the financial responsibility law, and inform the driver of possible fines, penalties and other sanctions if compliance doesn't occur within seven days.

�Vehicle owners, including those who lose their license plates, would be given seven days properly insure their vehicle before severe punishment;

�Peace officers shall not stop a vehicle for the sole purpose of determining whether a vehicle is being driven in violation of financial responsibility laws;

According to the Commissioner's draft initiative, approximately 25 percent of California drivers are not meeting their financial responsibility to acquire and maintain auto insurance as required by law. That costs law-abiding motorists more than $1 billion annually, taking into account that accidents are unnecessarily time consuming and aggravating for properly insured drivers.

Furthermore, the Commissioner indicated that the state's Low Cost Auto Program, which applies to all 58 counties, provides an affordable and actuarily sound insurance program, giving all vehicle owners the opportunity to comply with the state financial responsibility law. The draft initiative requires approximately 433,000 valid signatures before it could be placed on a statewide ballot for consideration by voters, according to the Secretary of State.

For more information, visit http://ag.ca.gov/cms_attachments/initiatives/pdfs/i756_07-0086_initiative.pdf.

From: Insurance Journal (www.insurancejournal.com)

State Fund To Stand Pat On Overall Rates

As California's State Compensation Insurance Fund continues bleeding premium and market share, it announced yesterday that it would in the aggregate keep its 2008 collectible rate level unchanged from this year. The rates, which adopt the Workers' Compensation Insurance Bureau's recommended changes in individual class loss costs, apply to both new and renewal workers' comp business.

"Individual employers will see differences in their pricing due to changes in their classification expected loss costs, their experience modifications, and other changes in rating plan features," a State Fund news release touting the rate filing states. Overall, however State Fund's "average collectible rate level" will be unchanged, the insurer stated in a carefully worded news release.
Many insureds have seen their premium levels jump dramatically due to changes in expected loss costs and, as Workers' Comp Executive reported last month, that trend will continue in 2008.

State Fund also noted that employers with premiums between $1,000 and $59,999 and with superior safety records will continue to receive a 10% credit.

The Bureau has recommended that that insurance commissioner increase average pure premium rates by 5.2% on Jan. 1, 2008. A decision on the recommendation is expected tomorrow. Few other carriers have filed their rates for January, preferring to wait for the insurance commissioner to make a final decision. Pure premium rates are only advisory and carriers are free to price their policies as they like.

From: Workers Comp Executive (www.wcexec.com)

Monday, November 26, 2007

S&P Announces Rating Actions on Five Major Mortgage Insurers

Standard & Poor's Ratings Services announced a number of rating actions, covering five mortgage guarantee insurers: Radian Group, Mortgage Guaranty Insurance PMI Group, Triad Guaranty and Old Republic. The sector has been severely affected by the subprime mortgage crisis, which poses a real threat to their financial stability.

Nonetheless, S&P sees some positive signs. It said "all mortgage insurers reported an increase in earned premium in the third quarter of 2007 because of higher persistency and increased penetration of mortgage originations. The specific rating actions taken, and a summary of the
reasons is as follows:

S&P affirmed its 'A' counterparty credit rating on Radian Group Inc. and its 'AA' counterparty credit and financial strength ratings on Radian's mortgage insurance subsidiaries (Radian MI); however, S&P maintained its negative rating outlook on all of the companies. "Although Radian reported a net loss of $704 million for the third quarter, Radian MI's results were either consistent with or better than our forecast," noted S&P credit analyst James Brender. S&P added that while the performance of Radian MI's core product--first-lien mortgage insurance--was encouraging, "this segment will still record underwriting losses until at least 2009.

S&P lowered its counterparty credit and financial strength ratings on Mortgage Guaranty Insurance Corp., MGIC Indemnity Co., and MGIC Australia Pty Ltd. (collectively referred to as MGIC) to 'AA-' from 'AA'. S&P also lowered its counterparty credit rating on MGIC Investment Corp., the holding company, to 'A-' from 'A'. But S&P has removed all these ratings from CreditWatch, where they were placed on Oct. 17, 2007, with negative implications. The outlook on all these companies is now stable.

"The downgrades primarily reflect the challenges confronting the mortgage and housing sectors," Brender explained. "We also expect MGIC's near-term results to compare somewhat unfavorably with those of its peers because of MGIC's higher risk tolerance, particularly for borrowers with low credit scores."

Consequently, S&P indicated that it "believes MGIC will report underwriting losses in 2007, 2008, and 2009." However, the rating agency added that the current ratings "are based on MGIC's excellent capitalization, which will enable the group to weather this very difficult period in the mortgage insurance industry. We still view MGIC's competitive position as very strong, and we believe changes in long-term fundamentals will enable MGIC to generate underwriting profits by 2010."

S&P removed its 'A' counterparty credit rating on PMI Group Inc. (PMI) and its 'AA' counterparty credit and financial strength ratings on PMI's mortgage insurance subsidiaries (PMI MIC) from CreditWatch with negative implications, and affirmed its ratings on all the companies, albeit with a negative outlook.

"The affirmation of the ratings on PMI MIC is based on the company's excellent capitalization, which will enable it to weather a very difficult period in the mortgage insurance industry," Brender explained. He noted that S&P "views PMI MIC's competitive position as very strong, and we believe changes in long-term fundamentals could enable PMI MIC to generate underwriting profits in 2009. These positive factors are offset by the challenges confronting the mortgage and housing sectors. These challenges will lead to weak operating performance in 2007 and 2008."

S&P lowered its counterparty credit and financial strength ratings on Triad Guaranty Insurance Corp. (Triad) to 'AA-' from 'AA', as well as its counterparty credit rating on Triad Guaranty Inc., the holding company, to 'A-' from 'A' and assigned a stable outlook.

"The downgrades reflect the challenges confronting the mortgage and housing sectors," Brender indicated. He explained that S&P "believes it is more difficult to estimate the losses from Triad's insured loan portfolio than some of its peers. Triad has an above average concentration of risk in-force (RIF) from products that have not been tested in a difficult environment. For example, Alt-A loans and mortgages with potential for negative amortization." These constituted 23 percent and 13 percent of primary RIF as of Sept. 30, 2007, respectively. Neither of these products represented a material percentage of production during the last downturn in the mortgage and housing sectors.

S&P has removed its 'A+/A-1' counterparty credit rating on Old Republic International Corp. and its 'AA' counterparty credit and financial strength ratings on ORI's insurance subsidiaries from CreditWatch, where they were placed on Oct. 29, 2007, with negative implications. It has also affirmed these ratings with a negative outlook. Brender explained that the "negative outlook reflects our expectations that operating results for ORI's mortgage and title operations will be inconsistent with the ratings until at least 2009.

Source: Standard & Poor's (www.standardandpoors.com)

From: Claims Journal (www.claimsjournal.com)

Limiting the Liability for Companies Throwing Holiday Parties

By James M. Hillas
Austin Business Journal

The holiday season is just around the corner, and with it comes the season of employer-sponsored holiday parties.

Holiday parties are an excellent way to bring together employees and their families in celebration. However, employers must be cautious that company celebrations do not result in unanticipated legal liability.

Social host liability is a serious issue for employers who choose to throw holiday parties. Liability can arise for the host when an intoxicated guest causes injury -- whether at the function or after leaving.

An employer's social host liability is greatest for drunk-driving accidents when the employer has provided alcoholic beverages to a visibly intoxicated individual who causes injury. In drunk-driving cases, liability under the law is strict, meaning that there are very few defenses once it is established that a guest was served while visibly intoxicated.

Liability for an employer also may arise when an employee who has had too much "holiday cheer" later becomes violent or sexually harasses a co-worker.

Finally, employers also may become liable if an employee or guest under the age of 21 consumes alcohol at a company holiday party.

Employers thus should take steps to ensure that employees have fun at the party and, more importantly, take steps to ensure that employees don't drive under the influence of alcohol or engage in other alcohol-induced conduct with adverse consequences.

Although the potential for liability exists, most employers can still throw a fun party while limiting their exposure by following several common-sense tips:

Maintain company policy. Remind employees ahead of time that normal work rules and standards apply to holiday parties. A memo or companywide email stating company policy and reminding employees to drink responsibly is a good practice.

Also consider scheduling holiday parties on a weeknight when employees may be less likely to overindulge. Make it clear the party is a voluntary event and that attendance is not mandatory.

Finally, review applicable liability insurance policies for alcohol-related exclusions and consult with your company's insurance agent or broker well in advance of the party if additional insurance is needed.

Control consumption. Take all reasonable steps to ensure that a visibly intoxicated individual is not served alcohol. Limiting consumption is a key component to limiting liability.

Have an ample supply of nonalcoholic drink options. Hiring professional servers who are trained to recognize and avoid serving intoxicated patrons, issuing a limited number of drink tickets, having a cash-only bar and closing the bar well before the end of the party also are wise options.
Finally, providing adequate food at your event may limit potential exposure, because food helps to slow the body's absorption of alcohol.

Hold the event off premises. In Washington, a state administrative rule requires employers to prohibit alcohol and narcotics in the workplace and to prohibit employees under the influence of alcohol or narcotics from being at the workplace.

Check ID. Texas law prohibits anyone, except for a parent or legal guardian in a private residence, from providing alcohol to a minor or a juvenile. A minor is a person under 21 and a juvenile is a person under 18.

Professional servers should be trained to check ID for any employee or guest who looks under 30 and should further verify that the ID has not expired or been altered. Likewise, the servers should not provide pitchers or multiple drinks without checking the ID of all persons who will be consuming the drinks.

Offer an alternative to driving. The most serious liability arises when an attendee leaving a party drives after having too much to drink. If alcohol will be served at your holiday party, be sure to make a clear announcement that a cab ride or an alternate form of designated driver is available upon request.

Stationing a high-level manager near the exit to say goodnight and remind attendees of this option (and insist when appropriate) is a good idea.

Enforce workplace behavior. Your employee manual should include clearly stated policies regarding alcohol consumption and sexual harassment. Although a holiday party is a time to celebrate, stress to your employees that the rules still apply. In general, an employer should not tolerate behavior at a party that would not be allowed in the workplace. If you do not have an employee manual, there is no time like the present to put one in place.

Take action. By taking a few practical steps, your company can throw a great holiday party without unwittingly incurring liability.

From: Austin Business Journal (www.bizjournals.com)

Saturday, November 24, 2007

Holiday Phishing Surges, Shoppers Beware

Barracuda Networks Inc. on Friday reported a more than 10 percent surge in the number of phishing Web sites created and 3 times the number of phishing e-mails sent out in the last 24 hours.

Campbell-based Barracuda, an e-mail and Web security provider, said the increase in activity indicates that scammers are working to cash in on Black Friday, traditionally the biggest shopping day of the year, and the long Thanksgiving Day weekend.

In many cases, because of the holiday the sites will go uninterrupted for longer than normal because no one is available to take them offline, the company said.

"Consumers need to be extra vigilant when shopping online this weekend," said Dean Drako, president and CEO of Barracuda Networks. "Anyone planning to do holiday shopping online this weekend should go directly to the sites that they plan to purchase from, rather than click on URLs that arrive via e-mails."

The Thanksgiving surge in phishing Web sites has also created an increase in e-mails directing users to the sites directly by offering special deals or sales as well as e-mails that attempt to lure the recipient into verifying account information via a link to the fake site.

From: Sacramento Business Journal (www.bizjournals.com)

Friday, November 23, 2007

Best Puts Swiss Re Under Review

A.M. Best Co. said yesterday that it has placed the ratings of Zurich-based Swiss Re under review with negative implications after the reinsurer announced an $878 million loss from its exposure to credit default swaps linked to the subprime mortgage market collapse.

Two other rating firms, Standard & Poor’s and Moody’s, said previously that they were keeping their ratings for Swiss Re unchanged.

Oldwick, N.J.-based Best said it was reviewing the financial strength rating and issuer credit ratings for the reinsurer and its subsidiaries along with debt issued or guaranteed by the company.

The rating agency said the move stemmed from Swiss Re’s exposures to two credit default swaps written by its Credit Solutions unit. Best said it would discuss “the potential for further write-downs arising from this exposure” with Swiss Re and that it will look to see if Swiss Re is vulnerable to other exposures.

“Although the loss does not exceed Swiss Re’s credit risk tolerance, A.M. Best will further evaluate Swiss Re’s enterprise risk management in light of this unexpected loss and the steps Swiss Re has taken to minimize such financial risks in the future,” the rating agency said.

In discussing Swiss Re’s losses, the company’s chief executive officer, Jacques Aigrain, said in a conference call this week “it is clear we made some poor choices” and the company is undergoing a review to improve the process and avoid a repeat of such a loss.

Moody’s, although affirming its rating of Swiss Re, said it will re-examine the company’s risk management processes, particularly those related to the Credit Solutions business. Moody's also said it will “revisit the assumptions behind the capital requirement for the Financial Services division and examine any implications in this regard for debt issuance capacity at the group level.”

S&P said the company’s AA-minus/Stable/A-1-plus ratings are unaffected. Despite its magnitude, “while the loss was unexpected,” Standard & Poor's said there would be no negative ratings action because the loss is within the group's articulated tolerance for credit risk and the group has “very strong underlying earnings for the year to date.”

The rating firm noted the group is still expected to meet its 13 percent target return on equity for the year and “no further material adverse development is expected over the medium term.”

From: NU Online News Service (www.nationalunderwriter.com)

Wednesday, November 21, 2007

Worst Ill Is Ignorance: Health Benefits Linked To Ability To Speak English And Education

By Joe Goldeen
The (Stockton, CA) Record

Learn English and you'll live a healthier life.

"I never have insurance," said Miguel Hurtado, 25, an unskilled construction laborer from Mexico who speaks very little English after seven years working in California.

Through a friend, Jaime, 25, who declined to give his last name, Hurtado said that if his English was better, he knows he could get a better job that includes health-insurance.

The two young immigrants say they spend most of their time working for an electrical contractor throughout Northern California and don't have the time or enough energy to take English classes.

Poor education, lack of citizenship and the inability to speak English -- all more common among Spanish-speaking Latinos -- result in lower wages and fewer jobs that offer health insurance, according to a recent study by the Washington-based Center for Studying Health System Change.

The exhaustive study -- funded by the Robert Wood Johnson Foundation -- examined why the proportion of Latinos with employer-sponsored health coverage is so much lower than whites' and why the rapid growth in the Latino population hasn't broadened the gap.

The ability to speak English is a major indicator of whether Latinos have employer-sponsored coverage, according to the study. English-speaking Latinos are more similar to whites in the workplace and access to employer health coverage than they are to Spanish-speaking Latinos.
Spanish-speaking Latinos also appear more sensitive to out-of-pocket premium costs and less likely to accept an offer of insurance when it's made available, according to the study.

"It's something we've always known, that in order to be successful you have to have the ability to speak English," said Jose Rodriguez, executive director of the Stockton-based Council for the Spanish Speaking, or El Concilio, a nonprofit service organization.

Rodriguez said the inability to speak English has always been an obstacle to adequate health care, and it continues to be a pervasive problem.

"Since the No. 1 way to get insurance is through the employer, the problem is that Hispanics generally have jobs that are part-time and low-skilled. It's the type of positions that we hold," he said.

And that is despite the fact that more Latino males -- 97 percent -- than any other ethnic group are working, according to Department of Labor statistics, Rodriguez said.

It will be difficult, if not impossible, for the recent effort to reform the health-care system to work without "a good amount of education on how health care works in this country. For any health-care system to work, you are going to need an educated consumer," Rodriguez said.

In San Joaquin County alone, with a 2006 estimated population of 673,000 according to the U.S. Census Bureau, almost 227,000 residents speak a language other than English at home. That's 33.7 percent. Statewide, the percentage is higher -- 39.5 percent whose primary language isn't English. That's about 14.4 million people out of 36.5 million residents.

"After 24 years of public-health education and community service, where thousands of people were screened, immunized, counseled and referred -- free of charge -- we learned that the most dangerous of all diseases is ignorance," said Guillermo Vicuna, a retired Stockton dentist and co-founder of the Su Salud Health Education Fair and Tour of Life who has made health education his life's work.

"It's the lack of information and knowledge of our health and well-being which contributes to overutilization of emergency rooms, unnecessary suffering and premature death," said Vicuna, who hosts a Spanish-language health-education radio program.

"I believe that if we do not put emphasis on this issue -- on patient education, providing direct counseling from doctors who are not being trained to prevent diseases, only to treat diseases -- we will never fix the health-care crisis that we are facing. This is absolutely a disaster," he said.

In addition to Vicuna's radio program and Tour of Life health-education series, there are numerous opportunities for non-English speakers to learn English around the county. For example, Stockton Unified School District's Adult School at 1525 Pacific Ave. offers free classes in English as a second language in the morning, afternoon and evening to accommodate just about any schedule. Its open-enrollment policy means students can begin classes at any time. Information: (209) 933-7455.

Stockton-based Community Medical Centers Inc. operates 13 health clinics in the region for low-income and uninsured patients. Chief executive Michael Kirkpatrick said a demographic review of his clientele in 2006 supports the nationwide study.

Community Medical Center clinics treated 52,000 individuals during 150,000 clinical visits in 2006. Of those patients, 63 percent identified themselves as Latino -- about 33,000; 46 percent had no insurance while almost half had publicly funded insurance -- either Medi-Cal, Medicare or Healthy Kids.

Just 6 percent were covered by private insurance, Kirkpatrick said.

"Sixty percent of the Hispanic patients of record are monolingual Spanish speakers. This along with low income levels and a lack of insurance pose a barrier to accessing specialty care, understanding the majority of written material available on preventive health education and self-management techniques to control chronic diseases," Kirkpatrick said.

Spanish-speaking patients are accommodated at Community Medical Center clinics because "the bilingual, bicultural staff goes out of its way to help these patients achieve access to primary medical services and to navigate the complexities of ancillary, specialty care, and pharmacy services in the community, which they may need," he said.

Spanish-speaking patient Marta Flores, 48, who came in for an exam last week for pain in her arm, agreed.

"It's not been difficult to get care because the people who help me have all spoken Spanish," Flores said through an interpreter.

However, Maria Vasquez, 25, also speaking through an interpreter, said not speaking English is a serious problem for her young family.

"The lack of money, the lack of employment, the lack of English is very hard," said Vasquez, who stays home with her children while her husband is employed as a farm worker.

Joanna Galindo, who enrolls eligible children from Spanish-speaking homes in the Healthy Families subsidized insurance program for $45 a year as program director at Catholic Charities, sees the gap in insurance coverage growing -- especially for children -- if Congress and the Bush administration don't provide continued funding for the State Children's Health Insurance Program (Healthy Families in California).

"I'm on the front lines and I see the kids who don't have insurance. We are unclear on the reasons, but there are literally thousands of Hispanics who live in our region whose children are not insured, and they feel comfortable coming into Catholic Charities to register for one of our programs," Galindo said.

"We do not ask why they do not have insurance, but our guess would be that the study is correct, that many are in very low-paying jobs that do not have insurance as a benefit," she said.

Source: The (Stockton, CA) Record (www.recordnet.com).

From: Insurance News Net (www.insurancenewsnet.com)

Best Puts Swiss Re's Ratings 'Under Review/Negative'

A.M. Best Co. announced that it has placed the financial strength rating of 'A+' (Superior) and the issuer credit ratings of "aa" of Swiss Reinsurance Co. and its similarly-rated subsidiaries "under review with negative implications."

Best also placed all debt issued or guaranteed by Swiss Re under review with negative implications.

The rating actions follow the announcement on Monday by Swiss Re that it was writing down CHF 1.2 billion ($1 billion) in a mark-to-market loss, arising from its exposure to two credit default swaps written by its Credit Solutions unit.

"The loss has resulted from the unprecedented ratings downgrades in October and the lack of liquid markets for the underlying securities," said Best. As Swiss Re explained the default swaps were heavily impacted by the subprime mortgage market crisis.

Best indicated that it plans to "discuss with Swiss Re's management the potential for further write-downs arising from this exposure." The rating agency also warned that even though the loss does not "exceed Swiss Re's credit risk tolerance," it will "further evaluate Swiss Re's enterprise risk management in light of this unexpected loss and the steps Swiss Re has taken to minimize such financial risks in the future."

Best's action is markedly more severe from the position taken by Standard & Poor's Rating Services, who announced that it did not plan to take any rating action at this time due to the write downs (See IJ web site Nov. 20).

For a complete listing of Swiss Re's FSRs, ICRs and debt ratings go to: www.ambest.com/press/112003swissre.pdf.

Source: A.M. Best (www.ambest.com)

From: Insurance Journal (www.insurancejournal.com)

Bliss and Glennon Offers Garage Liability Market in Calif.

Bliss and Glennon Inc. has a market for garage liability including garage keepers legal liability in California. The new Internet rating system is designed to provide agents with the best quote among the carriers the company represents. All carriers are rated "A" or better by A.M. Best.

For more information, visit www.bgsurplus.com or contact Robert Abramson at P.O. Box 8010. Redondo Beach, CA 90277. Phone 310-372-9115.

Source: Bliss & Glennon, Inc. (www.bgsurplus.com)

From: Insurance Journal (www.insurancejournal.com)

Tuesday, November 20, 2007

Multi-State Settlement Obtains Benefits for Victims of Race-Based Policies

A multi-state effort including California, Georgia, Florida, Ohio and Texas, has resulted in a settlement with Americo Life Inc. to secure benefits for African-American consumers historically sold insurance policies using discriminatory practices. According to the California Department of Insurance, Americo's acquiried companies charged or collected higher premiums for life insurance products based upon race; limited the amount, extent or type of coverage available by race; and, assigned risk classifications based on race.

Although the affected policies were not sold directly by Americo, they were sold by insurance companies Americo subsequently acquired (see Web link below). The settlement applies to policies issued by the companies from 1928 to 1960 and were active, live policies after Dec. 31, 1959. Possible victims, including heirs and beneficiaries, have four years to make a claim.

The settlement affects small face-amount life insurance policies, commonly known as industrial life or burial policies. For each person who is identified as a holder of an eligible policy, the company will add 25 percent to the face amount of the policy. In addition, policies that terminated by cash surrender, death or endowment will receive a payment calculated at four percent per annum from the date of termination until the present.

The Texas Department of Insurance (TDI) was the lead regulatory negotiator for the five states that acted on behalf of all the members of the National Association of Insurance Commissioners. TDI's Race-Based Pricing Web Resource Page includes information on current and past settlements, a list of insurance companies involved in race-based pricing, and online claim forms and complaint forms. It can be accessed at: www.tdi.state.tx.us/consumer/rbsettlement.html.

Source: California Department of Insurance (www.insurance.ca.gov)

From: Insurance Journal (www.insurancejournal.com)

Monday, November 19, 2007

Study: Safety Belt Use Still Important

Using the 2006 fatal crash data released by the U.S. Department of Transportation, Los Angeles-based Farmers Insurance has completed a study to determine the most influential factors in drivers' mortality rate in multi-vehicle accidents.

"Once again, we find strong statistical evidence that seat belts remain the most important protection for the driver," noted Kevin Mabe, Economist at Farmers, who completed the study.
"We found that when a driver used a seat belt, the odds of a fatality dropped nearly 70 percent compared to a driver who did not." Earlier this year, Mabe released a study on 2005 accident data and concluded similar results.

The analysis incorporates a logistic econometric model with 41 variables, accounting for factors such as road and traffic conditions at the time of the fatal accident, location and time, accident events, vehicle specifics, driver demographics, and safety features. "Controlling for these additional external factors allows us to more precisely isolate the degree to which safety belts save lives," Mabe explained.

Several other factors showed significance in decreasing the odds of a driver's death. For example, rear-end collisions proved less deadly than head-on or T-bone collisions. Larger vehicles, such as trucks, SUVs, and vans, appeared to protect the driver better than a typical automobile. Dry roads, in contrast with wet roads, decrease the odds of a fatality by over 10 percent, suggesting that drivers should use caution when navigating slick roads.

Other factors increased danger on the roads. "Nighttime and winter driving tended to produce more deadly accidents, and drivers should continue to exercise additional caution," Mabe noteed. Certain accident events, such as rollovers, ejections, and vehicle fires, greatly reduce the survivability in an accident. Motorcycle accidents showed remarkably increased mortality rates compared to other vehicles.

"Not all factors proved predictive," Mabe said. Driver height and weight appeared to have little influence on the outcome of the accident. "However, age plays an important part. Older drivers, as well as young new drivers, have an increased risk." The model also showed little evidence of differences between regions of the U.S.

"A driver's three-second choice to 'buckle up' will more than double his or her chances to survive a severe accident. Farmers encourages everyone to take precaution and use their safety belts."

For more information, visit www.farmers.com.

Source: Farmers Insurance (www.farmers.com)

From: Claims Journal (www.claimsjournal.com)

Progressive Lays-Off 341; Sees Oct. Income Drop 42%

By Mark E. Ruquet
NU Online News Service

Progressive Group of Insurance Companies said net income in October was down 42 percent and it is laying off 341 employees on Nov. 30 as part of a reorganization plan.

The Mayfield Village, Ohio-based auto insurer said it will cut 263 people in its information technology division and 78 people in its personal lines group.

The cuts amount to 7 percent of the IT staff and one percent of the personal lines group nationally. This amounts to about one percent of the company’s total workforce of more than 20,000. Most of the people affected are based in Cleveland, the company said.

The cuts in the personal lines group were mainly of managers and supervisors in the sales and customer service call center operations, Progressive said.

“This is undesirable and difficult, but necessary,” said Progressive President and Chief Executive Officer Glenn Renwick in a statement. “This industry, like many, is extremely competitive. We are constantly challenged to streamline our operations to compete effectively. This is a critical step we need to take now to remain competitive and to help ensure our future success in the industry.”

He said the company is assisting employees in trying to find new employment.

The company also reported that net income in October dropped $55 million to $75.5 million. Net premiums written dropped four percent, or $55 million, to $1.26 billion. The company’s combined ratio rose 5.8 percent, 94.9 from 89.1, for the same period last year.

For the ten months of this year net income is down 26 percent, or $355 million, to $1.02 billion. Earnings per share have dropped 34 cents to $1.41 a share. Net written premiums are down two percent, or $304 million, to $11.95 billion from $12.25 billion in 2006.

Progressive said that approximately $8 million in severance expense associated with the lay-offs will be included in its November results.

From: NU Online News Service (www.nationalunderwriter.com)

Saturday, November 17, 2007

CA Insurance Commissioner Seeks Initiative to Allow Police to Yank Uninsured Motorists' License Plates

By Marc Lifsher
Los Angeles Times

Uninsured motorists who ignore warnings from the state to buy coverage could have their license plates pulled by police officers under an initiative proposed by California Insurance Commissioner Steve Poizner.Poizner submitted papers with the attorney general's office Thursday to start the process that would allow him to gather signatures to put the measure before voters in the November 2008 election.

State law requires all motorists to have basic liability coverage, yet about 1 in 4 are uninsured, Poizner said.

"California has the worst uninsured-driver problem of any other state in the country except Mississippi," Poizner said in an interview.

He said his proposal, which must be endorsed with the signatures of 434,000 registered voters to earn a spot on the ballot, was needed to take scofflaws off the roads.

"Driving without insurance is not only against the law, but it creates a huge safety issue and creates a huge financial liability for folks" who get hit by uninsured drivers, Poizner said.

He noted that insured drivers typically pay an extra 10% to 15% in premiums to protect themselves from damage caused by uninsured drivers.But advocates for extremely low-income workers and their families said Poizner's initiative, if it became law, could be a hardship for people who can't afford insurance or can't get coverage because they are illegal immigrants and are prohibited from getting driver's licenses.

Nancy Berlin, the director of California Partnership, a Los Angeles-based community organization, contended that even California's state-backed low-cost auto insurance program, which provides basic coverage for as little as $400 a year, is too expensive for some families.

"We work with very low-income people, some temporary workers surviving on very minimal wages," Berlin said. "They don't have any money left over at the end of the month. Four hundred dollars doesn't sound like a lot until you have to live on $8,000 a year."

The proposal would allow police and Highway Patrol officers to take a driver's license plates if he couldn't provide a paper proof-of-insurance certificate or if there was no record of insurance coverage in the state Department of Motor Vehicles' electronic records. The driver would be issued a temporary permit to continue to operate the car for up to seven days. The driver would need to buy insurance to be able to register the car.

Poizner, a Silicon Valley near-billionaire Republican who took office in January, said he was pursuing the initiative to make good on a campaign pledge to do something about the problem of uninsured drivers. Critics, however, say he is trying to raise his profile for a possible run as a Republican candidate for governor in 2010. Poizner called such talk speculation.

From: Los Angeles Times (www.latimes.com)

Progressive Reduces IT and Personal Lines Work Force

In early September, The Progressive Group of Insurance Companies announced a reorganization designed to increase the Company’s ability to execute on key strategies, lower its non-claims expense ratio and foster growth through more competitive pricing, improved customer retention and an increased focus on brand development. The reorganization included combining its Agency and Direct Businesses into a single Personal Lines organization.

Since then, business areas have reviewed organization and staffing. As a result, the Company today announced a reduction-in-force in its Information Technology group and its Personal Lines group of 263 people and 78 people, respectively. This represents about 7 percent of its IT work force countrywide, and 1 percent of its Personal Lines group countrywide; those affected in Personal Lines are primarily supervisors and managers in the Company’s sales and customer service call center operations. Everyone affected will be employed through November 30th; most of the affected people are based in Cleveland. The Company employs more than 26,000 people throughout the country and nearly 10,000 in Northeast Ohio.

“Letting people go is never a desired outcome. The contributions of people affected by these changes helped us to get to where we are today. To every affected person, thank you,” said Progressive President and Chief Executive Officer Glenn Renwick. “We have met with each individual affected, are trying to help them with the transition and will continue to work to help them find other jobs.”

Renwick said: “This is undesirable and difficult, but necessary. This industry, like many, is extremely competitive. We are constantly challenged to streamline our operations to compete effectively. This is a critical step we need to take now to remain competitive and to help ensure our future success in the industry.”

Source: Progressive Insurance (www.progressive.com)

From: Business Wire (www.businesswire.com)

AZ Republicans Push Measure to Bar Illegals from Obtaining Drivers Licenses

By Mike Sunnucks
Phoenix Business Journal

Republicans -- including Arizona Congressman Trent Franks and the state GOP -- are fighting efforts to allow illegal immigrants to obtain drivers licenses.

New York Gov. Eliot Sptizer, a Democrat, retreated from a controversial plan Wednesday that would have allowed illegals to obtain a special drivers license. The program also caused consternation for Democratic presidential front-runner Hillary Clinton. Sen. Clinton took a number of different positions on the issue in recent weeks before saying she opposed the idea.

In 2003, Arizona Gov. Janet Napolitano said she was open to a bill that would have granted Arizona drivers licenses to illegals. Napolitano also moved away from that position and said recent state identification measures do not include licenses for illegals.

Arizona Republican Party Director Sean McCaffrey said the issue shows Democrats are not committed to border security and enforcing immigration laws. And, U.S. Rep. Trent Franks signed onto a Republican proposal to prohibit states from giving illegal immigrants drivers licenses or permits.

Drivers licenses are a primary form of ID for travel, employment and other purposes. Advocates say allowing illegals to have a form of ID will encourage them to obtain car insurance. Detractors say it goes against the rule of law.

From: Phoenix Business Journal (www.bizjournals.com)

Friday, November 16, 2007

Pre-Paid Legal Services, Inc. Exploring Immigration Issues

With the increasing focuson immigration issues and more than an estimated dozen states havingalready passed legislation or working on proposed legislation, Pre-Paid Legal Services, Inc. (NYSE: PPD) is making an effort to better educate itssales force on how the company's legal membership can assist businesses andtheir employees with compliance efforts.

"Our membership can help businesses and their employees deal with theevolving compliance arena and we should," said Pre-Paid Legal Services,Inc. CEO Harland Stonecipher. "As a company, we're committed to doing allwe can to educate and train our sales force, including this timely and important topic. We've positioned ourselves for years as a 'Life EventsLegal Plan' and dealing with all the compliance issues for both businessesand their employees certainly fits that description."

"This issue isn't going away," he said. "For example, Oklahoma recentlypassed House Bill 1804, effective Nov. 1, which established criminalpenalties for harboring, transporting or concealing illegal immigrants. Itdenies them public benefits and also requires businesses to run all newworkers through a verification system. The best thing any of us can do ismake sure we know our rights and understand our options - whether thisissue or the countless other legal events that touch our lives daily. To dothat, we need the ability to speak with an attorney."

Source: Pre-Paid Legal Service, Inc. (www.prepaidlegal.com)

From: PR Newswire (www.prnewswire.com)

Calif. Underinsured Homes Not Insurers’ Fault, Says Hartwig

By Matt Brady
NU Online News Service

Despite the claims of the state’s lieutenant governor, the issue of underinsured homeowners in the wake of the recent California wildfires cannot be blamed on the insurance industry, according to the head of an insurance industry group.

Robert P. Hartwig, president of the Insurance Information Institute, said allegations by California Lieutenant Governor John Garamendi “held no water,” given the facts of the issue.

At an Oct. 24 press conference with Gov. Arnold Schwarzenegger, Mr. Garamendi commented that the state would keep its eye on the industry.

In the aftermath of the fires, he said, “rebuilding mechanisms” were in place “with the insurance industry playing its appropriate role and the state watching carefully that they do so.”

Additionally, a recent news report attributed remarks to him expressing his belief that insurers and their agents may be to blame for giving consumers bad information and unclear policy language.

Mr. Garamendi was previously the state insurance commissioner and after the state’s last major wildfires in 2003 was reported to have said that major insurers were “screwing” their customers. Back then he also assailed insurers over underinsurance and claim payouts that were insufficient to cover rebuilding costs.

Mr. Hartwig said the “most bizarre” element of Mr. Garamendi’s recent claims was that the lieutenant governor argued that somehow insurers and their agents would encourage clients to significantly underinsure their home, which makes little sense. “That’s the first time in history that insurance agents have been accused of not selling,” he said.

Mr. Hartwig noted there is “not a single report” that supports the idea of a systemic plot to underinsure, and that a majority of homes have been rebuilt since the last series of major wildfires in 2003, with many being rebuilt even larger.

As for the number of homes that haven’t been rebuilt, Mr. Hartwig said the reason was not a grand conflict with insurers but something much more ordinary. “People took the money and moved somewhere else, which they are allowed to do,” he said.

Another “more telling” aspect of the aftermath of the 2003 fires, he said, is that not a single lawsuit filed against an insurer concerning the coverage issue that made it to the courts was found in favor of the plaintiff. In fact, he said “only a handful” had even made it as far as the court room.

“The allegation fails,” he said of Mr. Garamendi’s claims, which he noted can be seen in the various reviews done by newspapers and others, and in the fact that the state Department of Insurance has not even found the issue worth investigating.

A Tuesday New York Times article on the coverage issue reported on two families whose homes were destroyed by the fires and are now facing steep construction costs that may outpace their insurance policy limits.

The piece described their realization that they lacked coverage for the contents of their homes. One homeowner was quoted as saying his coverage covered construction costs of roughly $230 per square foot, while the actual rebuilding of his home could be more than twice that.

While there may not be a conspiracy to underinsure homes, Mr. Hartwig said that does not mean homes aren’t underinsured. “Of course there are” homes that should have more coverage, he said.

Typically risks are underinsured, he said, because the homeowner fails to report changes or additions they have made to the structure. There have been enormous amounts of money pumped into home equity loans, he noted, “and much of that has gone unreported.”

As an example, Mr. Hartwig mentioned a report he had seen recently in which a homeowner had put an $800,000 addition on his house that was burned in the fires but hadn’t told his insurer about it. “Is that the fault of the insurer?” he asked. “Of course not.”

However, he said that in the wake of the fires, he expects insurers to become “more aggressive” in trying to inform their policyholders about the issue, sending surveys to policyholders and calling them to try and find out if any changes have been made that could affect their risk or the amount of coverage they need.

From: NU Online News Service (www.nationalunderwriter.com)

Some Lines Seen Declining 10% In 2008

Adding to a recent drumbeat of news about falling insurance prices, a management firm said today that the property-casualty insurance market will stay soft in 2008 and rates for some lines could decline up to 10 percent.

Premiums “are expected to either decline or remain flat,” according to actuarial and risk management experts at Watson Wyatt Worldwide, consulting firm.

The company said insured companies may see enhancements in some coverage, particularly for directors’ and officers’ liability insurance, and can expect this trend to continue.

Orin Linden, p-c practice leader for Watson Wyatt’s New York insurance and financial services consulting group, said: “Rate decreases will be the rule for casualty insurance coverage next year. Strong competition and healthy capacity are forcing insurance companies to lower their premiums or, at the very least, hold them stable. It’s clearly a buyer’s market.”

Mr. Linden estimated that “rates for casualty insurance coverage may decline as much as 5 percent to 10 percent next year, and rates for property insurance coverage will be mostly flat, although some buyers may see a slight reduction. Rates have declined in each of the last few years for both property and casualty insurance coverage as the industry is going through a period of strong profitability.”

According to Steve Lawrence, a property and casualty senior consultant with the firm, other segments in the insurance industry—including workers’ compensation, directors’ and officers’ liability, and reinsurance—are also expected to experience soft market conditions.

He said he foresees rates for workers’ compensation staying relatively stable as the market remains soft and companies continue to experience strong profitability. “We are expecting to see rates remain unchanged or perhaps decline as much as 5 percent,” he added.

Mr. Lawrence also noted a growing interest among insurers and risk managers in using predictive modeling software. In particular, he said, insurers are applying the techniques they use for personal auto to workers’ compensation.

This helps risk managers identify potential problems with workers’ compensation claims earlier in the process and allows them to implement a settlement strategy to reduce their cost. “Large companies with high volumes of workers’ compensation claims are especially drawn to predictive modeling,” said Mr. Lawrence.

“With the marketplace showing little sign of hardening, it may be an ideal time for buyers to review their risk management program structure and insurance policies,” Mr. Linden counseled. “This will help them decide if key program parameters should remain intact or if alternative risk management solutions, such as insurance captives, should be considered.”

“Buyers clearly get better terms in softening markets. However, they need to be well positioned so that when the market firms up, they have a plan to move forward.”

Mr. Linden and Mr. Lawrence also suggested buyers who are considering switching carriers analyze the carrier’s long-term credit rating, noting that many claims may not be paid out for another six to 10 years.

From: NU Online News Service (www.nationalunderwriter.com)

Thursday, November 15, 2007

Property/Casualty Marketplace to Remain Soft in 2008, Watson Wyatt Worldwide Says

The market for property and casualty insurance will stay soft in 2008, as premiums are expected to either decline or remain flat, according to actuarial and risk management experts at Watson Wyatt Worldwide, a leading global consulting firm. Additionally, insured companies may see enhancements in some coverage, particularly for directors’ and officers’ liability insurance, and can expect this trend to continue.

“Rate decreases will be the rule for casualty insurance coverage next year,” said Orin Linden, property and casualty practice leader of Watson Wyatt’s insurance and financial services consulting group in New York. “Strong competition and healthy capacity are forcing insurance companies to lower their premiums or, at the very least, hold them stable. It’s clearly a buyer’s market.”

Rates for casualty insurance coverage may decline as much as 5 percent to 10 percent next year, and rates for property insurance coverage will be mostly flat, although some buyers may see a slight reduction. Rates have declined in each of the last few years for both property and casualty insurance coverage as the industry is going through a period of strong profitability, said Linden.

Other segments in the insurance industry — including workers’ compensation, directors’ and officers’ liability, and reinsurance — are also expected to experience soft market conditions, according to Steve Lawrence, a property and casualty senior consultant with Watson Wyatt.
Rates for workers’ compensation will be relatively stable as the market remains soft and companies continue to experience strong profitability. “We are expecting to see rates remain unchanged or perhaps decline as much as five percent,” said Lawrence.

Lawrence also noted a growing interest among insurers and risk managers in using predictive modeling software. In particular, insurers are applying the techniques they use for personal auto to workers’ compensation. This helps risk managers identify potential problems with workers’ compensation claims earlier in the process and allows them to implement a settlement strategy to reduce their cost. “Large companies with high volumes of workers’ compensation claims are especially drawn to predictive modeling,” said Lawrence.

“With the marketplace showing little sign of hardening, it may be an ideal time for buyers to review their risk management program structure and insurance policies,” Linden said. “This will help them decide if key program parameters should remain intact or if alternative risk management solutions, such as insurance captives, should be considered.”

“Buyers clearly get better terms in softening markets. However, they need to be well-positioned so that when the market firms up, they have a plan to move forward.”

Linden and Lawrence also suggested that buyers who are considering switching carriers should analyze the carrier’s long-term credit rating, since many claims may not be paid out for another six to 10 years.

Source: Watson Wyatt Worldwide (www.watsonwyatt.com)

From: Insurance News Net (www.insurancenewsnet.com)

Commissioner Poizner Obtains Benefits for Victims of Race-Based Insurance Policies

The California Department of Insurance (CDI), as part of a multi-state effort including Georgia, Florida, Ohio and Texas, has reached a settlement with Americo Life, Inc. to secure benefits for African-American consumers historically sold insurance policies using discriminatory practices, such as charging or collecting higher premiums for life insurance products based upon race; limiting the amount, extent or type of coverage available by race; and, assigning risk classifications based on race.

"Race-based pricing is not only illegal, it is morally abhorrent," said California Insurance Commissioner Steve Poizner. "I am very pleased to be part of an effort to return value to victims and their families which never should have been absent in the first place."

Although the affected policies were not sold directly by Americo, they were sold by insurance companies Americo subsequently acquired; a list of these 55 companies is attached. The settlement applies to policies issued by the named companies from 1928 to 1960 and were active, live policies after December 31, 1959. Possible victims, including heirs and beneficiaries, have four years to make a claim.

The settlement affects small face-amount life insurance policies, commonly known as industrial life or burial policies. For each person who is identified as a holder of an eligible policy, the company will add 25 percent to the face amount of the policy. In addition, policies which terminated by cash surrender, death, or endowment will receive a payment calculated at four percent per annum from the date of termination until the present.

The Texas Department of Insurance (TDI) was the lead regulatory negotiator for the five states that acted on behalf of all the members of the National Association of Insurance Commissioners. TDI's Race-Based Pricing Web Resource Page includes information on current and past settlements, a list of insurance companies involved in race-based pricing, and online claim forms and complaint forms. It can be accessed at: www.tdi.state.tx.us/consumer/rbsettlement.html.

From: California Department of Insurance (www.insurance.ca.gov)

American Vehicle Approved as Surplus Line Carrier in Calif.

Ft. Lauderdale, Fla.-based 21st Century Holding Co., an insurance holding company, announced that it's subsidiary, American Vehicle Insurance Company, has received approval to begin writing commercial general liability policies in California as a surplus lines insurer.

"Our expansion into the State of California demonstrates our continued commitment to nationwide growth in premiums and earnings," said Irwin "Buck" Giesecke, president of American Vehicle Insurance

Source: 21st Century Holding Company (www.21stcenturyholding.com)

From: Insurance Journal (www.insurancejournal.com)

GAINSCO Rolls Out Monthly Auto Policy in Texas

GAINSCO Auto Insurance, which specializes in minimum-limits personal auto policies, announced it has introduced a new monthly auto policy for Texas customers. The new product, which provides a single month of personal auto coverage for the policyholder, can be renewed indefinitely with no reinstatement fee in the event of a lapse.

GAINSCO's monthly policy allows agents to customize the coverage depending on individual customer needs, the company said. Starting with an affordable base policy, agents can offer additional optional coverages to meet the needs of all customers, from the most cost-conscious to the most coverage-conscious. Optional coverages include additional covered persons, authorized drivers, newly acquired automobiles, and physical damage for custom equipment.

The GAINSCO monthly product is also highly automated. Agency staff can handle the initial sale, policy renewals, and policy endorsements all on GAINSCO's Web site.

GAINSCO developed the monthly product in response to agent and customer requests. Like its 6-month policies, GAINSCO's monthly policy does not require credit scoring, and is available for liability or full coverage. Several discounts are also available.

GAINSCO will begin rolling out the monthly policy to a limited number of independent agents in Texas, with the rest of its agents to be rolled out in phases. The product will be offered in GAINSCO's other state markets in the coming months.

Source: GAINSCO Inc. (www.gainsco.com)

From: Insurance Journal (www.insurancejournal.com)

S&P Report Examines Calif. Earthquake Insurance Coverage

As if Southern California's recent devastating wildfires weren't enough, the Golden State got a second jolt on Oct. 30 via a 5.6 magnitude earthquake just outside of San Jose. An article published by Standard & Poor's Ratings Services, which is titled "Is California's Earthquake Insurance Coverage On Shaky Ground?" says that the quake, though not severe, was large enough to remind us that it is simply a matter of time before homeowners, the California Earthquake Authority (CEA), and insurers will all have to pay.

The CEA is the largest earthquake insurance provider in California -- and in the world. It is not an insurance company but rather an 11-year-old, state-created, privately funded entity governed by state officials. CEA has approximately 750,000 policyholders and 17 member companies.

Standard & Poor's does not rate CEA, but it believes that CEA's $8 billion in claims-paying ability could be inadequate if one or more major earthquakes were to occur. If claims on the CEA were larger than its ability to pay, policyholders might have to accept a prorated percentage of their expected coverage or installment payments.

An analysis of the 10 largest Standard & Poor's interactively rated homeowner insurance carriers in California shows that these insurance providers continue to maintain at least strong financial strength incorporating Standard & Poor's 1-in-250-year catastrophe capital charge.

Source: Standard & Poors (www.ratingsdirect.com)

From: Insurance Journal (www.insurancejournal.com)

Hispanic Marketing Report Shows Boom in Purchasing Power

By W.J. Hennigan
Phoenix Business Journal

The Arizona Hispanic Chamber of Commerce released its annual report on Hispanic market trends Wednesday showing income and purchasing power are booming in Arizona.

More than 1,500 people attended the event at the Arizona Biltmore Resort & Spa to learn firsthand the latest information in the 2007 Datos: Focus on Arizona's Hispanic Market study.

Attendees at the 12th annual event were informed about how the Latino population, income and purchasing power are booming in Arizona and other parts of the country. Studies say these numbers are expected to climb, particularly in the Phoenix area.

According to the report, Hispanic purchasing power nationally is expected to surpass $1 trillion by 2011. The data also showed that Phoenix has seen Hispanic purchasing power nearly double from $3.6 billion in 2000 to $6.4 billion last year.

Latino-owned businesses are on the rise as well. Datos revealed that in 2002, Hispanic-owned firms' sales totaled nearly $246 billion and are expected to jump to $539 billion by 2012.
Small businesses make up the lion's share of Hispanic-owned firms. Studies show that 75 percent of these businesses reported less than $50,000 in sales in 2002, which leaves them plenty of room to grow.

The findings were compiled by Loui Olivas and a team of Arizona State University graduate students from the W.P. Carey School of Business. Olivas led a presentation on the data and outlined that in 2006, 50 percent of all Hispanic households earned $50,000 or more. This is expected to increase exponentially by 2011, he said.

Harry Garewal, president and CEO of the Hispanic Chamber, said releasing the Datos information is an exciting opportunity to look at what is going on in the Phoenix area.

"The idea behind this presentation always has been to provide data that gives us a localized perspective and helps us better understand the growing Hispanic community within our communities," he said.

The Latino population in Phoenix has more than doubled in the past decade and, by 2030, the Hispanic Chamber is expecting that Latinos will outnumber the white, non-Hispanic population. In addition, Hispanics are Phoenix's youngest demographic, which also speaks to their expected growth.

Keynote speaker at the event was Cynthia Nelson of Todobebé, a leading multimedia company that specializes in parenting within the Latino community.

"This is my last speech of the year and I guess they saved the best for last," she said. "I've never seen a Chamber of Commerce this big and organized."

Closing out the event was a panel discussion taking a closer look at the findings. The discussion included Edmundo Hildalgo of Chicanos por la Causa, Olga Aros of Ora y Dia Management Group, Rufus Glaspar of the Maricopa County Community College District, Don Henninger of the Phoenix Business Journal and Loui Olivas of Arizona State University.

For more: www.azhcc.com.

From: Phoenix Business Journal (www.bizjournals.com)

FTCR Alleges New Evidence That CA Insurance Commissioner Aide Destroyed Key Document

California Insurance Commissioner Steve Poizner's special counsel William Gausewitz destroyed a fax sent to him by an insurance lobbyist that appears to have served as the basis for a declaration he claimed to have prepared independently for submission to a Sacramento Superior Court this summer, according to new documents consumer advocates have obtained from the Department of Insurance through a Public Records Act request.

Last month, the Foundation for Taxpayer and Consumer Rights (FTCR) obtained a series of e-mails between Mr. Gausewitz and insurance company lawyers and lobbyists indicating that Mr. Gausewitz privately tried to assist companies' effort in court to have the Department of Insurance pay legal fees associated with a failed lawsuit the insurance companies brought against the Department of Insurance, rather than the insurers themselves.

Insurance industry lawyers later filed a document signed by Gausewitz in the court case -- but made it appear that the California Attorney General had filed it.

In a November 5, 2007 written response to FTCR, which requested a copy of the draft declaration that the insurance industry first sent to Mr. Gausewitz, the Department of Insurance stated:

"[Insurance industry lobbyist Jeff] Fuller faxed a proposed declaration to Mr. Gausewitz. Because Mr. Gausewitz was unwilling to sign the draft declaration prepared by the insurers, he prepared text for an alternative version of the declaration and provided that text to Fuller...Mr. Gausewitz then discarded the fax."

Consumer advocates said the destruction of a key public document added another layer of concern to the incident, which caused the group to call on Commissioner Poizner to fire Mr. Gausewitz. FTCR noted that without the original document, the public cannot know whether or not Gausewitz actually made even a single word change to the industry's requested declaration.

"By destroying documents, Bill Gausewitz tried to cover his tracks in order to avoid the appearance that he was abusing his authority and serving as an insurance company toady at the Department of Insurance," said FTCR's Executive Director Douglas Heller.

From: Insurance News Net (www.insurancenewsnet.com)

CA Insurance Commissioner Names New General Counsel

Adam Cole has been named general counsel at the California Department of Insurance.

Cole was previously in the San Francisco office of Heller Ehrman LLP, where he directed litigation matters that focused on insurance recoveries. Cole also helped manage the 600-attorney firm.

A graduate of Yale University and Harvard law School, Cole has taught insurance law at the University of California Berkeley and the UC Hastings College of the Law.

From: Sacramento Business Journal (www.bizjournals.com)

Consumers At Sea Over Auto Rental Insurance

Forty-two percent of U.S. consumers are confused about whether to buy insurance when renting a car, a survey has found.

The research was conducted by the National Association of Insurance Commissioners (NAIC), which said that many people at the auto rental counter purchase insurance without knowing whether their existing auto policies or credit card benefits already cover their needs.

Many consumers “purchase unnecessary insurance and end up wasting money. Meanwhile, other drivers inadvertently underinsure their rental car, placing themselves at risk,” said NAIC President and Alabama Insurance Commissioner Walter Bell.

The NAIC’s national survey of 632 consumers, conducted Sept. 19-30, 2007, found:

• Approximately 42 percent of respondents said they were either thoroughly confused or had only a rough idea about insurance coverage when renting a car.
• Thirty-four percent of respondents said they purchased the rental company’s insurance just to make sure they were covered.
• Twenty-four percent of consumers were not sure whether their credit card provided insurance coverage when renting a car.

NAIC said it recommends that renters ask insurance agents if there are any situations in which their existing auto policy would not cover a rental and query their credit card company what the limitations are on rental car coverage.

From: NU Online News Service (www.nationalunderwriter.com)

Tuesday, November 13, 2007

Abram Interstate Offers Preferred and Standard Programs for Personal Auto

Abram Interstate Insurance Services Inc. in Rocklin, Calif., is offering preferred and standard personal auto programs in California. Good driver risks accepted in preferred program, and non-good drivers are permitted in standard program.

Minimum coverages offered in the program are 25/50/20 for bodily injury and 25/50 for uninsured motorist. Bodily injury limits are up to 500/500 for the preferred program and 250/500 for the standard program. Medical payments are up to $25,000 for preferred and $10,000 for standard. Loss of use, extended non-owned auto coverage, and an emergency assistance package are available in the preferred program. Rental reimbursement and special equipment coverage are offered in standard program only.

Discounts are available for good drivers, distant students, anti-theft devices, affinity group membership, good students, occasional operators, and account (multi-policy) discounts. The coverage is being provided by a preferred, admitted carrier.

For personal auto guidelines, quoting requirements, and binding requirements visit www.AbramInterstate.com.

From: Insurance Journal (www.insurancejournal.com)

Progressive Car Insurance Adds Collision Benefit for Pets

One U.S. auto insurance company is now offering coverage for pets.

Progressive Corp. is providing collision coverage for customers' dogs or cats at no additional premium cost. It will pay up to $500 if a customer's dog or cat is hurt or dies in a car accident.

"It's an unusual and interesting benefit,'' said Jean Salvatore, a senior vice president for the Insurance Information Institute. She was not aware of any other company offering a collision benefit for pets.

"Auto insurance is a very competitive market, and companies are always looking for ways to differentiate themselves. If this becomes popular, I'm sure others may look into it as well,'' Salvatore said.

There are more than 150 million pets in the U.S., and Americans spend more than $40 billion on their pets annually, according to a recent Insurance Information Institute study.

The Progressive benefit has been in place since Sept. 6, and it is still too soon to determine if the company's undetermined cost of offering it will be offset by better sales, Progressive spokeswoman Leah Knapp said.

The new Progressive benefit is not pet insurance, which some people obtain to help them pay veterinarian costs.

A Progressive strategist said the company saw a pets benefit as an auto insurance market opportunity.

"We found no coverage that was even similar to it,'' said Geoff Souser, Progressive product manager for auto insurance. "We have pets, too, and we know how important they are to our families. We are always looking for new and different ways of delivering value to our customers, and this seemed like a logical extension.''

Progressive is the third-biggest auto insurer in the U.S., ranking behind State Farm and Allstate.

State Farm and Allstate confirmed a pets benefit is not in the collision part of their policies.

From: Insurance Journal (www.insurancejournal.com)

Should Insurers Put Brakes On Elderly Drivers?

By Daniel Hays
NU Online News Service

As the percentage of elderly in the U.S. population continues to bulge, insurers may wish to provide large-type policies for older motorists and test them to see if they still have the ability to drive, an economist suggested.

Those were just a few of the points raised by Steven Weisbart, Insurance Information Institute vice president and chief economist, in a talk here last Thursday on “The Effect of the Aging Population on the Property-Casualty Insurance Industry.”

Mr. Weisbart’s study of the impacts and issues that could surface as the baby boom generation moves into its retirement years was delivered to the Nineteenth Annual Executive Conference for the Property-Casualty Industry, put on by the National Underwriter Company and additional sponsors.

Among the figures he noted was that by 2025, the number of people in the 85-and-older bracket is projected to be eight million--the same as there are today in the 70-to-75 age group.
Possible good news cited by Mr. Weisbart was the finding that currently people age 65 and above a have more positive attitude towards the auto insurance industry. Mr. Weisbart said it might be reasonable to assume that younger people will morph into that frame of mind as they grow older.

Auto insurers in the future will have to deal with an increasing number of drivers who are staying on the road well into their 80s. With older drivers, said Mr. Weisbart, underwriters will have to look at additional factors.

He warned that higher accident levels for the elderly do not correlate with moving violations. Increased mileage by the elderly, Mr. Weisbart added, might be linked to better health and higher income, and it might come with living in areas without alternate transportation.

A factor that might reduce mileage, he said, could be that as more elderly are without guaranteed pensions, they may drive less because of the cost involved.

Examining auto accidents, Mr. Weisbart noted that bodily injuries increase after age 60, while the death rate for drivers age 70 and above soars--possibly because they are more frail.

The economist said that among possible questions that the data on the elderly suggest:

• Will seniors not buy more expensive cars?
• Will their income levels keep them from maintaining their cars in safe condition?
• Will insurers want to offer alternative transport services?
• Will underwriters create tests of driving ability for the elderly?
• Will insurers add a surcharge if an insured refuses to take the test?

Further, Mr. Weisbart wondered whether the elderly might want more handholding with the claims process or prove more litigious.

Insurers, he suggested, might want to provide older clients with policies written in bigger type and special phone centers.

Automakers, he said, might build cars tailored to be age-friendly, while employers might redesign workplaces to minimize accidents that could prompt workers’ compensation claims.
Because statistics show the elderly have more trouble making left turns, governments may wish to fund improvements to make them easier to negotiate, suggested Mr. Weisbart.

He noted the figures showing longer injury recovery times for the elderly will mean that workers’ comp insurers will face longer indemnity claims. Additionally, Mr. Weisbart, cited statistics that the death rate for workers age 65 is triple that for those aged 35-to-44.

From: NU Online News Service (www.nationalunderwriter.com)

Monday, November 12, 2007

Unitrin Announces Agreement to Acquire Primesco, Inc.

Unitrin, Inc. announced that it has reached an agreement to acquire Primesco, Inc. of Decatur, Alabama, in a cash merger transaction valued at approximately $96 million, subject to certain purchase price adjustments at the time of closing.

Primesco’ s wholly-owned subsidiaries, Mutual Savings Life Insurance Company (“Mutual Savings”) and Mutual Savings Fire Insurance Company (“Mutual Savings Fire”), specialize in the sale of life, health and fire insurance products to persons of modest financial means in Alabama, Georgia, Mississippi and several other states in the Southeast.

Like Unitrin’ s Career Agency companies, Mutual Savings and Mutual Savings Fire employ a network of employee agents who call on customers in their homes to sell and service products and collect premiums.

For the year ended December 31, 2006, Mutual Savings and Mutual Savings Fire had total premium revenues of approximately $53 million. The transaction is subject to execution of definitive agreements, approvals by Primesco’ s shareholders, approvals by insurance regulators and other customary closing conditions and is expected to close in the first quarter of 2008.

Donald G. Southwell, Unitrin’ s Chief Executive Officer, said: “We are extremely pleased at the prospect of Primesco and its flagship companies, Mutual Savings and Mutual Savings Fire, joining our Unitrin family of companies. This acquisition underscores our commitment to grow our Career Agency business segment and to continue to serve an otherwise underserved part of the life and health insurance marketplace. We currently anticipate that this acquisition will be slightly accretive to earnings in 2008.”

Unitrin is a $3 billion financial services company focused on creating shareholder value by providing a diverse array of insurance and consumer finance products and services for individuals, families and small businesses.

Among the brands in Unitrin's Property and Casualty Insurance business are Kemper ® 1, Unitrin Specialty and Unitrin Business Insurance, which sell personal and commercial insurance through networks of independent agents, and Unitrin Direct, which sells auto insurance directly to consumers. Unitrin's Life and Health insurance businesses bring a high level of personalized service to their customers. Unitrin's consumer finance subsidiary, Fireside Bank, specializes in automobile loans for the purchase of pre-owned vehicles. Additional information about Unitrin is available by visiting its website (www.unitrin.com).

Source: Unitrin, Inc. (www.unitrin.com)

From: Business Wire (www.businesswire.com)

Insurance Advertising Expected To Reach Record Spending In 2007

By Marilyn Ostermiller
BestWire News Service

The amount of money spent on advertising insurance products will grow by an estimated 3.3% this year, according to Jon Swallen, senior vice president, TNS Media Intelligence.

Speaking at the Insurance Marketing and Advertising Summit, Swallen identified automobile insurance as the most advertised product. Geico led the pack last year by spending nearly $500 million on advertising.

The biggest auto insurers have built their business on advertising. Auto insurance is bought every year. That's what makes branding so important for an auto writer, he said.

Advertising's role is to build brand name awareness so your company is on their mental short list, Swallen said.

IMAS was held Nov. 8 in New York. It was sponsored by A.M. Best Co.

Source: BestWire News Service (www.ambest.com)

From: Insurance News Net (www.insurancenewsnet.com)

, Assistant Vice President, News) November 9, 2007

Calif. Considers Ballot Measure to Crack Down on Uninsured Motorists

By Frederick L. Pilot
Insurance Journal

California Insurance Commissioner Steve Poizner is reportedly exploring the possibility of a ballot measure next year designed get uninsured motorists off the state's roads and highways. Industry sources confirmed the development initially reported in newspaper accounts quoting a consultant who advised Poizner on his successful 2006 commissioner campaign, Wayne Johnson of Sacramento, Calif.-based JohnsonClark Associates.

According to the articles, some of the provisions of the ballot measure would allow authorities to remove license plates from vehicles operated by uninsured motorists.
Political pundits believe Poizner hopes to leverage a ballot measure to increase his name recognition among voters ahead of the 2010 gubernatorial election. Poizner is already seen by some as a leading contender for the Republican nomination for the office.

Neither Johnson nor Poizner's spokeswoman, Jennifer Kerns, responded to the Insurance Journal's inquiries regarding the proposed initiative.

Additional information on this topic will appear in Insurance Journal West Region's November 19 issue.

In a separate measure, Poizner is dedicating $1.5 million of his own to defeat voter Proposition 93, which would reduce the total years someone could be a legislator from 14 to 12, but allow all to be served in one house. Currently, lawmakers are permitted just three two-year terms in the Assembly and two four-year stints in the Senate.

From: Insurance Journal (www.insurancejournal.com)

Looking for Profits at Marsh

The Marsh & McLennan Companies, or MMC, has seen its once dominant position atop the brokerage world assailed by changing conditions, Eliot Spitzer, more competition and its own internal restructuring.

Although MMC posted over $2.8 billion in revenues for the third quarter of 2007, a 10 percent increase, that figure was greatly enhanced by the sale of its Putnam Securities division in August. MMC's non-brokerage divisions, Mercer, Oliver Wyman and Kroll all reported revenue increases. Guy Carpenter, its reinsurance and risk management brokerage division, earned $226 million in the third quarter, up 5 percent (four percent on an underlying basis) from the same period last year.

However, Marsh, the brokerage division and MMC's original business, has faired poorly. So poorly that President and CEO Michael G. Cherkasky stated in the earnings report: "Despite continued strong performance in our consulting businesses, MMC's third-quarter results were significantly impacted by unacceptable financial performance in our insurance broking business. We have changed the leadership at Marsh and are taking comprehensive actions to improve profitability."

The main action, aside from firing Marsh's former CEO Brian Storms last September, is an initiative aimed at "the middle market," as Cherkasky described it in the analysts' and investors' earnings conference call. He outlined five areas that he – as the now acting CEO of Marsh – seeks to make changes and improvements. These include; 1) new management and leadership; 2) simplifying Marsh's business structure; 3) narrowing its external focus and improving its use of technology; 4) reducing costs and centralizing operations, and last, but certainly not least, 5) increasing the commissions it receives.

Cherkasky stressed that he has no intention of returning to the acceptance of contingent commissions. He pointed out that Marsh's major competitors, Aon, Willis and Gallagher, do not use them, but a number of mid-size brokers do. "What we want," Cherkasky said, "is a level playing field." He's proposing a "2.5 percent enhanced commission," which he said would be fixed, would not be based on contingenent placement of business and would be fully disclosed to clients.

"It will be mainly applied to small commercial and mid market business," he continued, adding that it would not be applicable to risk management services and would exclude Marsh' "Fortune 1000" clients. The charge would be paid by those carriers who agree to do so – not Marsh's clients. "It will be fully disclosed and completely transparent," he stressed. Marsh has been slowly implementing the system in the UK, and has found a great deal of support for it.
There's also support from other quarters. Both Marsh and Aon have discussed such an arrangement with U.S. and U.K. carriers, including Chubb and Travelers, who appear to be interested.

In a short bulletin following Cherkasky's presentation RIMS said: "Transparency and client disclosure are the cornerstones of RIMS position on broker compensation. Marsh's announcement that it will accept enhanced commissions on midsize and small commercial accounts in the United States describes a program that is in accord with RIMS position."
Willis had originally opposed the idea, but that may be changing. At the recent Federation of European Risk Management Associations (FERMA) Conference in Geneva, Sarah Turvill, the Chairman of Willis International, indicated that "insurers seem to be willing to pay more money for enhanced services." She advocated a 2.5 percent surcharge, for providing clients with those services.

The reaction to the proposal at FERMA was decidedly mixed. "Rates should be based on value and services," said XL Insurance CEO Clive Tobin. Essentially higher payments are only justified if the broker has done something to "add value" to the policy. Swiss Re's Head of Corporate Clients Nick Beck said that while "in general companies are against undifferentiated commissions, it's different when a price is established based on the value of the services provided."

That may pose a problem for Marsh and the other large brokers. If Marsh excludes "risk management" services under the fixed commission plan, or if MMC charges straight fees to its clients when they use the expertise of Mercer, Oliver Wyman or Kroll, what is the 2.5 percent being paid for? That question will apparently have to answered out before there is widespread acceptance of a basic change in the standard broker commission business model.

Source: March & McLennan Companies (www.mmc.com)

From: Claims Journal (www.claimsjournal.com)

New Travel Insurance Website for Canadian Snowbirds Launched

A new website designed to help Canadians avoid pitfalls when buying out-of-country health insurance has been launched to coincide with the start of the 2008 winter sunbelt travel season.

Prepared by veteran medical journalist Milan Korcok, a Canadian/U.S. dual citizen who has previously published U.S. sunbelt hospital guides for international travelers, www.travelinsurancefile.com features plain language advice on what to look for when shopping for travel insurance, pitfalls to avoid, how to find good prices without risking bad coverage, understanding what travel insurance does NOT cover as well as what it does. The site also features news and commentary on current cross-border issues that need to be considered in these days of heightened security.

This year well over 600,000 Canadians are expected to spend between 30 days and six months in the U.S. sunbelt states: Florida, Arizona, California, Texas and Nevada. Canada’s government controlled national health system does not cover out-of-country medical care.

“Travel insurance is a necessary major investment when you consider that inadequate coverage can ruin a family financially. Medical emergencies can be catastrophically expensive, not only in the U.S., but any country in the world. Trying to save a few dollars by shading the truth on a medical application, or buying a plan without reading or understanding it is an unremitting gamble. Yet far too many Canadian travellers seem perfectly willing to roll the dice,” says publisher Korcok.

Journalist Korcok, who was born in Montreal and has been based in Florida since 1977, was instrumental in founding the Canadian Snowbird Association in 1992, and organizing the Travel Health Insurance Association of Canada in 1998.

From: Insurance News Net (www.insurancenewsnet.com)

Friday, November 09, 2007

BofA Launches $35 Million Ad Campaign

Bank of America Corp. will launch a $35 million advertising campaign on Sunday focusing on the company's retirement offerings.

The national print and online campaign will concentrate on the BofA's IRA products and services. It will continue through part of the second quarter.

"As our first major foray into the retirement advertising realm, we want to address head-on the challenges customers face in making sense of IRA solutions available in the marketplace," says Anne Finucane, chief marketing officer. "More broadly, we want them to be aware that Bank of America can help guide them through life's stages and provide the opportunity to realize their retirement dreams -- serving as the customer's trusted financial provider for their retirement-related needs."

Charlotte-based BofA (NYSE: BAC) is one of the world's largest financial institutions, with more than 5,700 retail banking offices and 17,000 ATMs. It is the largest bank in California by deposits.

From: Silicon Valley/San Jose Business Journal (www.bizjournals.com)

Hundreds Californians Wait to Get Word on FEMA Fire Aid

By Michael R. Blodd
Associated Press

More than a week after the worst of California's wildfires subsided, more than 700 households are waiting to learn if they will qualify for federal aid to begin restoring their homes and lives, according to figures released Wednesday.

The Federal Emergency Management Agency has received 15,694 requests for emergency assistance since wildfires burned across Southern California last month, and hundreds continue to come in each day.

The government will consider requests to pay for temporary housing, repairs or costs tied to replacing a home not covered by insurance. The maximum is $28,800 for lost homes and property.

About 70 percent of the claims -- roughly 11,000 -- involve households covered by insurance.
They are set aside temporarily by FEMA until it's determined what losses were covered under their policies. Then, those households can seek payments for losses that weren't covered.

That leaves almost 5,000 claims. So far, FEMA had paid out more than $5 million in housing assistance to 1,300 of those households.

About 2,300 claims were deemed ineligible, others were withdrawn voluntarily and 734 remain under review, FEMA spokeswoman Kelly Hudson said.

"We feel like ... we are keeping up a good pace," Hudson said.

Meanwhile, the state is monitoring federal assistance.

"If victims are not getting the assistance they need in a timely manner, we will do all that we can to ensure they get what they need," said Aaron McLear, a spokesman for Gov. Arnold Schwarzenegger.

Applicants who qualify can also receive money from FEMA for a wide range of emergency expenses, including heating oil, dental or medical costs, tools, moving expenses, funerals, computers -- even a vacuum.

Thus far, the agency has written about 350 checks for about $1.2 million to cover those costs. Hudson said the agency could not immediately say how many claims had been submitted to cover those expenses.

Source: Associated Press (www.ap.org)

From: Insurance Journal (www.insurancejournal.com)

Thursday, November 08, 2007

CA Insurance Commissioner Announces More Than 500 Adjusters to Assist in Wildfire Claims

California Insurance Commissioner Steve Poizner today announced that as of this morning, 502 emergency insurance adjusters have been registered with the Department of Insurance to expedite the processing of insurance claims for victims in Southern California’s fire-ravaged communities.

Just after the fires broke out, anticipating the urgent need for more assistance than insurance companies in California could provide on their own, Commissioner Poizner declared an insurance emergency. Through this declaration, the Commissioner authorized out of state adjusters to come to California and assist victims in processing their claims so they can get paid as quickly as possible.

“As Insurance Commissioner, it’s my duty to make sure that fire victims are fully equipped to recover from the tremendous losses they’ve endured,” said Commissioner Poizner. “So far, I have been pleased with the expediency of many insurance companies in taking care of their customers in the wake of these destructive fires. Since the fires broke out in Southern California, I have been working relentlessly to help victims recover, and will continue to do so until victims are back on their feet.”

Since the Southern California wildfires broke out, Commissioner Poizner has taken the following steps to assist victims in their recovery efforts:

Worked with Governor Schwarzenegger and local leaders to jointly help victims pave the road to recovery

Declared an Insurance Emergency to cut through the red tape and help insurance companies process claims more quickly, to expedite recovery efforts

Extended the hours of the Department of Insurance (CDI) Consumer Hotline (1-800-927-HELP) so that fire victims may contact the Department of Insurance after normal business hours to ask any insurance questions or report a complaint

Coordinated with CEOs of homeowners insurance companies in Southern California to ensure victims are paid quickly

Deployed CDI staff to assist fire victims at nine Local Assistance Centers and Disaster Recovery Centers in Southern California

Dispatched a team of law enforcement personnel to help with evacuations, traffic and looting prevention

Ordered CDI law enforcement teams to be on location and in full force to catch perpetrators seeking to defraud homeowners

Teamed with San Diego District Attorney Bonnie Dumanis and Sheriff Bill Kolander to stop criminals preying on fire victims

Formed a Southern California Wildfire Task Force composed of CDI executive staff, insurance company executives, consumer groups and attorneys to address issues and prevent problems from occurring

From: California Department of Insurance (http://www.insurance.ca.gov/)

Progressive Changes 10,000 Agencies' Signs

Progressive Insurance is changing the indoor and outdoor signs at thousands of its agencies across the country to highlight its affiliation with the businsses.

Earlier this year, Progressive announced that it was returning the Progressive logo to the independent agents and brokers who choose to represent the company. The change is highlighted in advertising and sponsorship and is most visibly highlighted on signs around the U.S. To date, Progressive reports it has retrofitted more than 10,000 independent agents' signs.

According to Jim Lloyd, Progressive's agency distribution leader, independent agents say signs are second only to Yellow Pages advertising when it comes to local marketing activities that most effectively attract customers to their agencies.

"It's plain and simple – we want to drive customers to our agents' doors so that we can grow together for many years to come," said Lloyd.

Source: Progressive Insurance (www.progressive.com)

From: Insurance Journal (www.insurancejournal.com)

AIG 3d Quarter Profit Down 27%; Vows Mortgage Exposure Under Control

Troubled residential mortgage and credit markets hurt American International Group Inc.'s third-quarter profit. Net income fell 27 percent compared to the third quarter last year. The giant insurer reported losses in its investment portfolio, credit-swap portfolio and mortgage-insurance business.

Net income for the third quarter of 2007 was $3.09 billion or $1.19 per diluted share, compared to $4.22 billion or $1.61 per diluted share in the third quarter of 2006.

Third quarter 2007 adjusted net income was $3.49 billion or $1.35 per diluted share, compared to $4.02 billion or $1.53 per diluted share in the third quarter of 2006.

Included in both third quarter and nine months 2007 net income and adjusted net income was a charge of approximately $352 million pretax ($229 million after tax) for a net unrealized market valuation loss related to AIG Financial Product Corp.'s (AIGFP) super senior credit default swap portfolio.

AIG said it continues to believe that it is "highly unlikely" that AIGFP will be required to make payments with respect to these derivatives.

Commenting on the third quarter's results, AIG President and Chief Executive Officer Martin J. Sullivan said that the company could handle the mortgage conditions. "While U.S. residential mortgage and credit market conditions adversely affected our results, our active and strong risk management processes helped contain the exposure. Our balance sheet remains strong with the financial resources to weather continued uncertainty as well as to take advantage of attractive market opportunities as they emerge."

While the mortgage guaranty business reported an operating loss in the quarter, the company's domestic brokerage, aircraft leasing and asset management reported operating income growth. General insurance and life insurance operating income declined.

General insurance third quarter 2007 operating income declined 3.4 percent to $2.51 billion compared to the third quarter of 2006.

Improved underwriting results in the Domestic Brokerage Group were offset by a $215 million operating loss in the Mortgage Guaranty business and declines in operating income in the Personal Lines and Foreign General businesses.

The third quarter 2007 combined ratio was 90.17, compared to 89.10 in the third quarter of 2006.

Third quarter 2007 General Insurance net investment income increased 1.8 percent compared to the third quarter of 2006, which included $213 million of income for an out of period adjustment for unit investment trusts and partnership income.

Domestic Brokerage Group third quarter 2007 operating income was $1.89 billion, an increase of 24.5 percent compared to the third quarter of 2006. Improved underwriting results reflect favorable loss trends in recent accident years across most lines of business. Third quarter 2007 net premiums written declined slightly to $6.01 billion compared to $6.07 billion in the third quarter of 2006. Premium growth in risk management, accident & health and program business offset the effects of increasing competition and rate declines in property and most casualty lines.

Personal Lines third quarter 2007 operating income was $28 million compared to $133 million in the third quarter of 2006. The decline in operating income was due primarily to unfavorable loss reserve development in prior accident years from discontinued businesses, together with transaction and integration costs related to the acquisition of the minority interest in 21st Century Insurance Group. Net premiums written increased 7.8 percent compared to the third quarter of 2006, the result of continued growth in the AIG Private Client Group and stronger growth in Agency Auto and aigdirect.com, its newly combined direct auto business.

Source: AIG (www.aig.com)

From: Insurance Journal (www.insurancejournal.com)

Class Action Lawsuits Abound in California

A review of class action lawsuits filed in California courts over the past three years shows that the state is still a happy hunting ground for class action lawyers -- despite the 2005 federal class action reforms designed to move many national class action cases into federal courts, according to the Civil Justice Association of California.

"Data shows that a state like California -- with a huge population and laws tilted against defendants -- remains a major forum for class action lawsuits, despite the 2005 federal Class Action Fairness Act," said John H. Sullivan, president of CJAC, which commissioned the study.

Research in six major California counties detected approximately 3,400 class actions filed in superior courts for the three-year period ending June 30, 2007.

"That's an average of more than four class action lawsuits each and every day the courthouses are open," Sullivan said.

Nearly half of those suits (47%) involve employment laws. The second largest group (36%) was in the consumer action category.

"California is experiencing a perfect storm of employment litigation," Sullivan said. "First, the state's class action rules favor plaintiffs' lawyers. Second, California's unique rules for distinguishing hourly from salaried employees and governing meals and rest periods are trapping too many employers - which lead to lawsuits. Third, our courts have been stretched thin with a growing criminal and civil caseload, putting pressure on the capacity to deal with complex class action lawsuits."

Case filings grew over the three year period studied: 1,093 in 2004-05; 1,180 in 2005-06; 1,156 in 2006 -07.

Los Angeles County experienced the most filings (1,753; 51%). Figures from the other five counties are:

* Alameda County: 218 filings, 7% of statewide total* Orange County: 378 filings, 11% of statewide total* San Diego County: 457 filings, 13% of statewide total* San Francisco County: 508 filings, 15% of statewide total* Santa Clara County: 115 filings, 3% of statewide total.

In addition to employment law (47% of total) and consumer actions (36%), other filing categories identified were environmental (6%), product liability (3%), shareholder (3%), civil rights (2%), governmental (2%), and construction defect (1%).

The study was conducted in each county by legal researchers at the international law firm of O'Melveny & Myers LLP, which has offices throughout California.

Data was compiled by examining the dockets for each of the six counties for the period studied.

The docket study was supplemented in certain instances by reviewing the filed complaints themselves and by reference to private services, such as those offered by commercial vendors and local bar associations, providing information on filed cases.

California does not have an official single statewide source of detailed information on types of civil lawsuits.

Source: Civil Justice Association of California (www.cjac.org)

From: Claims Journal (www.claimsjournal.com)

Wednesday, November 07, 2007

CNA Gives Restructuring Details

CNA Financial Corporation has given further details to its recently announced restructuring program for its Property & Casualty Operations. The Chicago-based insurer said it aims to create a "more streamlined, customer-focused operating structure."

CNA's strategy also reflects feedback from CNA agents and brokers, in altering the operations to "help increase CNA' s visibility in the market, leverage the structure of local branch offices and make it easier for agents to do business with CNA," said the bulletin.

"These changes reinforce the central role our 29 branches play in bringing the full range of CNA's national capabilities to the local market," explained President and CEO of P/C Operations Jim Lewis. "We are excited about serving our customers and distributors through a more efficient, integrated and focused operating structure."

CNA said its "local presence remains the same and no branches were closed. Field leadership is led from two regional centers – Field Operations West and Field Operations East. Each center will be led by Field Operations presidents – Steve Stonehouse (West) and Dennis Barger (East) -- who will execute underwriting and distribution strategies and work to maintain profitability."

Stonehouse recently served as president of CNA' s former West region and has a great deal of experience. Before joining CNA, he served as senior vice president of the Commercial Accounts Division of Reliance Insurance as well as managing director and West Zone officer for the Chubb Group of Insurance Companies.

Barger, who recently served as president of CNA' s former South region, is a Certified Insurance Counselor (CIC) with an insurance career that includes leadership responsibilities at Fireman' s Fund, Zurich and the Hartford.

CNA also listed a number of changes it will be making in its P&C Operations as follows:

-- Commercial Insurance, which provides centralized underwriting and service support to the Field, includes Middle Market, Commercial Segments and Risk Control. This area is led by Naveen Anand, who recently served as president of CNA's former Central region. He has two decades of insurance industry experience, including 15 years with the Chubb Group of Insurance Companies.

-- Business Insurance, which consolidates CNA's Small Business and CustomXpress units. CustomXpress targets accounts in the size range between small business and middle market. It is led by Larry Illion who, for the past three years, has been senior vice president for CNA Small Business. Prior to joining CNA, Illion served as president & chief executive officer of Travelers small business insurance division, and spent 30 years in various Middle Market leadership roles at Reliance Insurance Company.

-- Distribution Management, which is focused on a disciplined, data-driven approach to managing distribution and establishing a visible, local presence in the marketplace. This team is led by John Hennessy, former senior vice president of CNA Casualty Underwriting and Middle Market, who has a 25-year insurance career that began at CNA. He was most recently responsible for strategy and direction of CNA's casualty underwriting, as well as overall leadership of CNA's Middle Market book of business.

-- Global Specialty Lines remains under the leadership of Peter Wilson whose responsibilities have been expanded to include all foreign operations including those in Europe, Canada and Argentina

CNA is the country' s seventh largest commercial insurance writer and the 13th largest P/C company. The Company's insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages.

Source: CNA (www.cna.com)

From: Insurance Journal (www.insurancejournal.com)

Mexico Landslide Devastates Village as Floods Spread

By Eduardo Verdugo
Associated Press

Survivors saw relatives swept away by huge waves or buried by debris after a huge landslide hit a rain-swollen river, triggering waves that essentially wiped a Chiapas hamlet off the map and left at least 16 people missing.

Residents of San Juan Grijalva told The Associated Press on Monday they had been awakened by a rumbling roar, and the sound of rocks rolling down from surrounding mountaintops on Sunday night, almost a week after massive flooding sent rivers over their banks in the southern Mexican states of Chiapas and neighboring Tabasco.

"It was a roar, like a helicopter was passing overhead,'' recounted farmer Domingo Sanchez, 21. "We didn't know what was happening, and then we went outside, and there were cracks opening the earth,'' he said, apparently recounting the initial collapse of a nearby hillside into the river.
"We ran up the hill ... but soil kept coming down on us.'' For the next several hours, Sanchez, his mother, his wife and a cousin fought for their lives in a valley where the only salvation lay in getting to higher ground as the ground collapsed around them.

They reached the hilltop just in time to look across the valley and see a landslide cover the home of his grandparents. Sanchez believes at least nine of his relatives were buried.

A cousin, David Sanchez, 22, described the events he saw from his house in a different part of the village that once was home to about 600 people. He described two distinct waves - the first of which swept his mother about 200 meters (yards) downstream before he could rescue her. "It was an irresistible wave,'' he said, describing the water pushed downstream from the initial impact of the landslide.

After climbing up a hillside to safety, in a moment of calm he and three friends briefly descended to rescue some possessions when the second wave - apparently the release of water briefly dammed up by the landslide - swept down the valley. "'It swept away everything, trees, houses, everything,'' Sanchez said. He believes that a total of about 40 people died in San Juan Grijalva.

Chiapas state Gov. Juan Sabines, who visited the scene, described one of the waves as a "mini-tsunami'' and noted "this village practically disappeared.''

Helicopters searched the surrounding hills to rescue residents who fled to higher ground. Chiapas officials and the federal Interior Department placed the number of missing at 16. No bodies were immediately found.

The landslide was the latest blow after a week of devastating flooding and heavy rains that left 80 percent of Mexico's Gulf coast state of Tabasco under water, destroying or damaging the homes of about half a million people.

On Monday, officials readied huge pumps to suck water from the inundated streets of the state capital, Villahermosa, while rescuers struggled to reach thousands still stranded days after one of the worst floods in Mexico's history.

U.S. President George W. Bush shared his sympathy over the floods and suffering Monday with Mexican President Felipe Calderon.

U.S. Ambassador to Mexico Tony Garza said the U.S. had pledged US$300,000 (€207,000) in emergency assistance to Tabasco and Chiapas.

After Hurricane Katrina struck the U.S. in 2005, Mexico sent a convoy of about 200 unarmed soldiers and medical personnel across the border with portable kitchens and water treatment equipment to aid recovery efforts.

Officials also saw some signs of hope as the Grijalva and Carrizal rivers, which had risen as much as 2 meters (1.9 yards) above normal levels, began to subside slightly Monday, as did storm tides in the Gulf of Mexico.

But tens of thousands of hungry and sick storm victims still awaited food and aid. At least 20,000 people remained trapped on the rooftops of homes swallowed by floods.

Authorities said two more bodies were found Sunday in the waters covering much of the region. If the deaths are confirmed to have been caused by the flooding, the disaster's death toll would stand at 10, not including those feared deaths from Monday's landslide.

Source: Associated Press (www.ap.org)

From: Claims Journal (www.claimsjournal.com)

National Crime Bureau Offers Free VINCheck for Unrecovered Vehicles

The National Insurance Crime Bureau (NICB), based in Des Plaines, Ill., recently announced that it has launched a free service to help protect the nation's consumers.

Over one million vehicles have been stolen annually in the United States since 1986, according to NICB's release. With an annual average recovery rate of just 63 percent, several million vehicles remain unaccounted for and could possibly end up being purchased by unsuspecting consumers.

To help prevent innocent people from buying a stolen vehicle and to help recover stolen vehicles that may enter the commerce stream in the future, NICB is activated the nation's first Unrecovered Stolen Vehicle Database as a free service to the public.

Anyone anywhere can now run a Vehicle Identification Number (VIN) through this database and determine if it has been reported stolen by one of NICB's over 1000 member insurance companies.

To check a vehicle simply visit the NICB web site, http://www.nicb.org/, and follow the on-screen directions for the VINCheck search feature which is located on the home page.

In recent months, NICB Special Agents have identified numerous stolen vehicles that were in the process of being sold by auto dealers or restored by collectors. These examples demonstrate how even car-savvy people can be duped into unknowingly buying a stolen vehicle. If it happens to experts then the risks are even greater for ordinary consumers, the NICB release said.

Seeing a way to help mitigate that risk and to provide another free service to help protect the nation's drivers, NICB sought and received the cooperation of its member companies to make this feature possible.

The National Insurance Crime Bureau is a non-profit organization exclusively dedicated to preventing, detecting and defeating insurance fraud and vehicle theft through information analysis, investigations, training and public awareness.

Source: National Insurance Crime Bureau (www.nicb.org)

From: Claims Journal (www.claimsjournal.com)

Tuesday, November 06, 2007

Calif. Workers' Comp Insurance Rating Bureau: Premium Rates Declining

The Workers Compensation Insurance Rating Bureau of California has completed its report summarizing insurer loss and premium experience through June 30, 2007.

According to the report, California written premium reported for the first six months of 207 is estimated at $6.9 billion, approximately 23 percent below the written premium reported for the first two quarters of 2006. The average statewide insrer rate per $100 of payroll for policies written for the first six months of 2007 is $2.92. That figure is 22 percent below the average rate charged for the first six months of 2006, and 55 percent below the average rate charged in the second six months of 2003.

WCIRB projected statewide ultimate accident year losses for 2006 of $6.1 billion, consistent with the level projected for accident year 2005, but 50 percent less than the ultimate losses projected for accident year 2002, before workers' compensation legislative reforms were implemented.

The group projected an ultimate accident year loss ratio of 35 percent for accident year 2006.

"This loss ratio, while still very low compared to historical norms, represents a seven percentage point increase from the estimated accident year 2005 loss ratio. This increase is primarily the result of declining premium rates," it said.

WCIRB estimated that indemnity claim frequency for the first half of 2007 would be 7.6 percent lower than for the first half of 2006, and estimated that hte average cost of a 2006 indemnity claim would be approximately $40,000. "This preliminary severity estimate, which is below the pre-reform level but above the 2005 estimate, may change over time as the loss information matures," the report indicated. BOth indemnity and medical average costs per claim showed increases in 2006.

For more information, visit http://www.wcirbonline.org/.

Source: Workers Compensation Insurance Rating Bureau (http://www.wcirbonline.org/)

From: Claims Journal (http://www.claimsjournal.com/)

Allstate Auto Rate Battle In Calif.

Hearings on Allstate’s auto insurance rates in California opened yesterday with a consumer group announcing that the company was overcharging drivers and Allstate responding that the charges were unfounded.

Allstate said it had already filed to reduce rates and the only disagreement was about how much. The statements were issued before the Department of Insurance hearing began in San Francisco.

The Foundation for Taxpayer and Consumer Rights (FTCR) said it had determined Allstate was overcharging drivers over $300 million per year.

FTCR said they wanted Allstate to lower its auto insurance rates by 18.8 percent, or an average $150 per car.

The hearing was being held under new rules that set limits on company profits.

FTCR said it was objecting to Northbrook, Ill.-based Allstate’s request for five exemptions to the rate rules that determine auto insurance rates.

Nonprofit group FTCR said it will testify Allstate should be lowering its rates $300 million per year in accordance with the state regulations. FTCR has also challenged Allstate's proposed 12 percent increase in homeowners' premiums due to be heard at a separate hearing in January 2008.

“Regulators can't let Allstate bully its way to higher profits,” said FTCR attorney Todd Foreman.

FTCR said in its statement that as it reads the written testimony submitted by Allstate for the current hearing, the insurer has “issued a thinly veiled threat to insurance regulators, suggesting that a company forced to abide by rules limiting excessive profit might: ‘reduce the quality of its services to a level lower than what it would have otherwise been, by having fewer offices in the state, advertising less vigorously, or reducing the quality of its claims processing. Ultimately, a company might choose to leave the state entirely if long-term prospects are sufficiently poor.’”

Peter DeMarco, Allstate senior corporate relations manager for California, said in a statement: “FTCR’s allegations do nothing to further Allstate’s goal of lowering the cost of auto insurance for California consumers and bring new, innovative products to the market.

“The reality is we have over two million loyal auto customers in California who chose Allstate because of our competitive rates and our excellent customer service. We continue to attract hundreds of thousands of new auto customers each year in California and nearly 90 percent of our standard auto customers in the state choose to renew their policies with us. The numbers speak for themselves as far as our commitment to the market and our customer service.

“Furthermore, Allstate is committed to bringing new and innovative products to California auto consumers, including a version of Allstate Your Choice Auto, which when implemented will give customers more choice in their auto coverage than is currently available in the state.”

He said that “Allstate has been willing to take a rate reduction comparable to those of other major competitors and has been working with the department to make a version of its innovative Allstate Your Choice Auto product available to California customers.”

From: NU Online News Service (www.nationalunderwriter.com)

P-C Oct. Rates Down 15% Amid High Profits

The latest monthly “Market Barometer” survey found property-casualty rates on average plunging 15 percent in October, even as insurers are heading for an “historic” underwriting profit this year.

The report by Dallas-based MarketScout, the online insurance exchange, notes that the profits follow decades of sub-par performance by the industry.

MarketScout said, however, that the profits are driving the soft market, resulting in a composite property-casualty average rate change of minus-15 percent in October. Commercial property and general liability lines led rate reductions, at minus-16 percent and minus-17 percent, respectively.

By industry class, manufacturing and energy were found to be down the most at minus-16 percent.

Richard Kerr, MarketScout’s chief executive officer, said in a statement that a very competitive market is expected “for the balance of 2007 and well into 2008.”

“There is simply too much capacity chasing premium, and what is perceived as incredible opportunities for underwriting profits,” he said. “The only thing that will turn this market in the next six months is a horrific catastrophe or some type of unknown legislative or legal action which profoundly impacts the insurance industry.”

MarketScout said its findings are based on data from its exchange, supported by in-person surveys of retail agents, company personnel, wholesale brokers and managing general agents. The company underwrites and distributes hundreds of product lines to a 60,000-member U.S. agency network.

The rates for October 2007, broken down by coverage class, industry class and account size were as follows:

By coverage class :
• Commercial property--down 16 percent.
• Business interruption--down 16 percent.
• Inland marine--down 13 percent.
• General liability--down 17 percent.
• Umbrella/excess--down 16 percent.
• Commercial auto--down 9 percent.
• Workers’ compensation--down 10 percent.
• Professional liability--down 16 percent.
• Directors and officers liability--down 16 percent.
• Employment practices liability--down 15 percent.
• Fiduciary liability--down 9 percent.
• Crime--down 9 percent.
• Surety--down 7 percent.

By account size :
• Small accounts (up to $25,000), down 14 percent.
• Medium accounts ($25,001-to-$250,000), down 15 percent.
• Large accounts ($250,000-to $1 million), down 16 percent.
• Jumbo accounts (over $1 million), down 15 percent.

By industry class :
• Manufacturing--down 16 percent.
• Contracting--down 13 percent.
• Services--down 15 percent.
• Habitational--down 14 percent.
• Public entity--down 15 percent.
• Transportation--down 12 percent.
• Energy--down 16 percent.

From: NU Online News Service (http://www.nationalunderwriter.com/)

Monday, November 05, 2007

CEO Vows to Change State Fund

By Chris Rauber
San Francisco Business Times

Janet Frank, who took on the top job at the scandal-tarnished State Compensation Insurance Fund early this month, is determined to change the organization.

Frank hopes to make State Fund more accountable, more open and more amenable to the state's chief insurance regulator.

"After the removal of the two top executive officers here, (interim president) Larry Mulryan came in. He and the executive group have already started a lot of what I call the transformational changes," Frank, formerly a senior executive with CNA Financial, told the San Francisco Business Times. "They've really beefed up internal controls and corporate governance."

Frank made it clear that continuing that process, particularly making the giant San Francisco-based workers' comp carrier more "transparent" to the press, the public and its policyholders, will be major priorities for her. Others include keeping employees "focused," putting the scandals in the past, developing a "more collaborative" relationship with Insurance Commissioner Steve Poizner, and completing a comprehensive operational review to see what's working well and what needs to be improved -- or jettisoned.

"In addition to that, we're trying to take a look at what is the right, optimum size for our organization" in terms of market share, Frank said. State Fund's California market share since 1916 has veered from a low of 14 percent to a high of 52 percent a few years ago, when many private insurers exited the Golden State market. It's currently approximately 24 percent.

In terms of staffing, "retention's real critical to us," said Frank, State Fund's president and CEO, as is retaining the company's customer base in a highly competitive California comp market. "One of my biggest challenges is customers' retaining confidence in State Fund, while all this noise is going on."

The quasi-public entity has endured a difficult year, and has long been accused by critics of taking refuge in its unusual status (part public agency/part private insurance carrier) to avoid public and regulatory scrutiny. Among other challenges:

It's under investigation by state and local authorities, including the California Department of Insurance, California Highway Patrol and San Francisco District Attorney's Office, for alleged fraud involving its group programs and allegedly inflated "administrative fees" paid by policyholders to State Fund and the administrators of those groups.

Public release of its 2006 financial report has been delayed until the investigation is completed.
Its public image took a huge hit last spring, when former President James Tudor and former Vice President Renee Koren were abruptly fired. Longtime workers' comp executive Mulryan was brought in as interim president and CEO to help institute significant internal reforms.

Plans to gain legislative approval to augment its senior executive ranks with a CFO, COO, chief investment officer, chief information technology officer, and chief underwriting officer have been delayed, after failing to make the cut in year-end legislative wrangling. (Currently, State Fund is precluded from adding extra senior managers.)

"This is three weeks into the job, so you're catching me at the beginning of week four, so that's good -- I've come back," Frank said at the onset of an Oct. 29 interview.

Better financial controls, an internal whistleblower program with direct links to the board, attempts to improve managers' performance evaluations, and a new board-level audit committee are among the other reforms State Fund is pursuing.

Although the 2006 financial report's release has been postponed, signs are that State Fund's performance last year "was solid" and that the California market can continue to count on it, according to a Sept. 27 online "Letter to Policyholders" from Mulryan. The letter says the financial report is awaiting final approval by the DOI, "and will be posted upon the Department's release."

Jennifer Kerns, a spokeswoman for the Department of Insurance, said the agency will release an audit report about State Fund's operations and organizational issues in the near future, "probably in the next few weeks," that is separate from the joint criminal investigation.

From: San Francisco Business Times (www.bizjournals.com)

Friday, November 02, 2007

IRS Warns of E-Mail Donation Scam

The Internal Revenue Service on Friday warned about a new e-mail scam asking for donations to help victims of the recent Southern California wildfire.

The e-mails, which purport to be from the IRS, asks users to click on a link which opens a bogus IRS Web site and then asks for the user's personal and financial information.

The IRS said it doesn't solicit donations through e-mails and never asks for information such as bank PIN numbers or passwords.

Users who click on the link may also download malware onto their computer, the IRS said.

People should forward the e-mail to phishingirs.gov, the IRS said.

From: Sacramento Business Journal (www.bizjournals.com)

Massive Floods Hit Southern Mexico

By Antonio Villegas
Associated Press

A week of heavy rains unleashed massive flooding in southeastern Mexico, killing at least one person and forcing tens of thousands to flee rising waters in Tabasco and Chiapas states, officials said Wednesday.

An unidentified man was killed and some 20,400 people sought shelter Wednesday in Tabasco's oil-rich capital of Villahermosa, the state government said in a press release. Gov. Andres Granier urged residents to evacuate the city where floodwaters reached the rooftops of homes.

"The situation is lost,'' Granier said in a meeting with President Felipe Calderon, who flew to the area Wednesday. "Where are we going to put all these people who are now out on the street?''

Rescuers worked feverishly to evacuate thousands of people before nightfall Wednesday, but thousands more were still waiting on roofs, federal police rescue unit chief Daniel Montiel told local television.

The flooding, which is not related to Tropical Storm Noel, apparently caused the soil supporting a 10-inch natural gas pipeline to give way and spring a leak, officials from the state-owned company Petroleos Mexicanos, or Pemex, said. Tabasco state officials said the pipeline had exploded, but that there were no deaths or injuries.

Calderon said the government was sending help by boat and helicopter to aid the more than 300,000 people in Tabasco whose homes were flooded, damaged or cut off. "It's imperative that we get to the people who are trapped and bring them to safe places,'' Calderon said.

In the southern state of Chiapas 7,000 people were evacuated due to floods, the newspaper El Universal reported. In Villahermosa, rooftops barely jutted above the surface of brackish waters flooding the city's streets, and classes were suspended statewide.

Heavy rains started swelling waterways on Sunday. Later reports describe the flooding as the worst in 50 years. More than 2 million people in the State of Tabasco have been affected by the rising waters.

The ongoing storms have also directly affected Mexico's oil industry. Three of the main ports have been closed to shipping, reducing Mexico's oil exports by around 20 percent.

Source: Associated Press (www.ap.org)

From: Insurance Journal (www.insurancejournal.com)

Consumers Charge Covert Action By Poizner Appointee

By Daniel Hays
NU Online News Service

A consumer group said it had e-mail evidence that a lawyer in the California State Insurance Department worked secretly to help the insurance industry with a legal action against his own agency.

As a result, the Foundation for Taxpayer and Consumer Rights said they have written Insurance Commissioner Steve Poizner asking him to fire attorney William Gausewitz, whose background they said included 10 years working as an insurance industry lobbyist.

The FTCR said e-mails showed Mr. Gausewitz, who holds the post of senior counsel, had “covertly assisted insurance companies” in legal action related to a lawsuit the industry brought against the commissioner seeking to block regulations limiting the use of ZIP codes to rate customers.

FTCR founder Harvey Rosenfield and FTCR Executive Director Doug Heller, in a letter sent today to Mr. Poizner, said his staff’s action questioned his commitment to be an independent regulator.

They said e-mails obtained through an open records request showed Mr. Gausewitz “attempted to assist the industry in a surreptitious manner.”

Mr. Heller in an interview said that after insurance interests lost their case and the regulations had been upheld in court, the FTCR asked the court to have the insurers pay more than $200,000 in legal bills FTCR had piled up litigating in favor of the regulation. Mr. Gausewitz, he said, covertly aided insurers efforts to avoid paying.

He said Mr. Gausewitz after discussions with insurers had drawn up a “declaration” discussing the history of such payment issues, which was virtually a mirror of a similar document submitted to the court earlier by insurers.

According to Mr. Heller, Mr. Gausewitz sent a letter to all the litigants in the case saying basically that “somebody asked me to draft this declaration and if anyone would like to do something with it, please do so.”

Mr. Heller said an attorney for insurance interests had taken the declaration and submitted it and that Mr. Gausewitz had improperly used stationary with the State Attorney General’s Office on the letterhead.

Yesterday’s letter to Mr. Poizner said Mr. Gausewitz misrepresented “his actions not only to consumer organizations that are parties to the case, but to the Superior Court of Sacramento, where a document apparently first drafted by the insurance companies was submitted to the court as if it came from the California Attorney General but in fact was filed by lawyers for the insurance industry.”

The letter noted that the regulation concerning auto rating factors promulgated by Mr. Poizner’s predecessor John Garamendi, “as you pointed out in a news release…led to $700 million in savings for California motorists.”

The letter noted that last February, consumer advocates criticized Poizner for hiring Gausewitz, who had served more than a decade as an insurance industry lobbyist, which they said violated the Commissioner's inaugural pledge that "this office must always be fiercely independent from those being regulated."

Among Mr. Gausewitz e-mails that the FTCR obtained under the California Public Records Act was one written to insurance industry lobbyist Jeff Fuller telling him in part to “Send the draft declaration in Word format, to me alone. Please don’t talk about this to other folks until we have talked about it further.”

The e-mails said the FTCR letter “make quite clear that Mr. Gausewitz attempted to hide his assistance to the insurance companies and fool the public.”

Contacted yesterday Mr. Gausewitz said he could not answer questions because of departmental rules that “press calls go through the communications office.”

Jennifer Kerns, a spokesperson for the department, said by e-mail that Mr. Poizner would not fire Mr. Gausewitz.

Mr. Rosenfield, who was the architect of Proposition 103, the groundbreaking ballot initiative that set stringent new rules for the insurance department and rolled back insurance rates, does admirable work, Ms. Kerns wrote, but, “he's just plain wrong on this. The fact is, it is not uncommon for the Department of Insurance to submit statements of fact on particular issues, which is what Bill Gausewitz did in this case.”

“His call for Bill's resignation is personal, and it crosses the line. I don't believe Harvey's unfounded accusations merit much more comment than that.”

She wrote also that, “It is not uncommon to gain input and feedback from various groups prior to issuing a statement of fact. I'm sure we have gained similar input from the Foundation on previous issues.”

Ms. Kern said the department appreciates “Harvey's passion and the work he does on behalf of consumers, but he's just plain wrong in this particular issue.”

The FTCR letter and e-mails it obtained are online at
http://www.consumerwatchdog.org/resources/Ltr_Poizner_11-1-07.pdf

From: NU Online News Service (www.nationalunderwriter.com)

Thursday, November 01, 2007

Cities Reconsider 30-Day Impounding of Cars

By Anna Gorman
Los Angeles Times

After the city of Los Angeles' brief moratorium on impounding the cars of unlicensed drivers, two other cities have moved to end their 30-day impounds, which they say place an unfair financial burden on illegal immigrants and low-income residents.

Bell Gardens, which modified its policy in September, and Huntington Park, which approved the change last month, now allow drivers to reclaim cars immediately instead of waiting a month and paying the hundreds of dollars often required to get a car back.

The moves by those cities are part of a renewed push by some in California to soften the state law that requires impounding of vehicles driven by unlicensed drivers.

Huntington Park City Atty. Francisco Leal said the law imposes an unfair hardship on many drivers.

"This will take away the most egregious part of the law, that is, the 30-day period," Leal said. "There is no way these people can afford that."

Ira Mehlman, spokesman for the Federation for American Immigration Reform, said the law was intended to be harsh to ensure that drivers have licenses.

"Losing your car for a day isn't enough of a threat to convince people it's not worth the risk," he said.

But opponents maintain that the punishment goes way beyond the offense. They say the law has essentially become a weapon to punish illegal immigrants, who cannot get driver's licenses.

"The hardship on these families is just phenomenal," said Cynthia Anderson-Barker, who filed a lawsuit against the state and several cities challenging the 30-day impounds. "When the car is gone and the family . . . loses their transportation, it pushes them further into poverty."

The impound issue surfaced in August when the Los Angeles Police Department decided to halt the practice, saying it might be unconstitutional.

The LAPD's move was partly based on a 2005 U.S. 9th Circuit Court of Appeals case ruling that impounding a legally parked car was an unreasonable seizure of private property when there was no reasonable threat to public safety.

The city attorney's office later determined that the impound law did not violate the constitution in most cases, and the LAPD resumed impounding in September.

With no definitive legal guidance, cities have adopted a mishmash of enforcement policies.

"Each agency, I think, looks at it differently," said Maywood Police Cmdr. Frank Hauptmann. "We all know what the law says -- it really is a matter of how flexible the city wants to be.

"Last year, the department started releasing cars before the elapse of the 30-day period, Hauptmann said.

"The problem is people can't afford to get their cars out," he said. "They don't have a car to take their kids to school or go to work."

In Bell Gardens, police do not hold the cars of unlicensed drivers for 30 days unless the driver is a repeat offender, said Police Chief Andreas Probst. "To hold their cars for 30 days would be an economic hardship for them," he said. "I don't think it would be good public relations."

South Gate police routinely keep such cars for 30 days, though supervisors have some discretion to make exceptions, said Sgt. Keith Underwood. The monthlong impound is important because it gets the unlicensed drivers off the street, he said.

"Everybody has got to have a driver's license as far as we are concerned," he said. "If you don't have a driver's license, you are less likely to have insurance, and if there is a traffic accident, somebody has to be on the hook."

Immigrant rights groups have pushed lawmakers in Sacramento to allow illegal immigrants to get driver's licenses, but the bills have been rejected.

State Sen. Gil Cedillo (D-Los Angeles), who has sponsored several such bills, said he has been pushing city and police officials throughout the state to change their impound policies.

Cedillo said he was pleased that some cities have altered their policies but would like to see cities and counties stop towing entirely.

He said a statewide moratorium would be legal, citing an analysis by the state legislative council that said the simple fact of a driver's being unlicensed was not enough justification to impound a vehicle.

But Mehlman of the Federation for American Immigration Reform countered that ending impounds would send the signal that cities welcome illegal immigrants.

"Obviously, these are local governments who have been inclined to accommodate illegal immigrants in every way possible," he said.

From: Los Angeles Times (www.latimes.com)

Feds Require Financial Firms to Take Identity Theft Prevention Steps

Federal regulators are requiring that every financial institution have a program to detect and prevent identity theft on consumer accounts.

The federal financial institution regulatory agencies and the Federal Trade Commission have issued final rules on identity theft "red flags" and how firms must incorporate these warnings into their operations.

The final rules require each financial institution and creditor that holds any consumer account, or other account for which there is a "reasonably foreseeable risk of identity theft," to develop and implement an Identity Theft Prevention Program for combating identity theft in connection with new and existing accounts. The program must include "reasonable policies and procedures for detecting, preventing, and mitigating identity theft" and enable a financial institution or creditor to: Identify relevant patterns, practices, and specific forms of activity that are "red flags" signaling possible identity theft and incorporate those red flags into the program; Detect red flags that have been incorporated into the program; Respond appropriately to any red flags that are detected to prevent and mitigate identity theft; and Ensure the program is updated periodically to reflect changes in risks from identity theft.

The final rules are effective on Jan. 1, 2008. Covered financial institutions and creditors must comply with the rules by Nov. 1, 2008.

According to a report of the President's Identity Theft Task Force, identity theft results in billions of dollars in losses each year to individuals and businesses.

The agencies also issued guidelines to assist financial institutions and creditors in developing and implementing a program, including a supplement that provides examples of red flags.

The final rules also require credit and debit card issuers to develop policies and procedures to assess the validity of a request for a change of address that is followed closely by a request for an additional or replacement card.

In addition, the final rules require users of consumer reports to develop reasonable policies and procedures to apply when they receive a notice of address discrepancy from a consumer reporting agency.

The final rule was issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.

Source: The Office of the Comptroller of the Currency (www.occ.gov)

From: Insurance Journal (www.insurancejournal.com)
The final rule can be found athttp://www.occ.gov/ftp/release/2007-122a.pdf