Massachusetts has approved a 2.4 percent decrease in workers' compensation insurance costs, a figure that should reduce premiums by an estimated $22.5 million this year.
Originally the Workers' Compensation Rating and Inspection Bureau, a private, nonprofit organization of Massachusetts workers' compensation insurers, had asked for a 4.5 percent increase in rates. Based on the projected workers' compensation premiums of $935 million. That figure would have increased premiums by about $42 million statewide.
The rate reduction, which goes into effect Sept. 1, marks the tenth rate reduction in the Bay State since 1994.
"Lowering the cost of workers' compensation insurance is very much in keeping with our larger goal of improving the state's business climate so that we can grow the economy and create jobs," Gov. Deval Patrick said.
Barbara Anthony, undersecretary of the office of consumer affairs and business regulation, said the cut "offers further proof that reforms have created efficiencies within the system that continue to produce savings for businesses."
However, Paul Meagher, president of the Workers' Compensation Rating and Inspection Bureau of Massachusetts (WCRIBMA), sounded less enthusiastic about the cuts.
"In today's uncertain economic climate, maintaining a healthy voluntary market for workers' compensation insurance will likely be a challenge given the continuing increase in claims severity and low expected industry investment returns," he said. "The WCRIBMA is committed to working with its committees, members, regulators, and other stakeholders toward our shared goal of a stable and healthy workers' compensation market in the Commonwealth."
Wednesday, May 12, 2010
New Jersey Court Reverses Ruling in Insurance Records Case
A New Jersey court has found that records of settlements reached by insurance companies on behalf of government entities should be open to the public.
In 2008, lawyer Mark Cimino asked used the state's Open Public Records Act to request copies of legal settlements involving Gloucester County government.
The county argued that the settlements were made by insurance companies and that records of them were stored with the firms.
A lower court judge agreed that those factors meant the documents in question were not covered by the open records law.
But on Monday, a three-judge appeals panel reversed the ruling, sending it back to a lower court.
Gloucester County Counsel Samuel Leone says the county still believes it was right.
In 2008, lawyer Mark Cimino asked used the state's Open Public Records Act to request copies of legal settlements involving Gloucester County government.
The county argued that the settlements were made by insurance companies and that records of them were stored with the firms.
A lower court judge agreed that those factors meant the documents in question were not covered by the open records law.
But on Monday, a three-judge appeals panel reversed the ruling, sending it back to a lower court.
Gloucester County Counsel Samuel Leone says the county still believes it was right.
Insurance Industry Reacts to Gulf Coast Oil Spill
The blame game for the recent British Petroleum (BP) oil rig accident and subsequent oil spill is just getting started as are the insurance implications of this disastrous event, according to underwriters and other observers.
"It's going to take several years to sort out the various liabilities and what resources in terms of insurance assets and other assets each player is going to contribute," said John Nevius, a shareholder at Anderson Kill & Olick in New York and an expert in environmental insurance coverage.
According to Marla Donovan, vice president of product development at Burns & Wilcox, workers comp, excess casualty and liability, environmental and contingent business interruption are a few of the coverages that could be triggered by this event, but she expects the worst-case scenario.
"All liability coverages will be triggered," said Donovan. "This is an enormous property damage loss."
BP and the exploration company Transocean, and potentially Cameron International Corp. and Halliburton Co., are expected to have numerous payouts to deal with. These payouts will include coastal property owners, businesses along the Gulf Coast, and families of the lost the rig workers, just to name a few. Gulf Coast shrimpers, a Mississippi seafood company and stranded rig workers have already filed suits.
BP's chief executive officer Tony Hayward has told news outlets the company will honor all legitimate claims arising from the disaster. However, it is still anyone's guess as to what the total cost of this event will be to reinsurers and how these costs will eventually trickle down to the insurance industry. BP is self-insured but their total amount of self-insured retention (SIR) is unknown. Reinsurers will still be on the hook for a substantial amount.
"Every major reinsurer in the world is involved in this claim," said Donovan. "Swiss Re, Munich Re, Gen Re, Partner Re – everyone has a piece of this."
Partner Re has already come out and estimated that its losses will be in the $60 million to $70 million range, but Donovan and Nevius agree these are modest amounts at this point in time. However, it is important for the reinsurers to come forward with their potential liability so it doesn't look like they are dodging the situation.
"Usually the estimates are about one third of what it ends up being," said Donovan. "But no one that is participating can remain silent. It is standard for them to indicate how much they are involved and that is absolutely what is happening."
Oil Spill Insurance Issues
As insurers wade through the complications of this event, insureds are seeking respite and trying to save their businesses.
The weak economy forced many insureds to cut back on coverage that they didn't think they needed, such as environmental coverage, which could be crucial during this crisis.
"Environmental coverage is not a requirement most of the time like general liability," said Gina Jones, director of environmental programs at Burns & Wilcox in Centennial, Colo. "In this economic situation, insured's don't want to pay for something they don't have to."
Jones says that has left many business owners on the Gulf Coast vulnerable to the cost of the environmental impact of this situation.
"We have had a lot of calls from people and businesses that are uninsured for environmental exposures and are looking to buy after the fact, but it's too late," Jones said. "We can only help them going forward but a lot of insureds take the stance this isn't going to happen again."
Business income and business interruption are other huge liabilities because of this incident and could be covered on an environmental liability policy if the insured added business interruption coverage, says Joe Boren, CEO of Ironshore's environmental division and John O'Brien, president of the environmental division.
"Business interruption is an area that a lot of pollution policies have, and there is an option to purchase the coverage," said O'Brien. "But a lot of insureds do not purchase it because they think it won't affect them."
However, said Boren, many businesses will see differently after this event.
"Those in the hospitality industry [along the Gulf] are starting to get cancellations because of the pollutant incident and they may go look at their insurance policies and see they have no pollution coverage," Boren said. "This is going to lead people in commercial property business to say 'I have a gap in coverage because I didn't think I need it, and guess what, I need it.' The industry should start to see that."
Jones said this incident highlights why it is important for underwriters to discuss the importance of all of their potential exposures with insureds.
"If this teaches anyone anything it is that every one of our clients has an environmental exposure," she said. "It is real. If agents aren't talking about environmental exposures or insuring a particular risk, they are putting their E&O at stake because an insured could go back and say they weren't told they need pollution coverage."
Ironshore has formed a rapid response team of industry experts and has them on the Gulf Coast to answer liability questions about the incident and provide guidance from an insurance perspective. Since it is the only insurance carrier with an office in New Orleans, Ironshore has also been able to help workers on the ground make sure they have their liabilities covered.
"We know that whenever you have a crisis like this there is a lot of contractors out working and they may look at their insurance policies and say 'I need more limits to take on a project like this.' We wanted them to know we are available 24/7 if they need assistance," said Boren. "There are also people that aren't presently environmental contractors who are being used in that way to work on the spill, such as fisherman. Other people include those who are in related fields but are not environmental contractors and may not have environmental insurance at all and want to protect themselves."
Jones said Burns & Wilcox is also able to provide coverage for environmental contractors looking to assist with the clean-up efforts along the Gulf, and the company has been receiving many calls and submissions for that exposure.
Ironshore is also coordinating efforts with environmental contractors in different parts of the country that it doesn't insure with those working on the Gulf Coast.
"If we insure the company or not is irrelevant to us," said O'Brien. "We are just trying to match up resources where there is tremendous need for these resources. This is an unprecedented national emergency and doing what's right is way more important than just worrying about your own business."
"It's going to take several years to sort out the various liabilities and what resources in terms of insurance assets and other assets each player is going to contribute," said John Nevius, a shareholder at Anderson Kill & Olick in New York and an expert in environmental insurance coverage.
According to Marla Donovan, vice president of product development at Burns & Wilcox, workers comp, excess casualty and liability, environmental and contingent business interruption are a few of the coverages that could be triggered by this event, but she expects the worst-case scenario.
"All liability coverages will be triggered," said Donovan. "This is an enormous property damage loss."
BP and the exploration company Transocean, and potentially Cameron International Corp. and Halliburton Co., are expected to have numerous payouts to deal with. These payouts will include coastal property owners, businesses along the Gulf Coast, and families of the lost the rig workers, just to name a few. Gulf Coast shrimpers, a Mississippi seafood company and stranded rig workers have already filed suits.
BP's chief executive officer Tony Hayward has told news outlets the company will honor all legitimate claims arising from the disaster. However, it is still anyone's guess as to what the total cost of this event will be to reinsurers and how these costs will eventually trickle down to the insurance industry. BP is self-insured but their total amount of self-insured retention (SIR) is unknown. Reinsurers will still be on the hook for a substantial amount.
"Every major reinsurer in the world is involved in this claim," said Donovan. "Swiss Re, Munich Re, Gen Re, Partner Re – everyone has a piece of this."
Partner Re has already come out and estimated that its losses will be in the $60 million to $70 million range, but Donovan and Nevius agree these are modest amounts at this point in time. However, it is important for the reinsurers to come forward with their potential liability so it doesn't look like they are dodging the situation.
"Usually the estimates are about one third of what it ends up being," said Donovan. "But no one that is participating can remain silent. It is standard for them to indicate how much they are involved and that is absolutely what is happening."
Oil Spill Insurance Issues
As insurers wade through the complications of this event, insureds are seeking respite and trying to save their businesses.
The weak economy forced many insureds to cut back on coverage that they didn't think they needed, such as environmental coverage, which could be crucial during this crisis.
"Environmental coverage is not a requirement most of the time like general liability," said Gina Jones, director of environmental programs at Burns & Wilcox in Centennial, Colo. "In this economic situation, insured's don't want to pay for something they don't have to."
Jones says that has left many business owners on the Gulf Coast vulnerable to the cost of the environmental impact of this situation.
"We have had a lot of calls from people and businesses that are uninsured for environmental exposures and are looking to buy after the fact, but it's too late," Jones said. "We can only help them going forward but a lot of insureds take the stance this isn't going to happen again."
Business income and business interruption are other huge liabilities because of this incident and could be covered on an environmental liability policy if the insured added business interruption coverage, says Joe Boren, CEO of Ironshore's environmental division and John O'Brien, president of the environmental division.
"Business interruption is an area that a lot of pollution policies have, and there is an option to purchase the coverage," said O'Brien. "But a lot of insureds do not purchase it because they think it won't affect them."
However, said Boren, many businesses will see differently after this event.
"Those in the hospitality industry [along the Gulf] are starting to get cancellations because of the pollutant incident and they may go look at their insurance policies and see they have no pollution coverage," Boren said. "This is going to lead people in commercial property business to say 'I have a gap in coverage because I didn't think I need it, and guess what, I need it.' The industry should start to see that."
Jones said this incident highlights why it is important for underwriters to discuss the importance of all of their potential exposures with insureds.
"If this teaches anyone anything it is that every one of our clients has an environmental exposure," she said. "It is real. If agents aren't talking about environmental exposures or insuring a particular risk, they are putting their E&O at stake because an insured could go back and say they weren't told they need pollution coverage."
Ironshore has formed a rapid response team of industry experts and has them on the Gulf Coast to answer liability questions about the incident and provide guidance from an insurance perspective. Since it is the only insurance carrier with an office in New Orleans, Ironshore has also been able to help workers on the ground make sure they have their liabilities covered.
"We know that whenever you have a crisis like this there is a lot of contractors out working and they may look at their insurance policies and say 'I need more limits to take on a project like this.' We wanted them to know we are available 24/7 if they need assistance," said Boren. "There are also people that aren't presently environmental contractors who are being used in that way to work on the spill, such as fisherman. Other people include those who are in related fields but are not environmental contractors and may not have environmental insurance at all and want to protect themselves."
Jones said Burns & Wilcox is also able to provide coverage for environmental contractors looking to assist with the clean-up efforts along the Gulf, and the company has been receiving many calls and submissions for that exposure.
Ironshore is also coordinating efforts with environmental contractors in different parts of the country that it doesn't insure with those working on the Gulf Coast.
"If we insure the company or not is irrelevant to us," said O'Brien. "We are just trying to match up resources where there is tremendous need for these resources. This is an unprecedented national emergency and doing what's right is way more important than just worrying about your own business."
Monday, May 10, 2010
Dog Attack Proves Costly for Tennessee Child's Family
The family of an 8-year-old girl who was attacked by a pit bull on her birthday is now wondering how to pay for a large hospital bill.
Eileen King has nothing but praise for the treatment her daughter Hailey received at Le Bonheur Children's Medical Center after the April 8 mauling in north Shelby County.
King told The Commercial Appeal her children are covered by her ex-husband's health insurance, but she's concerned she still might have to pay some of the $47,870 hospital bill.
"I don't know what I can do,'' said King, 42, a former gas station manager who is unemployed.
The woman who owned the dog that attacked Hailey was a renter and has no homeowners insurance that could cover the costs. King tried to contact lawyers, but they weren't making any promises that they could recover damages from the dog owner.
(According to the Insurance Information Institute, dog bites account for one-third of all homeowners insurance liability claims.)
An account for donations to Hailey's medical costs has been established at Regions Bank.
Hailey and her 9-year-old brother, Dylan, and a friend were walking in north Shelby County near Raleigh. She wanted to invite another friend to her birthday party.
A one-year-old pit bull named Spike was chained to a tree in the yard of a home, but broke its collar and attacked her, according to the Shelby County Sheriff's Office.
The dog dragged her down the sidewalk before a neighbor fended the dog off with a rake.
The dog's owner, Latoya Redwing, 32, gave up the dog to county animal control authorities and it was euthanized April 19, she said.
In an appearance in Environmental Court, Redwing received a $50 fine for violating a county ordinance.
Redwing said the dog was a gift after her Chihuahua died and that it was not vicious but had been provoked by children throwing bricks. She wasn't home during the attack, and didn't say that Hailey was one of those children.
"Personally, I love animals and I think that my dog, just because he was a pit bull, got a bad reputation before anybody even knew the situation and what happened,'' Redwing said. "He was already condemned.''
Redwing said she took flowers, a teddy bear and balloons to the Kings' home to apologize and offered assistance while Hailey was still in the hospital, but her mother told the woman to leave.
King said she doesn't believe that the dog was provoked and said she didn't want to hear Redwing offer any excuses.
Hailey is recovering well and is getting her school lessons at home. But it remains to be seen how well her right arm will bounce back. The dog bit down on her shoulder all the way to the bone and the injury required reconstruction of her rotator cuff, King said.
The attack was so severe "it was difficult to see all of the dog bites because of the blood,'' according to report by the deputies who responded that day.
But Hailey, who wants to be a veterinarian, said the attack hasn't shaken her affection for dogs, although she is "still scare of pit bulls.''
Eileen King has nothing but praise for the treatment her daughter Hailey received at Le Bonheur Children's Medical Center after the April 8 mauling in north Shelby County.
King told The Commercial Appeal her children are covered by her ex-husband's health insurance, but she's concerned she still might have to pay some of the $47,870 hospital bill.
"I don't know what I can do,'' said King, 42, a former gas station manager who is unemployed.
The woman who owned the dog that attacked Hailey was a renter and has no homeowners insurance that could cover the costs. King tried to contact lawyers, but they weren't making any promises that they could recover damages from the dog owner.
(According to the Insurance Information Institute, dog bites account for one-third of all homeowners insurance liability claims.)
An account for donations to Hailey's medical costs has been established at Regions Bank.
Hailey and her 9-year-old brother, Dylan, and a friend were walking in north Shelby County near Raleigh. She wanted to invite another friend to her birthday party.
A one-year-old pit bull named Spike was chained to a tree in the yard of a home, but broke its collar and attacked her, according to the Shelby County Sheriff's Office.
The dog dragged her down the sidewalk before a neighbor fended the dog off with a rake.
The dog's owner, Latoya Redwing, 32, gave up the dog to county animal control authorities and it was euthanized April 19, she said.
In an appearance in Environmental Court, Redwing received a $50 fine for violating a county ordinance.
Redwing said the dog was a gift after her Chihuahua died and that it was not vicious but had been provoked by children throwing bricks. She wasn't home during the attack, and didn't say that Hailey was one of those children.
"Personally, I love animals and I think that my dog, just because he was a pit bull, got a bad reputation before anybody even knew the situation and what happened,'' Redwing said. "He was already condemned.''
Redwing said she took flowers, a teddy bear and balloons to the Kings' home to apologize and offered assistance while Hailey was still in the hospital, but her mother told the woman to leave.
King said she doesn't believe that the dog was provoked and said she didn't want to hear Redwing offer any excuses.
Hailey is recovering well and is getting her school lessons at home. But it remains to be seen how well her right arm will bounce back. The dog bit down on her shoulder all the way to the bone and the injury required reconstruction of her rotator cuff, King said.
The attack was so severe "it was difficult to see all of the dog bites because of the blood,'' according to report by the deputies who responded that day.
But Hailey, who wants to be a veterinarian, said the attack hasn't shaken her affection for dogs, although she is "still scare of pit bulls.''
Wednesday, May 5, 2010
Don’t Assess Insurers For Failed Banks, Senate Urged
WASHINGTON—Legislation to fund the unwinding of failing companies that threaten the nation’s financial system should not put assessments on insurers, three trade groups have written the Senate leadership.
The three property and casualty insurance organizations in seeking an exemption cited insurers’ existing participation in the state funds that guaranty support for failed insurers.
Their plea was made in a letter to Sen. Harry Reid, D-Nev., Senate majority leader, and Sen. Mitch McConnell, R-Ky., minority leader.
The American Insurance Association, the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America wrote their letter as floor debate continues on the bill, S. 3217, “the Restoring Financial Stability Act of 2010.”
Assessment provisions are part of the legislation dealing with financial institutions deemed “too big to fail.”
As currently written, the bill creates a Financial Stability Oversight Council of regulators whose role it will be to monitor the financial system for companies that have become so large or interconnected that their failure could threaten the economy.
Under the scheme as currently designed, if such an institution were to be declared insolvent, it would be liquidated by a Resolution Authority run by the Federal Deposit Insurance Corporation.
The Resolution Authority would be prefunded through assessments levied on institutions with assets of $50 billion or more.
Under the current language, the only insurer that would be assessed would be MetLife.
However, if the funds are inadequate, under the provision as currently written, a post-funding assessment would be mandated, and all insurers with assets of more than $50 billion would be required to participate, whether or not they have a federally regulated subsidiary.
It is this provision that p&c insurers seek to amend.
The issue has become more important since it is likely that the prefunding provision will be removed as debate continues on the legislation.
“We ask that you recognize the existing state insurance guaranty system and not subject the property and casualty industry to inequitable, dual resolution authority,” the letter said.
“Making property and casualty insurers pay twice for resolution threatens to increase costs for the 270 million home, auto and business policies that we honor across the nation,” the letter said.
“Instead, these assessments should only apply to non-bank financial companies that are deemed systemically significant and subject to heightened supervision by the Federal Reserve under section 113 of that legislation,” the letter said.
The letter argued, “It simply does not make sense for non-risky property and casualty insurers to be subject to two regimes—a state fund to address their own industry’s insolvencies, and a federal fund to address the insolvencies of unrelated financial services companies.
“It is inequitable to hold insurers responsible for the risky behavior of others,” the letter said.
The three property and casualty insurance organizations in seeking an exemption cited insurers’ existing participation in the state funds that guaranty support for failed insurers.
Their plea was made in a letter to Sen. Harry Reid, D-Nev., Senate majority leader, and Sen. Mitch McConnell, R-Ky., minority leader.
The American Insurance Association, the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America wrote their letter as floor debate continues on the bill, S. 3217, “the Restoring Financial Stability Act of 2010.”
Assessment provisions are part of the legislation dealing with financial institutions deemed “too big to fail.”
As currently written, the bill creates a Financial Stability Oversight Council of regulators whose role it will be to monitor the financial system for companies that have become so large or interconnected that their failure could threaten the economy.
Under the scheme as currently designed, if such an institution were to be declared insolvent, it would be liquidated by a Resolution Authority run by the Federal Deposit Insurance Corporation.
The Resolution Authority would be prefunded through assessments levied on institutions with assets of $50 billion or more.
Under the current language, the only insurer that would be assessed would be MetLife.
However, if the funds are inadequate, under the provision as currently written, a post-funding assessment would be mandated, and all insurers with assets of more than $50 billion would be required to participate, whether or not they have a federally regulated subsidiary.
It is this provision that p&c insurers seek to amend.
The issue has become more important since it is likely that the prefunding provision will be removed as debate continues on the legislation.
“We ask that you recognize the existing state insurance guaranty system and not subject the property and casualty industry to inequitable, dual resolution authority,” the letter said.
“Making property and casualty insurers pay twice for resolution threatens to increase costs for the 270 million home, auto and business policies that we honor across the nation,” the letter said.
“Instead, these assessments should only apply to non-bank financial companies that are deemed systemically significant and subject to heightened supervision by the Federal Reserve under section 113 of that legislation,” the letter said.
The letter argued, “It simply does not make sense for non-risky property and casualty insurers to be subject to two regimes—a state fund to address their own industry’s insolvencies, and a federal fund to address the insolvencies of unrelated financial services companies.
“It is inequitable to hold insurers responsible for the risky behavior of others,” the letter said.
Fla. Legislature Passes Commercial Lines Rate Deregulation
The Florida legislature has passed a bill that would exclude certain commercial insurance lines from the rate filing and approval process.
A spokesperson for Florida Gov. Charlie Crist said it was unknown at this time whether the governor will sign the measure.
Cecil Pearce, vice president of state affairs for the American Insurance Association (AIA), said the bill, S. 2176, passed by a vote of 119-0 in the House and 37-1 in the Senate.
According to the bill, the types of insurance lines not subject to filing and approval would be excess or umbrella; surety and fidelity; boiler and machinery and leakage and fire extinguishing equipment; errors and omissions; directors and officers; employment practices and management liability; intellectual property and patent infringement liability; advertising injury and Internet liability insurance; and property risks rated under a highly protected risks rating plan.
AIA, which supported the bill, said current Florida law exempts only those policies with annual premiums above $500,000 in addition to other criteria.
Mr. Pearce noted that the filing and approval exemptions would not apply to personal lines and to commercial risks that have catastrophe exposure, such as commercial property.
He said AIA has supported the bill to address what he called the “creeping effect” of increased rate regulation in insurance lines due to the issues experienced in Florida insurance lines impacted by catastrophes.
Rate regulatory efforts since the 2004 and 2005 hurricane seasons, he said, began to creep into unrelated commercial lines.
The goal, Mr. Pearce said, is to show that competition can accomplish effective regulation of rates in lines where there are a lot of sellers.
Mr. Pearce said the three keys AIA stressed to legislators were that the bill would not impact lines with catastrophe exposure, that the products in the bill were competitive with many sellers, and that the bill had the support of buyers of these products.
To highlight the third key, Mr. Pearce said Florida’s two main business groups—The Associated Industries of Florida and the Florida Chamber of Commerce—supported the bill.
Mr. Pearce said AIA had conversations with the Office of Insurance Regulation (OIR) and reported the regulators expressed concern with including professional liability and commercial auto when there is only a single vehicle.
To take care of regulators’ concerns, professional liability was excluded from the legislation, and the commercial auto portion applies only to fleets with 20 or more vehicles, Mr. Pearce said.
Several amendments were added to the bill, Mr. Pearce said, including a workers’ compensation measure supported by the state’s county sheriff’s association and an amendment designed to protect senior citizen’s annuities.
Mr. Pearce said his understanding is that the department will recommend that the bill be signed. An OIR spokesperson said the office is still in the process of reviewing the bill and the last-minute amendments.
NU Online News Service, May 3, 3:15 p.m. EDT
The Florida legislature has passed a bill that would exclude certain commercial insurance lines from the rate filing and approval process.
A spokesperson for Florida Gov. Charlie Crist said it was unknown at this time whether the governor will sign the measure.
Cecil Pearce, vice president of state affairs for the American Insurance Association (AIA), said the bill, S. 2176 (http://tinyurl.com/3xg8jsm), passed by a vote of 119-0 in the House and 37-1 in the Senate.
According to the bill, the types of insurance lines not subject to filing and approval would be excess or umbrella; surety and fidelity; boiler and machinery and leakage and fire extinguishing equipment; errors and omissions; directors and officers; employment practices and management liability; intellectual property and patent infringement liability; advertising injury and Internet liability insurance; and property risks rated under a highly protected risks rating plan.
AIA, which supported the bill, said current Florida law exempts only those policies with annual premiums above $500,000 in addition to other criteria.
Mr. Pearce noted that the filing and approval exemptions would not apply to personal lines and to commercial risks that have catastrophe exposure, such as commercial property.
He said AIA has supported the bill to address what he called the “creeping effect” of increased rate regulation in insurance lines due to the issues experienced in Florida insurance lines impacted by catastrophes.
Rate regulatory efforts since the 2004 and 2005 hurricane seasons, he said, began to creep into unrelated commercial lines.
The goal, Mr. Pearce said, is to show that competition can accomplish effective regulation of rates in lines where there are a lot of sellers.
Mr. Pearce said the three keys AIA stressed to legislators were that the bill would not impact lines with catastrophe exposure, that the products in the bill were competitive with many sellers, and that the bill had the support of buyers of these products.
To highlight the third key, Mr. Pearce said Florida’s two main business groups—The Associated Industries of Florida and the Florida Chamber of Commerce—supported the bill.
Mr. Pearce said AIA had conversations with the Office of Insurance Regulation (OIR) and reported the regulators expressed concern with including professional liability and commercial auto when there is only a single vehicle.
To take care of regulators’ concerns, professional liability was excluded from the legislation, and the commercial auto portion applies only to fleets with 20 or more vehicles, Mr. Pearce said.
Several amendments were added to the bill, Mr. Pearce said, including a workers’ compensation measure supported by the state’s county sheriff’s association and an amendment designed to protect senior citizen’s annuities.
Mr. Pearce said his understanding is that the department will recommend that the bill be signed. An OIR spokesperson said the office is still in the process of reviewing the bill and the last-minute amendments.
A spokesperson for Florida Gov. Charlie Crist said it was unknown at this time whether the governor will sign the measure.
Cecil Pearce, vice president of state affairs for the American Insurance Association (AIA), said the bill, S. 2176, passed by a vote of 119-0 in the House and 37-1 in the Senate.
According to the bill, the types of insurance lines not subject to filing and approval would be excess or umbrella; surety and fidelity; boiler and machinery and leakage and fire extinguishing equipment; errors and omissions; directors and officers; employment practices and management liability; intellectual property and patent infringement liability; advertising injury and Internet liability insurance; and property risks rated under a highly protected risks rating plan.
AIA, which supported the bill, said current Florida law exempts only those policies with annual premiums above $500,000 in addition to other criteria.
Mr. Pearce noted that the filing and approval exemptions would not apply to personal lines and to commercial risks that have catastrophe exposure, such as commercial property.
He said AIA has supported the bill to address what he called the “creeping effect” of increased rate regulation in insurance lines due to the issues experienced in Florida insurance lines impacted by catastrophes.
Rate regulatory efforts since the 2004 and 2005 hurricane seasons, he said, began to creep into unrelated commercial lines.
The goal, Mr. Pearce said, is to show that competition can accomplish effective regulation of rates in lines where there are a lot of sellers.
Mr. Pearce said the three keys AIA stressed to legislators were that the bill would not impact lines with catastrophe exposure, that the products in the bill were competitive with many sellers, and that the bill had the support of buyers of these products.
To highlight the third key, Mr. Pearce said Florida’s two main business groups—The Associated Industries of Florida and the Florida Chamber of Commerce—supported the bill.
Mr. Pearce said AIA had conversations with the Office of Insurance Regulation (OIR) and reported the regulators expressed concern with including professional liability and commercial auto when there is only a single vehicle.
To take care of regulators’ concerns, professional liability was excluded from the legislation, and the commercial auto portion applies only to fleets with 20 or more vehicles, Mr. Pearce said.
Several amendments were added to the bill, Mr. Pearce said, including a workers’ compensation measure supported by the state’s county sheriff’s association and an amendment designed to protect senior citizen’s annuities.
Mr. Pearce said his understanding is that the department will recommend that the bill be signed. An OIR spokesperson said the office is still in the process of reviewing the bill and the last-minute amendments.
NU Online News Service, May 3, 3:15 p.m. EDT
The Florida legislature has passed a bill that would exclude certain commercial insurance lines from the rate filing and approval process.
A spokesperson for Florida Gov. Charlie Crist said it was unknown at this time whether the governor will sign the measure.
Cecil Pearce, vice president of state affairs for the American Insurance Association (AIA), said the bill, S. 2176 (http://tinyurl.com/3xg8jsm), passed by a vote of 119-0 in the House and 37-1 in the Senate.
According to the bill, the types of insurance lines not subject to filing and approval would be excess or umbrella; surety and fidelity; boiler and machinery and leakage and fire extinguishing equipment; errors and omissions; directors and officers; employment practices and management liability; intellectual property and patent infringement liability; advertising injury and Internet liability insurance; and property risks rated under a highly protected risks rating plan.
AIA, which supported the bill, said current Florida law exempts only those policies with annual premiums above $500,000 in addition to other criteria.
Mr. Pearce noted that the filing and approval exemptions would not apply to personal lines and to commercial risks that have catastrophe exposure, such as commercial property.
He said AIA has supported the bill to address what he called the “creeping effect” of increased rate regulation in insurance lines due to the issues experienced in Florida insurance lines impacted by catastrophes.
Rate regulatory efforts since the 2004 and 2005 hurricane seasons, he said, began to creep into unrelated commercial lines.
The goal, Mr. Pearce said, is to show that competition can accomplish effective regulation of rates in lines where there are a lot of sellers.
Mr. Pearce said the three keys AIA stressed to legislators were that the bill would not impact lines with catastrophe exposure, that the products in the bill were competitive with many sellers, and that the bill had the support of buyers of these products.
To highlight the third key, Mr. Pearce said Florida’s two main business groups—The Associated Industries of Florida and the Florida Chamber of Commerce—supported the bill.
Mr. Pearce said AIA had conversations with the Office of Insurance Regulation (OIR) and reported the regulators expressed concern with including professional liability and commercial auto when there is only a single vehicle.
To take care of regulators’ concerns, professional liability was excluded from the legislation, and the commercial auto portion applies only to fleets with 20 or more vehicles, Mr. Pearce said.
Several amendments were added to the bill, Mr. Pearce said, including a workers’ compensation measure supported by the state’s county sheriff’s association and an amendment designed to protect senior citizen’s annuities.
Mr. Pearce said his understanding is that the department will recommend that the bill be signed. An OIR spokesperson said the office is still in the process of reviewing the bill and the last-minute amendments.
Florida Passes Property Insurance Measure Supported By Insurers
The Florida Legislature passed a bill that would allow property insurers to apply more quickly for rate increases of up to 10 percent under certain conditions.
Current law allows insurers to make an expedited filing for increases of up to 10 percent due to changes in the cost of reinsurance, according to William Stander, assistant vice president and regional manager for Florida for the Property Casualty Insurers Association of America (PCI).
This bill, SB 2044 (http://tinyurl.com/364d3w3), extends the reasons to the cost of financing products used as a replacement for reinsurance, or changes in an inflation trend factor published annually by the Office of Insurance Regulation (OIR).
Expedited filings, Mr. Stander said, are still reviewed and approved by the OIR, but they are reviewed on an expedited basis.
The bill also restricts the amount of time homeowners have to file a claim after a storm to three years (down from five).
Mr. Stander said insureds still have five years to assert their defense, but must make an initial filing of damage within three years.
That lower deadline was hard fought on both sides—the industry, which sought the time limits to stem the flow of new and reopened claims seen after the 2005 storms, and the public adjusters, who viewed it as a major restriction on how they operate in Florida.
The bill also reauthorizes a 2009 requirement that insurers get state permission for rate hikes, and requires insurers to file detailed financial information about affiliates they hire for some services, addressing the recent publicized concern of so-called “hidden profits.”
Insurers also may now withhold part of a claim payout until policyholders can demonstrate the funds will actually be used to make repairs.
While declaring that he is “not overly enthusiastic about the bill,” Florida Insurance Consumer Advocate Sean Shaw did concede that the legislation benefits both companies and consumers. Most stakeholders seem to agree, offering lukewarm and cautious praise or condemnation.
Even one of the bill's sponsors, Sen. Garrett Richter, R-Naples, said the legislation was only the beginning of the long process of solving the state's property insurance challenges.
Florida Insurance Commissioner Kevin McCarty declared soon after the bill passed that he generally supported the legislation.
This may put him at odds with Gov. Charlie Crist, an unusual position. The two are normally in lockstep when it comes to insurance matters. Gov. Crist has not offered significant opinions yet on the bill but has repeatedly declared that he will veto any legislation that includes increases in premiums.
The bill has not yet been presented to the governor.
NU Online News Service, May 3, 4:05 p.m. EDT
The Florida Legislature passed a bill that would allow property insurers to apply more quickly for rate increases of up to 10 percent under certain conditions.
Current law allows insurers to make an expedited filing for increases of up to 10 percent due to changes in the cost of reinsurance, according to William Stander, assistant vice president and regional manager for Florida for the Property Casualty Insurers Association of America (PCI).
This bill, SB 2044 (http://tinyurl.com/364d3w3), extends the reasons to the cost of financing products used as a replacement for reinsurance, or changes in an inflation trend factor published annually by the Office of Insurance Regulation (OIR).
Expedited filings, Mr. Stander said, are still reviewed and approved by the OIR, but they are reviewed on an expedited basis.
The bill also restricts the amount of time homeowners have to file a claim after a storm to three years (down from five).
Mr. Stander said insureds still have five years to assert their defense, but must make an initial filing of damage within three years.
That lower deadline was hard fought on both sides—the industry, which sought the time limits to stem the flow of new and reopened claims seen after the 2005 storms, and the public adjusters, who viewed it as a major restriction on how they operate in Florida.
The bill also reauthorizes a 2009 requirement that insurers get state permission for rate hikes, and requires insurers to file detailed financial information about affiliates they hire for some services, addressing the recent publicized concern of so-called “hidden profits.”
Insurers also may now withhold part of a claim payout until policyholders can demonstrate the funds will actually be used to make repairs.
While declaring that he is “not overly enthusiastic about the bill,” Florida Insurance Consumer Advocate Sean Shaw did concede that the legislation benefits both companies and consumers. Most stakeholders seem to agree, offering lukewarm and cautious praise or condemnation.
Even one of the bill's sponsors, Sen. Garrett Richter, R-Naples, said the legislation was only the beginning of the long process of solving the state's property insurance challenges.
Florida Insurance Commissioner Kevin McCarty declared soon after the bill passed that he generally supported the legislation.
This may put him at odds with Gov. Charlie Crist, an unusual position. The two are normally in lockstep when it comes to insurance matters. Gov. Crist has not offered significant opinions yet on the bill but has repeatedly declared that he will veto any legislation that includes increases in premiums.
The bill has not yet been presented to the governor.
Current law allows insurers to make an expedited filing for increases of up to 10 percent due to changes in the cost of reinsurance, according to William Stander, assistant vice president and regional manager for Florida for the Property Casualty Insurers Association of America (PCI).
This bill, SB 2044 (http://tinyurl.com/364d3w3), extends the reasons to the cost of financing products used as a replacement for reinsurance, or changes in an inflation trend factor published annually by the Office of Insurance Regulation (OIR).
Expedited filings, Mr. Stander said, are still reviewed and approved by the OIR, but they are reviewed on an expedited basis.
The bill also restricts the amount of time homeowners have to file a claim after a storm to three years (down from five).
Mr. Stander said insureds still have five years to assert their defense, but must make an initial filing of damage within three years.
That lower deadline was hard fought on both sides—the industry, which sought the time limits to stem the flow of new and reopened claims seen after the 2005 storms, and the public adjusters, who viewed it as a major restriction on how they operate in Florida.
The bill also reauthorizes a 2009 requirement that insurers get state permission for rate hikes, and requires insurers to file detailed financial information about affiliates they hire for some services, addressing the recent publicized concern of so-called “hidden profits.”
Insurers also may now withhold part of a claim payout until policyholders can demonstrate the funds will actually be used to make repairs.
While declaring that he is “not overly enthusiastic about the bill,” Florida Insurance Consumer Advocate Sean Shaw did concede that the legislation benefits both companies and consumers. Most stakeholders seem to agree, offering lukewarm and cautious praise or condemnation.
Even one of the bill's sponsors, Sen. Garrett Richter, R-Naples, said the legislation was only the beginning of the long process of solving the state's property insurance challenges.
Florida Insurance Commissioner Kevin McCarty declared soon after the bill passed that he generally supported the legislation.
This may put him at odds with Gov. Charlie Crist, an unusual position. The two are normally in lockstep when it comes to insurance matters. Gov. Crist has not offered significant opinions yet on the bill but has repeatedly declared that he will veto any legislation that includes increases in premiums.
The bill has not yet been presented to the governor.
NU Online News Service, May 3, 4:05 p.m. EDT
The Florida Legislature passed a bill that would allow property insurers to apply more quickly for rate increases of up to 10 percent under certain conditions.
Current law allows insurers to make an expedited filing for increases of up to 10 percent due to changes in the cost of reinsurance, according to William Stander, assistant vice president and regional manager for Florida for the Property Casualty Insurers Association of America (PCI).
This bill, SB 2044 (http://tinyurl.com/364d3w3), extends the reasons to the cost of financing products used as a replacement for reinsurance, or changes in an inflation trend factor published annually by the Office of Insurance Regulation (OIR).
Expedited filings, Mr. Stander said, are still reviewed and approved by the OIR, but they are reviewed on an expedited basis.
The bill also restricts the amount of time homeowners have to file a claim after a storm to three years (down from five).
Mr. Stander said insureds still have five years to assert their defense, but must make an initial filing of damage within three years.
That lower deadline was hard fought on both sides—the industry, which sought the time limits to stem the flow of new and reopened claims seen after the 2005 storms, and the public adjusters, who viewed it as a major restriction on how they operate in Florida.
The bill also reauthorizes a 2009 requirement that insurers get state permission for rate hikes, and requires insurers to file detailed financial information about affiliates they hire for some services, addressing the recent publicized concern of so-called “hidden profits.”
Insurers also may now withhold part of a claim payout until policyholders can demonstrate the funds will actually be used to make repairs.
While declaring that he is “not overly enthusiastic about the bill,” Florida Insurance Consumer Advocate Sean Shaw did concede that the legislation benefits both companies and consumers. Most stakeholders seem to agree, offering lukewarm and cautious praise or condemnation.
Even one of the bill's sponsors, Sen. Garrett Richter, R-Naples, said the legislation was only the beginning of the long process of solving the state's property insurance challenges.
Florida Insurance Commissioner Kevin McCarty declared soon after the bill passed that he generally supported the legislation.
This may put him at odds with Gov. Charlie Crist, an unusual position. The two are normally in lockstep when it comes to insurance matters. Gov. Crist has not offered significant opinions yet on the bill but has repeatedly declared that he will veto any legislation that includes increases in premiums.
The bill has not yet been presented to the governor.
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