HIGH RISK CHALLENGE IN COURT:

Massachusetts insurance company trade associations and companies recently filed a friend of the court brief defending the reforms of the state's auto insurance system pursued by Insurance Commissioner Julianne Bowler, which are being challenged in a lawsuit before the Massachusetts Superior Court.

On Dec. 31, 2004, Bowler issued rules changing the auto insurance high risk pool. The changes have been challenged in court by the state's largest auto insurance writer, Commerce Insurance Company, and others. In February, a Superior Court judge issued an order staying the effectiveness of the new rules as a result of the Commerce challenge.

"These reforms are an essential start in reforming the entire market which is in crisis," said Paul Moran, AIA vice president, northeast region. "The current system offers consumers few choices because the Massachusetts market has driven away many insurers."
Together, the insurance companies participating in the brief write approximately 55 percent of the private passenger auto insurance business in Massachusetts.

INSURERS OPPOSE POLICE LEVY:

State regulators and auto insurance companies doing business in Massachusetts are opposed to a legislative proposal that would impose $15 million in new surcharges on insurers to pay for police training. Insurance companies say the new fee would likely be passed on to consumers and would drive more companies out of a state already seen as inhospitable to their industry.

"The amount we commit to the tax revenue and additional assessments in the Commonwealth of Massachusetts probably exceeds any other regulated industry," said James Harrington, executive director of the Massachusetts Insurance Federation.

The bill, sponsored by Rep. Thomas Petrolati, D-Ludlow, would require companies to pay a charge equal to one quarter of one percent of all premiums collected. It was filed in response to complaints by Massachusetts police chiefs, who say state budget cuts have left departments without training and forced some officers to pay $2,300 out of pocket for mandatory basic training.

CIVIL UNIONS ADOPTED:

Connecticut Gov. M. Jodi Rell signed landmark legislation that makes Connecticut the first state to recognize same-sex civil unions without court pressure. It joins Vermont and Massachusetts as the only states with laws that provide far-reaching benefits to same-sex couples. Vermont recognizes civil unions and Massachusetts has gay marriage, but the laws were enacted only after court fights.

Rell, a Republican, signed the bill about an hour after it was approved by the Democrat-controlled Senate on a 26-8 vote. The legislation grants gay and lesbian couples the same rights, privileges and obligations as married couples in Connecticut, but does not allow them to wed. The law takes effect on Oct. 1.

METLIFE AGREES TO JOBS PLAN:

Connecticut Governor M. Jodi Rell and MetLife Chairman and Chief Executive Officer Robert H. Benmosche announced an agreement to keep 1,310 jobs in Hartford following the acquisition by MetLife of Travelers Life & Annuity. The announcement came after several weeks of talks between representatives of Governor Rell's office and MetLife. Rell said that the job losses, which stood at 1,200 when the talks began, will now total 490.

MetLife has guaranteed that 1,310 jobs will be preserved for at least one year following the official closing of the deal. Moreover, MetLife has promised that there will be no change, apart from attrition, to the approximately 1,200 positions it currently has in Connecticut, including the towns of Glastonbury, Rocky Hill, Shelton and Westport. MetLife's application for approval of the transaction is pending before the state Department of Insurance.

BILL SEEKS PRODUCER DISCLOSURE:

Two Rhode Island State Senators, William A. Walaska, D-Warwick, and David E. Bates, R- Barrington, Bristol, who is an insurance agent, have introduced legislation that they believe will add to consumer confidence in insurance firms. The bill, (2005 - S1015) sets rule for compensation disclosure where any insurance producer or any affiliate of such a producer receives any compensation from a customer for the initial placement of insurance.

"This is about consumer protection through full and detailed disclosure of insurer income and the sources of that income," said Senators Walaska and Bates. "Rhode Island should never see the kind of illegal activity that was uncovered in New York earlier this year because we already have a law prohibiting insurance brokers from collecting fees and commissions from both clients and companies. Nonetheless, more information is always better than none or too little, and this bill will provide another level of openness for all insurance customers in our state."

The bill is based on model legislation drafted by the National Association of Insurance Commissioners. Co-sponsors of the bill include Senate Majority Leader M. Teresa Paiva Weed D-Jamestown, Newport. and Sen. Joseph M. Polisena, D-Johnston.

AIG FACES AUDIT OVER COMP:

The state insurance department is appointing a consultant to audit years of alleged improper booking of workers' compensation premiums at American International Group. New York Attorney General Eliot Spitzer and Insurance Superintendent Howard Mills announced that the practice to be audited, now apparently discontinued, involved booking premiums for workers' comp coverage as premiums for general liability coverage. The conduct appears to have taken place for over a decade, and continued even after AIG insiders challenged its legality.

By reportedly booking the income as something other than workers' comp premiums, AIG might have avoided paying its true share into various workers' comp funds. One AIG document dating from the early 1990s reportedly estimated the benefit to AIG at tens of millions of dollars annually.

In 1992, an internal AIG legal memorandum to top management reported that the practice was illegal. This followed similar warnings made years earlier. It reportedly remains unclear when the practice stopped.

CLOSING HIT-AND-RUN LOOPHOLE:

New York lawmakers are about to increase the penalties for leaving the scene of a fatal accident, instead of "rewarding" a drunken driver for leaving the scene, the way the current law does, reports The Buffalo News.

Under current state law, an intoxicated driver who stays at the scene of a fatal accident can face a vehicular-manslaughter charge, a Class D felony that can lead to seven years in prison. But that same person, by leaving the scene of the fatal accident and sobering up for a few hours, can avoid a charge of driving while intoxicated. That person then may be charged with leaving the scene of a fatal accident; that's a less serious Class E felony, which can lead to a four-year sentence - and often no more than one year.

"Current law is advantageous to those who are reckless and cold-blooded," State Sen. Mary Lou Rath, R-Williamsville, a sponsor, has said.

"The law protects someone who was intoxicated, left the scene and turned themselves in later," said Assembly Majority Leader Paul A. Tokasz, D-Cheektowaga. "That was not the intent of the law."

The Senate has already passed the measure, and the Assembly is expected to follow soon. Gov. George E. Pataki has agreed to sign it into law, according to the News.

CHANGE AHEAD FOR AUTO TERRITORIES:

New Jersey officials claim that caps removed from auto insurance rates in cities will not automatically increase costs for drivers and could help build a more competitive market but advocates for consumers are not so sure. The caps, signed into law in 1998, prohibit companies from charging city drivers more than 35 percent above an insurer's statewide average.

Agent John Dyke, chairman of the N.J. Auto Agents Alliance Inc. said he expects drivers in urban centers will eventually be hit with steep increases. "The caps were put in place 20 years ago and they were put in place for a reason," said Dyke. "Rates were soaring in the urban areas."

The state plans public meetings to obtain input for drawing up a new map for insurers to use in setting rates. Auto insurers could use their own rating maps, but those would need department approval. After the process is done, which could take at least a year, the caps will be lifted.

"Nobody is going to find themselves hung out there until the process is complete," said Donald Bryan, acting commissioner of the Banking and Insurance Department. "They (the rates) cannot be, and should not be, significantly disproportionate to what they are now."

But Dyke is worried. "Once the caps are removed, urban rates are going to go through the roof," he said, although the change may not happen right away.

SOLON CAN'T STOMACH OBESITY SUITS:

A state legislator wants to add Pennsylvania to the list of states that protect the food industry from lawsuits in which people blame restaurants and other food vendors for making them fat. Rep. Douglas Reichley, R-Lehigh, said he introduced his bill to protect the state's agriculture and food industries because he doesn't think they should be sued for "making food that tastes good."

In the last two years, 16 states have enacted laws prohibiting such obesity lawsuits; in New Mexico, lawmakers approved a "right-to-eat-enchiladas act." The U.S. House has also approved such legislation. Twenty-six other state legislatures, including those in Pennsylvania and New Jersey, are considering similar measures.

The flurry of legislation across the country -- dubbed by some as "cheeseburger bills" -- is partly a response to a high-profile suit against McDonald's filed by two New York City teenagers who said their burger-and-fries diet made them fat. Lower courts in New York dismissed the case twice, but a federal appeals court reinstated part of it earlier this year. A handful of similar suits have been thrown out since the New York case was filed in 2002 and there are no other known cases pending, legal experts said.

The bills provide food vendors and producers with immunity from civil suits based on weight gain or other health conditions caused by the long-term consumption of their food.

DEVELOPMENT EFFECT ON FLOODING:

A doctoral student says his study of two small streams in eastern Pennsylvania appears to back up what inundated residents have long suspected: flooding along small creeks and streams is worsened when land is paved over. Joshua Galster watched the Little Lehigh and Sacony creeks for months, taking rainfall measurements at certain points along each one. The streams are similar in almost every respect, but there is a lot more development along the Little Lehigh, than along the Sacony. Galster found that discharge increased at a much greater rate as he moved downstream along the Little Lehigh than along the Sacony. Precipitation, climate and geology can all play a role in discharge, but Galster, a doctoral candidate in environmental sciences at Lehigh University, said his research has largely accounted for those factors -- leaving development as a likely explanation for all that water.

Lehigh professor Bruce Hargreaves, one of Galster's advisers, said paved, or impervious, surfaces cause more runoff, which in turn contributes to stream discharge.

Bill Muehler, who works in the planning division of the Army Corps of Engineers, said that when at least 10 percent of a given land mass is developed, runoff into nearby streams is increased significantly.

Many waterlogged residents along the Delaware River blame their flooding problems on development. But researchers say the latest round of flooding -- which forced thousands to evacuate in New Jersey, New York and Pennsylvania and caused millions in property damage -- was more likely caused by other factors, including back-to-back soaking rainstorms, melting snow and oversaturated ground.

Development may have a greater effect on smaller streams and creeks such as the Little Lehigh, which flooded in September in the wake of Hurricane Ivan, Muehler said.

COURT ORDERS NFL TO PAY:

A federal judge in Baltimore has ordered the National Football League to pay the estate of Hall of Fame center Mike Webster disability benefits for head injuries caused by his football career. U.S. District Judge William Quarles Jr. granted the request by Webster's estate that the NFL Player Retirement Plan and the NFL Player Supplemental Disability Plan pay all benefits owed under the plan retroactive to March 1991, when Webster became totally and permanently disabled. Quarles did not set a dollar amount on the payment, but ordered the NFL and Webster's estate to determine the amount plus interest in 25 days. The suit had been filed in federal court in Baltimore, where the NFL plans are administered.

Webster, who played center for the Pittsburgh Steelers from 1974-89, died in September 2002 in Pittsburgh at age 50 after several appeals for benefits failed. He was diagnosed with brain damage resulting from the long-term head trauma he sustained during his NFL career. After leaving the NFL, Webster was tormented by debt, depression and poor health and was homeless at times. Webster applied for total and permanent disability benefits but, in 1999, the plans refused to grant him an active football disability pension.

ARSON SUSPECT ARRESTED:

Officials with the Bureau of Alcohol Tobacco and Firearms arrested a District of Columbia man who they suspect may be responsible for more than 40 fires in the Washington region. Authorities made the arrest in Prince George's County, Md., ATF spokesman Mike Campbell said. The serial arsonist is suspected in more than 40 fires set in D.C., Montgomery and Prince George's counties in Maryland, Alexandria, Va., and Fairfax County, Va. The fires began on March 8, 2003, in the district. One blaze -- on June 5, 2003 in Northeast Washington -- killed an elderly woman.