AGENCY SUSPENDED IN OKLAHOMA
Oklahoma Insurance Commissioner Carroll Fisher suspended the license of Edmond agent Earl Cody after Cody refused to permit examiners from the Oklahoma Insurance Department to review records as part of an investigation into alleged misappropriation of premiums. According to the suspension order, Cody was accused of: Forging insurance applications; Accepting money from consumers but failing to take out insurance policies with licensed companies; Misrepresentation to insureds regarding the existence of policies; and, "Churning" policies, which is the placing policyholders with a new company primarily for the purpose of collected increased first-year commissions. Cody allegedly made the changes without the knowledge of the policyholders. When faced with an examination, Cody refused to allow investigators access to records. Fisher noted that the allegations were of a serious nature and that Cody's refusal to give investigators "immediate access to records sent up red flags" for the department. Fisher also suspended Cody's partner Jenny Cody and their agency JLC Insurance Agency. The order prohibits insurance companies from paying commissions to the Codys.
UNINSURED DRIVER BILL MOVES ON
The Texas Senate approved legislation that Lt. Gov. David Dewhurst said will drive down the cost of automobile insurance by finally "putting teeth" into the Texas law requiring drivers to carry liability insurance coverage. In an announcement on the Senate Web site, Amarillo Senator Teel Bivins, sponsor of Senate Bill (SB) 422, commented that Texas leads the nation in the number of drivers that do not carry mandatory liability insurance. Bivins' legislation is based on an Illinois statute that lowered that state's uninsured motorist rate from 17 percent to just below six percent. SB 422 would require the Texas Department of Transporta-tion to send out a mailing to a random sampling of 500,000 registered vehicle owners a year. A person who receives a notice will have 30 days to provide proof of insurance. If the person cannot provide proof, he or she will be subject to a fine; and vehicle registration will be cancelled if a person fails to comply. According to the Houston Chronicle, the fine for falsifying the "proof" could run between $500 and $1,000. Driving without proof of liability could bring a fine of between $350 and $500, up from the $175 to $350 range. The bill would also require insurance companies to standardize liability insurance cards to make them more difficult to counterfeit. In addition, it would allow consumers to buy uninsured motorist coverage with exemplary damage and non-economic damage coverages waived.
SCORING BILL PASSES OKLA. LEGE
The Oklahoma Legislature has approved an insurance scoring bill based on model legislation developed by the National Conference of Insurance Legislators (NCOIL), according to the American Insurance Association (AIA). John Marlow, AIA assistant vice president, southwest region, said while SB 539 places limits on insurers' use of insurance scores, "it also provides important consumer protections and affirms the right of insurers to use this accurate and cost-effective underwriting tool." Major provisions of SB 539 include: Prohibits an insurer from denying, canceling, non-renewing or basing renewal rates solely on the basis of credit information, without consideration of any other applicable underwriting factor; Requires an insurer to disclose to an applicant for insurance that credit information will be used in underwriting and rating; Requires an insurer to notify a consumer in the event of an adverse action based on credit information, including up to four factors that were the primary reasons for the adverse action; Prohibits insurers from using certain information in scoring models, including income, gender, address, zip code, ethnic group, religion, marital status, or nationality of the consumer as a factor; and Limits the manner in which an insurer may handle a consumer who lacks credit information or for whom no score can be generated.
STATE FARM RATE INCREASES IN LA.
State Farm recently won a 12.2 percent average rate increase for homeowners policies in Louisiana that goes into effect June 15. At that time around 263,000 Louisiana homeowners will face an average increase of $100. According to the New Orleans Times Picayune, State Farm estimates it will receive an extra $27.3 million in several lines of residential insurance, including policies for homeowners, farmers and ranchers and apartment renters as a result of the increase. Also approved were State Farm's average rate increases of: 20 percent, or $1.8 million, for the 17,000 homeowners who live in manufactured homes; 7.2 percent, or $1.7 million, in homeowners insurance for condominium owners and apartment and condo renters; and 14.9 percent, or a $500,000 increase, for farm and ranch owners. While State Farm currently has a moratorium on writing new homeowners policies in Louisiana, it does write policies for existing customers in the state, customers who move to Louisiana from elsewhere and for current insureds who build new homes or remodel existing ones.
CE RELIEF FOR ACTIVE DUTY AGENTS
Both Oklahoma and Louisiana are offering relief to insurance agents serving on active duty with the U.S. armed forces in Iraq. Louisiana Insurance Commissioner Robert Wooley and Oklahoma Insurance Commissioner Carroll Fisher issued notice in their respective states that continuing education requirements (CE) for active duty agents will be waived or deferred. In addition, in Louisiana any insurance license renewal late fees incurred by those military personnel will also be waived. Fisher's order applies to adjusters and bail bondsmen, as well as agents. Fisher said agents and adjusters should notify the Oklahoma Insurance Department of their need for the deferment when they apply to renew their license or when they complete their tour of duty. In addition to the request, they must provide documentation that they have been called to active duty, or a copy of their separation orders. Rules governing bondsmen require them to request an extension of time before Aug. 30. Wooley said licensees may notify the Department of Insurance of their need for a waiver when they complete their tour of duty. The only documentation they will need is a copy of their orders of separation from active duty. Because the department is not notified in advance of the activation of military personnel, some licensees may receive notices of suspension. Their records will be corrected upon notice and proof of activation. For more information on Louisiana's policy, contact the Department of Insurance at (800) 259-5300, statewide; in Baton Rouge at (225) 342-5900; or by e-mail: public@ldi.state.la.us. The Oklahoma Insurance Department can be accessed toll free statewide at (800) 522-0071 or via the Internet at www.oid.state.ok.us.
STORMS RACK UP $1.2B IN CLAIMS
U.S. property/casualty insurers are expected to pay an estimated $1.2 billion for insured property-loss claims from winter storms and windstorms that pummeled 10 states in early April, according to preliminary estimates by Insurance Services Office Inc.'s (ISO) Property Claim Services (PCS) unit. PCS estimates insurers will be inundated with more than 386,000 claims from auto, residential and commercial policyholders who were affected by ice, snow, freezing rain, wind, hail, tornadoes and flooding. Texas was hit hardest, sustaining $885 million in insured property losses from an estimated 285,000 claims. Wind gusts exceeding 80 miles an hour and hail the size of baseballs pounded several Texas counties along the path of the thunderstorm. Missouri insured losses were the second highest at $110 million.
D&O LIABILITY COSTS UP AGAIN
Directors & Officers (D&O) liability insurance cost nearly 30 percent more in 2002, according to Tillinghast Towers Perrin's 2002 Directors & Officers Liability Survey. The increase followed similar hikes in 2001. Meanwhile, claim frequency and claim severity appeared to stabilize for most types of claims, although shareholder claims severity was up significantly. Among closed claims, U.S. participants paid an average of $5.72 million, up only slightly from $5.65 million last year. However, the average indemnity paid for shareholder claims increased significantly to $23.35 million, compared with $17.18 million last year and $9.62 million two years ago. Other key findings from the survey revealed: Inadequate or inaccurate disclosure, including financial reporting and claims related to stock offerings, was most frequently at issue in U.S. shareholder claims, up from 38.8 percent last year to 46.4 percent this year; Even though some respondents purchased higher limits, the survey found a decrease in average D&O policy limits for the first time in eight years; and Discrimination in employment was the most frequently cited D&O issue among U.S. participants, accounting for 43 percent of employee claims, down slightly from last year (46.1 percent), and 27.1 percent of overall claims. U.S. and Canadian participants indicated the purchase of D&O insurance was common, with 97 percent and 90 percent of businesses, respectively, having secured coverage. The average amount of coverage carried by U.S. participants was $18.9 million in total limits, which was down slightly from last year ($20.1 million). The survey, which included 2,275 participants, is the 25th in a series of studies on D&O liability claims and insurance purchasing patterns.
COMMERCIAL P/C MARKET STABILIZING'
While rates continued their upward spiral in 2002, according to the First Quarter 2003 Market Index survey by The Council of Insurance Agents & Brokers, the commercial property/casualty insurance marketplace is beginning to stabilize. About two-thirds of small, medium and large accounts are still experiencing average increases of up to 20 percent for all lines of insurance. But unlike previous surveys, respondents said only a small proportion of their accounts had rate hikes in the 20 to 30 percent range. Only a small percentage of accounts saw rates go up more than that, while 12 percent of the small accounts and 8 percent of both medium and large accounts experienced no change at all in their commercial P/C premiums for renewals during the survey period. Business interruption and commercial property showed the greatest moderation, with 16 percent of respondents reporting that premiums for those lines either were holding steady or dropping slightly. Conversely, medical malpractice premiums increased the most, with about one-third of the accounts seeing rate hikes of from 30-100 percent, and an additional 8 percent rising by more than 100 percent. Commercial lines experiencing premium increases in the 30-50 percent range were umbrella policies, construction risks and D&O policies.
