MASS. AUTO PLAN NOT READY YET:
Parties hoping to change the way Massachusetts handles its high risk auto market have some more work to do. Massachusetts Insurance Commissioner Julianne Bowler has ordered Commonwealth Auto Reinsurers (CAR) to amend its proposed assigned auto insurance plan before she will approve it. While commending the proposed Massachusetts Assigned Insurance Plan (MAIP) as a "solid framework for residual market reform and transition," Bowler nevertheless asked for key amendments to address concerns raised during the hearing process. Bowler has asked CAR to: clarify the rules so that drivers with good driving records are not impacted by the changes in the residual market; adopt the so-called "Clean in Three" proposal, under which experienced drivers with no-fault accidents or moving violations in the most recent three years cannot be placed in the assigned risk plan; and introduce incentives to encourage new agencies in urban areas. Bowler asked CAR to submit amendments by Sept. 24 and scheduled a hearing for Oct. 4.
CONN. SUIT OVER R.I. FIRE EXPANDED:
Lawyers from New London, Conn., have added 26 more defendants to a lawsuit on behalf of eight Connecticut residents who were killed or injured in The Station nightclub fire last year. One of the new defendants is a television cameraman who was at the club filming footage for a story. Other defendants added include insurance firms and a company that inspected the West Warwick nightclub before the fire. The amended lawsuit, filed in U.S. District Court in Providence, pushed the number of defendants to 53. "Essentially we want to make sure that we have named every party that was involved in this fire to make sure that everybody liable is involved in this lawsuit," Robert I. Reardon Jr., one of the lawyers working on the case, told The Day of New London, Conn. The original lawsuit, filed in June 2003 in U.S. District Court in Hartford, Conn., named 27 defendants, including the brothers who owned the nightclub, Michael and Jeffrey Derderian, West Warwick town officials and Anheuser-Busch Inc., which sold beer at the concert. The 141-page, 70-count Connecticut lawsuit sues the same defendants as its Rhode Island counterpart and adds seven more names that lawyers allege promoted the concert across state lines and lured people from Connecticut to see Great White. They include the Norwich, Conn., branch of Strawberries, a chain of East Coast music stores, which allegedly sold two tickets to the concert, and New London radio station WQGN, which gave away tickets to the concert. The Connecticut suit seeks compensatory damages of $100 million, punitive damages, lawyer's fees and court costs.
R.I. OWNERS PERSONALLY LIABLE:
The Rhode Island Workers Compensation Court has ruled that the owners of The Station nightclub can be held personally liable for their failure to obtain required workers' compensation coverage. The ruling means that the brothers' personal assets can be tapped to pay the more than $1 million fine levied against their company, Derco LLC, for not having the insurance in place when their nightclub burned, killing 100 people including four employees. That fine is under appeal and Jeff Pine, the lawyer for the owners, Michael and Jeffrey Derderian, vowed that the ruling on personal liability would be appealed as well. The issue of personal liability came up because on July 2 the state enacted an amendment to its statute on limited liability corporations, under which Derco is licensed. The amendment said that owners and managers of limited liability companies could be personally responsible for fines and penalties. The Derderians maintained that the new amendment was meant to establish personal liability and since it was not retroactive, they could not be held personally liable for the fine imposed before July 2. But the state won with its contention that this was not a change in the law but simply a clarification.
MASS. LLJUA TO WRITE HIGHER LIMITS:
The Liquor Liability Joint Underwriting Authority (LLJUA) of Massachusetts has taken advantage of a new law and filed to write higher occurrence policy limits of $1 million/$1 million. By law, the LLJUA had been limited to writing $500,000/$1 million limits but a bill recently signed into law removes the 15-year old statutory limit and gives the LLJUA leeway to offer higher occurrence limits after approval of rates by the commissioner of insurance. Charles Bucke, LLJUA president, said his organization felt the higher limits were necessary because some customers were having difficulty obtaining excess umbrellas based on the lower limits. "We think this will satisfy more umbrella carriers," Bucke explained. He said the LLJUA hopes for approval in time to begin offering the higher limits by Oct. 1 but there is no indication if approval will be received by then. LLJUA is a liquor liability insurer of last-resort. To be eligible for coverage from LLJUA, the business owner has to be turned down for coverage three times in the voluntary market. The LLJUA wrote about 1,275 policies in 2003 and is on track to write about 1,500 for 2004, according to Bucke.
N.Y. COMP WRITERS SEEK 9.3% HIKE:
Their 29.3 percent increase having been rejected by state officials last month, workers compensation insurers in New York have tried again, this time for an average 9.3 percent increase. Maintaining that it has responded to the concerns raised by the New York State Insurance Department when it rejected its previous filing, the New York Compensation Insurance Rating Board re-filed on Aug. 6 with the lower bid. NYCIB officials said they also met with department to discuss a new rate recommendation after the first one was defeated. If approved, the new rates would go into effect 75 days from the date of approval. In the meantime, a separate rate change is slated to go into effect beginning Oct. 1, 2004. Effective that date, the state assessment, unaffected by the rate filing, increases from 14.3 percent to 15.1 percent of premium. In his July 15 decision turning down the 29.3 percent bid, Superintendent of Insurance Gregory V. Serio questioned the level of profitability reported by the workers' compensation industry in recent years. Insurers reported a return of 4.1 percent for 2004 and 4.5 percent in 2003. The department believes that the true rate of return for the industry is as high as 8.1 percent.
N.Y. BLOCKS PAWTUCKET MUTUAL:
New York Superintendent of Insurance Gregory V. Serio applauded a decision by the New York Supreme Court to issue a temporary restraining order preventing Pawtucket Mutual Insurance Company from canceling approximately 1,000 homeowners policies in the state. The department submitted the court motion in response to the insurer's decision in June to issue mid-term cancellation notices to its policyholders. "The law clearly states that insurers cannot cancel policies mid-term without just reasons or without submitting a plan to the department, neither of which were done by Pawtucket," Serio said. Pawtucket is a Rhode Island-based company currently in rehabilitation.
N.J. SEEKS MIIX REHABILITATION:
The New Jersey Department of Banking and Insurance has gone to court to place medical malpractice insurance carrier MIIX Insurance Company in rehabilitation, according to the company. The department is seeking permission from the court to maintain in force MIIX Insurance's current management services agreement with The MIIX Group and New Jersey State Medical Underwriter's, Inc. until the order of rehabilitation is entered. The department also wants the court to prohibit the filing of new lawsuits against MIIX Insurance without the permission of the department or the court. The company said it has not consented to the entry of the orders requested by the department.
4.9% VIRGINIA COMP HIKE SOUGHT:
Virginia's State Corporation Commission (SCC) has scheduled a November hearing to consider a request by the National Council on Compensation Insurance, Inc. (NCCI) to increase workers compensation premium levels for industrial classes by an average 4.9 percent in the voluntary market. NCCI is also seeking to raise the assigned risk premium levels for industrial risks by an average 10.2 percent. Rates for all other classes including coal mines would decrease by as much as 15.6 percent under the filing. The proposed changes, if approved, would become effective on April 1, 2005, for new and renewal policies. NCCI represents insurance companies licensed to write workers' compensation insurance in Virginia. The SCC hearing is scheduled for 10 a.m. on Tuesday, Nov. 9, 2004, in the Commission's second floor courtroom located in the Tyler Building, 1300 East Main Street, in downtown Richmond.
PA. COURT REJECTS HEROIN CLAIM:
An insurance company does not have to pay a wrongful-death claim under the homeowner's policy of a man whose houseguest overdosed on the heroin that he provided to her, the Pennsylvania Supreme Court ruled. The court ruled 4-2 that public policy interests trump the language of Michael J. Greenfield's insurance policy, precluding his insurer from having to indemnify Greenfield for the February 1998 fatal overdose of 18-year-old Angela Chelsea Smith. Smith died in Greenfield's Wormleysburg home after she injected a blue packet of heroin marked "suicide'" that Greenfield had given to her. Greenfield, who was sentenced to jail, was sued by Smith's parents on behalf of her estate. He has since declared bankruptcy and. Minnesota Fire and Casualty Co. asked a Cumberland County judge to declare they did not have to defend Greenfield, an action that culminated in this recent ruling. The high court said the insurer should not be saddled with a loss that was attributable to Greenfield's unlawful actions. "If the explicit criminalization of use or possession or sale of drugs that have a high potential for abuse, no currently accepted medical use in the United States, and lack of accepted safety for use under medical supervision does not manifest convincing proof of public interest, what would?" Justice Sandra Schultz Newman wrote for the majority. John R. Fenstermacher, the lawyer for Smith's estate, said the decision was based on "rather tortured reasoning'" that could affect other people's insurance coverage. "Basically what they've decided is, you and I have an icy sidewalk and we don't remove our ice within the required 24 hours and somebody falls, (then it's as if) we don't have insurance,'" he said.
