Credit crisis throws AIG
into 'uncharted waters'
American International Group Inc., on the heels of
reporting its largest-ever loss, said on Friday the subprime crisis had
thrown it into "uncharted waters" that were likely to remain choppy
through 2008.
The world's biggest insurer did not rule out further write-downs and
losses but said the crisis that led to a $5.3 billion fourth-quarter
loss was not expected to be material in the long run.
Its shares fell 7% and led other insurers lower. The KBW Insurance Index
was down 2%, with AIG the biggest drag.
"We are in unchartered waters," Chief Executive Martin Sullivan said on
a conference call on Friday, a day after reporting AIG's largest
quarterly loss since it was founded in 1919.
The world's largest insurer said the loss stemmed largely from a $11.12
billion write-down of a super senior credit swap portfolio in its AIG
Financial Products unit.
AIG said it had not incurred a realized loss in the credit swap
portfolio since it entered this business in 1998, but it forecast
potential realized losses of $900 million over time, based on current
analysis.
Business Insurance - February 29, 2008
Public Hearing on Bond
Insurance
In light of the current bond insurance crisis, the
Assembly Insurance Committee has scheduled a Mar. 14 public hearing to
gather information on the role of the New York State Insurance
Department. The hearing is scheduled for 10:00 a.m. in Manhattan at 250
Broadway, 19th Floor, Room 1923. Gov. Eliot Spitzer and Insurance Supt.
Eric R. Dinallo recently testified before a Congressional Subcommittee
on Capital Markets regarding New York state's ongoing effort to find
solutions to the growing bond insurance crisis. New York is involved in
structuring a solution because the majority of the biggest bond
insurance companies are domiciled in and primarily regulated by New
York. While New York is working on solutions to the problem, Spitzer
blamed federal regulators for not stepping in when investment banks
securitized and marketed large volumes of bad debt.
Commission to Modernize Financial Services
Scheduled to Meet
The New York Commission to Modernize the Regulation
of Financial Services Property/Casualty Working Group will meet on Mar.
11. The commission will make recommendations on modernizing a regulatory
structure in which four separate state agencies—Insurance Department,
Banking Department, Department of State and the Attorney General’s
Office—all regulate the financial services industry. Dinallo is Chair of
the commission.
Flood Insurance Correction
Because of incorrect information from the Federal
Emergency Management Agency, a story yesterday said all property owners
on Long Island could obtain flood insurance. FEMA says the federal
insurance is available everywhere in Nassau and Suffolk except Islandia
and Lake Grove because they do not have any flood zones on the federal
flood zone map. But those communities could choose to participate in the
program anyway, allowing residents to get coverage even if there is no
flood zone.
NY Newsday - February 29, 2009
Health care for small
business workers
City Council Speaker Christine Quinn announces a $4.9 million program to
offer low-cost health insurance to small businesses in Queens and
Manhattan.
More mom-and-pops may soon cover aches and pains.
City Council Speaker Christine Quinn unveiled a $4.9million program
Thursday to allow small businesses in Queens and Manhattan to offer
low-cost health insurance - like their Brooklyn brethren already do.
"Working for a small business nowadays doesn't guarantee you health
insurance. It can," Quinn said as she hailed Brooklyn HealthWorks, which
has covered 170 small businesses since it began in 2004.
HealthWorks is sponsored by the state, Group Health Inc. and the
Brooklyn Chamber of Commerce. But Quinn wants it expanded so that 4,500
workers in Queens and Manhattan also can buy affordable insurance for
themselves and their families.
NY Daily News - February 29, 2008
N.Y. gov's health plan
proposal 'unrealistic': Comptroller
New York Gov. Eliot Spitzer's $124 billion budget
plan relies on some proposals that may not be realistic, including the
conversion of nonprofit health insurers into for-profit corporations and
a tax on illegal drugs, the state comptroller said Thursday.
The Democratic governor must close a $4.4 billion shortfall. He and the
Legislature must agree on how much revenue the state has to spend by a
Feb. 29 deadline, or toss this crucial aspect of budget planning to the
Democratic state comptroller.
Gov. Spitzer, the state's former attorney general, said drug dealers
should have to pay taxes when they are caught. The proposal—which
mirrors tax stamps—was widely derided.
Comptroller Thomas DiNapoli also said there were $2.6 billion of risks
in the governor's plan, noting the Legislature previously spurned $676
million of his initiatives.
Taking a page from former Gov. George Pataki's budget, Gov. Spitzer said
Group Health Inc. and Health Insurance Plan of Greater New York should
go public. The affiliated health insurers now cover most of New York
City's public employees and retirees.
New York Mayor Michael Bloomberg opposes the plan to take the nonprofit
health insurers public, which he says will cause premiums to rise.
Business Insurance February 28, 2008
DOL proposes safe harbor for
plan contributions
The Labor Department has proposed a revised rule that
would require small employers to speed up the transfer of employee
contributions to pension and welfare plans and said it is considering
doing the same for large employers.
Under current rules, employers—regardless of size—must transmit employee
contributions to pension plans as soon as the contributions can be
reasonably segregated from general employer assets, but no later than
the 15th business day after the month in which the contributions are
received or withheld by the employer. In the case of welfare plans, the
latest date to forward employee contributions is 90 days from the date
the amounts are received or withheld by the employer.
Under the proposed rule, which will be published in Friday’s Federal
Register, employers that sponsor pension and welfare plans with less
than 100 participants would automatically be considered in compliance
with the law only if pension and welfare contributions are deposited
with the plans within seven days of receipt or withholding.
Business Insurance - February 28, 2008
Could Subprime Mortgage
Crisis Turn Desperate Homeowners Into Arsonists?
Insurers fear financial pressure may prompt policyholders to burn houses
With as many as two million or more homeowners reportedly at risk of
foreclosure because of soaring interest rates under subprime adjustable
mortgages, will a significant number of policyholders resort to arson to
free themselves of their financial liabilities? That’s the critical
question facing homeowners insurers and their special investigation
units as anecdotal evidence begins to emerge that some might indeed be
desperate enough to torch their houses to relieve their credit burden.
For example, after a recent fire devoured most of a two-story home in a
Pennsylvania urban area, investigators didn’t take long to find what
they think might be the cause—a subprime mortgage.
David Rioux, the vice president and manager of corporate security and
investigative services at Erie Insurance, said the case provided
anecdotal evidence that some financially strapped homeowners with
subprime mortgages might become desperate enough to commit arson for
profit.
But while he and other investigators say there are no conclusive
numbers, they take the attitude that being proactive is a wise course to
prevent such a trend from being realized, given the number of people who
might be at risk of losing their homes if they cannot keep up with
rapidly escalating interest rates on their adjustable subprime home
loans.
National Underwriter
New York Workers
Compensation Payroll Limitation Law Payroll Limitation as of July 1,
2008
Legislation enacted in 1998 established limitations
on the payroll to be used in the calculation of
workers compensation premiums for the construction industry beginning on
October 1, 1999. Details of this
law were published by the Rating Board in R.C. Bulletin 1917, dated
August 3, 1999.
The payroll caps changed annually through October 1,
2002, at which time the law set the payroll
limitation amount at a maximum of either $750 per week, or the weekly
wage upon which the maximum
benefit is based. Because the statutory maximum weekly workers
compensation benefit remained at $400 per week through June 30, 2007,
the $750 payroll limitation remained in effect. On July 1, 2007, the
statutory maximum was raised to $500 per week, but the maximum payroll
limitation still remained at $750 per week since $750 is effectively the
average weekly wage upon which the $500 is based.
On July 1, 2008, the maximum weekly workers
compensation benefit will increase to $550 per week in
accordance with the provisions of the 2007 Workers Compensation Reform
Act. This change in the
maximum weekly benefit will result in a corresponding increase in the
payroll limitation amount.
Consequently, please be advised that, for policies with effective dates
on and after July 1, 2008, the
payroll limitation cap will be $825 per week.
When subsequent changes in the workers compensation
maximum weekly benefit occur, we will notify
you of the appropriate payroll limitation.
NY
Workers Compensation Board
NYSID Reverses Ruling
On Credit Card Fees.
On June 19, 2007, the
New York State Insurance Department issued an Office of General Counsel
opinion on whether it was permissible for a third-party facilitator
to charge a fee for credit card payment services. In that opinion, the
NYSID said no, based upon New York Attorney General
Opinion No. 2006-F2. This week, the NYSID has reversed its previous
position, issuing a
new opinion stating that a third-party credit card service provider,
who is not the “seller” of insurance, may charge a fee for these
services.
PIA Weekly Reporter
- February 28, 2008
FEMA flood zone changes may
spur insurance sales
People just outside the borders of flood zones may want to invest in
flood insurance in a hurry.
That's because some Long Island homeowners who now live outside a
federally designated flood zone could soon find themselves in one. And
some now inside a flood zone might end up on the outside.
The changes have nothing to do with global warming. They will be the
result of the Federal Emergency Management Agency updating its flood
maps for Nassau and Suffolk for the first time in more than a decade.
Because more accurate surveying equipment will change the boundaries,
FEMA officials and insurance companies recommend that those without
flood insurance in borderline areas that might be included within the
new zones buy flood insurance now to save money.
"If you buy flood insurance while you are out of the flood plain on the
old maps, lower premiums will be grandfathered in on the new maps," said
Stephen Kempf, the regional FEMA administrator.
Flood policies do not take effect until 30 days after purchase. It's
impossible to estimate how much insurance premiums could increase in
newly designated flood areas because many factors contribute to the
rates, FEMA spokeswoman Barbara Lynch said.
The preliminary maps are expected to be ready for Nassau next month and
in May for Suffolk.
The owner of property added to a flood zone can appeal within 90 days,
based on factors such as hilly terrain or a raised foundation, Lynch
said. The new maps become final six months after the last appeal has
been resolved. Then mortgage lenders may require flood insurance for
those added to the flood zones.
Newsday - February 28, 2008
Selected Opinions of the Office of General Council
NY
Insurance Department
MOLD THAT FORMED WHILE CONTRACTOR WAS REPLACING
ROOF IS EXCLUDED FROM COVERAGE
Roy v. Encompass Insurance, (2008 NY Slip Op 30487[U]) (Supreme Court,
Suffolk County) (Judge: Denise F. Molia)
Plaintiffs Steven Roy and Kelly Roy were the owners of a residence
located at 15 Pacific Street, Bay Shore, Ncw York. In 2005, plaintiffs
filed a claim under an insurance policy issued by defendant Encompass
for damage to their roof. The claim was approved by Encompass, and
defcndant A- 1 Roofing and Siding was hired to replace the roof at
plaintiffs' residcnce. Thereafter, in January 2006, plaintiffs allegedly
discovered an extensive mold condition in the roof and the attic of
their home. In February 2006, a claim for mold remediation was filed by
plaintiffs with Encompass. By notice dated February 2,2006, Encompass
disclaimed liability on the ground that plaintiffs failed to give prompt
notice of the claim.
Subsequently, plaintiffs commenced this action against Encompass and A-1
Roofing to recover damages for breach of contract and negligence.
Plaintiffs also asserted a claim for attorney's fees.
The complaint alleged that A-1 Roofing failed to properly install the
roof at plaintiffs' residence and that, as a result, a mold condition
developed on the roof and in the attic. It alleged that plaintiffs first
became aware of a leak in the roof and mold in the attack on or about
January 30, 2006 and filed a claim with Encompass on February 1, 2006.
Also, that Encompass breached its insurance contract by improperly
denying plaintiffs' claim for property damage.
Rogak Report -
February 27, 2008
Aetna Announces Delay In Implementation Of
New Clinical Policy
Decision on monitored anesthesia care seeks to avoid impact on colon
cancer screening rates, provides transition to patient-friendly
alternatives in emerging new sedation approaches
Aetna today announced that it will delay the effective date of a new
clinical policy addressing the medical necessity of an
anesthesiologist’s services during routine upper and lower endoscopic
procedures, such as a colonoscopy. Aetna has always covered moderate
sedation, which is delivered by the treating physician, and is the type
of sedation used for the majority of colonoscopies across the country.
In the new policy, which was announced in late December, Aetna continues
to cover moderate sedation, but only covers monitored anesthesia care
for high-risk patients. The policy was scheduled to be effective on
April 1, 2008. Aetna will now delay implementation until
patient-friendly alternatives – which will not require the added expense
of an anesthesiologist – are approved by the Food and Drug
Administration (FDA) and available in the marketplace.
“Aetna believes that we have a responsibility to encourage physicians to
follow clinical practices based on the best medical evidence,” said
Troyen A. Brennan, M.D., Aetna’s chief medical officer. “It’s not only
important to the health of our nearly 37 million unique members, but it
promotes affordable quality health care and access to important
procedures, such as cancer screening, which we consider top priorities.
“We have determined that in those few markets where monitored anesthesia
care (MAC) has become the routine approach to sedation, implementation
of our policy on April 1 would inconvenience our members in those
markets and potentially depress cancer screening rates in the short
term.”
Aetna News Release
- February 27, 2008
IIHS Rates SUVs for Safety
The Insurance Institute for Highway Safety (IIHS) recently put the wraps
on its ratings for SUV safety picks, and several Japanese models came
out on top.
According to tests that involved front, side, and rear impacts, the 2009
Nissan Murano was rated as the top safety pick. The Mitsubishi Endeavor
and Mazda’s CX-7 and CX-9 would have earned top rankings as well, but
all three models failed to earn good ratings for protection against neck
injuries in rear-end crashes. (Both Mazdas were rated marginal, while
the Endeavor was rated poor.)
To earn the Top Safety Pick designation, an SUV must rank as good or
higher in all three impact tests. They also must be equipped with
electronic stability control (ESC), a crash prevention technology that
monitors how well a car responds to a driver’s steering input. Last
year, t he nation's top transportation officials announced a rule that
will require ESC to become standard equipment on every new passenger
vehicle sold in America by 2012, which could lead to reduced number of
auto claims for insurers.
Claims Magazine
Insurance Groups Unite to Fight Equipment
Theft
The National Insurance Crime Bureau and the Insurance Services Office
have teamed up with the National Equipment Register to create an
alliance to help the insurance industry reduce equipment theft.
The alliance will make NER databases more accessible to law enforcement
through NICB's network of agents working with law enforcement agencies
throughout the U.S. According to the NICB, ISO has helped NER develop
databases of construction and farm equipment losses and ownership
records to help law enforcement officials identify stolen machines.
NER offers services to equipment owners and potential buyers like
HELPtech , which allows owners to register equipment details to receive
theft deterrence decals and often preferred insurance pricing.
Claims Magazine
Fiduciary duty suit against broker allowed
to proceed
An Illinois Appellate Court ruled that a lawsuit against Mesirow
Insurance Services Inc. alleging breach of fiduciary duty in connection
with undisclosed contingent commissions can proceed.
Crystal Lake, Ill.-based DOD Technologies Inc. sued Chicago-based
Mesirow in March 2005, alleging breach of fiduciary duty, unjust
enrichment and consumer fraud in connection with Mesirow’s practice of
accepting contingent commissions, among other charges.
The circuit court in Cook County dismissed all charges against Mesirow
in October 2006, ruling that Illinois’ insurance code precludes claims
for breach of fiduciary duty and that the plaintiff did not prove actual
damages to prove consumer fraud.
While a three-judge panel of the First District Illinois Appellate
Court, Fourth Division, in Chicago upheld the lower court’s ruling on
the consumer fraud and common law fraud counts, it ruled that producers
breach their fiduciary duty of acting in their clients' best interest
when they steer business to insurers that pay the broker undisclosed
contingent commissions.
“It is not the undisclosed incentives that constitute misappropriation,”
the appellate panel concluded in its Feb. 18 ruling. “Rather, the
undisclosed incentives, as alleged in the complaint, were what led
defendant to place certain policies without regard for the customer’s
needs and in breach of its fiduciary duty. We hold that a producer
misappropriates premiums within the terms of (the Illinois Insurance
Code) when it directs a premium to an insurer, the price or coverage is
not in the consumer’s best interest, and the placement earns the
producer
Business Insurance - February 26, 2008
States Draw Fire for Pitching Citizens On
Private Long-Term Care Insurance
Last year, six million letters bearing Gov. Arnold Schwarzenegger's name
and official state seal went out to Californians.
The missives, sent by a direct-mail company called Senior Direct Inc.,
were pitch letters, urging many low- and middle-income residents to buy
long-term care insurance to cover any future nursing home bills.
Behind the plug: California, like many other states, is trying to curb
the high costs of long-term care paid under Medicaid, the joint
federal-state health insurance program for low-income people. Last year,
total Medicaid expenditures for older adults' nursing-facility and other
long-term care bills hit $100 billion.
So, more states are encouraging such citizens to buy private insurance.
Along with California, 14 other states are now promoting long-term care
policies under marketing partnerships with the insurance industry. More
than a dozen others are getting started.
The state endorsements are "the single best thing that has happened to
the long-term care industry," says Jesse Slome, executive director of
the American Association of Long-Term Care Insurance. Total premiums
collected for long-term care, or LTC, policies were $10 billion in 2007,
up 21% from $8.2 billion in 2004.
Critics are sounding alarm bells. They argue that the financial benefits
of LTC insurance for many target customers are negligible to
nonexistent. Their income and assets are so low that they would quickly
qualify for free care under Medicaid.
$$
Wall Street Journal - February 26, 2008
EXCESS INSURER MAY NOT DELAY ISSUING LATE
NOTICE DISCLAIMER WHILE IT LOOKS INTO DETAILS OF PRIMARY COVERAGE
Transcontinental Ins. Co. v. Gold 2008 NY Slip Op 50322(U) Decided on
January 24, 2008 Supreme Court, Nassau County Feinman, J.
In this declaratory judgment action, plaintiff insurer sought a
declaration that the excess general liability policy issued to the
defendant, Fred L. Gold, did not provide coverage to the defendant in an
underlying wrongful death action.
On December 26, 2005, Marcia E. Jones, a pedestrian, was struck by the
defendant's vehicle at or near an intersection located in East Meadow,
New York. Ms. Jones was transported to the hospital where she lapsed
into a coma and eventually died.
The plaintiff, Transcontinental, disclaimed coverage to the defendant on
the ground of late notice.
"While plaintiff argues that Transcontinental issued its disclaimer
thirty-four days after receiving the defendant's notice and claim,
Transcontinental maintains that its disclaimer was issued thirty days
after receiving the defendant's claim. Transcontinental submits that its
delay in issuing its disclaimer is reasonable as Transcontinental needed
additional information regarding the limits of the Allstate policy, the
erosion of the limits and the facts concerning the accident as this
information is critical to determine whether excess coverage is even
potentially triggered."
Rogak Report -
February 25, 2008
Coastal Growth, Not Global Warming, Blamed
for Rising Storm Losses
A hurricane that hit Miami in 1926 would cause up to $157 billion in
damage if it were to strike today, according to a recent study.
U.S. storm costs are rising because of higher populations and wealth on
the coasts, not a spike in the number or power of hurricanes, the study
said.
Its conclusions run counter to the notion that the $150 billion in
damages caused by the destructive Atlantic hurricane seasons of 2004 and
2005 might be linked to global warming, which some scientists believe is
behind a spate of extraordinarily powerful hurricanes in recent years.
An extrapolation of current trends "suggests a storm like the 1926 Great
Miami Hurricane could result in perhaps $500 billion in damage as soon
as the 2020s," the study said.
Hurricanes and their destructive potential have become a key concern in
global energy, insurance and commodities markets in the last decade.
Scientists believe the Atlantic basin entered a new era of more frequent
hurricanes around 1995, which could last 25 to 40 years.
The study found that the 1926 Miami hurricane would have caused the
largest losses in history -- $140 billion to $157 billion -- if it
struck today, accounting for inflation and massive building along the
Miami coastline in the last 80 years.
That toll would have far exceeded the current costliest hurricane,
Katrina, which killed 1,500 people when it swamped New Orleans and the
Gulf of Mexico coast in 2005, causing $81 billion in damage.
"There is nothing in the U.S. hurricane damage record that indicates
global warming has caused a significant increase in destruction along
our coasts," Chris Landsea, one of the study's authors and a leading
skeptic on the influence global warming may have on hurricanes, said in
a statement.
Insurance Journal - February 25, 2008
The New York Automobile Insurance Plan has
developed an informative brochure that provides valuable information
regarding our Special Investigations Unit and our anti-fraud
initiatives.
To view or download the brochure simply click on the link below
https://www.aipso.com/ny/NYAIP%20SIU%20Fraud%20Brochure.pdf
Lead Poisoning May Not Be Sole Cause
Of Infant's Injuries; Landlord Prevails
O'Connor v. Weiss
Assembly Insurance Chair Joe
Morelle has just introduced A.10001,
http://www.assembly.state.ny.us/leg/?bn=A10001&sh=t , to make
NYPIUA permanent, and has placed the bill on his agenda for Wednesday,
2/27/08. There is currently no Senate companion bill.
401(k) Participants Can Sue Under
ERISA
Individual participants in 401(k) retirement plans can
sue under ERISA to recover their losses, the Supreme Court ruled
yesterday in a case that has created concern within the insurance
industry.
In a unanimous ruling (LaRue vs. DeWolf), the court said the Employee
Retirement Income Security Act does permit an individual account holder
to sue plan administrators for breaching their fiduciary duties.
The case revolved around language in ERISA that referred to recovering
money for the retirement “plan,” rather than an individual participant
in the plan suing solely on his own behalf.
In the court’s opinion, Justice John Paul Stevens said that such
lawsuits are permissible.
“Fiduciary misconduct need not threaten the solvency of the entire plan
to reduce benefits below the amount that participants would otherwise
receive,” Justice Stevens said. He added that ERISA “does authorize
recovery for fiduciary breaches that impair the value of plan assets in
a participant’s individual account.”
National Underwriter - February 21, 2008
Governor Eliot Spitzer unveiled his
21-day budget amendments, increasing the covered lives assessment by an
additional $50 million, bringing the total increase to $190 million.
Combined with his proposed 1.75 percent HMO tax and
the existing patient services surcharge (8.95 percent), New York's
health insurers would pay a total of $1.4 billion in taxes. In addition,
Governor Spitzer revived last year's failed "anti-subrogation" language,
which would prohibit insurers from recovering costs for medical care
from collateral sources in personal injury, injury and wrongful death
cases. If enacted, insurers stand to lose an additional $50 million. In
other news, Attorney General Andrew Cuomo announced his intent to sue
UnitedHealth Group and its subsidiary Ingenix over certain provider
payment practices. The AG also launched an industry-wide investigation
of 16 companies requesting information on how insurers calculate
reasonable and customary charges.
Aetna Newsletter - February 21, 2008
Editorial: Insurer's retreat
leaves LI in lurch
Say you are a typical Long Island homeowner who has diligently paid
premiums for years, if not decades, to insure your home against
unexpected losses. Then suddenly your insurance company tells you it
won't renew your policy, because the Island may be hit by a hurricane in
the future. You're left unprotected, and so are many others like you in
Nassau and Suffolk.
That's exactly what's happened to homeowners covered by State Farm, the
second-largest insurer in the state, which has decided not to renew any
of its home insurance policies on Long Island. Last year, Allstate,
MetLife, Nationwide and several others said they would curtail sharply
the number of homes they will cover on the Island, in New York City and
Westchester County, because of the risk of intense storms.
Outrageous? Yes. Even despicable, if you have paid tens of thousands of
dollars over the years without filing a single damage claim. But
illegal? No. Not even unethical in strictly business terms. The state's
Insurance Department is conducting a formal examination of complaints
lodged against State Farm, but it's unlikely punitive action will result
from it.
Newsday Editorial - February 21, 2008
CRM Holdings, Ltd. Announces
Changes at Self-Insured Group Management Subsidiary
Compensation Risk Managers, LLC. announced the the elimination of 34
positions at it's headquarters in Poughkeepsie and the transfer of 6
positions to the Company's Majestic Insurance Company subsidiary.
This was in response to changes in market and business
conditions that have reduced the volume of business in group
self-insured trusts in its New York market, (The closing of several CRM
Self Insured Trusts)
CRM News Release - February 20, 2008
N.Y. Court: Insureds Can Sue
For Consequential Damages
A new ruling by the New York Court of Appeals could open the door for
breach of contract suits against commercial property insurers – a move
two dissenting judges warned could raise the price of insurance for
everyone in the state.
In two decisions earlier this week, the state's high court ruled that
commercial property owners can assert "consequential damages" against
their insurance companies if those insurers breach their contracts.
Those damages can exceed an insurance policy's limits if they are a
"natural and probable consequence" of a broken contract.
Five of the court's seven judges agree with that opinion. However two
judges – Robert S. Smith and Susan Phillips Read – dissented, calling
consequential damages little more than thinly disguised punitive
damages. The dissenters predicted insurers will be forced to raise
premiums for all New Yorkers, fearing unsympathetic juries will
potentially expose them to unpredictable settlements.
Insurance Journal - February 20, 2008
NEW YORK INSUREDS MAY NOW SUE
FOR THOSE DAMAGES CAUSED BY INSURER'S BREACH OF INSURANCE CONTRACT, EVEN
BEYOND POLICY LIMITS
Bi-Economy Market Inc. v. Harleysville Insurance Company of New York
2008 NY Slip Op 01418 Decided on February 19, 2008 Court of Appeals
Pigott, J.
In a break with long-standing precedent, the Court of Appeals has held
that when an insurer's refusal to pay a first-party claim causes further
damage to the insured -- as here, where the insurer's refusal to pay
business interruption benefits resulted in the failure of the insured's
business -- the insured may sue for those "consequential damages," even
if they are excluded by policy language, and those damages can exceed
policy limits.
"In this action brought by an insured against an insurer for breach of a
commercial property insurance contract," wrote the Court, "the principal
issue presented is whether the insured can assert a claim for
consequential damages. Under the circumstances of this case, we hold
that it can.[FN1] "
Rogak Report -
February 20, 2008
CLAIMANT'S STATEMENT TO
INSURED THAT HE WOULD NOT SUE MAY EXCUSE LATE NOTICE; INSURER'S TARDY
DISCLAIMER MAY BE EXCUSED BY INVESTIGATION
Equinox Partners Ltd. v. Greenwich Insurance Co. 2008 NY Slip Op
50263(U) Decided on February 15, 2008 Supreme Court, Richmond County
Minardo, J.
Plaintiff Equinox Partners Ltd. moved for summary judgment in this DJ
action against defendant Greenwich regarding the latter's obligation to
indemnify and pay the cost of its defense in a lawsuit entitled Vasquez
v. Equinox Partners Ltd., which was pending in Richmond County under
Index No. 12117/04. Greenwich opposed and cross-moved for summary
judgment.
In the underlying action, Vasquez alleged that on April 26, 2004,
Equinox was negligent in the ownership, operation, maintenance and
control of the premises located at 2701 Clove Road, Staten Island,
thereby causing him to sustain severe personal injuries. At the time in
question, Equinox had in place a policy of insurance with Greenwich.
Upon being served with a summons and complaint in the Vasquez action,
Equinox promptly forwarded a copy of same to Greenwich on or about
September 13, 2004. On September 22, 2004, Greenwich acknowledged its
receipt of this notice of loss in a letter to Equinox, but indicated
that coverage may be unavailable because of the six-month delay in
providing notice of the April 26, 2004 accident.
Rogak Report -
February 19, 2008
New York State to Launch Bid
Bond Program
New York's minority- and women-owned businesses could have an easier
time getting surety bonds needed for state and private contracting work
under an ambitious program that will launch in New York City later this
week and in Buffalo, Syracuse, Rochester and Albany next month.
The new program, called the New York State Bonding Initiative,
substantially expands a previous plan geared at helping businesses
obtain so-called bid bonds. It includes workshops and one-on-one
sessions for contractors with bonding experts, increased participation
by the federal Small Business Administration, loan and grant programs,
and a commitment from the surety bond industry to develop programs
tailored to small and emerging contractors.
The move comes after several months of negotiations between the state,
the insurance industry and advocates for small contractors in the Empire
State.
"Minority and women entrepreneurs have not been given a fair shake at
the opportunity to do business with the state. This additional access to
borrowed capital will help New York get back on track by supporting
businesses that are vital to New York's communities and overall economic
growth," Lt. Gov. David Paterson said.
Superintendent of Insurance Eric Dinallo said "The New York State
Bonding Initiative will open up new opportunities and give these
business owners the chance to tackle more and larger projects, to grow
their businesses, to create jobs and foster economic development all
across this state."
Insurance Journal - February 18, 2008
Insurance panel eyes no-fault
malpractice plan
A medical malpractice-reform task force convened by state Insurance
Superintendent Eric Dinallo is expected to recommend that New York
establish a no-fault compensation fund for babies injured at birth. The
goal is to remove such cases from the litigation process, which often
leads to huge jury awards.
Instead, families would receive immediate and continued financial
assistance to care for the children. Set fees would be paid to lawyers
for helping families through the system and to doctors for providing
medical care. It’s hoped that the reform would reduce the high cost of
medical malpractice insurance for obstetrical care.
State Department of Insurance spokesman David Neustadt says the panel
has not decided what plan to recommend and could not comment on
deliberations.
“We can’t comment until we see the final product, but this is a solution
we have been recommending,” says Dr. Robert Goldberg, president of the
Medical Society of the State of New York.
The American College of Obstetricians and Gynecologists’ New York
chapter confirmed only that the plan was under discussion. The New York
State Trial Lawyers Association says it opposes the proposal because it
would “hurt mothers and babies.”
CrainsNY - February 15, 2008
37 Days too Long for Company to Deny
Sirius America Insurance Company v. Vigo
Construction Corp.Appellate Division, Second Department
Unexcused failure to disclaim for 37 days after carrier had enough
information to deny coverage leads to loss of right to disclaim.
Hurwitz & Fine
Late Notice Denial of Coverage
J.C. Contracting of Woodside Corp. v. Insurance
Corporation of New York Appellate Division, Second Department
Insurance Corporation of New York established that it
did not receive timely notice of the accident and promptly disclaimed
coverage on that ground. First notice of claim was made five months
after the insured was sued and while an application for a default was
pending. No excuse was offered that impressed the court.
Hurwitz & Fine
Late Notice Excuse Denied: Where a
Reasonable Person Could Envision Liability, there is a Duty to Make
Inquiry
York Speciality Food, Inc. v. Tower Insurance
Company of New York Appellate Division, First Department
Insured knew of accident three days after it occurred
but waited eight months to notify insurer. Insured did nothing to
investigate knowledge of employees, some of whom saw injured party
removed from premises in ambulance. Late notice excuse therefore fails.
Hurwitz & Fine
Workers Compensation Board
Issues New Draft Forms
Between December 11th, 2007 and January 25th 2007, the Board posted the
revised C-2, C-3, C-4, and C-4.2 forms on our web site for input from
the general public. During this period the Board received over 340
survey responses. Posted below are the new version of each of these
forms resulting from refinements we were made based on the surveys
received.
Draft C-2
Schumer fights State Farm's
insurance terminations
After 19 years as a customer of State Farm, Walter
Buhner of Wading River received a letter from the insurer in
mid-December saying it would not renew his home insurance policy "due to
the unacceptably high risk of damage to your property from a
catastrophe."
Buhner's predicament has been happening elsewhere on Long Island. Sen.
Charles Schumer (D-N.Y.) said yesterday that State Farm has become the
latest giant insurance company to notify customers on Long Island that
their homeowner's policies will be terminated.
In a news release, Schumer said he's "received several calls in the last
six months from Long Island residents who received word from State Farm
that their policies would be terminated and they would be forced to find
new, more costly insurance."
State Farm officials did not return phone calls for comment.
Last year, Allstate, MetLife, Nationwide and several others said they'd
sharply curtail the number of homes they will cover on Long Island, in
New York City and Westchester County because of the fear of intense
storms and huge damage claims.
Newsday - February 15, 2008
Cuomo to sue health insurers
A six-month investigation by the Attorney General's
office found that some insurers were altering the average cost of health
care services to lower the amount they would have to reimburse
customers.
New York state Attorney General Andrew Cuomo on Wednesday announced
plans to sue UnitedHealth Group Inc., and said he will issue 16
subpoenas in an industry-wide probe of how U.S. insurers defraud
customers by manipulating reimbursement rates.
Mr. Cuomo plans to sue Minnetonka, Minn.-based UnitedHealth, as well as
subsidiary Ingenix Inc. and three other subsidiaries over deceptive
practices in its reimbursement policy, which he claims shortchange
patients and involves a conflict of interest.
Additionally, he will subpoena Aetna Inc., Cigna Corp. and Empire Blue
Cross & Blue Shield over their own reimbursement policies.
Ingenix is one of the nation’s largest providers of healthcare billing
information, which insurers use to gauge the proper reimbursement rates
for consumers. Ingenix uses information from doctors, insurers,
pharmacies and other healthcare providers to generate average market
rates for various services, including routine doctor visits, and
utilizes this rate to determine how much customers should be reimbursed
when they receive services from a health care provider outside of their
network.
A six-month investigation by Mr. Cuomo’s Healthcare Industry Taskforce
charges Ingenix with rigging average market data to generate
artificially low reimbursement figures. In one example, Task Force head
Linda Lacewell noted that a routine doctor’s visit generally runs a
consumer around $200 without insurance, but figures in the database were
manipulated to show the typical rate at $77. As a result and applying
the typical contracted reimbursement rate of 80%, insurers would only be
returning $62 to a customer.
CrainsNY - February 13, 2008
Cell Phone Use in Car Leads
to $5.2 Million Payout by Employer
Fulton County Daily Report
Talk isn't always cheap, as International Paper Co. learned recently
when it agreed to pay $5.2 million to settle a personal injury suit
related, at least in part, to one of its employees' use of a cell phone
while driving.
According to the complaint, filed in Fulton County, Ga., Superior Court
in 2006, International Paper employee Vanessa C. McGrogan was using her
company-supplied cell phone as she drove west on Interstate 16 near
Dublin, Ga., when she rear-ended a vehicle driven by Debra Ford. The
collision pushed Ford's vehicle into the ditch on the right side of the
road, overturning it so that the driver's side hit and then slid along
the roadway -- with Ford's arm trapped between the door and the asphalt.
Medical complications eventually forced Ford, a widowed mother of four,
to have her arm amputated almost up to the shoulder.
"We have a cell phone statute in Georgia that says the driver is not to
do things that are distracting," said Ford's attorney, Katherine L.
McArthur of The Law Firm of Kathy McArthur in Macon, Ga. McArthur
explained that this essentially means reasonable cell phone use is
acceptable within the purview of the statute. The International Paper
employee's cell phone use was not reasonable, McArthur continued,
because the employee had set her cruise control at 77 miles per hour --
in a 70 mph speed zone.
The combination of those two factors, said McArthur, allowed her to
raise the issue of intentional negligence on the part of the employee
and International Paper and to seek punitive damages.
.........
Comment (LR) : And so, as we can see, a cellular phone
provides a direct connection between an injured person and the phone
user's employer's pocket. What employers need to do, is to make an
official written company policy prohibiting its employees from using
cell phones while driving on company business. That way, the cell phone
use becomes an unauthorized and prohibited act by the employee which may
insulate the employer from liability.
Rogak Report -
February 13, 2008
Lawmakers blast Spitzer's $15
charge on auto insurance
Key lawmakers are assailing Gov. Eliot Spitzer's plan to assess a $15
fee on insurance policies to help pay for bridge repairs.
Senate Transportation Committee Chairman Thomas Libous and Assemblyman
Richard Brodsky say the fee is unfair and unnecessary.
Libous questions charging the fee while the administration raids what is
supposed to be a fund dedicated for bridge repair.
Brodsky argues the fee doesn't distinguish between owners of luxury and
economy cars and is another hit for middle class families in a budget
that claims no tax increases.
Newsday - February 13, 2008
STATE FINDS MILLIONS IN
UNREPORTED WAGES AND UNDERPAYMENTS TO WORKERS DUE TO ILLEGAL LABOR
PRACTICES
The Department of Labor today announced the initial findings of the
Joint Enforcement Task Force on Worker Misclassification. In its first
four months, the Task Force discovered that more than 2,000 workers had
been misclassified: a situation where employers improperly treat their
workers as independent contractors rather than as employees, costing the
state millions of dollars. Worker misclassification translates into a
substantial revenue loss at all levels of government for vital programs
and services, which leaves taxpayers the burden of making up the
difference.
Governor Eliot Spitzer created the Joint Enforcement Task Force in
September 2007 to address the problem of employers paying their workers
off the books. Such employers hope to avoid taxes and other legal
obligations such as workers’ compensation coverage and overtime pay.
This misclassification resulted in more than $19 million in unreported
wages, $3 million in underpayments owed to workers, and more than $1.2
million in taxes and penalties owed to the Unemployment Insurance Trust
Fund. The Governor’s order directed the Task Force to report on its
findings each February and make recommendations for ways to address the
problems it encountered. Commissioner M. Patricia Smith announced the
Task Force’s first report in New York City today, where she was joined
by members of the Task Force and labor representatives.
“I created this Task Force as a part of my economic security agenda to
reduce long-standing abuses of workers and to level the playing field
for law-abiding businesses,” said Governor Spitzer. “This report
demonstrates why employee misclassification is a serious problem and why
a coordinated approach is needed. I commend Commissioner Smith and the
Task Force members for their hard work on behalf of New York workers.”
State Department of Labor Commissioner M. Patricia Smith said: “These
striking results, in only four months, reveal the extent of a problem
that has been ignored for many years. Employers who misclassify their
workers are violating the state’s laws and cheating their workers out of
required pay, benefits and protections.”
NY Governor -
February 11, 2008
OSHA Reminds Employers to
Post Injury/Illness Summaries Beginning Feb. 1, 2008
The Occupational Safety and Health Administration today reminded
employers that beginning Feb. 1, 2008, they must post a summary of the
total number of job-related injuries and illnesses that occurred during
2007. Employers are required to post OSHA Form 300A (summary). The 2007
summary must be posted from Feb. 1 to April 30, 2008.
"The OSHA 300 logs provide employers and employees a broad view of where
injuries and illnesses are occurring at their worksites," stated
Assistant Secretary of Labor for OSHA Edwin G. Foulke, Jr. "Identifying
and posting injury and illness information provides employers and
employees with useful information to help ensure a more safe and
healthful workplace."
The summary must include the total number of job-related injuries and
illnesses that occurred in 2007 and were logged on the OSHA Form 300. To
assist in calculating incidence rates, information about the annual
average number of employees and total hours worked during the calendar
year is also required. If a company recorded no injuries or illnesses in
2007, the employer must enter "zero" on the total line. The form must be
signed and certified by a company executive. Form 300A should be
displayed in a common area where notices to employees are usually
posted.
Employers with 10 or fewer employees and employers in certain industries
are normally exempt from federal OSHA injury and illness recordkeeping
and posting requirements. A complete list of exempt industries in the
retail, services, finance, insurance and real estate sectors is posted
on the OSHA Web site.
OSHA
Sitting Pretty: New American
National Standard Addresses Workstation and Computer Design
According to the American Chiropractic Association, more than half of
all working Americans admit to having back pain each year, largely
attributable to poor workstation posture.
But back pain isn’t the only job hazard facing the
nation’s workforce. From eyestrain caused by insufficient lighting to
wrist pain from improper keyboard and mouse usage, ergonomically
appropriate systems are a critical component of a safe and healthy work
environment.
The Human Factors and Ergonomics Society (HFES), a member of the
American National Standards Institute (ANSI) and an ANSI-accredited
standards developer, has published ANSI/HFES 100-2007, Human Factors
Engineering of Computer Workstations, a new standard that addresses the
design of workstations, furniture, and computer systems.
ANSI
Connecticut Agents Get Online
License Renewals
There'll be no more ink and paper for Connecticut agents looking to
renew or change their insurance licenses.
That's because the state's insurance department said it has upgraded its
computer systems to allow agents to renew or alter their licensing
information online.
The department said the new service, available at
www.ct.gov/cid , allows licensees to
change their names, addresses, and doing-business-as information as
necessary.
Insurance Carriers
Denounce Budget Plan On Health
Health insurance carriers are denouncing Governor Spitzer's revised
budget proposal, which would further increase a tax on health insurance
policies in New York.
A proposal to increase the "covered lives assessment" by an additional
$50 million will make health insurance unaffordable at a time when Mr.
Spitzer is trying to expand health insurance coverage, officials at the
New York Health Plan Association said. Mr. Spitzer's earlier budget
called for increasing the assessment by $140 million, so the total
increase would now be $190 million
Individual policyholders who previously owed $149.85 a year for the tax
will now owe $182, and families who paid $494.50 a year will be charged
$603, according to the group's analysis.
NY Sun -
February 12, 2008
NYSIF Anti-Fraud Campaign Notches
Milestones in 2007
The New York State Insurance Fund marked two
milestones in fighting workers’ compensation fraud in 2007, notching 158
arrests for the year and, in the process, surpassing 1,000 arrests in
its anti-fraud program.
“Our industry-leading fraud program is a credit to the dedication of our
entire staff in detecting fraud, and to the successful working
relationship among our division of Confidential Investigations, New York
State agencies that are our partners in the fight against fraud, and law
enforcement authorities across the state,” NYSIF CEO David P. Wehner
stated.
NYSIF topped its previous one-year total – 148 set in 2006 – with 158
arrests in 2007, representing fraud, restitution and estimated future
savings of more than $17,428,000.
Late last summer, NYSIF passed the 1,000 mark for fraud arrests since
1996. During that time, cumulative fraud halted by NYSIF investigation,
along with restitution and estimated future savings has totaled nearly
$132 million.
In keeping with New York workers’ compensation reform signed into law in
2007, NYSIF continued cracking down on policyholder, claimant and
medical provider fraud, with particular attention paid to policyholders
who under report payroll or misclassify workers to avoid paying proper
premium.
NYSIF
Tenants in Famous NYC
Building Sue Neighbor over Second-Hand Smoke
A couple in a famed apartment building that has been home to celebrities
such as Angelina Jolie are suing a neighbor over her heavy smoking.
Lawyers Jonathan and Jenny Needleman Selbin say in a lawsuit filed
Thursday that their home in the Ansonia on Manhattan's Upper West Side
"smells like a casino" because a chain-smoking neighbor, Galila Huff,
filled their apartment and the hallways with smoke almost daily from
their arrival in 2003 until last year.
Huff admitted when reached at home that she was a smoker. She said she
knew about the lawsuit but could not discuss it.
Huff's smoke sometimes came directly into the Selbins' apartment through
vents from shared duct work, court papers say. The couple said they
worried about the "grave danger" the secondhand smoke posed to their son
Charlie, who is now nearly 4.
The attorney couple said Friday that the building's management renovated
the ducts in early 2007 and mostly fixed that problem, but the
renovations did nothing to address the secondhand smoke wafting through
the hallways.
"Visitors regularly comment on the smoke and have noted that it 'smells
like a casino' in the common hallway," the Selbins' court papers say.
In their lawsuit, filed in Manhattan's state Supreme Court, the Selbins
said they complained to Huff about the smoke but she "intentionally,
recklessly and/or negligently" endangered their health and that of their
son.
Insurance Journal - February 11, 2008
NEW YORK STATE INSURANCE DEPARTMENT
TAKES DISCIPLINARY ACTIONS AGAINST COMPANIES, AGENTS, BROKERS &
ADJUSTERS
The New York State Insurance Department has taken
disciplinary action against the following licensees. Those categorized
as stipulations have been agreed to by the licensee. Department actions
that result from Department hearings are subject to judicial review and
possible stay of enforcement.
NY Insurance Department - February 7, 2008
Increase in GPS thefts on
Long Island prompts police warning
A nearly 500 percent increase in the thefts of global positioning system
receivers has prompted Nassau County Police Commissioner Lawrence Mulvey
to warn people to take the portable devices from their unattended cars.
Mulvey says leaving GPS devices visible on the windshield or dashboard
is an open invitation to thieves.
NY Post - February 6, 2008
Suffolk Contractor Who Evaded Taxes
Arrested Again, Now for Workers' Compensation Fraud
A Port Jefferson construction contractor already
convicted of tax evasion faces two more felonies after his arrest
Thursday on charges he also avoided workers' compensation premiums.
Gary Woltmann, the president of Woltmann Associates, allegedly used an
off-the-books payroll scheme to avoid paying $150,000 in workers'
compensation premiums to his insurer, American International Group, in
the policy years 2002-2003 through 2006-2007. He also allegedly
defrauded New York State out of $36,000 in payroll taxes.
Woltmann faces two Class E felonies: one count each of fraudulent
practices and offering a false instrument for filing in the first
degree. Under New York state penal law and workers' compensation law,
businesses with employees must carry insurance to cover workers who may
be injured on the job. These charges are punishable by one and a third
to four years in prison, fines up to $50,000, and restitution.
NY Compensation Board - February 4, 2008
January P/C rates decline but
at slower pace: MarketScout
The average reduction in property/casualty rates slowed somewhat to 15%
in January compared with a year earlier, MarketScout reported Tuesday.
December showed a 16% reduction in average P/C rates across the board
compared with the previous year, according to the Dallas-based
electronic insurance exchange.
January’s lesser decline of 15% was largely attributable to directors
and officers liability prices “related to the subprime lending crises,”
MarketScout said in its analysis.
“D&O rates adjusted 3% to a reduction of minus 14% as compared to minus
17% in December,” Richard Kerr, MarketScout’s chief executive officer,
said in the statement.
Business Insurance - February 5, 2008
Study: Subprime Crisis Not
Materially Affecting D&O or E&O Pricing
The crisis in the subprime mortgage market has had little impact on
availability, cost or policy conditions of directors and officers
liability (D&O) and errors and omissions liability (E&O) insurance
policies, according to a survey of financial sector risk managers and
chief financial officers by Advisen Ltd.
More than 90 percent of commercial banks, investment banks, mortgage
lenders, real estate investment trusts and other companies in the
financial services sector have renewed, or expect to renew, their D&O
and E&O policies at the same or lower rates. That is based on responses
from 110 insurance buyers.
The lack of reaction to the crisis is despite more than $200 billion in
writedowns reported to date from mortgage related investments and more
than 175 lawsuits already filed against companies involved in the
subprime mortgage market, noted Advisen. More writedowns – and more
lawsuits – are anticipated in the coming months.
"We launched this survey when we didn't detect a reaction to the
subprime meltdown in the D&O and E&O insurance program data we routinely
compile from insurance buyers and brokers," said Dave Bradford,
Advisen's chief insurance industry analyst. "We felt there had to be
more to the story, but the survey results confirm our initial
observations – all is quiet on the D&O and E&O fronts."
Insurance Journal - February 5, 2008
Report: Coverage Limits Stay
Steady Despite Price Drop
U.S. businesses maintained their level of liability insurance protection
during 2007 as costs for the coverage dropped an average of 7.3 percent
for firms reporting multiple years of data, according to a new Marsh
brokerage survey.
These are some of the results contained in a new global study of 7,265
companies in 58 countries by the New York-based firm. The survey covers
corporate insurance buying decisions made during the 12-month period
ending March 31, 2007.
For the third consecutive year, the average price for $1 million of
liability coverage among U.S. firms declined, falling 4.6 percent to
$11,348 in 2007, compared to $11,895 in 2006. After three years of price
decreases, costs in 2007 have fallen to 2003 levels, providing some
degree of relief from the steady price increases experienced in several
preceding years, Marsh said.
The largest U.S. firms in the study (those with revenues exceeding $10
billion) purchased limits of $288 million on average, the greatest
amount of coverage of all firms in the study. Notably, firms in this
category that reported multiple years of data increased their limits by
2.4 percent.
Midsize firms (those with revenues ranging from $201 million to $1
billion) purchased limits of $51 million on average, increasing their
limits by 3 percent.
The smallest firms in the study (those with annual revenues of $200
million or less) increased their average limits slightly to $28 million
in 2007 from $27 million in 2006.
“Even though firms of all sizes maintained their levels of insurance
protection this year, they need to recognize that they are buying
insurance today to cover losses they might have to pay five years from
now or more,” said George G. Pallis, a managing director of Marsh’s
National Casualty Practice.
National Underwriter - February 4, 2008
Bush proposes adding health costs
to W-2s
Employers would be required to report the cost of
health insurance coverage they provide to employees on annual W-2 wage
and income statements under a recommendation by the Bush administration.
Such disclosure is necessary because many employees “are unaware” of the
value of coverage, the administration said of the idea that was included
in its fiscal 2009 budget proposal released Monday.
The current lack of transparency may result in “inefficient choices of
health coverage, including overconsumption of health coverages by
employees,” the administration said.
Under the proposal, costs of health care-related plans in which
employees are enrolled, such as medical, dental and vision plans, could
be aggregated. Contributions, if any, to health savings accounts would
be excluded.
Cost information would be reported based on “similarly situated”
employees who receive the same level of coverage, such as individual or
family coverage. Costs, however, would not be reported on a specific
employee’s use of health care services during a year.
Meanwhile, the Bush administration also recommended several changes to
health savings accounts that it first proposed last year, but on which
Congress took no action. Under one proposal, for example, HSAs could be
set up without being linked to high-deductible insurance plans, as is
the case now. Instead, HSAs could be paired with insurance plans that
have a 50% coinsurance requirement.
Business Insurance - February 4, 2008
Meet Insurance Superintendent Eric
Dinallo
Insurance Superintendent Eric Dinallo will discuss
efforts to streamline regulation of New York's crucial financial
services sector, his efforts to solve the bond insurance problem, the
continuing controversy over health insurers rates, profits and policies
and the effort to reform malpractice laws among other topics. He will be
questioned by Crain's editor Greg David and another journalist.
Date - Wednesday February 27, 2008
8:00-8:30am Networking Breakfast
8:30-9:30am Program
Venue - Hilton New York
Address - 1335 Avenue of the Americas between 53rd and 54th streets
Online registration available at:
http://www.crainsnewyork.com/apps/pbcs.dll/section?category=events&list=all
Softening Insurance Market
Putting The Squeeze On Premium Financers
Shrinking premium pie forces firms to outperform competitors on service
With cheaper insurance rates and the re-entry of standard carriers into
some specialty markets putting the squeeze on the amount of business
available, premium financing companies are becoming more aggressive on
terms and pricing but don’t see any long-term threats to their industry,
interviews with leading players revealed.
Times are definitely more challenging, those queried conceded. Soft
market conditions in commercial insurance mean a smaller premium pie
overall to finance and fewer clients choosing to pay their falling
premiums in installments.
Meanwhile, the softening market has prompted standard carriers to expand
their net, writing risks that are typically the domain of excess and
surplus lines players—further shrinking the premium finance prospect
list because standard carriers generally offer their own extended
payment options.
National Underwriter - February 4, 2008
New York changes method of
determining comp rates
New York Gov. Eliot Spitzer has signed into law
legislation establishing a loss-cost system to determine New York’s
workers compensation rates.
Previously, New York did not rely on
a loss-cost system to set its workers comp rates, said Gary Henning,
Northeast region vp in Albany, N.Y., for the American Insurance Assn.
Instead, New York insurers submitted workers comp claims data to the New
York Compensation Insurance Rating Board, which recommended manual rates
for approval by the New York State Insurance Department, Mr. Henning
said.
Under the new law that Gov. Spitzer signed Thursday, a
rating agency will develop loss costs that must receive Insurance
Department approval. Insurers also will submit for approval their
individual loss-cost multiplier, which will be determined by their
expenses.
Business Insurance - February 1, 2008
IRS ruling protects cash balance
plan conversions
An Internal Revenue Service ruling issued Friday will
protect from the threat of disqualification hundreds of pension plans
that were converted from traditional designs to cash balance designs.
The ruling affects employers that—as part of the conversion process—said
the benefits that current employees receive would be based on the design
that resulted in the greatest benefit—whether through the old plan or
the new cash balance plan.
Earlier, IRS officials maintained that
such “greater of the two” techniques violated so called IRS
“backloading” rules that bar plan designs in which benefit accruals are
concentrated during employees’ final years of service. In some cases,
IRS field agents refused to approve the conversions, threatening the
tax-qualified status of the plans.
However, in Revenue Ruling
2008-7, the IRS said plans that have requested or received an IRS
determination letter through Dec. 31, 2008, would not be disqualified
just because they offer a greater-of-the-two benefit formula.
Business Insurance - February 1, 2008
N.Y. Agents and Insurers Laud
Workers' Comp Loss Cost Rating Bill
New York State
agents and insurers praised the passage late last month of a key workers
compensation reform that will extend the rate-making authority of the
New York Compensation Insurance Rating Board, and move the system to a
loss cost method of calculating rates.
The bill, which has been
passed by both legislative houses, awaits the signature of Gov. Eliot
Spitzer.
"This legislation will allow for more competition and
more choice in the workers' compensation system, ultimately benefitting
the consumers and businesses of New York," said Gary Henning, assistant
vice president for the American Insurance Association, a trade group for
insurers. "Enactment of a loss cost system is a critical component of
the workers' compensation reforms that have been taking place in New
York."
Under a loss cost system, NYCIRB would develop and file
prospective loss costs and supporting actuarial and statistical data,
and would rely on each insurer to individually file the rates it will
use.
The new method will better reflect industry-wide experience
and directly related expenses and create a more competitive environment
for workers compensation, said the Independent Insurance Agents and
Brokers of New York
Insurance Journal - February 1, 2008
Insurance Crime Pays
I know I am being redundant but when you can be forgiven
after being convicted of insurance fraud if you just say you are sorry
my editorial comments need repeating and stated with more force.
I am sad to report that insurance fraud still pays the perpetrator and
it pays the perpetrator well.
Have you ever been tempted to enter
into a life of crime? Insurance fraud seems to be the crime to choose.
It is highly profitable and even if you are caught the punishment is
mild and you get to keep all of the proceeds of your criminal activity
except that for which you are caught.
Check out the convictions
listed below in the "Good News" section. What other criminal can steal
$50,000 from an innocent victim and receive probation if he pays the
victim back? That means if you commit an insurance crime and are not
caught you get to keep the money you stole and if you are caught you get
to stay free if you give back the money to the person you defrauded. Of
course you only have to pay back the victims the court knows about you
still get to keep the illicit gains from those they don't know about.
I give up! The person who steals $400 from a convenience store by
pretending he has a gun and he will go to jail for years. Steal from an
insurance company and the thief gets his hand slapped. Insurance fraud
is the safest crime a criminal can commit. It makes big money and has
little downside. Heck, if the insurance company denies the fraudulent
claim the criminal sues for bad faith and makes even more from the crime
when the insurer understands how much it would cost to defend the suit.
Some are trying to hit the frauds where they hurt with monetary damages
but in my opinion, until the profit is taken out of the crime and people
begin serving serious jail time for the crime it will continue to grow
past the $100 billion estimate.
Zalma's
Insurance Fraud Letter - February 2008
Tom Bower's roundup of recent
interesting NY coverage law news is now available.
This month's edition discusses the following topics:
* the correct "period of restoration" for an insured business
that was in the World Trade Center;
* whether a liability carrier had
a duty to defend claims because of a sewer break; and
* a setback for
New York's civil suit attacking Wells Fargo's contingent commission
arrangements.
Tom Bower's
News - February 2008
