Friday, March 26, 2010

Nurse Practitioner Liability Claims Costs Rising 2.3% a Year: CNA HealthPro

The average indemnity and expense payments in nurse practitioner liability claims have increased at a rate of 2.3 percent per year over the past 10 years, according to an insurer's review of claims.

Pediatric/neonatal specialty has the highest average severity, professional liability insurer CNA HealthPro also reported.

The new report -- Understanding Nurse Practitioner Liability: CNA HealthPro Nurse Practitioner Claims Analysis 1998-2008, Risk Management Strategies and Highlights of the 2009 NSO Survey -- suggests that nurse practitioners are at a "paradigm shift" in today's health care system. Whereas 10 years ago they did not have a prominent role, today physician groups, hospitals, aging services and other healthcare organizations increasingly depend upon them.
A nurse practitioner is a registered nurse who has received advanced training and may perform some of the duties of a physician.

The document draws on CNA HealthPro claims data and NSO's survey of nurse practitioners.

The data showed that the average indemnity payment increased from $168,600 in 1999 to $189,300 in 2008. Average expenses including legal costs went from $28,500 to $42,900 over the same span.

CNA HealthPro paid $64.8 million in claims over the 10 years and placed $24.9 million in reserves.

"In the last 10 years, nurse practitioners have increased their role in patient care; and, as a result, there is a greater focus on nurse practitioners in malpractice litigation," said Bruce Dmytrow, vice president of Specialty Risk Control, CNA.

Other highlights of the CNA report:

•the medical care office is the location with the highest number of claims;
•adult/geriatric, family and pediatric/neonatal medicine specialties continue to have the most claims;
•several closed claims that settled at the policy limit ($1 million) resulted from allegations of failure to diagnose or failure to properly assess.

The report's data excludes claims for registered nurses, certified registered nurse anesthetists and certified nurse midwives. Nurse practitioners in the report include clinical nurse specialists.

Hacker Gets 20-Year Prison Sentence for ID Theft from Retailers

One of the world's most notorious computer hackers was sentenced to 20 years in prison Thursday after he pleaded guilty to helping run a global ring that stole tens of millions of payment card numbers.

Albert Gonzalez, a 28-year-old college dropout from Miami, had confessed to helping lead a ring that stole more than 40 million payment card numbers by breaking into retailers including TJX Cos Inc, BJ's Wholesale Club Inc. and Barnes & Noble.

It was the harshest sentence ever handed down for a computer crime in an American court, said Mark Rasch, former head of the computer crimes unit at the U.S. Department of Justice.

Gonzalez and conspirators scattered across the globe caused some $200 million in damages to those businesses, said Assistant U.S. Attorney Stephen Heymann.

Heymann said it was not possible to quantify how much money was stolen from individuals. "They would quite literally go to ATMs and take out bundles of money from victims' accounts,'' Heymann told the court in Boston.

Under his plea agreement, Gonzalez had faced up to 25 years in prison, but asked the judge for leniency in sentencing, saying he had been addicted to computers since childhood, had abused alcohol and illegal drugs for years and suffered from symptoms of Asperger's disorder, a form of autism.

"I stand before you humbled by the past 22 months sober,'' he told U.S. District Court Judge Patti Saris with his parents and sister watching from the front row of a packed gallery.

Gonzalez, who buried $1 million cash in the backyard of his parents' home, said that his crimes got out of control "because of my inability to stop my pursuit of curiosity and addiction.''

Heymann urged Saris to issue a stiff sentence, saying it would send a strong message to potential criminals that the government takes computer crimes seriously.

"He shook a portion of our financial system,'' Heymann said. ''What matters most is that teenagers and young adults not look up to Albert Gonzalez. They need to know that they will be caught. That they will be punished and that the punishment will be severe.''

In a statement, TJX said, "We are grateful that the investigation and prosecution of cyber crime continues to be a top priority of the U.S. Secret Service and Department of Justice,'' and added that the number of retailers hit highlighted how widespread a problem hacking is.

Gonzalez's prison term could be extended as another judge on Friday will sentence him on a second set of charges for which he has also pleaded guilty -- stealing tens of millions more payment card numbers from companies including payment card processor Heartland Payment Systems, 7-Eleven Inc. and the Hannaford chain of New England grocery stores.

Wednesday, March 24, 2010

With Few Cats To Pay For, Lloyd’s Sees Record Results For 2009

Lloyd’s of London announced that its 2009 pre-tax profits more than doubled, to £3.86billion ($6.2 billion) compared to £1.89 billion in 2008 ($2.82 billion at today’s rate).

In an interview Luke Savage, director, finance, risk management and operations at Lloyd’s, cited a benign year for disasters and catastrophes as a big factor in the results.

The chairman of Lloyd's, Lord Peter Levene, said in a statement, “The hard work and very careful attention to risk in the Lloyd’s market have resulted in a pre-tax profit of $6.2 billion, the highest that we have ever recorded.”

The result was achieved, he noted, “despite the economic turbulence that characterized most of 2009, although we were certainly helped by a low level of catastrophe-related losses, helped by a benign Atlantic hurricane season. The market can be proud of what it has achieved in 2009.”

Lord Levene also commented that the results illustrate that “not all parts of the financial services sector are the same and, at Lloyd’s, our strength and resilience means that we can face the future with confidence.”

Mr. Savage mentioned that Lloyd’s provides a lot of cover to the hurricane-affected areas of the United States.

He said last year’s particularly benign environment “helped to keep the contribution to our combined ratio down to just 2 percent for major losses.” For context, he noted, “the average catastrophes over the past eight-to-nine years have added about 10 points to the combined ratio.”

The major losses for 2009, he said, were the Air France disaster over the Atlantic Ocean, Windstorm Klaus in Europe and several bushfires in Australia. Those losses averaged £60-to-£70 million each ($89.3-to-$104.2 million), “and those were the biggest things we saw last year,” Mr. Savage said.

This was a marked contrast to the prior year, he said, when Hurricanes Gustav and Ike in the United States “cost us significantly more than that.” Hurricane Ike came in at £1.2 billion ($1.78) and Gustav at £200 million ($297.8 million), he said.

So far, he observed, 2010 has had a more volatile start with earthquakes in Haiti and Chile, but those most likely will not see losses near those from Hurricane Ike. He added that Lloyd’s focus for these disasters is not on costs, but in seeing that policyholders are paid as soon as possible.

Mr. Savage said another reason 2009 did so well was because “globally we saw rebounding stock markets.” He said, “Even if we have a similarly low level of catastrophes, we’re not going to see the same level of investment income in 2010.”

What will make it even more difficult in 2010 is pressure on rates, “particularly in things like property, where one year without any windstorms and everyone expects their premiums to start coming down,” he said, adding that all these factors combined make 2010 look “pretty gloomy in comparison.”

Lloyd's Chief Executive Richard Ward said the 2009 results are built on a “resolute focus on underwriting discipline coupled with a strong balance sheet and a conservative investment strategy.”

This has meant, he said, that during testing times for the financial services industry “we continued to be a stable partner for businesses seeking to manage their risks.”

Mr. Ward cautioned, however, that “while the results are a testament to our strength, we cannot afford to be complacent and in 2010 we must work to continue to develop the attractiveness of the market, whilst focusing on profitable underwriting and sound risk management.”

Other Lloyd’s financial highlights:

• Combined ratio of 86.1 (2008: 91.3), which compares favorably with an estimated average of 100 for U.S. property and casualty insurers; 94 for U.S. reinsurers; 99 for European insurers and reinsurers; and 84 for Bermudian insurers and reinsurers.

• Central assets increased to £2.08 billion ($3.35 billion), (2008: £2.07 billion).

• Investment return of £1.76 billion ($2.84 billion), (2008: £957 million).

• Profit before tax excluding currency movements on non-monetary items of £4.24 billion ($6.83 billion), (2008: £1.52 billion).

• Surplus on prior years’ reserves of £934 million ($1.5 billion), (2008: £1.26 billion).

Insurance Agents, Carriers Make Progress in Modifying Dodd Bill

Insurance agents and carriers are reporting progress in their efforts to modify a proposed federal financial services regulation bill passed by the Senate Banking Committee, while risk managers have extended their support to the legislation.

Lobbyists for the Independent Insurance Agents & Brokers of America (Big "I") were pleased that an amendment, filed by Sen. Tester (D-Mont.), which clarified that the definition of "insurer" for mandatory data collection does not include insurance agents and agencies, was attached to the act. The amendment makes it clear that only entities that issue contracts and write insurance or reinsurance are to be included.

"Without this amendment, the proposed Office of National Insurance (ONI) would have inadvertently had the ability to require countless agents and brokers to produce any data and information demanded by ONI," said Robert Rusbuldt, Big "I" president and CEO.
Tester said his amendment ensures that individual agents, brokers and adjusters will "not have to go through the hassle" of reporting information to a federal bureaucracy.

The financial reform measure, Restoring America's Financial Stability Act, sponsored by Sen. Christopher Dodd, D-Conn., who is chair of the Senate Banking Committee, passed the committee on a 13-10 party line vote, with Republicans opposing it. The bill will now be debated before the full Senate, where many other amendments are expected to be introduced.

While agents sought to amend the ONI provision, they do not oppose the formation of the national insurance information office within the U.S. Treasury Department. The ONI is intended to serve as a knowledge base on insurance in Washington, D.C. and represent the U.S. in international insurance negotiations. It is not supposed to interfere with the jobs of state insurance regulators.

"While the Big 'I' believes that the state regulatory system should be preserved and reformed, it has become evident that the state system needs assistance to effectively address some inefficiencies that exist today in the regulation of insurance," said Charles Symington, Big "I" senior vice president of government affairs. "The Big 'I' has long supported the use of targeted federal legislation to help reform the state system without creating a federal regulator, and we believe this insurance informational office adheres to these principles."

Also included in this legislation, and supported by the Big "I," is the Nonadmitted and Reinsurance Reform Act, which aims to streamline the regulation of surplus lines insurance and reinsurance through state-based reforms.

Property/casualty insurance carriers, meanwhile, remained concerned with the Dodd bill and are working to amend it to guarantee they are not called upon to help support a $50 billion fund that would be triggered by a major ($50 billion) financial services institution collapse. The original bill left open the possibility that some insurers could be assessed if the fund fell short.

Insurers argue that they pose no systemic risk to the economy and did not contribute to the financial crisis and therefore should not be on the hook for other financial firms' mistakes.

The committee agreed to narrow the population of insurers that could be assessed for the fund by limiting it to any non-bank institution supervised by the Federal Reserve System, which would apply to only the very largest insurers.

But insurers still aren't happy.

"It remains a one-way proposition for property and casualty insurers to be compelled to pay for a system that will likely never resolve an insurer -- and pay for losses not incurred by an insurance company. Consistent with the approach taken in other parts of the bill, we believe insurers should not be included in the assessment mechanism at all," said Leigh Ann Pusey, president and CEO of the American Insurance Association.

Insurance buyers, meanwhile, have thrown their support behind the Dodd bill.

The Risk and Insurance Management Society (RIMS) said it believes the legislation will promote greater efficiencies in the insurance marketplace for commercial insurance consumers, as well as require consideration of enterprise-wide risk for certain financial entities.

"The print put forth this week by Sen. Dodd is a multifaceted piece of legislation that contains critical measures that impact the U.S. economy on many fronts," said Terry Fleming, president of RIMS and director, division of risk management for Montgomery County, Maryland. "RIMS believes its passage will usher in not only a more effective insurance market within the United States, but will also further the country's influence abroad with regard to insurance issues."

The bill requires large financial institutions to establish risk committees in order to ensure greater consideration of the management of risk on an enterprise wide basis. Fleming said RIMS views this requirement as recognition of the committees' value to shareholders and to the greater financial stability of the U.S. economy.

In addition, RIMS praised the decision to include the legislation to streamline requirements for surplus lines insurance market.

RIMS also supports the creation of the federal insurance office "as a necessary first step" to helping the federal government acquire an expertise in insurance matters, as well as the ability to speak with one voice on international insurance issues. RIMS said it views this as a precursor to the creation of an optional federal charter for commercial property and casualty insurers.

Health Care Reform Legislation Update

Yesterday President Obama signed into law a piece of legislation that will transform America’s Healthcare system. Over the last year, Congress has discussed many different healthcare reform ideas, and now we can start to focus on what is included in the 2000+ pages of actual legislation.

Below is a brief timeline of when certain provisions of the bill will take effect. This is only a highlight of the provisions that are going to affect many mainstream employers who sponsor a Health Plan.

Please understand that even though the law has passed, there are going to be
changes(primarily the reconciliation act that is going to be taken up by the Senate shortly). Also, the law now has to go through the regulatory process where the actual rules will be written so that the law is followed. As more information becomes available, we will continue to keep you updated.

Health Reform Implementation Timeline:


Within 6 months of enactment:

•Regulations prohibiting insurance contracts containing lifetime limits, rescission (canceling of medical policies already issued), and excessive waiting periods go into effect.
•Coverage available for children up to age 26 on their parents plan.
Employer tax credit (sliding scale) for employers with fewer than 25 employees who offer coverage.


Fee on Name Brand Drugs implemented (costs are expected to be passed along to consumers)


FSA Limits‐ annual contribution limit of $2,500 for Flexible Spending Accounts

Medicare Tax Increase‐ Imposes an additional 0.9% tax on income in excess of $200,000 (individual)/ $250,000 (couple) and a 3.8% tax on investment income for taxpayers with an adjusted gross income of more than $250,000


Health Insurance Exchanges‐ Each state is required to create a marketplace where individuals and small business (under 50 employees) can buy coverage and possibly be eligible for a Premium subsidy.

Individual Obligation- Individuals will be required to carry Health insurance. The fully phased in penalty for not carrying insurance is $695 or 2.5% of income

Employer Obligation‐ Employers with 50 or more employees (part time employees count) who do not offer health coverage will be assessed penalties up to $2000 per employee. For Employers who provide coverage, but the coverage is deemed too expensive, they could be fined up to $3,000 for each employee who obtains a premium credit from the government.

Fees on Health Insurance Providers‐ $8 billion will be assessed in 2014, $11.3 billion in 2015 and 2016, and 13.9 billion in 2017, and $14.3 billion in 2018.(Most experts believe these “fees” will be passed directly to the consumer).

Pre-Existing Conditions Exclusions prohibited

Annual Limits on contracts prohibited


State may allow Large Employers (over 50 lives) to participate in the Exchanges


High Premium Excise Tax‐ the “Cadillac tax” takes effect. This tax imposes a 40% tax on health coverage in excess of $10,200 for a single employee or $27,500 for a family.

Tuesday, March 23, 2010

Insurers Get A Break In Financial Services Bill

WASHINGTON— Insurers have secured key changes in financial services reform legislation easing a proposed financial requirement for large firms and eliminating tighter regulation of financial product sales.

One revision to the bill reported out of the Senate Banking Committee yesterday means only one life and property and casualty insurer will be required to pay into a fund to finance a Resolution Authority for the liquidation or reorganization of huge financial services companies whose bankruptcy would pose a systemic risk to the economy.

The other change calls for a study of a proposal to establish a “standard of care” for the sale of investment products and create a financial planning oversight board.

Originally the proposal, by Sen. Herb Kohl, D-Wis., chairman of the Senate Aging Committee, would have created the standard and board creation as part of the bill.

The life insurance industry, both underwriters and agents, strongly opposed such a provision, fearing that it was a back-door way to impose a uniform fiduciary standard on the sale of investment products.

The bill was passed by a party-line, 13-10 vote. But comments from both committee Republicans and Democrats reflected optimism that such legislation could ultimately become law this year.

Specifically, both Sen. Chris Dodd, D-Conn., chairman of the committee, and Sen. Richard Shelby, R-Ala., said they would meet over the coming two-week Easter recess to see if they could craft bipartisan legislation that would secure the 60 votes needed to limit debate on the measure.

The hope is that they could agree to a bipartisan bill that could be put on the Senate floor by the end of April.

That would set the stage for talks with the House and the Obama administration on a final bill. The administration and Democrats in Congress want a final measure approved before Congress leaves in late June for the July 4 recess.

In a statement, Sen. Shelby said that Sen. Dodd’s latest proposal contains a number of positive steps forward and could form the foundation for broad bipartisan agreement.”

“I do not view today’s markup as the end of the road, but rather just another step in the process,” he said.

And Sen. Bob Corker, R-Tenn., who negotiated with Sen. Dodd on a compromise before the Connecticut senator decided to go ahead with his own bill last week, said in comments at the late afternoon committee meeting and in an answer to a reporter’s question, that he thought that there was a 90 percent chance of passage.

"I think it's probably true that we have a better opportunity with a different cast of characters -- the full Senate -- to do something that is sound, policy-wise," Corker said.

For insurers, the bill creates an Office of National Insurance. It also makes systemically risky insurers subject to federal oversight and contains provisions similar to the House financial services reform measure by modernizing and streamlining the surplus lines and reinsurance industry by facilitating regulation of insurers and reinsurers by their state of domicile.

Insurance industry representatives have said they regard inclusion of these provisions as a key step forward, and believe it non-controversial and therefore likely to survive melding of the House and Senate bills into a bill that can be enacted into law.

In a memo to members of the Council of Insurance Agents and Brokers obtained by the National Underwriter, Joel Wood, CIAB senior vice president for government relations, said, “After eight years of effort, and House passage of surplus lines reform legislation on four occasions, we’re closer than ever to final enactment of these reforms.”

“To the extent that Sen. Dodd, Shelby and Corker have all had optimistic statements in the past day that consensus can be reached on the Senate floor, we’re optimistic too,” he said adding that, “the Senate is the Senate, and this is a tough political environment.”

Richard Bouhan, executive director of the National Association of Professional Surplus Lines Offices, said, "We are pleased to see the Senate make this important first step toward approving needed surplus lines reform legislation. With the inclusion of these reforms in the bill we are moving closer to more efficient and effective regulation of the surplus lines insurance market."

Under the bill section dealing with Resolution Authority pre-funding issue, use of the fund would be determined by a new Financial Stability Oversight Council, consisting of 11 federal regulators led by the Treasury secretary and one insurance representative appointed by the president.

According to Sen. Dodd, this body will focus on identifying, monitoring and addressing systemic risks posed by large, complex financial firms as well as products and activities that spread risk across firms.

It will make recommendations to regulators for increasingly stringent rules on companies that grow large and complex enough to pose a threat to the financial stability of the United States, Sen. Dodd explained.

Under the original bill, any financial services company with assets of more than $50 billion would have been assessed for the creation of a $50 billion fund in 5 years.

But, in a manager’s amendment Sen. Dodd changed the provision to read, “and any nonbank financial company supervised by the Board of Governors [of the Federal Reserve System]. According to a lawyer for one of the insurance companies involved, who asked not to be quoted by name, that means that only MetLife would have to contribute to the pre-funding of the Resolution Authority.

However, if the failure of a large company depletes the fund, a larger universe of companies, likely to include all non-health insurers with assets of more than $50 billion, would be forced to contribute, the industry lawyer said.

Amongst the companies that will benefit from the change will be 11 property and casualty companies, ACE, Allstate, Chubb, CAN, Liberty Mutual, Nationwide, State Farm, Travelers, W.R. Berkley, Zurich and Hartford Insurance Group.

Amongst the life companies who will benefit are Prudential, New York Life, Northwestern Mutual, Mass Mutual, TIAA-Cref, ManuLife, Lincoln Financial Group, The Principal, Pacific Life, Aflac, Riversource, Jackson National, Genworth, Sun Life and Thrivent Financial, the source said, citing the American Council of Life Insurers annual Fact Book.

This change was a priority of both the property casualty and life insurance industries.

Leigh Ann Pusey, American Insurance Association president and CEO, said in a statement that, AIA appreciates the bill’s changes. However she said insurers will continue to lobby to be exempt from the post-funding and other provisions that the industries fear would impose dual regulation on property and casualty and life insurers.

AIA, she said, is “concerned with a resolution mechanism that envisions assessing low-risk, low-leveraged property and casualty insurers for losses outside our industry, particularly where the failing firms are high-risk, high-leveraged entities.”

Under the mandate for the Government Accountability Office to study the effectiveness of state and federal financial product sales regulations the GAO would have to report back to Congress within six months of the date of enactment of the bill.

Thursday, March 18, 2010

U.S. Offers Grants for Research Using Weather Data to Improve Road Safety

The U.S. Department of Transportation will sponsor up to seven innovative ideas for using the new Clarus live weather information system to improve roadway safety during severe weather. The department intends to provide up to $80,000 per award in an open competition.

Launched in 2004, Clarus provides near real-time atmospheric and pavement observations from more than 2,000 environmental sensor stations and 45,000 road sensors deployed by state departments of transportation. The result is a comprehensive picture of the weather along the nation's roads that is available to any user, at anytime, anywhere in the U.S.

Transportation managers and weather providers in 36 states and three Canadian provinces currently contribute data to Clarus and use it to make critical decisions.

The incentive program was announced by Research and Innovative Technology Administrator (RITA) Peter Appel, who believes that by offering researchers and other innovators full access to Clarus' live weather data, the department can tap into the program's vast potential.

"Applications developed using Clarus data could help someone decide not only whether to grab an umbrella, but also when they should travel and what routes they should take," said Appel. "This competition will lead to new safety products and ideas that are bound only by the limits of our imagination."

"Nearly a quarter of all vehicle crashes happen when severe weather strikes, and many of those crashes can be prevented using available technology," said U.S. Transportation Secretary Ray LaHood. "Having access to highly accurate, live weather information will raise the level of safety on our roads and save lives."

The Federal Highway Administration's Road Weather Management Program, in conjunction with the Intelligent Transportation Systems (ITS) Joint Program Office, established the Clarus Initiative in 2004 to reduce the impact of adverse weather conditions on surface transportation users. Proposals will be accepted until April 14, 2010. Additional information on how to submit a proposal can be found at, Solicitation number DTFH61-10-R-00015.

Industry Reps See Finance Bill Exempting Big Insurers

Insurance representatives said they may get a deal for Senate financial services reform legislation with no financial assessments and little regulatory impact for high-asset insurers.

But nothing is certain at this point, said an industry lobbyist who asked not to be identified because of the sensitivity of the negotiations.

In talks going on now, the insurance industry is seeking to ensure that carriers with assets of more than $50 billion will not be subject to the assessments in the pre-funding provisions of the resolution authority that the bill would create.

The authority would be, in essence, a guarantee fund for institutions posing a systemic risk to the financial system.

Insurance industry representatives also hope to win clarifying language in the bill ensuring that large insurance companies would be subject to federal oversight only under extremely limited conditions.

The changes being sought by the industry would be included in legislation from the Senate Banking Committee being marked up in a drafting process beginning Monday.

The changes are being negotiated with Sen. Chris Dodd, D-Conn., chairman of the committee, and Sen. Mark Warner, D-Va..

An industry lobbyist said, "While the language will still need some additional clarification, it appears the intent of Chairman Dodd was not to have insurers assessed to capitalize the initial $50 billion fund." The lobbyist cautioned that the compromise is tentative, “and nothing has been secured,” as yet.

The fund is to be used to resolve troubled financial services companies that federal regulators determine constitute a systemic risk to the system.

A copy of the changes the insurance industry has proposed in the regulatory reform bill that Sen. Dodd introduced Monday were obtained today by National Underwriter.

Sen. Dodd hopes to complete the markup of the bill by next Friday, when Congress starts a 10-day Easter recess. But, Sen. Richard Shelby, R-Ala., cautioned today that the bill as proposed by Sen. Dodd may be reported out by the committee on a party-line vote, but is unlikely to pass the full Senate.

Sen. Shelby said the “door remains open a crack” for bipartisan legislation.

The changes in language negotiated by the life and property and casualty insurance companies were made even as a Federal Reserve Board official gave testimony today that insurance companies and other financial institutions whose failure could pose systemic risks should be regulated under the same plan used for banks and financial holding companies.

In his testimony, Jon Greenlee, the associate director for the Fed's Division of Banking Supervision and Regulation, said that, "The current financial crisis has clearly demonstrated that risks to the financial system can arise not only in the banking sector, but also from the activities of other financial firms--such as investment banks or insurance companies."

He added that, "To close this important gap in our regulatory structure, legislative action is needed that would subject all systemically important financial institutions to the same framework for consolidated, prudential supervision that currently applies to bank holding companies and financial holding companies."

He made his comments at a hearing on insurance holding company supervision held by the Capital Markets Subcommittee of the House Financial Services Committee.

Mr. Greenlee said the Fed's customary focus on protecting the bank within a holding company is no longer sufficient because risks can arise outside of a commercial banking unit.

"The crisis has highlighted the financial, managerial, operational, and reputational linkages among the bank, securities, commodity, insurance and other units of financial firms," he said.

The language proposed by life and property and casualty insurance organizations and accepted by Sen. Dodd and Sen. Warner for inclusion in the bill clarifies that the language is intended “to exclude insurance companies (including those that are part of non-bank financial holding company structures) from the pre-event assessment.”

Specifically, “this provision is only meant to apply to banking holding companies that meet the total consolidated asset threshold and to nonbank financial companies that are determined by a 2/3 majority vote of the Financial Stability Oversight Council, pursuant to section 113, to be subject to prudential supervision by the Board of Governors of the Federal Reserve System because ‘material financial distress’ at the company ‘would pose a threat to the financial stability of the United States’.”

Another industry lobbyist, was more specific. “Insurers do not want to be the cash cow that provides the federal government with funding to use its resolution authority against banks, hedge funds, securities firms etc.,” he said.

The lobbyist insisted that, “Just because insurers are big doesn’t mean that they present systemic risk and should be subject to federal assessment. Insurers already pay for their industry competitors’ insolvencies through the state guaranty funds.”

He also noted that the American Council of Life Insurers had at one time suggested that insurers ought to be able to deduct their annual state guaranty fund assessments from any federal assessment.

The concern of both the life and property and casualty industry, he explained, is that the industries do not want the financial services reform bill to constitute dual regulation.

“We are concerned that large insurance companies could be subject to federal solvency standards, such as capital and surplus requirements, reserving restrictions by the federal systemic regulator over and above state insurance regulation or dual and conflicting with state regulation,” the industry official said. “That would be the worst of all worlds.”

Wednesday, March 17, 2010

More Than One-Third of U.S. Facing High Risk of Flooding

Major flooding has begun and is forecast to continue through spring in parts of the Midwest, according to the National Weather Service. The South and East are also more susceptible to flooding as an El Niño influenced winter has left the area soggier than usual.

Overall, more than a third of the contiguous United States has an above average flood risk –– with the highest threat in the Dakotas, Minnesota and Iowa, including along the Red River Valley where crests could approach the record levels set just last year.

Supporting the forecast of imminent Midwest flooding is a snowpack more extensive than in 2009 and containing in excess of 10 inches of liquid water in some locations. Until early March, consistently cold temperatures limited snow melt and runoff. These conditions exist on top of: above normal streamflows; December precipitation that was up to four times above average; and the ground which is frozen to a depth as much as three feet below the surface.

"It's a terrible case of déjà vu, but this time the flooding will likely be more widespread. As the spring thaw melts the snowpack, saturated and frozen ground in the Midwest will exacerbate the flooding of the flat terrain and feed rising rivers and streams," said Jane Lubchenco, Ph.D., under secretary of commerce for oceans and atmosphere and NOAA administrator. "We will continue to refine forecasts to account for additional precipitation and rising temperatures, which affect the rate and severity of flooding."

In the South and East, where an El Niño-driven winter was very wet and white, spring flooding is "more of a possibility than a certainty and will largely be dependent upon the severity and duration of additional precipitation and how fast existing snow cover melts," said Jack Hayes, Ph.D., director of the National Weather Service. "Though El Niño is forecast to continue at least through spring, its influence on day-to-day weather should lessen considerably."

Without a strong El Niño influence, climate forecasting for spring (April through June) is more challenging, but the Climate Prediction Center of the National Oceanic and Atmospheric Administration (NOAA) says odds currently favor wetter-than-average conditions in coastal sections of the Southeast; warmer-than-average temperatures across the western third of the nation and Alaska; and below-average temperatures in the extreme north-central and south-central U.S.

This is national Flood Safety Awareness Week. Floods are the deadliest weather phenomena — claiming an average of 100 lives annually.

Tuesday, March 16, 2010

Lloyd's Must Pay Alleged Swindler Stanford's Legal Fees, Court Says

A federal appeals court said Monday insurer Lloyd's of London must pay claims related to alleged swindler Allen Stanford's defense.

Stanford, his former chief investment officer Laura Holt, and former accounting executives Gilbert Lopez and Mark Kuhrt sued Lloyd's after the firm stopped providing coverage under a directors and officers policy last year, citing a money laundering exclusion.

But U.S. District Judge David Hittner in Houston ruled in January that Lloyd's must pay costs and expenses that had been submitted by Stanford and his attorneys. Lloyd's appealed that decision to the U.S. Court of Appeals for the Fifth Circuit in New Orleans.

AdvertisementThe appeals court Monday upheld Hittner's ruling but also sent the case back to the district court for additional arguments on the coverage question. Lloyd's must pay in the meantime, the court said in a 24-page ruling.

"The underwriters are enjoined from refusing to advance defense costs as provided for in the D&O policy unless and until a court 'determines in fact' by clear and convincing evidence ...'' that money laundering occurred, the ruling said.

Stanford, Holt, Lopez, and Kuhrt face criminal and civil charges for for defrauding investors in a $7 billion Ponzi scheme centered around certificates of deposit issued by Stanford's Antiguan bank.

They have denied any wrongdoing. Stanford, 59, is waiting in a Houston jail for his January 2011 trial.

The case is Laura Pendergest-Holt, R. Allen Stanford, Gilbert Lopez and Mark Kuhrt v Certain Underwriters at Lloyd's of London and Arch Specialty Insurance Co, U.S. Court of Appeals for the Fifth Circuit, No. 10-20069.

Global ’09 Insured Cat Losses Fell More Than $26 Billion: Swiss Re

Swiss Re said worldwide natural catastrophes and man-made disasters, which killed 15,000 people last year, cost insurers $26 billion, $26.5 billion less than the firm reported for 2008.

In 2009 the total economic loss was $62 billion compared with $269 billion for 2008 when insured loss was $52.5 billion, the company said in its latest sigma report.

Insured losses, Swiss Re said, were below average due to a calm U.S. hurricane season. The portion of insured losses last year attributable to 133 natural catastrophes was put at $22 billion and losses from 155 man-made disasters totaled $4 billion.

North America’s insured loss was listed at more than $12.7 billion.

The death toll was far below the 240,500 Swiss Re counted last year. The highest number of 2009 fatalities was in Asia, where nearly 9,400 people died.

Swiss Re’s report said the $36 billion gap between economic loss and insured loss for 2009 suggests lack of insurance coverage leaves many individuals and governments vulnerable after a catastrophe. With yearly losses increasing, so is the need for insurance coverage.

The report noted that a higher value concentration of wealth in loss prone regions and a trend towards more insurance coverage, plus global warming and the related higher risk of extreme weather conditions contribute to the loss trend.

Thomas Hess, Swiss Re chief economist, in a statement warned “The probability that we see natcat losses as low as those in 2009 is less than 35 percent. We have already seen significant events in 2010 with winter storm Xynthia in Europe or the earthquakes in Chile and Haiti.”

Estimates of the Chile quake insured loss have been as high as $10 billion with a possible $30 billion economic loss. Insured loss estimates for Xynthia have reached $4 billion.

Mr. Hess said, “Given their high volatility, [2010] losses could easily be three to five times what they were in 2009. In 2005, insured losses set a record when they soared to $120 billion. I would not be surprised if this record is broken in the not too distant future.”

Six 2009 events each triggered insured losses in excess of $1 billion. The costliest event was the European winter storm Klaus, which struck France and Spain in January, and led to insured losses of €2.35 billion (nearly $3.4 billion), said Swiss Re.

The report said secondary perils such as flooding, landslides, hail storms, tornadoes, winter storms outside Europe, snow and ice storms, droughts and bush fires are important loss sources but receive little attention with most of the focus on earthquakes, hurricanes and winter storms.

In 2009, more than half of the natural catastrophe loss burden was caused by secondary perils, the report said.

Jens Mehlhorn, co-author of the study, suggested in a statement that “more advanced probabilistic risk assessment models would help to better gauge and price the risk of secondary perils.”

Examining earthquakes, the report noted that since 1970, 360 damaging earthquakes have claimed over 1 million lives. Brian Rogers, co-author of the sigma study commented, “The deadliest earthquakes tend to occur in less economically developed countries and in regions that are usually densely populated and prone to earthquakes. These countries typically have low per-capita income and fewer resources for prevention- and post-disaster management.”

The report said that, “Even in developed economies the current earthquake insurance take-up rates in heavily exposed areas seldom surpass 20 percent.”

Concerning global warming, the report said climate change effects would lead to stronger rainstorms, more flooding and more powerful hailstorms. It said in addition to heavy storms in Europe, climate change may also result in more U.S. tornadoes.

Monday, March 15, 2010

Forecasters Predict Active Hurricane Season

Meteorologists are predicting an active 2010 hurricane season with above-normal threats on the U.S. coastline.

Hurricane Forecaster Joe Bastardi, with the Hurricane Center, said Wednesday that he predicts seven landfalls. Five will be hurricanes and two or three of the hurricanes will be major landfalls for the U.S.

Bastardi forecasts 16 to 18 tropical storms in total, 15 of which will likely be in the western Atlantic or Gulf of Mexico.

In a typical season, there are about 11 named storms, with only two or three impacting the coast of the United States.

The rapidly weakening El Nino, warmer ocean temperatures, weakening trade winds and higher humidity levels will all contribute to greater storm activity.

More New Florida Property Insurers in Trouble?

Florida insurance regulators this week notified a Jacksonville-based insurer that it has until the end of the month to comply with solvency requirements to avoid suspension or losing its license.

And the warning to Southern Oak Insurance Co. is just the first in what regulators said will be a series of similar messages to companies on the brink of insolvency.

Officials expect some will fail.

"You'll lose some companies,'' said Robin Westcott, who monitors property and casualty insurers for solvency and compliance with the state's financial requirements. "That's the natural process of the market. There will be at least three or four.''

Southern Oak has until March 30 to comply with Tuesday's order. Regulators are concerned the insurer funneled too much profit to its managing general agent while claiming underwriting losses, held too much risk in South Florida and retained an insufficient amount -- approximately $3 million -- for catastrophic loss.

The Office of Insurance Regulation has been running audits in recent weeks on smaller companies to ensure they could pay claims if their policyholders were hit with a destructive hurricane this summer.

Florida's chief financial officer wants to know how any of the property insurers could be faced with insolvency after several years without much storm damage.

"What gives in an environment with four years of no storms?'' CFO Alex Sink asked after a Tuesday meeting of the governor and cabinet. "Our insurance companies ought to be making good profits.'' Sink asked OIR for a status report on troubled insurers by March 21.

Three property insurers went into receivership last year, two others are under administrative supervision and several more are expected to follow soon, potentially leaving tens of thousands of business and homeowners looking for a new company as the 2010 hurricane season approaches June 1.

The Republican-led Legislature is reviewing some of its decisions from 2007 that now seem too lax on low-budget startups. The days are over when a new insurer can be licensed with as little as $5 million in startup capital. Westcott now wants to see at least $15 million in startup capital.

The Senate Banking and Insurance Committee discussed a bill Wednesday aimed at balancing the state's risk with consumer considerations and keeping plenty of insurers healthy.

"There are systematic issues in the property insurance market that must be dealt with by this Legislature,'' said Sam Miller, vice president of the Florida Insurance Council, an industry group. "It's important that they find out why these companies are failing.''

But with the highly capitalized companies like AllState and State Farm reducing their risk in the state, Florida needs the new, smaller insurers in business, Miller noted.

"Smaller Florida-grown property insurers have found a niche by selecting smaller, more manageable pools of risk,'' Miller said. While the new Florida-based insurers now write close to 50 percent of the residential insurance market, he said, most are nowhere near well enough capitalized to pay off should catastrophe strike.

Sink, a Democrat who is running for governor, doesn't want homeowners worried about the solvency of their insurance company.

"The people of Florida need to feel confident that their insurance companies can pay claims in the case of a storm or any property loss in that matter,'' Sink said.

Thursday, March 11, 2010

U.S. Traffic Fatality Rate Fell to Lowest Ever Recorded in 2009

The number of overall traffic fatalities reported at the end of 2009 reached the lowest level since 1954, declining for the 15th consecutive quarter, the U.S. Department of Transportation reported.

According to early projections, the fatality rate, which takes into account the number of miles traveled, reached the lowest level ever recorded.

The projected fatality data for 2009 places the highway death count at 33,963, a drop of 8.9 percent as compared to the 37,261 deaths reported in 2008. The fatality rate for 2009 declined to the lowest on record, to 1.16 fatalities per 100 million Vehicle Miles Traveled (VMT) down from 1.25 fatalities per 100 million VMT in 2008.

"This continuing decline in highway deaths is encouraging, but our work is far from over," said National Highway Traffic Safety Administrator David Strickland. "We want to see those numbers drop further. We will not stop as long as there are still lives lost on our nation's highways. We must continue our efforts to ensure seat belts are always used and stay focused on reducing distracted and impaired driving."

The National Highway Traffic Safety Administration attributes the decline in 2009 to a combination of factors that include, high visibility campaigns like Click It or Ticket to increase seat belt use, and Drunk Driving. Over the Limit. Under Arrest which helps with the enforcement of state laws to prevent drunk driving and distracted driving. In addition, the decline is also the result of safer roads, safer vehicles and motorists driving less.

Tuesday, March 9, 2010

Supreme Court to Rule If Vaccine Makers Are Immune from Lawsuits

The Supreme Court said Monday that it would decide whether a federal law protects vaccine manufacturers from lawsuits in state court seeking damages for alleged design defects.

The high court agreed to hear a Pennsylvania case involving a lawsuit by the parents of a child who suffered seizures after her third dose of a diphtheria-tetanus-pertussis (DTP) vaccine. They sued the vaccine manufacturer, Wyeth, which Pfizer Inc. purchased last year.

Pfizer shares fell 1 percent to $17.30 in morning trading on the New York Stock Exchange.

At issue was the National Childhood Vaccine Injury Act of 1986. It says no manufacturer "shall be liable in any civil action'' for any injury that "resulted from side effects that were unavoidable even though the vaccine was properly prepared and was accompanied by proper directions and warnings.''

The justices agreed to decide the issue after conflicting lower-court rulings.

The Georgia Supreme Court ruled the federal law allows some design defect claims against vaccine manufacturers while a U.S. appeals court based in Philadelphia ruled Congress expressly prohibited such lawsuits in an effort to shield manufacturers from liability.

The Obama administration said the federal law expressly prevented design defect lawsuits in state court, but said the uncertainty caused by the conflicting rulings warranted the Supreme Court getting involved.

While the issue remains unsettled, manufacturers' uncertainty about potential liability may harm the public health by deterring development and production of vaccines, administration attorneys said.

Pfizer, in a statement, said it was "hopeful that the Supreme Court will affirm'' the Philadelphia appeals court ruling in Wyeth's favor.

"Pfizer is pleased that the U.S. Supreme Court has agreed to resolve this legal issue, which is of critical importance to national public health policy,'' the company said.

There are about 5,000 claims pending under the process set out under federal law alleging a link between childhood vaccines and neurological damage such as autism. The legal issue would affect whether those claimants can also seek damages under state law, the attorneys said.

The case from Pennsylvania involved Hannah Bruesewitz. Her parents in their lawsuit alleged her seizure disorder and serious developmental delay stemmed from toxins inherent in the vaccine design.

After their claims were rejected under the federal compensation process, they filed a lawsuit in state court. But a federal judge and the appeals court based in Philadelphia both ruled that the federal law barred such lawsuits.

The Supreme Court is expected to hear arguments in the case and to issue its decision during its upcoming term that begins in October. Chief Justice John Roberts did not take part in considering the case, an action he usually takes when he owns stock in a company in the case before the court.

Insurance Industry Chile Quake Loss May Hit $10B: PartnerRe

PartnerRe Ltd. said it expects insurance industry losses from the Chile earthquake could hit $10 billion and its own expected claims could exceed $300 million.

Its estimate for the impact on the industry is $2 billion higher than the largest catastrophe modeling firm estimate of $8 billion. PartnerRe also released an industry loss estimate for European Windstorm Xynthia of up to $4 billion.

The Bermuda-based company said it expects between $220 million and $320 million in pre-tax claims from the Chile quake and total insured industry losses from the magnitude 8.8 event will be in the range of around $6 billion to $10 billion.

The company said its loss estimate is net of reinstatement premium and retrocession and is based on a top down analysis as well as on model output, the assessment of individual treaties and client data, and is consistent with the company's market position in the region.

It said its claims relating to the earthquake are expected to be contained primarily within the Global Property & Casualty, Catastrophe and Paris Re subsegments.

PartnerRe noted that its estimate is preliminary, as there is limited actual loss data. As additional information is received, particularly relating to potential structural damage in the capital of Santiago, the company said it will update its estimate.

European Windstorm Xynthia, which struck Europe over the weekend of February 27-28, PartnerRe said is estimated to have caused industry losses in the range of $2 billion to $4 billion.

The storm swept across several European countries including Portugal, Spain, France, Belgium, the Netherlands, Luxembourg and Germany. The company said it expects its claims relating to Windstorm Xynthia will be $40-to-$70 million pre-tax and are expected to be contained primarily within the Catastrophe and Paris Re subsegments. This estimate is net of reinstatement premium and retrocession.

Monday, March 8, 2010

More Males Filing Sexual Harassment in Workplace Claims

John Pilkington's boss wouldn't take no for an answer.

During more than two years as a food runner at an upscale steakhouse in Scottsdale, Arizona, Pilkington says his male supervisor groped, fondled and otherwise sexually harassed him more than a dozen times.

"It was very embarrassing,'' Pilkington said. "I felt like I had to do something because the situation was just so bad.''

Now Pilkington, a married father of two, is the star witness in a U.S. federal lawsuit against Fleming's Prime Steakhouse & Wine Bar and one of a growing number of American men claiming they are victims of sexual harassment in the workplace.

From 1990 to 2009, the percentage of sexual harassment claims filed by men has doubled from 8 percent to 16 percent, according to the U.S. Equal Employment Opportunity Commission.

Lawyers at the commission say they've noticed the increase in complaints by men -- more than 2,000 were filed in 2009 out of about 12,700 cases.

"It's certainly possible that there's more sexual harassment of men going on, but it could just be that more men are coming forward and complaining about it,'' said Ernest Haffner, an attorney in the commission's Office of Legal Counsel.

While some cases allege harassment by female supervisors or co-workers, most charges involve men harassing other men. Sometimes it's unwelcome romantic advances. Other times, men are picked on because they are gay, perceived as being gay or not considered masculine enough for the work setting.

In the past, some employers might have shrugged off such antics as "boys will be boys'' horseplay or fraternity-type behavior. But the Equal Employment Opportunity Commission has been filing more lawsuits involving male victims, saying it wants to send a message that such behavior is unacceptable and unlawful.

In November, for example, the Cheesecake Factory restaurant chain agreed to pay $345,000 to six male employees who claimed they were repeatedly sexually assaulted by a group of male kitchen staffers at a Phoenix-area restaurant.

The commission said the abusers would drag some victims kicking and screaming into a walk-in refrigerator, touching and grinding against the victims' genitals and take turns simulating rape. The company denied the allegations but agreed to make a financial settlement and educate its employees and managers about sexual harassment.

Susan Strauss, a consultant who advises companies about how to avoid sexual harassment in the workplace, said she's seeing more cases in which men are subject to a sexualized form of hazing.

"If you don't fit the masculine stereotype or are viewed as effeminate, you get picked on in a sexual way to demean you,'' Strauss said.

Cases involving women making unwanted advances toward men may also be rising as women make up a growing part of the work force. Last year, the Regal Entertainment Group, which operates a national chain of movie theaters, agreed to pay $175,000 to settle a lawsuit by a male employee who claimed a female co-worker repeatedly grabbed his crotch at work.

When the employee complained to his supervisor and the theater's then-general manager, he claims, she failed to stop the harassment and instead retaliated with unfair discipline and lower performance evaluations.

The number of cases filed by men has grown steadily since a landmark Supreme Court ruling in 1998 held that same-sex harassment is a valid claim under federal anti-discrimination laws. That ruling involved an offshore oil rig worker who said he was subject to humiliating sex-related treatment by other workers, including being sodomized in the shower with a bar of soap.

In Pilkington's case, he claims the restaurant's chef would grope and pinch his genitals or grab his backside when Pilkington walked to the kitchen or stock room. Despite his complaints to the restaurant's operating partner, he says the conduct didn't stop.

After one incident, Pilkington lost his composure and yelled at the chef. Days later, he was fired -- an action he claims was retaliation for his complaints. An Equal Employment Opportunity Commission lawsuit on behalf of Pilkington and three other current and former employees is pending.

"I think maybe it's just harder for males to come out and file a complaint because of how embarrassing it is,'' Pilkington said. "When I talk about it I get this nauseous feeling in my stomach.''

The restaurant has denied the charges. In a statement, the company that owns Fleming's said the restaurant "has always been committed to providing a safe and healthy workplace free of harassment for all of its associates.''

Many victims are hesitant to come forward because they are afraid of being considered unmanly or being derided by co-workers, said Mary Jo O'Neill, a regional attorney in the EEOC's Phoenix District office.

"All sexual harassment victims feel humiliated, lacking control and power,'' O'Neill said. "This has a different twist because everyone expects that they would be able to handle it and take care of it themselves.''

Wednesday, March 3, 2010

Senate Approves U.S. Flood Program After Delay

After a lawmaker agreed to drop his objections, the Senate voted final approval last night for legislation that included a reauthorization of the National Flood Insurance Program.

Senate action followed an agreement by Sen. Jim Bunning R-Ky., to end his filibuster and allow the Senate to move forward with H.R. 4691, a composite spending measure that in addition to reviving the NFIP until March 28 extended several other federal programs that had expired last Sunday.

Mr. Bunning had objected to the measure because it does not detail what revenues will be used to fund it.

Officials of the American Insurance Association said that in the wake of the temporary extension the Senate has begun consideration of a broader extensions package, which will extend the NFIP till Dec. 31, 2010.

The short-term extension will allow Congress to get the broader flood program bill through the legislative process, according to Blain Rethmeier, an AIA spokesman.

Approval for the bill extending the flood insurance program came on a 78-19 vote, and President Obama is expected to quickly sign the bill, according to officials of the Property Casualty Insurers Association of America.

“We applaud the Senate for recognizing the urgency in extending the National Flood Insurance Program,” said David Sampson, president and CEO of PCI.

“This vitally important program protects over five million families across the country,” he said.

“The recent debate in Congress underscores the need to bring greater certainty and stability to the flood program in 2010 and advance a long-term extension that ensures the program’s fiscal soundness,” he added.

An official of the Federal Emergency Management Agency said it hopes to finish work on a memo to Write-Your-Own companies offering guidance on the reauthorized program by the end of the day.

A PCI official clarified that the agency guidance is needed because the legislation extending the program is not retroactive—but the FEMA guidance will address the gap.

At the same time, the spokesman, Harriette Kinberg, chief of the Industry and Public Relations Branch of the Federal Insurance and Mitigation Administration/Risk Insurance Division of the Federal Emergency Management Program, clarified that a “talking point” document issued by the agency last week in anticipation of a lapse in the program said the document incorrectly stated that flood insurance policies will expire and claims will not be paid during the lapse period.

In responding to the reauthorization, Mr. Rethmeier said, “This feels like living paycheck to paycheck… At some point, this short-term extension game needs to stop and more meaningful reform needs to be enacted.”

Other industry officials were also critical.

“This is only a short reprieve for the flood insurance program,” said Mike Becker, director of federal affairs for the National Association of Professional Insurance Agents.

“Congress continues to pass short reauthorizations that fail to address the need to enact comprehensive reforms,” he said.

In order to do that, he added, a longer authorization is necessary. “PIA believes that the next NFIP reauthorization should be for at least six months—with a one-year extension an even better way to ensure that there is enough time to accomplish meaningful reforms.”

Mr. Becker added, “This episode illustrated what can happen if Congress continues to use NFIP reauthorization as a political football.”

“Real estate closings can get delayed when mortgage holders require flood insurance, putting the financial security of millions of Americans at risk,” he said.

“This can have a negative effect on the overall health of our economy,” Mr. Becker said. “We agree that the flood insurance program needs common-sense reforms, but the reform process must be conducted in a manner that does not destabilize markets.”

Matt Brady, a spokesman for the National Association of Mutual Insurance Companies, said, “We applaud the extension of the NFIP and hope that, given all that happened, Congress will work to enact a long-term extension for the program.”

He noted that this was the second time in a row that the NFIP was allowed to expire for reasons that have nothing to do with the program itself.

“With the next deadline just a few weeks away, we believe this experience should serve as a reminder to make extending the program on a long-term basis with common-sense reforms a priority for the government,” Mr. Brady said.

Monday, March 1, 2010

Winners, Losers in Obama Health Proposal

Health insurers, makers of brand-name drugs and generic drugmakers are among the industry players who see further pressure in President Barack Obama's health care proposal released Monday.

The White House plans to hold a summit with Democratic and Republican congressional leaders on Thursday to discuss Obama's plan.

Following are some of the changes health care industries face in the Obama administration's proposal, which was posted on the White House website at


Health Insurers

•Insurers such as WellPoint Inc, UnitedHealth Group Inc and Aetna Inc overall face increased regulations and payment cuts.
•Insurance plans would face a new federal Health Insurance Rate Authority to help U.S. states review "unreasonable rate increases and other unfair practices of insurance plans.''
•Restrictions on companies that aim to protect consumers are expanded to add new protections, such as prohibiting all annual and lifetime limits, and ban pre-existing condition exclusions, among others.
•Private Medicare plans called Medicare Advantage would see payment changes that aim to compromise between the U.S. House of Representatives and Senate bills. Reimbursement rates for the plans, which can offer more benefits than traditional fee-for-service Medicare coverage at a higher cost, would set benchmark payments at a certain percentage of traditional Medicare and then phase them out.
•Medicare Advantage plans would also see payment adjustments for unjustified billing practices.
•One small positive for health insurance companies: The 10-year $67 billion in fees they would face would be delayed until 2014.

Brand-Name Drugmakers

•The brand-name pharmaceutical industry faces another $10 billion in fees over 10 years on top of its earlier agreement with the Senate Finance Committee to provide savings and rebates.
•The industrywide fees, to be parceled out among companies such as Pfizer In and Merck & Co Inc, will be used to eliminate a gap in Medicare's prescription drug coverage known as the "doughnut hole.'' That could help brand-name companies by getting patients to continue taking their medication rather than switching to a generic or stopping medication altogether.
•In a positive move for the companies, the fees will be delayed by one year until 2011.

Generic Drugmakers

•Companies that make cheaper, generic versions of brand-name medicines would see an end to lucrative ''pay-to-delay'' settlements with brand-name drugmakers.
•Obama's measure gives the Federal Trade Commission authority to address the settlements and makes it illegal to pay generic manufacturers "to limit or forego research, development, marketing, manufacturing or sales of the generic drug.''
•Exemptions would only be allowed if the companies can show their settlement would "outweigh the anti-competitive effects of the agreement.''


Device Makers

•Medical device makers such as Boston Scientific and Medtronic Inc maintained their earlier win of reducing their costs to $20 billion, down from $40 billion, and won a two-year delay until 2013.
•The industrywide fees were replaced with an excise tax that raises the same amount of revenue over 10 years.