UCITA DEAD IN OKLAHOMA
Proponents of the Uniform Computer Information Transactions Act (UCITA) suffered a double setback as UCITA legislation (SB697) in Oklahoma died in the Senate Appropriations Committee and the American Bar Association (ABA) refused to take a formal position on the act during its Midyear Meeting in Seattle. According to the National Association of Independent Insurers (NAII), which opposed it, the UCITA model as developed by the National Conference of Commissioners on Uniform State Laws (NCCUSL) seeks to establish new commercial law for the licensing of information-based products. The NAII believes the proposal would negatively affect consumers and businesses. UCITA was originally adopted in July 1999, but only Maryland and Virginia have adopted the act. In 2002 the model act was amended by NCCUSL and is now under consideration for introduction in a number of states.
ATNIP PLEADS GUILTY IN ARK.
Arkansas Insurance Commissioner Mike Pickens announced that Gary Atnip, an alleged co-conspirator with Martin Frankel, entered a guilty plea to a felony charge of violating the maintenance of home office records law. The plea was entered in the Seventh Division Circuit Court of Pulaski County. Atnip was sentenced to 12 months in the Arkansas Department of Corrections. Atnip, a Tennessee resident and CFO of Tennessee-based Franklin American Life Insurance Company, was charged with the illegal removal of $5.285 million in funds from Old Southwest Insurance Company of Jacksonville, Ark., when Franklin American purchased Old Southwest in March 1999. According to investigators, shortly after Old Southwest was purchased, Atnip caused the funds to be transferred to a bank in Switzerland, violating Arkansas Insurance Code Sec. 23-69-134, which led to the ultimate collapse of Old Southwest. It remains in receivership. Marty Nevrla, director of the Insurance Department's Fraud Investigation Division, commented that Atnip's case was the first to be "filed under the statute designed to protect the assets and records of insurers." Atnip is currently awaiting sentencing on federal mail fraud and wire fraud charges connected to the Frankel scheme. The Frankel scheme reportedly consisted of plans to illegally remove what has been estimated at more than $200 million from insurance companies, including Old Southwest, and to transfer those funds into accounts for Frankel's personal use. Both Frankel and Atnip have been ordered to pay $2.5 million in restitution. Atnip is expected to receive a 10 to 15 year federal prison sentence. Frankel is currently serving time in federal prison.
FLAMING AN SUV FOR $$
A Houston man who allegedly burned a sport utility vehicle belonging to family members in order to collect $35,000 in insurance proceeds, was arrested and charged after an investigation by Harris County fire marshal investigators. According to the Houston Chronicle, Paul Rodriguez was charged with arson and placed in county jail on $20,000 bail. Others are expected to be arrested for arson and insurance fraud in connection with the case. Investigators said Rodriguez is a "flight risk" and felt it was important to charge him without delay. The torched vehicle, a 2003 Ford Expedition, was reported stolen on Feb. 24 at an area mall and later was found burned in north Harris County. The $35,000 insurance policy on the car was purchased on Feb. 23.
FEDS ISSUE REGS ON TRIA
The Alliance of American Insurers (AAI) said it is pleased with the U.S. Department of the Treasury's initial set of regulations under the Terrorism Risk Insurance Act (TRIA) of 2002. AIA associate vice president of research, Roger Kenney, said while the proposed rules are just the beginning, they still "provide insurers with more certainty than they have had." Kenney said the AIA is "pleased that in the definition of direct earned premium, Treasury has made it much clearer what constitutes commercial premium. The earlier definition seemed to imply that some personal lines premium would be considered commercial under TRIA, but that is no longer the case." Treasury is soliciting comments in several areas, including comments on how the program should treat multiple controlling owners of an insurer, and how Treasury might prevent evasion of insurer deductible and other program requirements by certain newly-formed insurance companies. The proposed rule is reportedly consistent with the three interim guidance documents that were previously published. The Alliance expects subsequent regulations will soon follow, such as the disclosure requirements and the "make available" requirement, and on the treatment of state residual market entities and state workers compensation funds.
CLEAR AS MUD
According to the National Association of Independent Insurers (NAII), unless a claim is filed, workers' compensation insurers would not know if an insured employee's name is included in the infamous Specialty Designated National (SDN) list of criminals and terrorists targeted by the U.S. government. The NAII sent a letter to the Office of the Foreign Assets Control (OFAC) requesting clarification of this issue, which appeared as a question in the OFAC document, "Questions Frequently Asked By The Insurance Industry." The question that prompted the NAII's response asks: "A workers' compensation policy is with the employer not the employee. Is it permissible for an insurer to maintain a workers' compensation policy that would cover a person on the SDN list, since the insurer is not transacting business with the SDN, but only with his/her employer?" The OFAC answer: "No, it is not permissible because the insurer would be providing an indirect benefit." However, although companies may have a list of their employees covered by the workers' comp policy, the insurer may not see a list until a claim is filed, said NAII insurance services counsel Kathleen Jensen. She added that "once a claim is filed the insurer has the responsibility to check the SDN list and report within 10 days to OFAC if the claimant's name appears on the list. In addition, the insurer must freeze and block payment of a claim, putting claim monies into an interest bearing account." Jensen made it clear that the workers' compensation insurers would not knowingly provide an indirect benefit since that company would not have any knowledge about whether a person is on the SDN list until a claim is filed. In its letter to OFAC, NAII offered to assist in re-wording the specific question and answer to reduce confusion and clarify the message for all interested parties.
FORE!
The Houston National Association of Insurance Women announced its Annual Golf Tournament will be held April 7, 2003, at Willow Fork Golf Club. Houston NAIW is a non-profit organization that serves its members by providing professional education, scholarships and local community service. Participants may form their own teams or be paired with other players. All sponsors will be recognized at the tournament. The tournament format will be a shotgun start, 4-man scramble. The entry fee includes green fees, cart, range balls and a delicious dinner. For more information, contact Becky Jordan at (713) 995-8805 or Joanne Pearson at (713) 852-9899 ext. 107.
