ST. PAUL TRAVELERS HIT WITH CLASS ACTION SUIT:
A law firm representing former St. Paul Travelers Cos. shareholders announced it has filed suit against the company relating to the $1.6 billion reserve charge the company took last month to bring St. Paul's accounting standards into line with Travelers'. The news initially sent shares down 89 cents, or 2.4 percent. When the company later reported second-quarter losses of $275 million, shares further dropped by $1.73 each, or 4.7 percent, to close at $34.75 on Aug. 5. The suit, filed by the Washington, D.C., firm of Cohen, Milstein, Hausfeld and Toll, alleged that statements filed with the SEC were misleading because they left the impression that the St. Paul Travelers transaction was a "merger of equals." The lawyers argue it was more of a "bailout" of St. Paul. The suit also alleged that executives with both firms knew before the merger was announced that a reserve charge would be necessary because of St. Paul's less conservative reserving philosophy.
CSISZAR NAMED PRESIDENT OF PCI:
The Board of Governors of the Property Casualty Insurers Association of America (PCI) has named South Carolina Director of Insurance and current president of the National Association of Insurance Commissioners (NAIC) Ernst N. Csiszar to serve as the association's next president and CEO. He will begin his new position Oct. 4, and has resigned from the South Carolina office he's held since 1999. He also resigned from the NAIC. Csiszar replaces retiring PCI President Jack Ramirez and Executive Vice President Rodger Lawson. Csiszar has been a leading figure in the movement to reform state regulation of insurance and has been dogged by criticisms of being "pro-industry" since he became insurance director. Csiszar has been a business school professor and had a long career as an investment banker. He was born in Romania and emigrated to Ontario, Canada, as a teenager.
STUDY: COMP PAYMENTS AGAIN OUTPACE WAGES:
Total payments for workers' compensation rose faster than wages in 2002 for the second year in a row, according to a new report released by the National Academy of Social Insurance (NASI). In 2002, total workers' comp benefits grew by 7.4 percent, for a total of $53.4 billion. Spending for medical care contributed to the increase in total payments. Medical spending rose by 9.4 percent, while cash payments to workers rose by just 5.8 percent. The disparity was due in large part to sluggish wage growth during the recession. The year 2002 saw the slowest growth in wages in more than a decade (0.4 percent) and a decline in the number of covered workers for the second year in a row. Benefits per $100 of wages grew by eight cents to $1.16 in 2002, from $1.08 in 2001, but were still lower than their peak in 1992 when benefits were $1.68 per $100 of wages. The report, Workers' Compensation: Benefits, Coverage, and Costs, 2002, is the seventh in a NASI series.
MORE AUTO INSUREDS TURNING TO WEB:
A small but growing group of customers are turning to the Internet rather than phone calls or office visits to communicate with their auto insurance provider, according to J.D. Power and Associates' 2004 National Auto Insurance Study. While only 7 percent of consumers are using the Internet to check on or update their auto insurance policies, their satisfaction is higher than those who use an automated phone system. In addition, their satisfaction is only slightly lower than those who talk directly with their insurance agent or representative. The study also finds that younger car insurance buyers are fueling the expansion of Internet insurance shopping. Forty-two percent of shoppers under 30 used the Internet to shop for auto insurance, compared to 29 percent of all shoppers.
ILL. HOMEOWNERS COMPLAINTS UP 16%:
While Illinois consumers filed fewer complaints overall about their insurance companies and HMOs in 2003, complaints regarding homeowners insurers were up for the second consecutive year, according to statistics released by the Illinois Department of Financial and Professional Regulation (IDFPR). In 2003, as in 2002, homeowner insurance complaints increased by 16 percent, from 1,462 in 2002 to 1,692 in 2003. The bulk of this increase occurred in complaints against companies' underwriting practices, which increased from 678 complaints in 2002 to 851 complaints in 2003, a 26 percent increase. Acting Insurance Director Deirdre Manna pinned the complaint increase on weather-related losses and insurers' "more selective underwriting criteria." Automobile complaints also witnessed a significant increase in 2003. The rise in auto complaints, from 3,885 in 2002 to 4,227 in 2003, represents a 9 percent increase. The majority of this increase was due to an 11 percent increase in the number of auto claim handling complaints. In contrast, the number of auto underwriting complaints actually witnessed a slight decline from 2002 to 2003.
PROGRESSIVE PILOTS DATA-LOGGING FOR MINN. DRIVERS:
Mayfield Village, Ohio-based vehicle insurer Progressive announced that it is offering a discount to 5,000 Minnesota drivers who agree to use a data-logging device in their cars. The discount—as much as 25 percent—is only available to customers who purchased their coverage directly from Progressive online or by phone. The device, dubbed TripSensor, measures how much, how fast and when drivers use their cars. Drivers receive an automatic 5 percent discount for each car in which they install the device—it plugs into a port—and could save up to 20 percent more. Progressive briefly experimented with a similar device in Texas but found the technology was not cost-effective, and some were critical of its privacy implications. The company also tested the program in Minnesota in early 2004 when it offered 250 drivers $25 to plug a data-logging device into their vehicles to collect information for 30 days, upload their data to Progressive and complete a survey about the experience. The device is about the size of a matchbox. The company did not say when or whether the discount would be expanded to other states or be available to the insurer's independent agent customers.
BLACK INSURANCE PROS TO CONVENE IN CHICAGO:
The Washington, D.C.-based National African-American Insurance Association (NAAIA) announced that its 2004 national conference will be held Sept. 16-18 at the Palmer House Hilton in Chicago. Hundreds of independent agents, company representatives and industry professionals are expected to attend. NAAIA was formed to empower black insurance professionals and increase participation in the insurance industry among blacks. The event will feature keynote speakers and panel discussions offering solutions to the challenges faced by minorities in the industry as well as companies looking to tap into the multicultural marketplace, according to NAAIA President Roosevelt Haywood III, a Hammond, Ind.-based independent agent. To register, call (866) 56-NAAIA or visit the NAAIA Web site.
