News Briefs

ALABAMA

Vesta Reinsurance To Cover Wilma

Vesta Insurance of Birmingham, issued a statement saying it has complete reinsurance coverage for Hur-ricane Wilma claims in Florida.

“As previously disclosed, Vesta’s losses from Hurricanes Katrina and Rita did not reach the company’s catastrophe excess of loss reinsurance program threshold. As previously disclosed in a Form 8-K filed July 7, 2005, Vesta and its subsidiary insurance companies including Florida Select, have excess of loss catastrophe reinsurance in effect, including the Florida Hurricane Catastrophe Fund, to cover gross losses in excess of $20.0 million up to approximately $218.0 million in Florida,” the statement said.

“Additionally, the company has a 50 percent quota share reinsurance agreement in place. As a result, in the event that Hurricane Wilma impacts Florida, Vesta’s maximum potential net loss exposure would be approximately $10.0 million plus any additional reinstatement premiums which will depend on the size of the gross loss.”

Wilma Victims Told to Use Caution

Attorney General Charlie Crist has advised Florid-ians to use extra caution when hiring workers to help clean up the damage caused by Hurricane Wilma. He warned victims of water damage and downed trees to be alert for contractors who offer water removal or cleanup services for homes and property.

Residents in the southern portions of Florida, who are facing significant cleanup, were cautioned to weed out legitimate contractors mixed in with those seeking to profit at the expense of storm victims. Crist cautioned that consumers face the risk that cleanup services will be offered by unlicensed contractors at unconscionably high prices, or that so-called “contractors” will accept down payments but will not do the work at all.

Amicus Brief on Valued Policy Law

The National Association of Mutual Insurance Companies has joined with State Farm Florida Insurance Company to file an amicus curiae brief in a case involving Florida’s valued policy law.

“We filed a friend of the court brief because our member companies believe that the valued policy law cannot create liability for an insurer for losses caused by an excluded peril,” NAMIC Regulatory Affairs Counsel Marsha Harrison said.

Citizens Property Insurance Corporation v. Scylla Properties, et al., supports the appellant Citizens’ position that the trial court’s rulings on issues involving Florida’s valued policy law were incorrect. The brief was filed Sept. 30 in the District Court of Appeal for the First District of Florida.

The Citizens case, a class action law suit, arose from property damage caused in Florida by Hurricane Ivan in 2004. It was undisputed that, as a result of the hurricane, the plaintiffs’ structure was rendered a total loss by a combination of wind and flood damage. The insurer, Citizens, took the position that its liability was limited only to that portion of damage caused by wind since flood damage was excluded by its policy.

Nationwide Auditing Hurricane Claims

Nationwide Insurance has reached an agreement with state regulators to audit its claims from the 2004 hurricane season and correct any underpayments. The state Office of Insurance Regulation has announced that under the agreement Nationwide will also pay $250,000 in administrative costs for an investigation by the office into Nationwide’s claims.

Nationwide has also agreed to review its adjusting procedures and repay money when multiple deductibles were incorrectly applied if the policy holder wasn’t already reimbursed through the state’s program for those hit with multiple deductibles.

Gov. Bush Supports Disaster Program

Gov. Jeb Bush expressed support for federal legislation to create a nationwide insurance program for disasters during a hurricane preparedness conference in Tampa.

Bush told said he would back a Congressional bill that will create an insurance fund, but said that for states to participate they must strengthen their building codes and improve their emergency management agencies.

McCarty Won’t Approve Allstate Request

A decision not to approve a rate request by Allstate Floridian Insurance Company and Allstate Floridian Indemnity Company was announced by Florida Insurance Commis-sioner Kevin McCarty.

McCarty’s decision was applauded by Tom Gallagher, Florida CFO, who said an independent review by the Consumer Advocate’s Office in August revealed that the companies’ rate requests were unjustified.

“This is great news for Allstate’s policyholders,” Gallagher said. “We will continue to closely scrutinize rate requests and demand accountability.”

GEORGIA

NAMIC Applauds Associations’ Role in Shaping Public Policy

The importance of state insurance associations in shaping public policy was acknowledged by Charles M. Chamness, president of the National Association of Mutual Insurance Companies in an address in Savannah, Ga., to the State Insurance Trade Associations, a large group of state insurance trade executives.

Chamness told the group that state trade executives’ work makes them invaluable
partners in the achievement of industry objectives.

“We know this: state trade associations form the foundation of public policy advocacy in our industry; partnerships with you are the best approach for NAMIC to provide the most effective state government advocacy service to our members,” Chamness said.

He cited the importance of working on issues of common importance and that his staff is charged with helping “develop a unified strategy to address issues critical to all our members.”

As evidence of the productive partnerships between NAMIC and state trade associations, he pointed to successes in Indiana, Kansas, Minnesota, Missouri, Nebraska and Wisconsin on issues ranging from credit-based insurance scoring to environmental clean up, each of which “helped to shape the public policy environment in which our member companies do business.”

IIAG Offers Flood Insurance Education

Flood insurance education to meet National Flood Insurance Program requirements is being offered by the Independent Insurance Agents of Georgia as part of its ongoing continuing education offerings.

An IIAG spokesperson said its goal in providing such classes is to avoid duplicative education requirements for agents who sell flood insurance. Part of the National Flood Insurance Program’s reauthorization requirements are that agents participate in state continuing education programs.

“Thanks to the Big ‘I’ and its involvement in developing the language for the Flood Insurance Reform Act, FEMA was required to work with all interested parties, including insurance companies and agents, as well as state insurance regulators to establish training and education requirements and work to make sure that agents are not burdened with inconsistent state and federal training and education requirements,” the IIAG spokesperson said.

“More important, Big ‘I’ also had language included that directed FEMA to “work to implement the training requirements through the states which already have continuing education processes in place.”

Prior to the insertion of this language, the education provisions were extremely broad and would have given FEMA unlimited latitude to create any form of education it chose potentially leading to burdensome and unnecessary requirements, which could lead to fewer agents selling flood insurance.

IIAG will provide necessary flood insurance education as part of its ongoing continuing education offerings. Education bulletins announcing the flood education class schedules will soon be posted on IIAG’s online education calendar at www.iiag.org. IIAG recommends “killing two birds with one stone,” by taking an IIAG flood class: meet the NFIP education requirement and get three hours of CE credit toward continuing education requirements for the Georgia agent’s license.

MISSISSIPPI

Medical Assurance Co. Drops Rates

Medical Assurance Co. of Mississippi, a physician owned provider which covers about 70 percent of the state’s physicians, has announced a 5 percent decrease in its 2006 malpractice rates and a 10 percent refund on 2005 premiums.

The premium reductions are Mississippi doctors’ first taste of relief from malpractice insurance premiums since the legislature approved tort reform legislation three years ago.

The reduction was approved by MACM’s board of directors.

In 2004, the Mississippi Legislature approved limits on civil lawsuits in response to complaints that high insurance rates were driving physicians out of the state.

If MACM’s financial position continues its recovery from the underwriting difficulties experienced in recent years, the company’s board has approved a refund of 10 percent of the premium paid by those insured in 2005.

The refund will be based on the first $1 million of coverage for physicians insured with the company as of Dec. 15, 2005.

SOUTH CAROLINA

Attorney General Targets Scams

The South Carolina Attorney General’s Office is beefing up its Fraud Division staff to reduce a backlog of cases and answer critics who say the department isn’t tough enough on insurance scams.

The office has $400,000 in this year’s budget to fight fraud and will increase the number of prosecutors to five from one. The attorney general’s office had cut the number of prosecutors as it budget was cut to $6 million from $10 million in recent years.

From July 1 to Sept. 30, the office has 25 criminal fraud convictions, up from just seven during the same period last year. Civil actions also were up to 23 from nine last year.

The new team will significantly reduce the office’s open fraud cases, which currently is just less than 700, attorney general’s office spokesman Trey Walker said.

“Next quarter, the numbers should be even more dramatic,” he added.

Insurance fraud has been a growing concern in South Carolina, law enforcement and industry officials say. The cases encompass everything from staged auto accidents to bogus insurance companies that collect premiums but fail to pay claims.

In 2004, South Carolina had 595 complaints of insurance fraud, totaling more than $5 million.

Much of those costs are passed along to policy holders, but businesses often bear the brunt of fraud, said Frank Knapp, president of the Small Business Chamber of Commerce.

“There are businesses that cheat,” he said. “Not only does it hurt businesses in terms of increasing rates, but it hurts them in terms of competition.”

SBCC lobbied to increase the budget to fight fraud and is encouraging businesses to report fraud cases.

Sen. David Thomas, R-Greenville, chairs the Banking and Insurance Committee and pushed earlier this year for the extra money to be put into the unit’s budget.

Hurricane Plans Tweaked

Emergency workers along the South Carolina coast are tweaking hurricane preparedness plans in the wake of Gulf Coast storms Katrina and Rita.

According to the Columbia State, officials are looking into whether there are enough boats to rescue people potentially stranded by flood waters as well as whether there is sufficient shelter space. The evacuation of nursing homes also has raised some concern.

Topics Florida Catastrophe Carriers Fraud Legislation Agencies Flood Reinsurance Mississippi Hurricane Contractors Training Development South Carolina