News Briefs

WASH. CLIENTS ELIGIBLE FOR $14M FROM MARSH: More than 15,000 Washington businesses, associations, individuals and other organizations reportedly qualify for nearly $14 million in restitution offered by the nation’s largest insurance brokerage firm to settle allegations of fraud and anti-competitive practices against the company. Washington Insurance Commissioner Mike Kreidler said that Marsh & McLennan Companies Inc., recently sent letters to more than 15,000 of its Washington clients eligible to share in the national settlement. He said that each client will have to decide for itself if the settlement offer is sufficient compensation for damages. “The Office of the Insurance Commissioner won’t offer case-by-case recommendations,” he said, “but our overall evaluation is that this is a fair settlement offer for Marsh’s Washington clients.” The settlement covers a period from Jan. 1, 2001 through Dec. 31, 2004. Settlement offers range from more than $952,000 to amounts of less than $20. Clients who accept the settlement must sign a release forfeiting the right to pursue any claims against Marsh related to the fraud and anti-competitive practices. Clients who elect not to accept the settlement can pursue legal remedies. The national settlement stems from an investigation and lawsuit in New York last fall, alleging that Marsh made improper payments, rigged bids and allowed other anti-competitive activities. Announcing the $850 million settlement in January, Marsh did not dispute the allegations. Earlier, the company discontinued the practice of receiving contingent compensation from insurance carriers. In the aftermath of the Marsh investigation, Kreidler issued a strongly worded technical assistance advisory, reminding Washington’s licensed brokers and insurance companies of their duties and responsibilities to insured parties. In addition, Kreidler’s office launched a separate inquiry targeting the top 10 brokerages in the state and the seven largest Washington-based insurance companies. That investigation continues with findings expected later this summer.

NEVADA LEGISLATURE WRAPS UP SESSION: The Nevada Legislature wrapped up its session recently, passing a number of insurance-related bills. Bills signed into law include: AB 137, signed into law on June 6, requires an insurance company to give a claimant a written notice when the insurer makes a claim payment of $500 or more to a person other then the claimant; AB 468, signed into law on May 18, specifies the cases that must be submitted to nonbinding arbitration in civil action lawsuits; and SB 175, signed into law on June 1, limits the fees that a towing yard may charge when a vehicle is placed into storage after an accident, and also authorizes insurers to receive accident reports from law enforcement agencies. The following bills are awaiting the governor’s signature: AB 254, which would increase the fines that may be imposed on a workers’ compensation insurer for delaying the payment of benefits to claimants and for other specified acts; AB 315, which would require an auto manufacturer to disclose the fact that the vehicle is equipped with an event recording device and restrict the dissemination of the data recorded by the event recording device; AB 338, the Division of Insurance’s omnibus bill that addresses a number of issues including captive insurers, medical discount plans, credit insurance, risk retention group fees and producer compensation; and AB 364, which would require a workers’ comp insurer that is paying compensation to an injured employee for a permanent total disability to provide the employee with an annual accounting of payments and would also require an insurer to reopen a workers’ comp claim to consider the payment for a permanent partial disability if specified conditions exist. In most cases, bills signed by the governor go into effect Oct. 1, 2005.

PCI PRAISES HAWAII GOVERNOR ON LICENSE BILL: The Property Casualty Insurers Association of America praised Gov. Linda Lingle for signing into law legislation that will establish a graduated driver’s license program designed to save lives and reduce accidents involving young, teen drivers. “Graduated licenses that place restrictions on young drivers have been successful in other states in reducing crashes, injuries and deaths,” said Sam Sorich, PCI’s regional vice president. The new law, which will go into effect Jan. 9, 2006, establishes a three-stage graduated driver licensing program for individuals under the age of 18. A graduated license holder will be prohibited from driving between 11 p.m. and 5 a.m. unless accompanied by a licensed parent or guardian. In addition, the licensee can transport just one non-family person under the age of 18 after 5 a.m. and before 11 p.m., unless a licensed guardian or parent is also in the vehicle. The driver and passengers also will be required to wear seat restraints. Violators of these provisions will have their licenses revoked for three months after the first offense and six months for a second offense. Sorich noted that a recent Insurance Institute for Highway Safety study found vehicle deaths involving 16-year-old drivers decreased 30 percent between 1993 and 2003 in states that enacted graduated drivers license programs.

PINNACOL ASSURANCE PRESIDENT PON TO RETIRE: Pinnacol Assurance, Colorado’s largest provider of workers’ compensation insurance, announced that President and CEO Gary Pon will retire this summer. Pon has served as the company’s CEO since 1986. During his 20-year tenure, Pon transformed Pinnacol from a beleaguered state agency with a half-billion dollar deficit into a thriving, entrepreneurial company with more than $300 million in surplus. As a result of this turnaround, the company distributed policyholder dividends in May for the first time in 23 years. Pon guided Pinnacol’s evolution from a corporate hierarchy to a team-based structure, aimed at making the workers’ comp claims process efficient for injured workers and cost-effective for Colorado businesses. He eliminated unnecessary management layers and was instrumental in developing the company’s Web-based policy and claims management system. Under Pon’s leadership, the company launched SelectNet, an exclusive network of more than 1,200 medical providers who specialize in treating workplace injuries. Service improvements have boosted Pinnacol’s overall customer-approval rating to an all-time high of 8.6 on a 10-point scale, according to a 2004 survey conducted by Snowberry Research. Another significant element of Pinnacol’s success was Pon’s strategy to contract with independent insurance agents. This approach boosted Pinnacol’s market share and pushed the company beyond its original charter as the “safety net” provider for Colorado businesses that can’t get workers’ comp insurance elsewhere. Pinnacol’s board of directors is conducting a search for Pon’s successor. Pon will remain in his role until a replacement is found and then work with the new CEO to ensure a smooth transition.

REPUBLIC WESTERN LIFTED FROM ADMINISTRATIVE SUPERVISION: Republic Western Insurance Company, a subsidiary of AMERCO, announced that the Arizona Department of Insurance has signed an order releasing the company from administrative supervision. Repwest was placed under supervision on May 20, 2003. Repwest has been domiciled in Arizona as a property/casualty insurance company since 1973. The Company employs 250 professionals and operates claims adjusting offices in seven states. Repwest has developed products for U-Haul self-move and storage customers. “Our focus going forward will remain on supporting the insurance needs of U-Haul and its customers and independent self-storage providers,” said Richard Amoroso, president of Republic Western Insurance Company. “It is through the collective hard work and dedication of our employees and the employees at AMERCO and U-Haul that Repwest is able to achieve our objectives.”

ACIC SUPPORTS CALIF. GRADUATED DRIVER’S LICENSE BILL: Legislation supported by the Association of California Insurance Companies to extend restrictions placed on graduated drivers licenses won the approval of the Senate Transportation and Housing Committee. The bill, AB 1474 by Assemblyman Bill Maze (R-Visalia), was approved on a 10-3 committee vote and will be considered next by the Senate Appropriations Committee. “California’s existing graduated driver’s license program has been successful in reducing crashes, injuries and death,” said Sam Sorich, president of ACIC. “ACIC supports AB 1474’s focus on two areas where there is a potential for improving the program results even more.” The bill would extend from six months to one year when graduated driver’s licensees are prohibited from transporting individuals under the age of 20 unless the driver is accompanied by a guardian or parent or a licensed driver 25 or older. In addition, AB 1474 would expand the restriction on driving between the hours of midnight and 5 a.m. to 11 p.m. and 5 a.m. The graduated license holder could drive between those hours if accompanied by a parent or guardian or a licensed driver age 25 or older. California’s existing program, enacted in 1997, allows for the issuance of a graduated driver’s license to young drivers between the ages of 16 and 18. Sorich noted that a recent Insurance Institute for Highway Safety study found vehicle deaths involving 16-year-old drivers decreased 30 percent between 1993 and 2003, during which 46 states-including California-enacted graduated drivers license programs.

COLO. GOVERNOR VETOES NAMIC-OPPOSED BILL: Colorado Gov. Bill Owens took a strong stand in support of tort reform and constitutional rights by vetoing a bill that would have allowed substitute service of process upon the Colorado Secretary of State, according to The National Association of Mutual Insurance Companies. Members of the insurance industry and other trade associations actively opposed this legislation as being inconsistent with tort reform, contrary to established constitutional law, and imprudent from a public policy standpoint. NAMIC lobbied and formally asked Gov. Owens to veto H.B. 1121, Concerning Substitute Service of Process upon the Secretary of State Due to Defendant’s Absence from the State in Civil Actions Arising from the Operation of a Motor Vehicle. “H.B. 1121 would have lead to a number of constitutional challenges to substitute service of process and would have created procedural problems at the trial court level that would have adversely impacted the legal system and those citizens that seek a timely redress of their civil claims in a court of law,” said State Affairs Manager Christian Rataj. The bill applied in any civil action against a Colorado resident or non-resident for damages or injuries sustained as the result of the operation of a motor vehicle if, after reasonable diligence and 120 days, the operator of the vehicle cannot be located.

AIA CALLS FOR BETTER COORDINATION OF INSURANCE DEPT. INVESTIGATIONS: The American Insurance Association urged state insurance regulators to change their chaotic and costly approach of individual states issuing investigative subpoenas whenever an insurer comes under scrutiny-a serious problem which is worsening. “While state insurance regulators have legal authority to obtain necessary information in their investigations, we do not believe it is necessary or desirable for the states to essentially tackle these issues on a fragmented, inconsistent basis,” wrote Craig A. Berrington, AIA senior vice president and general counsel, in a May 31 letter to Diane Koken, president of the National Association of Insurance Commissioners. Berrington suggested a better and more effective approach in his letter: authorize the regulator of the state where the insurer is domesticated to be the lead state. “Where multiple jurisdictions are involved because of the insurance company’s domiciliary structure, those jurisdictions should establish a lead state based on the facts of the individual case and the expertise in the affected states,” Berrington wrote. “The concept is already used successfully in other areas of regulation.” Berrington said that current procedures waste time, are needlessly expensive, and inconsistent with the NAIC’s quest for uniform state regulation. “We request that the NAIC take the initiative and act on a solution quickly, for the benefit of the public, regulators and insurers.”

Topics California Carriers Auto Legislation Agencies Claims Workers' Compensation Washington Colorado