JURY RULES FOR SWISS RE IN WTC CASE:
Swiss Re has received a favorable verdict more than 2 1/2 years after it filed a declaratory relief action against Silverstein Properties, the master leaseholder of the World Trade Center. On May 10, the federal jury ended its deliberations by accepting the giant reinsurer's position that the parties were bound by the language of the "WilProp Form," which defines the loss of the twin towers as one event, i.e. an "occurrence or series of occurrences." Swiss Re, the largest carrier in the group that insured the WTC, is thus liable for only one recovery of $877 million, roughly 25 percent of the total coverage. The jury decided in favor of eight other insurers in a decision reached the week before. The precise meaning of the Travelers form, however, is still at issue and will require a second trial. Three companies, Zurich American, Royal Indemnity (a unit of Royal & SunAlliance USA) and Twin City Fire Insurance were found by the jury to have accepted the terms of the Travelers form. They will join Travelers, Allianz as primary carrier and with SCOR as reinsurer, IRI, Tokyo Marine, Gulf and TIG as participants in the second trial to define their liability under the Travelers form, which does not have the restrictive language of the WilProp Form. A third trial could be necessary to determine the exact amount each carrier is responsible for. No date has been set for the trial, but it is expected to begin soon.
PLACING AUTO BUSINESS IN ILL. SURPLUS MARKET MAY GET EASIER:
A bill that would give agents the flexibility to place certain auto insurance business with surplus line carriers instead of the state's auto insurance plan passed the Illinois House Insurance Committee 14-0. The bill has already passed the Senate. A similar bill was vetoed last year by Democratic Gov. Rod Blagojevich last year, but the governor's concerns have been addressed, according to Surplus Lines Association of Illinois Executive Director David Ocasek. The governor was concerned that consumers would have less redress against insolvent surplus lines insurers, but he was assuaged by A.M. Best data showing that domestic surplus line carriers' insolvency rates are superior to domestically licensed insurers, according to Ocasek. The bill would allow agents to directly seek a surplus lines quote for commercial auto risk after three standard-market declinations. Currently, agents are forced to place the business with the Illinois Automobile Insurance Plan. For personal auto risks, if the limits and coverage being sought are available in the residual market, the business must be placed there. If not, an agent can place the business with a surplus line carrier. Again, this can only be done after three declinations from standard-market insurers. The "overwhelming majority" of business affected by the bill would be commercial auto, according to Ocasek.Chances of the bill's passage appear good.
DOI CONSOLIDATION, MED-MAL ALSO ON ILL. DOCKET:
Meanwhile, Blagojevich's proposal to consolidate the Illinois Department of Insurance (DOI) within the Department of Professional Regulation has received some opposition in the Illinois Senate. Democratic Sen. Miguel del Valle proposed a resolution to reject the governor's proposal, but it is unclear whether he will call for a vote during the Senate Executive Committee before the end of the session deadline, according to a briefing from the Professional Independent Insurance Agents of Illinois (PIIAI). The PIIAI briefing also reported that negotiations on what to do about the state's medical liability insurance crisis continue without clear resolution. The Democratic-controlled General Assembly has appeared to lean in the direction of rate regulation as the answer. The Illinois Trial Lawyers Association has called for using Web-based direct marketing instead of agents and brokers to distribute medical liability insurance, using the projected savings to reduce rates. The PIIAI briefing said it is unlikely the concept will gain any traction.
SEGAL SUPPORTERS START WEB SITE:
An anonymous group of supporters of embattled Chicago insurance broker Michael Segal has launched a Web site to bolster his tarnished image. Segal, the CEO of Near North National Group, is on trial on federal charges of embezzling more than $20 million over the course of 10 years from the premium fund trust account of his brokerage for extravagant personal expenses and contributions to powerful local politicians. The Web site, SegalSupport.com, is "designed to offer supporters of Michael Segal a place to voice their support as well as discuss legal issues related to the case," according to a news release. Additionally, the Web site will provide trial updates and links to related articles. The site's slogan, announced in a subsequent release, is "The American Dream on Trial." The site operators claim to have no connection to Segal but would not release any information about who they are. A spokeswoman for Segal said he has no connection to and does not condone the site. "Neither Mr. Segal nor Near North National Group have any direct or indirect knowledge of or connection to this Web site," Kurth said. "They do not condone its existence." Segal's trial in the U.S. Northern District Court of Illinois began April 19.
IOWA PASSES NCOIL MODEL, TORT LIMITS:
The Iowa General Assembly concluded its legislative session April 30 and passed three important laws affecting the property/casualty insurance industry, according to the American Insurance Association (AIA), a Washington, D.C.-based lobbying group. SF 2257 governs insurer use of credit information largely based on the National Conference of Insurance Legislators' (NCOIL) model law, which is effective in some form in 22 states, according to AIA. The new law details how credit information can be used in insurance underwriting and rating. For example, it cannot be used as the sole factor in denying or non-renewing a policy. Democratic Gov. Tom Vilsack signed the bill April 7 and the new law becomes effective Oct. 1, 2004. HF 2440, meanwhile, limits pain-and-suffering damage awards in medical malpractice cases to $250,000. Missouri and Wisconsin have already enacted similar changes, according to AIA.
