Auto crashes up, workplace injuries down according to Neb. Safety Council

Deaths from accidents have been increasing in Nebraska, becoming the fourth overall leading cause of death, according to figures from the Nebraska Safety Council.

Accidental deaths had not ranked that high since 1998, but accounted for 741 Nebraska deaths in 2004, the last year data was available, according to the council.

"With one person dying from an accident every five minutes, unintentional injury is one of the most serious public health issues facing Nebraska and the entire country," said Laurie Kloster-boer, the council's executive director. "The economic and social impact is substantial for families, communities, employers and the health care system."

Car crashes cause more accidental deaths in Nebraska and the country than anything else. Speeding, distracted driving, driving impaired and not wearing seat belts contribute to the deaths, the council said.

The death rate from injuries at home and in community settings increased 30 percent since 1992. Death rates for workplace injuries went down 17 percent, according to the council.

"When it comes to safety, most Americans are more concerned about being the victim of a random act of violence than they are about being seriously injured in an accident," Klosterboer said. "The reality is that, while we are at greater risk of experiencing an accidental injury, we have greater control over managing those risks."

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Indiana insurer for mutual insurers, agents celebrates 20 years

The blueprint for the company was originally conceived by an ad hoc task force of senior executive officers from several mutual property/casualty insurance companies in response to the liability insurance crisis of the mid-1980s.

This month, NAMIC Insurance Co. Inc., or NAMICO, the specialty lines carrier built from that blueprint, is celebrating its 20th anniversary.

NAMICO was incorporated in Indiana on Nov. 21, 1986, and began operations on July 1, 1987, by offering directors and officers liability, insurance company professional liability, and agents' errors and omissions insurance. The carrier insures insurer members of the National Association of Mutual Insurance Companies and their agents,

NAMIC and a majority of its members were responsible for the company's capitalization. A "significant number of members" also provided reinsurance support through a pooling arrangement, which still exists today and has proven to be a stabilizing influence on NAMICO's premiums, according to Jerry Wollam, president of NAMICO.

Chuck Chamness, president of NAMIC, notes that although NAMICO is not licensed in all states, a working relationship with Scottsdale Insurance Co. and the use of counter reinsurance agreements allows the company to manage a program that attracts targeted business from across the United States.

Today, officials say the program writes D&O and E&O coverage and provides risk-management expertise in 42 states to more than 700 mutual property/casualty insurance companies and more than 4,000 property/casualty insurance agents.

NAMICO is rated "A" or "Excellent," by the A.M. Best Co. Since its inception, surplus has grown from $3.7 million in 1987 to $20 million in 2007. The company employs a staff of 14.

Source: NAMIC

Half million more taxpayers' info on stolen computer device in Ohio

The names and Social Security numbers of a half million more taxpayers were on a computer storage device stolen from a state intern last month, more than tripling the number previously reported, Gov. Ted Strickland said recently.

Information on 561,126 additional taxpayers with uncashed state income tax refund checks has been located in the state's continuing review of the device. That brings the total number of those taxpayers with information on the device to more than 786,000, Strickland said.

However, Strickland continued to emphasize that there is no evidence the information has been accessed, following its theft June 10 from a state intern's unlocked car.

No ID theft cases have been reported and extracting the data on the device would require a high degree of knowledge and specialized equipment, he said.

The theft at an apartment complex in suburban Hilliard prompted Strickland to hire an independent computer security expert to determine whether someone would be able to access the device's data.

In addition to the taxpayer information, it contained the names and Social Security numbers of all 64,000 state employees and of lottery winners who have yet to cash winning tickets.

The device also held the names and case numbers of the state's 84,000 welfare recipients.

Strickland said a grand total of affected people has not yet been calculated because some people's names could be duplicated among the various groups whose information was included on the device.

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Wis. Supreme Court nixes class-action lawsuit against Harley-Davidson

The Wisconsin Supreme Court refused to reopen a class-action lawsuit that accuses Harley-Davidson Inc. of failing to disclose a defect in two engine types sold in 1999 and 2000.

In a 4-3 vote, the court upheld a circuit court decision refusing to reopen and amend a 2001 case brought by Steven Tietsworth, of California. Tietsworth claimed the Milwaukee-based motorcycle maker knew or should have known the engine design for some motorcycles made in 1999 and early 2000 was inherently defective. The flaw, he claimed, diminished the value of his motorcycle.

A court of appeals had overruled the circuit court in December 2005, saying Tietsworth's case could be amended to include warranty and contract claims. The state Supreme Court ruled that the circuit court has no authority to reopen the amended case.

Harley-Davidson spokesman Bob Klein said the company would not comment until it had reviewed the decision. Tiets-worth's lawyer, Ted Warshafsky, also declined to comment before reading the decision.

Harley-Davidson sent letters in January 2001 to Tietsworth and 140,000 other owners of 1999 and early 2000 models built with the Twin Cam 88 and Twin Cam 88B engines. The company told owners the rear cam bearing in some bikes had failed but would probably not cause engine failure. Harley extended its warranty for the part and made cam repair kits available for $495.

Tietsworth's complaint, which later involved four other owners, said the problem increased riders' safety risks and decreased the value of their Harleys.

A circuit court judge threw out the original case, saying Tietsworth and others failed to show actual damages or economic loss, and its decision was eventually upheld by the state Supreme Court.

In 2004, Tietsworth asked a court to amend his original complaint to include contract and warranty claims. The Supreme Court decision ended that effort.

Harley shares rose 72 cents, or 1.17 percent, to $62.14 after the court decision.

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

Industry supports terror bill but not all agree with NBCR mandate

At a congressional hearing in Washington, D.C. last month, insurance industry group representatives generally spoke in favor of a bill that would extend the federal backstop for terrorism insurance coverage for another 10 years. The Bush administration opposed this extension of the federal program, arguing no program would be better than a bad one, while insurers themselves split over a new provision mandating nuclear-biological-chemical-radioactive (NBCR) coverage.

Two Massachusetts Democrats -- U.S. Rep. Mike Capuano and the Chairman of the House Financial Services Committee Barney Frank -- introduced HR 2761, the Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA). Supporters of the bill, which extends the Terrorism Risk Insurance Act (TRIA) for 10 years, contend it will spur the development of a private market for terrorism risk insurance.

TRIREA would extend TRIA for 10 years with current co-payments and deductibles for conventional terrorism acts as well as expand TRIA's "make available" requirement to include NBCR coverage.

It would also change the law's definition of terrorism to include acts of domestic terrorism; set the program trigger at $50 million; add group life insurance to the lines of insurance for which terrorism coverage must be made available; decrease deductibles and triggers for areas previously impacted by a significant terrorist attack; and continue to require studies of the development of a private market for terrorism risk insurance.

Not all industry representatives agreed on all aspects of the bill, however, notably the requirement that insurers make NBCR coverage available on the same terms and conditions as "conventional terrorism" coverage.

Agents back the plan
Still, two leading insurance agent trade groups, the National Association of Professional Insurance Agents and the Independent Insurance Agents and Brokers of America, both support a long-term extension of the terrorism insurance act and both see the need to address NBCR coverage in the bill.

Sharon Emek, a managing director and partner at the CBS Coverage Group, a regional agency with locations in New York City, Plainview, Saratoga and West Hampton Beach, N.Y., spoke to the subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises on behalf of the IIABA.

"The current public-private partnership created by TRIA, and extended in TRIEA, has worked well and generally as intended, allowing businesses across America to continue operating and growing, and preserving jobs in the process," Emek stated in her testimony.

Emek said IIABA believes that the 10 year extension of the federal backstop is a "reasonable length given current market capacity."

Emek also pointed out that even though NBCR losses would stem from "the most catastrophic types of terrorist attacks," currently there is little coverage available in the marketplace for such events, other than in statutorily mandated lines such as workers' compensation. There is essentially no reinsurance capacity for NBCR losses, she added.

No PIA representative spoke to the subcommittee, but on its Web site, PIA expresses its support for "a long-term mechanism for terrorism coverage to ensure the viability of the existing domestic insurance market."

The Bush administration, through Treasury Assistant Secretary for Financial Institutions David G. Nason, opposed HR 2761. Nasson told the subcommittee that TRIA should be phased out in order to stimulate private sector participation in providing terrorism risk coverage.

Nason said the Treasury would support an extension only if it assured that the program remain temporary and short-term; private sector retentions are increased; and there is no expansion of the program.

Without those "critical elements," the Treasury department would be unwilling to support an extension of the Act. "In Treasury's view, from both a market and economic perspective, it would be better to have no TRIA than a bad TRIA," Nason stated.

I.I.I. weighs in
But insurers, even though some don't like all the provisions, argued that the extension is needed for the economy and government to function properly.

"Implementation of a long-term terrorism risk insurance program is an essential component of the nation's effort to protect the financial homeland," said Robert Hartwig, president and chief economist of the Insurance Information Institute in a statement.

Hartwig said the program's benefits will be felt immediately across all economic segments but stopped short of praising all elements of the bill.

Hartwig said the provision that compels insurers to cover NBCR risks poses a concern. He pointed out that private markets "have little to no experience insuring against these risks."

Hartwig was not alone in questioning the NBCR mandate.

Warren Heck, chairman and CEO of Greater New York Mutual Insurance Co., testifying on behalf of the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America, favored the long-term extension of TRIA but said the bill should not mandate that insurers provide NBCR coverage.

"Attacks utilizing weapons of mass destruction (NBCR) are the ultimate in uninsurable events and they can have qualitatively different consequences than non-NBCR attacks," Heck told the subcommittee.

The American Insurance Association (AIA), on the other hand, praised the NBCR provisions. AIA President Marc Racicot, said, "Creating a long-term program which addresses the NBCR and conventional terrorism risks brings much needed stability and certainty to the market, without which long-term investment, economic development, and growth are clearly and substantially threatened."

FBI data mining targets include insurance fraud suspects

The FBI is gathering and sorting information about Americans to help search for potential terrorists, insurance cheats and crooked pharmacists, according to a government report.

Records about identity thefts, real estate transactions, motor vehicle accidents and complaints about Internet drug companies are being searched for common threads to aid law enforcement officials, the Justice Department said in a report to Congress on the agency's data-mining practices.

In addition, the report disclosed government plans to build a new database to assess the risk posed by people identified as potential or suspected terrorists.

The chairman of the Senate committee that oversees the Justice Department said the database was "ripe for abuse." The American Civil Liberties Union immediately derided the quality of the information that could be used to score someone as a terror threat.

The report, sent to Congress this month, marked the department's first public detailing of six of its data-mining tools, which look for patterns to catch criminals. The disclosure was required by lawmakers when they renewed the USA Patriot Act in 2005. It comes as the Justice Department faces sharp criticism from Congress and civil liberties advocates for violating peoples' privacy rights in terror and spy investigations.

Justice spokesman Dean Boyd said the databases are strictly regulated to protect privacy rights and civil liberties.

"Each of these initiatives is extremely valuable for investigators, allowing them to analyze and process lawfully acquired information more effectively in order to detect potential criminal activity and focus resources appropriately," Boyd said in a statement.

All but one of the databases -- the one to track terrorists -- have been up and running for several years, the report showed. The lone exception is the System to Assess Risk, or STAR, program to rate the threat posed by people already identified as suspected terrorists or named on terror watch lists.

The five other databases detailed in the report include:

• An identity theft intelligence program, used since 2003, to examine and analyze consumer complaints to identify major identity theft rings in a given geographic area.


• A health care fraud system that looks at billing records in government and private insurance claims databases to identify fraud or over-billing by health care providers. It also has been running since 2003.


• A database created in 2005 that looks at consumer complaints to the Food and Drug Administration to identify larger trends about fraud by Internet pharmacies.


• A housing fraud program that analyzes public data on real estate transactions to identify fraudulent housing purchases, including property flipping. The database was built in 1999.


• A system that compares National Insurance Crime Bureau information against other data to crack down on fake car accident insurance claims and
  identify major offenders.

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

GAO: Identity theft cases limited compared to number of security breaches

While the Government Accountability Office fell short of offering recommendations, it released a report stating that many entities in the private, public, and government sectors have reported the loss or theft of sensitive personal information in recent years.

A rapidly developing crisis, GAO says data breaches are frequent but the full extent of the problem is unknown, though evidence of resulting identity theft is "limited."

The law of averages dictates that as the number of data breaches increases, so will the incidences of follow-on identity theft. The GAO report released last month said more than 570 data breaches were reported in the news media from January 2005 through December 2006, according to lists maintained by private groups that track reports of breaches.

Account fraud (such as misuse of credit card numbers) or unauthorized establishments of new accounts (such as opening a credit card in someone else's name) are common examples of identity theft resulting from data breaches.

While many states have enacted laws requiring entities that experience breaches to notify affected individuals, Congress is considering legislation that would establish a national breach notification requirement as well.

GAO analyzed 24 large data breaches, and gathered information from federal and state government agencies, researchers and consumer advocates. The Office examined the incidence and circumstances of breaches, the occurrence of identity theft resulting from breaches and issues related to breach notification requirements.

These incidents varied significantly in size and occurred across a wide range of entities, including federal, state, and local government agencies; retailers; financial institutions; colleges and universities; and medical facilities.

The extent to which data breaches have resulted in identity theft is not well known, largely because of the difficulty of determining the source of the data used to commit identity theft. However, available data and interviews with researchers, law enforcement officials, and industry representatives indicated that most breaches have not resulted in detected incidents of identity theft, particularly the unauthorized creation of new accounts.

In reviewing the 24 breaches reported in the media from January 2000 through June 2005, GAO found that three included evidence of resulting fraud on existing accounts and one included evidence of unauthorized creation of new accounts. For 18 of the breaches, no clear evidence had been uncovered linking them to identity theft; and for the remaining two, there was not sufficient information to make a determination.

P/C industry net income, overall profitability slips

The U.S. property/casualty insurance industry's net income after taxes dipped to $15.8 billion in first-quarter 2007 from $16.7 billion in first-quarter 2006 and $17.7 billion in first-quarter 2005, according to industry analysts at the ISO and the Property Casualty Insurers Association of America (PCI). Reflecting the declines in net income, the property/casualty industry's annualized rate of return on average policyholders' surplus (statutory net worth) dropped to 12.9 percent in first-quarter 2007 from 15.5 percent in first-quarter 2006 and 17.9 percent in first-quarter 2005.

"Insurers' 12.9 percent rate of return for first-quarter 2007 was 1.8 percentage points above insurers' 11.1 percent average first-quarter rate of return since the start of ISO's quarterly data in 1986, but it fell short of the rates of return typically earned by firms in other industries," said Michael R. Murray, ISO's assistant vice president for financial analysis."

Premium growth slows
Contributing to the $0.9 billion, or 5.5 percent, decline in net income in first-quarter 2007, the industry's net gain on underwriting receded to $8.3 billion in the first three months of this year from $8.4 billion in the first three months of 2006, as net written premium growth versus year-ago levels slowed to 0.8 percent in first-quarter 2007 from 1.8 percent in first-quarter 2006.

Also contributing to the decline in net income, the industry's federal income taxes rose to $5.4 billion in first-quarter 2007 from $5.3 billion in first-quarter 2006. But much of the decline in first-quarter net income reflects a special transaction in which one U.S. insurer assumed $9.3 billion in liabilities from a foreign entity in exchange for considerations valued at $7.1 billion.

"Seasonal patterns in the data also suggest that insurers' rate of return will decline later this year," said Genio Staranczak, PCI's chief economist.

"Insurers' profitability in the first quarter usually exceeds their profitability later in the year, in part because of the timing of weather-related catastrophe losses. The Atlantic hurricane season runs from June 1 to Nov. 30."

The figures are consolidated estimates for all private property/casualty insurers based on reports accounting for at least 96 percent of all business written by private U.S. P/C insurers.

Net written premiums grew $0.9 billion to $111.4 billion in first-quarter 2007 from $110.5 billion in first-quarter 2006, but written premium growth slowed to 0.8 percent in the first quarter of this year from 1.8 percent in the first quarter of last year, the analysts reported.

"Similarly, net earned premiums rose $2 billion to $108.6 billion in first-quarter 2007 from $106.6 billion in first-quarter 2006, as earned premium growth slowed to 1.9 percent during the first three months of 2007 from 2.7 percent during the first three months of 2006," analysts said.

"At 0.8 percent in first-quarter 2007, net written premium growth was the weakest for any first quarter since 1992," said Murray. "Market surveys and U.S. government data indicate that escalating competition and declines in the price of insurance are cutting into premium growth."

"In first-quarter 2007, net written premiums were up 0.8 percent from a year ago, while the nation's gross domestic product (GDP), which takes into account both inflation and real growth, increased 4.6 percent during the same time frame," Staranczak said. "That premiums grew only about one-sixth as much as GDP is an indication that intensifying competition is leading to lower prices for most coverages in most locations, though property insurance remains scarce and expensive in some coastal areas."

Loss expenses increase
Overall loss and loss adjustment expenses increased $1.1 billion, or 1.6 percent, to $70.4 billion in first-quarter 2007 from $69.3 billion in first-quarter 2006, the analysts reported. Non-catastrophe loss and loss adjustment expenses rose $1.3 billion, or 1.9 percent, to $69.1 billion in first-quarter 2007 from $67.8 billion in first-quarter 2006. But according to ISO's Property Claim Services (PCS) unit, direct insured losses from catastrophes dropped to $1.3 billion in the first three months of 2007 from $1.5 billion in the corresponding portion of 2006.

Other underwriting expenses -- primarily acquisition expenses, other expenses associated with underwriting, pricing and servicing insurance policies, and premium taxes -- rose $1.1 billion, or 3.8 percent, to $29.6 billion in first-quarter 2007 from $28.6 billion in first-quarter 2006.

Combined ratio
The combined ratio rose to 91.7 percent in first-quarter 2007 from 91.1 percent in first-quarter 2006, with the change in the combined ratio reflecting imbalances between the growth in premiums and the costs of providing insurance.

Bermuda shorted as more U.S. captives form onshore, Aon reports

Bermuda's reign as the undisputed global leader among captive domiciles is being challenged by U.S. companies that are increasingly leaning toward onshore domiciles for their captive insurance companies.

That is among the findings of Aon's new Global 1500 (G1500) research report on captives and their owners.

The latest Aon report indicates that the gap between onshore and offshore captive growth in the Americas has narrowed. While Bermuda remains the domicile of choice for the G1500 (with over a quarter of all G1500 captives), Bermuda's biggest growth as a captive domicile was between 1995 and 2000. Between 2000 and 2005 Bermuda grew by just 21 percent, whereas Vermont grew by 60 percent.

Large U.S. companies clearly more often favor establishing an onshore U.S. captive -- about two-thirds of U.S. parented captives established in the last five years have been based in U.S. onshore domiciles.

Among the domiciles within the U.S., Vermont has been and continues to be the location of choice. The Green Mountain State has more than four times the number of G1500 captives as all the other U.S. onshore domiciles combined. Hawaii is the next most popular with 20 captives, followed by New York, Arizona and South Carolina.

Findings show that U.S. companies account for more than a third of the G1500 and account for nearly half of all captives owned. Of the ten G1500 companies with five or more captives, seven have their parent companies in the United States.

The research also highlights that contrary to popular belief, the captive market remains underdeveloped with more than half (53 percent) of the current global 1500 companies not currently owning a captive. The outcome is that insurance buyers within the world's largest companies are failing to achieve a better quality of cover as well as cost savings of typically 10 percent to 15 percent, through economies of scale, efficient use of capital, leverage and more efficient use of senior management time.

Sectors missing an opportunity include manufacturing and communications, where 55 percent and 62 percent respectively do not have captives. Even sectors that have greater take-up still show room for growth. For example, 44 percent of the largest financial and insurance companies and 39 percent of mining companies still do not use captives.

"G1500 companies currently have 1,061 captives, as the benefits of captives become clear, I believe that this figure will rise to at least 1,200 by the year 2010," said Andrew Tunnicliffe, group managing director, Business Development, Aon Global Risk Consulting.

Supreme Court raises bar for investors bringing securities fraud suits

The U.S. Supreme Court last month imposed a strict standard that investors must meet to keep alive their lawsuits alleging securities fraud.

In an 8-1 decision, the justices said that courts must weigh possible innocent explanations for defendants' conduct at the very start of a securities fraud case. Doing so can lead to early dismissal of investors' lawsuits.

The ruling came in a shareholders suit against high-tech company Tellabs Inc.

The firm misled investors by engaging in a scheme to inflate Tellabs' stock price from December 2000 to June 2001, according to the lawsuit. It said the company's CEO provided false assurances of robust demand for the company's products.

A lawsuit will survive only if the facts alleged in it are "cogent and compelling" in pointing to an intent to deceive, wrote Ruth Bader Ginsburg. Those factual allegations must be at least as compelling as "any opposing inference" suggesting innocence, she added.

The Supreme Court decision comes as the corporate world pushes regulators to roll back some safeguards put in place after the accounting scandals that brought down Enron Corp. and WorldCom Inc.

The business community says the Tellabs case is the kind of meritless claim that Congress intended to prohibit when it reformed securities law 12 years ago.

Under the 1995 reforms, a securities fraud complaint must allege facts giving rise to a "strong inference" that defendants acted with an intent to deceive investors.

The 7th U.S. Circuit Court of Appeals had ruled against Tellabs, saying the complaint should survive if a reasonable person could infer from the allegations that defendants' conduct was intentionally deceptive.

"That one-sided approach, we hold, was erroneous," Ginsburg said in court.

The justices sent the case back so that the lower courts can assess whether the lawsuit should survive.

The court dealt another setback to investors when it sided with Wall Street investment banks that allegedly colluded to drive up the price of 900 technology stocks in the late 1990s. Shareholders subsequently lost billions when the dot-com bubble burst.

Next fall, the court will consider a case that could make it impossible for Enron shareholders to recover money from Wall Street institutions that allegedly assisted the energy company in disguising its financial problems.

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

Treasury chief Paulson vows review of U.S. financial services regulation

The Bush administration plans to review the U.S. government's regulatory system for financial institutions with the goal of making changes to better reflect modern markets.

Treasury Secretary Henry Paulson said the review, which will be conducted by officials at his department, will examine the system for all companies that provide financial services. The blueprint for recommended changes will be released early next year, he said.

"To maintain our capital markets' leadership, we need a modern regulatory structure complemented by market leaders embracing best practices," Paulson said in a statement announcing the review. "The steps we are announcing today will help to strengthen our global competitiveness."

Paulson did not spell out any proposed changes but other officials said that Treasury would look into consolidating overlapping regulatory functions. Previously, the Clinton administration considered merging the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

Paulson, the head of investment giant Goldman Sachs before taking the Treasury post a year ago, said in a speech last November that he planned an extensive review of the regulations governing America's financial markets to make sure they were not harming the country's ability to compete in the global economy.

He held a conference on capital markets in March where billionaire investor Warren Buffett, former Federal Reserve Chairman Alan Greenspan and other titans of U.S. finance got together to discuss whether an overregulated financial system is putting the country at a disadvantage in attracting foreign investment.

Paulson said that the regulatory review now being conducted was part of a second stage of his capital markets competitiveness plan. The goal will be to recommend changes that will improve oversight, increase efficiency, reduce overlap and support the ability of regulators to adapt to constantly changing investment strategies.

He said he would also encourage the development of best practices for asset managers and investors in hedge funds and work to modernize the Treasury Department's management of the government's finances and borrowing procedures.

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