Frankel Pleads Guilty in Miss.

Former financier Martin Frankel, accused of defrauding more than $200 million from insurance companies, has pled guilty to corruption charges in Mississippi. According to the Associated Press, Frankel pled guilty to nine counts of mail fraud, one count of conspiracy and one count of making false statements and representations. Each count carries a maximum sentence of five years. As part of a deal with state and federal prosecutors in which Frankel has agreed to cooperate with investigators and asset recovery efforts, Circuit Judge L. Breland Hilburn deferred Frankel's sentencing for one year. Mississippi investigators claim to have recovered between $80 and $90 million. Following Frankel's guilty plea, Hilburn approved his return to Connecticut authorities. Frankel pleaded guilty May 15 to 24 counts of federal corruption charges in New Haven, Conn., for which he faces up to 150 years in prison and $6.5 million in fines.

Houston Theater Sues Insurer

The Alley Theater of Houston is suing its insurer, Gulf Group Lloyds Insurance Co., for reportedly failing to reimburse $6.5 million in damage caused by Tropical Storm Allison last year. According to the Houston Chronicle, the Alley claims to have had an all-risk commercial property policy which provides up to $7.5 million for loss or damages, $1.5 million for personal property damage, and $2 million for loss of business income. The policy was in force from Aug. 31, 2000 to Aug. 31, 2001; the storm struck Houston in June 2001. The Alley's lawsuit claims floodwater entered the theatre through an underground tunnel connecting it to a parking garage operated by a separate entity. The theater's first two floors were submerged. The stage, rehearsal hall, and electric and temperature control systems were completely destroyed. Cleanup efforts started within hours, but performances had to be either cancelled or moved to other venues. Gulf Group denied coverage Aug. 20, stating that the Alley's policy excluded the water and weather conditions that caused the damage. The company did make partial payments on losses under inland marine coverage, however. The Alley's lawsuit contends that all damages incurred were covered under its policy, and that Gulf Group breached its contract.

La. Fire Ins. Premiums May Go Down

Three fire departments in Louisiana's Jeffers on Parish are set to receive higher fire ratings in June, which could save property owners in Marrero and Harvey as much as 15 percent on their fire insurance premiums. The New Orleans Times-Picayune reported that the three volunteer fire departments of Jefferson Parish's District 8 will be upgraded from Class 3 to Class 2 June 10. Insurers use these ratings to determine premium rates for property owners. Some 63,000 residents in the district, which stretches from the Harvey Canal to the Marrero-Westwego line and from the Mississippi River to the West Bank hurricane levee, could be affected by the rate change. Not all residents could see savings, however: State Farm, one of Louisiana's largest homeowners insurers, recently won approval for a 12 percent premium increase, which could nullify any savings policyholders would see from improved fire ratings.

Ark. Workers' Comp Costs Decline

Arkansas Insurance Commissioner Mike Pickens reported a 4.5 percent loss decrease in the state's workers' compensation voluntary insurance market. Workers' comp costs have declined for eight straight years now. Over the past seven years, loss costs dropped 44.5 percent. The new loss costs will become effective July 1 for new and renewal policies. The commissioner also announced a rate decrease of 3.1 percent in the assigned risk market. The high-risk workers' comp market has enjoyed a 33.1 percent decrease since 1993. The significant reduction in workplace injury frequency and severity, as well as the aggressive prosecution of insurance fraud are reflected in continuing workers' comp cost reductions. While the overall changes are decreases, insured individuals may experience increases or decreases in excess of the industry average, when individual risk factors are applied.

TX Updates Consumer Bill of Rights

Texas Insurance Commissioner Jose Montemayor has approved updates to a consumer bill of rights, which automobile and residential property insurers are obligated to provide their policyholders. According to the Texas Department of Insurance, as provided by the Texas Insurance Code, the Office of Public Insurance Counsel (OPIC) submitted proposed changes to the bills of rights. Texas Department of Insurance (TDI)

staff subsequently worked with OPIC on the changes and recommended them to Montemayor. The revisions reflect legislation and TDI actions since the bills of rights were originally adopted in 1993. There are two separate documents: a "Consumer Bill of Rights for Personal Automobile Insurance" and a "Consumer Bill of Rights for Homeowners, Dwelling and Renters Insurance." Insurance companies are required by law to provide the updated bills of rights to all new customers when they receive their policies. Insurers also must provide the updated bills of rights to all existing customers with their next policy renewals. Updates include additional information about residential property and private passenger auto market assistance programs set up by TDI for policyholders in underserved areas, as well as expanded sections pertaining to consumers' rights to be informed upon request of reasons for denial, cancellation, or non-renewal of auto or residential policies.

Diminished Value 3-Time Loser in La.

A Louisiana Circuit Court has reversed

a trial court's holding that an insurance company's auto policy covered "diminished value claims," making it the third such case that has been rejected in the Louisiana courts. The National Association of Independent Insurers (NAII) had filed an amicus brief on behalf of the insurer in the original lawsuit. The original case, Floyd v. Republic Lloyd Insurance Co., involved a first-party claim against the plaintiff's insurer, filed after the company had paid for auto damage and for a rental vehicle. The court granted summary judgment in favor of the plaintiff and Republic appealed, arguing that policy language does not encompass diminished value as part of the claim. Floyd v. Republic is the third diminished value class action case to come before the Louisiana trial courts. The first two, naming Allstate and Markel American Insurance as plaintiffs, were dismissed and won on appeal, respectively. In addition to reversing the trial court's holding that plaintiff Republic Lloyd Insurance Co.'s auto policy covered diminished value, the First Circuit Court also granted Republic's motion for summary judgment, dismissed the plaintiff's claim with prejudice, and assessed appeal costs to the plaintiff.