Kansas State's new lab on front lines of biosecurity

Randy Phebus, food microbiologist and professor of food safety and security at Kansas State University, didn't get much of a response when he first proposed the idea of a new lab that would aim to protect the nation's food supply.

He and other researchers made a presentation to the Senate in 1999 to make a case for why the country needed such a center.

"There was a lot of yawning that day by the panel of officials," he said.

But then came Sept. 11, 2001.

"And all of a sudden, there were a lot of people paying attention."

Now the new $50-million Biosecurity Research Institute, a full-size, agricultural and food safety biosecurity laboratory, is scheduled to open soon at Kansas State.

Researchers there, led by Phebus, will study pathogens considered possible terrorist weapons, including anthrax, and staphylococcus and botulinum toxins. The laboratory has a live animal holding area, a slaughter floor, meat processing equipment and the capability to bring in objects as large as an airplane cabin for contamination and de-contamination experiments.

The new lab is also Biosafety Level 3, the second-highest laboratory security level in the U.S. It is assigned to laboratories that use toxic agents that may cause serious or potentially lethal disease as a result of inhalation.

The highest level, Biosafety Level 4, is reserved for labs that handle the most dangerous agents, including fatal viruses without cures, such as ebola, and toxins for which there are no antidotes. Those products will not be handled at Kansas State.

The university's older food safety lab is a Level 2, which handles less dangerous agents and smaller amounts of contaminants.

"In the old lab, we might have a small vial of bacteria and be doing tests on small quantities of foods," Phebus said. "In here, we're talking about being able to spray the entire carcass of a cow with a pathogen such as anthrax or botulinum."

Much of the lab's work will be validating processes or technologies for the government, other research institutions or commercial food companies.

Among the initial substances studied in the lab will be the anthrax bacteria, toxins produced by the staphylococcus bacteria and the potent nerve toxins produced by the botulinum bacteria.

Researchers will also conduct extensive tests of the avian influenza virus, he said.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

State fraud bureaus long on arrests; Short on convictions

State fraud bureaus are delivering record results in combating swindles, but the positive figures may mask deeper weaknesses in some areas of performance, says a study of 47 state agencies by the Coalition Against Insurance Fraud.

"For the most part, fraud fighters are priming the pipelines with fresh cases that could create a new generation of convictions in the years ahead. Still, the lack of growth in convictions and cases opened is a cause for concern," says the report.

The full report is downloadable at www.InsuranceFraud.org.

Key measures of success--fraud convictions, cases opened, referrals received, cases sent for prosecution, and court-ordered restitution -- all rose between 2004 and 2005, the study says.

But on the downside, 18 fraud bureaus reported declines in convictions, even though fraud convictions rose 6.4 percent overall.

The average docket of new cases also has stayed flat since 2001, the coalition's study says. New cases increased 6.4 percent overall mainly because two new units started feeding cases into the pipeline.

Despite the clear warning signals, fraud bureaus are making progress and may be setting the stage for even-stronger results over the next several years, the coalition's study concludes.

Insurers and hotlines are sending fraud bureaus far more cases to investigate than ever -- a 19-percent spike over 2004.

Budgets also rose enough for fraud bureaus to hire 280 more investigators.

"Convictions -- the bottom line for fraud-fighting -- thus may spike in the next few years as growing investigations mature into full-blown prosecutions," says Dennis Jay, the coalition's executive director.

More specifically:

Prosecutions. While the total cases presented for prosecution--5,467--rose 6.5 percent, most of the growth appears to come from newer fraud bureaus as their early cases wind through the pipeline. Fraud bureaus with dedicated prosecutors, such as Florida, had the largest growth in cases.

Convictions. California continues to convict more insurance swindlers than any other state--one of every three convictions in the U.S. The Golden State's fraud bureau logged a record 1,546 convictions, well ahead of runnersup Florida (493), New York (450) and New Jersey (354).

Cases referred. Nearly three of four fraud units reported increases in receiving referrals of suspected frauds from insurers, hotlines and other sources. A half dozen fraud bureaus each received an increase of 50 percent or more. California reported the most referrals (27,687).

Cases opened. Fraud bureaus opened more than 29,000 investigations in 2005, a 6.5-percent increase. These units opened about one case for every four they receive. Each investigator handled an average of 84 cases in 2005.

Budgets. A total of $134 million was budgeted for 42 bureaus reporting that data in 2006. California is the richest at $36.8 million. New Jersey is second with $29.7 million. But nearly three of four budget dollars were spent by just five states. Overall, budgets averaged about 65 cents per state resident.

"Though fraud bureaus show encouraging gains on several important fronts, fraud fighters should be wary of too much celebration. The sobering truth is that America's fraud problem may be much larger than people realize," the report concludes.

Source: Coalition Against Insurance Fraud

Ind. Missing Computer Disc with Personal Insurance Info Found

A missing compact disc containing unprotected personal data for 75,000 Empire Blue Cross Blue Shield members was recovered four days after the insurer began warning customers about potential privacy violations.

The disc, which had been missing since January, was found March 14, Empire spokeswoman Lisa Greiner said. A statement from Empire did not say where the disc was found or whether patient confidentiality had been violated. Empire is a subsidiary of Indianapolis-based WellPoint Inc., which reported a separate security breach in Massachusetts last month.

In the latest incident, Health Data Management Systems had placed the disc in a UPS drop box in Chicago in January, but it never reached its Philadelphia destination, said Health Data spokeswoman Oonagh Holt.

UPS ships 15.6 million packages daily worldwide and less than 1 percent wind up missing, a UPS spokeswoman said.

Health Data normally sends confidential information via an encrypted e-mail or through a secure Web site, according to Holt. But her company and the contractor that was supposed to receive the disc, Magellan Behavioral Health Services, agreed to the unprotected format.

"That's not our policy, but in this situation both parties had agreed to do it that way," she said.

She referred questions on the agreement to Magellan. Representatives there did not return several phone calls seeking comment.

The disc contained information dating from 2003, including names, Social Security numbers and health plan identification numbers for mostly New York-area members, Greiner said.

Greiner said Empire sent the information to Health Data in an encrypted format and requires information sent by vendors to be protected as well.

Ohio-based Health Data cleans data and puts it in an easy-to-use format so people can review it, Holt said.

Magellan serves as a benefit program administrator for Empire.

Empire first learned about the missing disc Feb. 9 and started a review to determine which members were affected. It began sending letters to those members on Saturday.

Empire plans to offer free credit monitoring for a year to affected members, Greiner said.

In a separate incident, WellPoint notified nearly 200,000 members last month that personal information stored on back up computer tapes was stolen in October from the office of a Massachusetts vendor.

Greiner said there was no indication the WellPoint information was targeted. The insurer has received no reports of privacy violations from it.

That incident affected members in Ohio, Indiana, Kentucky and Virginia.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Jury awards $17 million in Missouri aftermarket parts lawsuit

American Family Mutual Insurance Co. was ordered to pay $17 million as part of a class-action lawsuit over aftermarket vehicle parts in Missouri.

Following a 3 1/2-week trial, a Jackson County jury found American Family wrongly paid auto damage claims based on the use of non-original replacement parts.

The verdict covers 315,000 Missouri customers who filed claims between May 1990 and December 2004, said plaintiffs' attorney Ted Pintar.

"Plaintiffs think this is a re-sounding victory for insurance customers throughout Missouri," Pintar said in a telephone interview. He said it was too soon to say how much class members would receive and how much of the award will go to attorneys' fees.

Ken Muth, a spokesman for Madison, Wis.-based American Family, said the company will appeal.

"We don't believe it's warranted by the laws of Missouri or the facts for that matter," he said. "We believe it hurts our customers because they would feel the impact of higher auto repair costs if the verdict is allowed to stand."

The case was filed in 2000 and certified as a national class action in 2001. But the Missouri Supreme Court in 2003 ruled that it could apply only to Missouri customers because other states differed in how they regulate insurance company's use of aftermarket parts.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Swiss Re sigma study details 2006 natural, man-made disasters

in its just released sigma study, "Natural catastrophes and man-made disasters in 2006", Swiss Re notes that "losses due to natural catastrophes and man-made disasters were below the long-term trend in 2006." Cat losses totaled around $48 billion, of which approximately $5.9 billion was covered by insurance.

Swiss Re also noted that "insurers have modified their catastrophe simulation models, where appropriate, to bring them into line with higher expected damage -- especially in the light of the record loss years 2004/05 and an increasingly volatile climate."

Although 2006 was a relatively benign year in economic terms, "natural catastrophes and man-made disasters claimed more than 31,000 human lives worldwide," according to the report. There were 349 catastrophes. However, "unlike in the two previous years, natural catastrophes affected mainly developing countries where property values are low," said Swiss Re, "resulting in comparatively light economic losses of $48 billion. Low insurance penetration in developing countries also meant that only one third of these economic losses in 2006 was actually covered by insurance."

The $15.9 billion insured loss figure produced the "third-lowest losses of the past 20 years -- only 1997 and 1988 were less expensive (after allowance for inflation)." The total for natural catastrophes was $11.8 billion and man-made disasters around $4 billion, mainly attributable to "the calm hurricane season in the U.S. and the absence of any highly damaging events in Europe."

Swiss Re doesn't see the 2006 results as a reversal of the trend towards higher losses over the past decades, which have been due "mainly to weather-related catastrophes." The "increasing concentration of property values and urban encroachment into highly-exposed regions" has also raised loss figures.

The trend is also linked to climate change. "Going forward, the effects of global warming are also likely to aggravate the loss situation," the report explained.

This is the first time the Swiss Re sigma report has included statistics from flood losses in the U.S. "The historical series as of 1970 have been revised accordingly," said the report. As a result of this change, the insured loss of Hurricane Katrina was revised upward to $66 billion from $49 billion without National Flood Insurance Program.

Washington warming to national disaster plan idea

Sen. Dodd says hurricane and flood disasters are not just a local issue, but a national one

A proposal for a national disaster plan to backup private hurricane and flood insurance markets appears to be gaining momentum in Washington.

This month, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, expressed his support for a national disaster program.

"It is clear that the government has got to step in," said Frank during a press conference where he was flanked by Rep. Ginny Brown-Waite, R-Fla., and Rep. Carol Maloney, D-N.Y., who are advocating a federal role.

Citing the federal government's role in providing a backstop for terrorism insurance, Frank said, "We believe that we have reached a similar point with regard to what happens with floods and hurricanes. ... I believe that some federal backstop is necessary."

U.S. Sen. Chris Dodd, D-Conn., chairman of the Senate Committee on Banking, Housing and Urban Affairs and a Democratic presidential candidate, is also interested. Dodd has said he will hold hearings on insurance issues on April 11 either in Washington or the New Orleans area.

"This is not a local issue. It's a national one," Dodd told The Associated Press. He noted that more than 60 percent of the country's population lives within 100 miles of the coast. "What happened here could happen in my state. It could happen to an awful lot of people in this country."

Industry watching closely

The insurance industry tends to agree that policymakers must address this issue but is watching closely how Congress responds.

The Property Casualty Insurers Association of America (PCI) is hoping lawmakers will respect the role of private insurers and come up with state-specific remedies that provide releif where it is most needed.

"Insurers, regulators, and consumers all want the same thing: a healthy and competitive insurance market in which consumers can choose a variety of coverage options from a variety of financially secure insurers," said June Holmes, PCI's interim CEO. "PCI is a strong believer in the power of market systems and signals to solve most problems. At the same time, we believe there are some risks in some areas that market solutions alone may not have the tools to address. Mega-catastrophe hurricane and earthquake risks fall into this category. Mega-catastrophe risks, if not addressed, can undermine the economies in these critical areas of the country and insurers need to work with state and federal policymakers to develop innovative solutions that promote increased insurance availability and responsible economic development."

Holmes said solutions should meet the unique needs in each state. She maintained that a one-size fits all approach is not likely to work.

"Conditions in Florida are unique from any other state," said Holmes. "Over 80 percent of the insured property in Florida is located along the Gulf and Atlantic Coasts and the total value of insured property there is nearly $2 trillion and growing. Florida is the most hurricane-prone state in the U.S., accounting for roughly half of the total U.S. annual aggregate storm losses. The solution to market disruptions in Louisiana, South Carolina, or Massachusetts will look much different from one crafted by Florida legislators. That's why we favor a state-by-state approach backed up at a very high level by federal liquidity protection."

R.I., Mass. safest while Wyo., Ark. deadliest states for truck crashes

Wyoming and Arkansas are the deadliest states for truck crashes, according to a safety group that has called for tougher federal regulation to reduce fatalities hovering above 100 a week nationwide for years.

The safest states for truck crashes are Rhode Island and Massachusetts, based on the number of fatalities per 100,000 residents in 2005, the most recent year with complete figures.

Seven years since its creation by Congress to improve the safety of trucks, the federal Motor Carrier Safety Administration "is still putting cargo over people," said Joan Claybrook, chair of Citizens for Reliable and Safe Highways. "This federal agency has failed miserably."

In 1999, when the agency was created, 5,380 people died in crashes with big trucks, Claybrook told a news conference by the Truck Safety Coalition. "That figure has barely budged." It was 5,212 in 2005. The agency's spokesman, Ian M. Grossman, was not available to respond.

Speakers at the event called on the agency to reduce the hours that truckers are allowed to drive without rest, increase safety inspections of big trucks, require on-board electronic monitors to ensure compliance with hours-of-service rules, and train drivers better.

The group said that in 2005 Wyoming had 6.09 deaths in big truck crashes per 100,000 residents, followed by Arkansas at 4.17, Oklahoma at 3.41, New Mexico at 3.27, Mississippi at 3.12, and West Virginia at 3.03.

The safest state, Rhode Island, had 0.09 fatalities per 100,000 residents, followed by Massachusetts at 0.38, Connecticut at 0.48, District of Columbia at 0.54, Hawaii at 0.71, Alaska at 0.75, New York at 0.76, New Hampshire at 0.84 and Delaware at 0.95.

Largest increases

The largest increases in truck fatality rates between 2004 and 2005 came in Oklahoma, South Carolina and Louisiana. The greatest drops were in Alabama, Indiana and South Dakota.

"We spend millions of dollars on food safety. Nearly 61 people die from E.coli (infections) each year, which is equivalent to the four-day death toll from truck crashes," said Jacqueline Gillan, vice president of Advocates for Highway and Auto Safety. "Anytime there is an E.coli outbreak, the federal government uses every resource available to stop this public health threat. Yet, unsafe big rigs kill and maim tens of thousands each year because truckers are pushed to drive long hours under unsafe conditions while the federal response has been silence and indifference."

Gillan and Claybrook criticized the motor carrier administration for increasing the number of hours a driver can operate a truck by 28 percent since 2003, up to as much as 88 hours over an eight-day tour of duty.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

A.M. Best says commercial P/C outlook stable

Pricing remains rational for now despite increasing competition

A.M. Best Co. has completed its assessment of the U.S. commercial market and revised the outlook to stable from negative for 2007. Although Best says there continues to be evidence of pricing deterioration, the level of deterioration thus far has been gradual as irrational pricing has yet to surface.

The outlook change also considers the level of rate adequacy in the sector, the record underwriting profits recorded in 2006 and an expectation of stabilized reserve development over the near term.

Best anticipates that there will be few rating upgrades or positive rating outlooks assigned in 2007 as most commercial lines companies will need to demonstrate their so-called underwriting discipline through the next soft market, which Best believes is inevitable.

Price discipline

Through 2006, Best believes that many U.S. commercial lines insurers were the recipients of much improved pricing, proving the old adage, "a rising tide lifts all boats." With the beginning of a new soft cycle now underway, however, many companies will be put to the test in proving their underwriting discipline, according to the rating organization.

Over the near term, Best says price discipline remains rational. It is over the longer term that Best is wary of price competition intensifying to a level where price discipline is compromised for the sake of growth.

In 2007, Best expects commercial lines premium to decline a modest 1 percent. While on the surface this level of deterioration is quite modest, it does not consider actual pricing changes such as terms and conditions, premium credits and exposure growth. Nevertheless, Best expects commercial lines to produce a net underwriting profit in 2007.

The outlook for the commercial lines market is intended to span over the next 12 to 36 months and is a prospective view that considers the effects of potential internal and external pressures, the sector's ability to optimize capital and its ability to preserve capital while maintaining balance sheet integrity over that period. While Best said it expects the inevitable lowering of the tide will happen again, thus far the commercial lines sector seems to be maintaining a rational level of price discipline while keeping the integrity of the balance sheet intact.

Navigating the cycle

Best believes a trend should not be measured by any single cycle -- hard or soft -- and believes rating upgrades will be few in number until companies can truly demonstrate their underwriting acumen through the soft as well as hard market cycles. Those companies that are able to navigate through these cycles will benefit from rating upgrades over time. On the other hand, those companies that have insufficient price monitoring tools, relaxed underwriting standards and are aggressive during soft markets are certain to face negative rating actions in the future.

Best said it will continue to take a "more rigorous approach in its due diligence when evaluating companies' capitalization, cycle management and risk management controls." Exposure to terrorism, its impact on capitalization and the uncertainty surrounding a long-term solution to this issue are key concerns.

The rating firm says that catastrophe models will continue to be "valuable tools for the quantification of risk but are not the only barometers."

As part of enterprise risk management and cycle management, companies will need to demonstrate their ability to monitor and measure risk and provide quality data and adequate underwriting and risk controls, the firm adds.

Three ways to bag more personal lines sales

The Post Office isn't the only way to deliver insurance marketing materials. Inserts, e-mails, Web site downloads, and hand delivery are some of the other options that are available. The first three methods are regularly employed; the last is often overlooked. Basically, it involves placing promotional materials in plastic bags and handing them to, or dropping them off for prospects. This style of delivery is common at trade shows, so why not employ it outside of the exhibit hall? It distinguishes the aggressive personal lines agency from other marketers who limit themselves to the more traditional avenues of distribution.

Here are a few possibilities.

Auto litter bags

These transitory trash receptacles serve as short-term insurance billboards. Once in use, they usually hang in full view of the driver for weeks before they are filled and discarded. The colorful plastic bags cost about 20 cents each, custom imprinted with your logo, agency information, and sales message. Print different bags with messages that promote auto, home, boat, and life insurance. Then add your prospect's first pieces of trash: a custom marketing memo that ties in with the bag's message, a free pen, and a business reply card. Prospects can then fill out the card with the pen and drop it off at the nearest mailbox, all without leaving the car.

• home
• boat
• life] insurance rates."

Distribution possibilities: Supply select business clients and commercial prospects with litter bags to give to their customers. Invite them to join in the promotion by inserting a coupon or marketing brochure of their own. Potential distribution sites: Gas station shops, car washes, repair/collision/muffler shops, and parking lots. Persuade restaurants with drive-up windows to hand out your bags by inviting them to add a copy of their take-out menu. To promote watercraft insurance, encourage marinas and dockside restaurants to distribute your boat litter bags as a free environmental service.

Plastic newspaper bags

Gone are the days when children on bicycles pedaled from door to door delivering carefully folded newspapers. Now they are rolled up and placed in weatherproof plastic bags and tossed from moving mini-vans. So check with your local daily or weekly's ad department to learn if you can provide these bags for subscribers who live on routes that match up with your desired demographic. If they agree (for a fee) supply them with imprinted bags from a vendor or purchase them directly through the paper, if they offer the service. Either way, the approach is most effective when you also advertise in the paper that's being delivered in your bag. Emblazon it with a message that guides the reader to your ad's location. Or, if you prefer to place an agency insert, use the bag to let readers know it's there. Either way, this bag-to-ad tie-in can favorably increase your response rate.

Door-hanger bags

These bags can contain any type of insurance solicitation that you want, such as an auto policy rate comparison graph or a coverage checklist for homeowners. You can even provide sample rates and facts on renters or condominium-unit owners policies. Apartments and condos are especially quick to deliver to by this method, due to the close proximity of their doors. Furthermore, many of these prospects don't carry any property insurance at all, mistakenly believing that the landlord or the master condo policy protects their personal belongings. Consider enclosing an agency certificate for a free gift along with your promo material as a reward for dropping by your office for a new or comparative quote.

Here's a different twist on this concept. Team up with other neighborhood businesses or your own commercial lines clients to put together specially imprinted "coupon bags" that are hung on the doorknobs of pre-selected prospects. You might even support your efforts with a postcard that tells people to look for a special discount coupon bag this week. Test out various themes such as automobile services containing discounts for auto parts, detailing, tires, etc. Home safety bags might include discount coupons for first aid kits, burglar alarms, etc. As for who physically hangs the bags on the doorknobs, hire your clerical staff, employee's kids, or a professional delivery firm.

Conclusion

Try thinking outside of the mailbox, inbox, and Web. Hand delivery may not be the most sophisticated marketing method there is, but it has a key advantage. You know that it won't be blocked by a spam filter or misdelivered by a letter carrier; as it is physically transported to its destination. However, it still comes with its own set of cautions. Always check first with your state insurance department and local government to see if the above types of promotional gifts and delivery activities are freely permitted in your marketing territory.

Alan Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the 1001 Agency Ideas book series and other popular P/C sales resources. He may be reached at 800-724-1435 or by e-mail shulman@agencyideas.com. Visit: www.agencyideas.com.