MARYLAND TARGETS URBAN AUTO RATES

Maryland, seeking to address the higher costs of insurance for urban drivers, recently passed legislation to require insurers to regularly review their rating territories and streamline the process for protesting rates.

But some other recommendations of a recent urban insurance report have yet to be adopted.

Maryland Insurance Commissioner R. Steven Orr issued the final report of the Automobile Insurance Task Force to Study Rates in Urban Areas, which was formed in 2005.

Certain recommendations of the task force will be implemented as a result of legislation passed during the 2006 session.

Insurance companies will now be required to affirmatively state in each rate filing that the territories they are using and the rates for each territory are actuarially justified. (HB1600 and SB965).

Also, a new law requires that rules for protesting rate increases be clarified and streamlined. (HB760 and SB 948)

The task force also offered other recommendations that were not addressed by legislators. These included allowing the Maryland Automobile Insurance Fund to accept installment payments from its insureds and permitting insurers to create and introduce pilot programs for urban drivers.

The task force also urged but legislators never acted on a bill making personal injury protection payments secondary to health insurance or other sources of recovery; reducing uninsured motorist benefits by the amount of compensation paid or payable from collateral sources; and reducing recoveries from third party liability insurers on third party liability claims or judgments by the amount of compensation paid or payable from collateral sources.

MORE N.Y. SELF-INSURED COMP TRUSTS CLOSE

Two more self-insured workers' compensation groups in New York will close over the next several months, bringing the year's tally to five, as officials continue to enforce stricter financial standards.

The Retail & Wholesale Industry Worker Compensation Self-Insurance Trust, with 23 active and 47 inactive member businesses, and the New York Healthcare Facilities Workers Compensation Self-Insurance Trust, with 71 active and 135 inactive members, will both terminate on July 31, 2006.

The funds are being closed because their assets do not cover at least 90 percent of their liabilities, as is required by the New York Board of Workers Compensation, according to Jon Sullivan, spokesman. They will still be responsible for outstanding claims.

In addition, the Manufacturing Self Insurance Trust Fund will voluntarily close on Aug. 31 rather than raise its rates.

The closing of these groups follows the shuttering in March of the Provider Agency Trust for Human Services and the Manufacturing Industry Workers Compensation Self-Insurance Trust.

The retail industry trust is managed by Consolidated Risk Services, which also managed the two closed in March. Hamilton Wharton manages the healthcare trust and N.Y. Compensation Managers Inc. handles the Manufacturing Self-Insurance Trust.

According to Sullivan, self-insured trusts have been under closer scrutiny since 2001.

"The new standards have caused some to reconsider their options," he said.

Employers in the trusts that are closing will have to seek new coverage, either through private carriers or the New York State Insurance Fund.

U.S. COMMERCIAL INSURERS EARN BIG

At the midpoint of 2006, many commercial insurers are generating exceptional earnings, according to an article published by Standard & Poor's Ratings Services. The article, which is titled "U.S. Commercial Lines Midyear 2006 Outlook: Sector Enjoying Exceptional Earnings," says these companies' balance sheets are in the best shape since the late 1990s, when the industry had its last pricing downturn. S&P is maintaining its stable outlook on the domestic commercial insurance segment for the rest of the year.

If current earnings and capitalization trends continue, more companies could be reviewed for revisions to positive outlooks before the end of this year. S&P expects few rating or outlook changes before then. Positive outlooks, however, do not necessarily mean positive rating actions, according to S&P. That, ultimately, would depend on whether the strong earnings trends last into 2007 and whether the industry implements a longer-term, or permanent, backstop for catastrophic terrorism events.

S&P remains concerned about whether and how fully commercial insurers have captured catastrophe exposure in their risk mitigation, capital planning, and pricing decisions. In the near term, the possible impact of a third severe hurricane season on primary commercial lines writers remains a concern as well.