OKLA. BOND SCAM ALERT:
Insurance Commissioner Carroll Fisher warned Oklahomans that Eastern Shores Casualty and Indemnity Co. and Continental Surety Company Ltd. are unlicensed to sell bonds in Oklahoma and are possibly shams. Allegedly, an Arizona agent has been operating the companies, claiming they were offshore entities. In February, Fisher ordered Phoenix-based Diana Greene, with International Bond Source, to stop doing business in Oklahoma. At the time, it was believed she was mainly targeting used car dealers by selling fraudulent bonds over the Internet, but only a handful of cases involving Oklahoma victims were identified. Since that time, officials have learned of bonds sold to other types of businesses. Fisher said Arizona officials have identified over $1.5 million in unpaid claims across the nation. Greene was indicted in Arizona on three separate felony counts, in addition to revocation proceedings started earlier against her license. A dozen other states where she is suspected of selling the fraudulent bonds have joined the investigation. It is believed Greene may be continuing to operate in Oklahoma via the Internet despite the threat of sizeable fines. People who have contracted with Greene, International Bond Source, Eastern Shores Casualty or Continental Surety Co. may call the Oklahoma Insurance Department's fraud division toll free at (800) 522-0071.
FARMERS SETTLEMENT APPROVED:
State District Judge Scott Jenkins gave preliminary approval to the $117.5 million settlement between the State of Texas and Farmers Insurance. The record settlement is the result of action taken by the Texas Office of Attorney General and the Texas Department of Insurance under which $117.5 million will be paid to Farmers policyholders in the form of combined savings and restitution. In August 2002, the Office of Attorney General (OAG) filed a lawsuit against Farmers Insurance Group for violations of the Deceptive Trade Practices Act and discrimination against some groups of homeowners. TDI also issued two enforcement actions against the company, including a cease-and-desist order, forcing Farmers Insurance to halt certain pricing practices. The settlement agreement between Farmers Insurance and the State of Texas was reached on Nov. 30, 2002, when Farmers agreed to change its pricing practices and return $100 million to policyholders. The settlement increased to $117.5 million after the date for retrospective rate reductions (refunds) was expanded from Dec. 28, 2001 back to Nov. 16, 2000. As many as 700,000 Farmers policyholders could begin receiving notices in June explaining the settlement, under which Farmers must cut its base rates by 6.8 percent and provide refunds and credits for certain types of overcharges. Farmers will also be required to change some of its rating and underwriting practices. The company has admitted no wrongdoing in the case and is not required to do so. According to the Austin American-Statesman, plaintiff attorneys challenged the case on the assertion that policyholders were not adequately represented in the settlement proceedings and that the state conceded too much to the insurer. Jenkins, however, rejected those arguments and others, including the notion that Farmers received a "sweetheart deal" from the state.
RATE HIKES MAY BE LIMITED IN LA.:
Multiple double-digit rate hikes within the space of one year may be soon be off limits to insurance companies doing business in Louisiana if a bill that passed the House Insurance Committee makes it through the legislative session. According to the New Orleans Times-Picayune, House Bill 1420 would allow insurance companies to raise rates by less than 10 percent without the approval of the Louisiana Insurance Rating Commission. But the bill would limit those increases to one in a 12-month period. In addition, they would have to be justified to the state insurance department. Meanwhile, the Louisiana House and Governmental Affairs Committee approved HB 1318, which would allow the governor to appoint the state's insurance commissioner beginning in 2008. The committee also approved HB 638, which would allow voters to decide on a proposed change in the state Constitution making the job appointive.
OKLA. GOV. GETS TORT REFORM BILL:
A tort reform measure aimed at addressing the state's medical malpractice liability insurance crisis passed the Oklahoma House of Representatives by a wide margin, according to the American Insurance Association (AIA), and was sent to Gov. Brad Henry for his consideration. The AIA praised the legislation for being "a step in the right direction to provide Oklahoma doctors and health care facilities with some much-needed relief against a growing tidal wave of lawsuits." The measure that passed the House is a compromise version of Senate Bill 629, and is entitled the "Affordable Access to Health Care Act." Among other things, SB 629 would establish a $300,000 cap on non-economic damages for obstetric cases and emergency room cases. SB 629 defines non-economic damages as pain, suffering, inconvenience, mental anguish, emotional distress, loss of enjoyment of life, loss of society and companionship or consortium, injury to reputation and humiliation. However, if a judge determined "by clear and convincing evidence" that the defendant committed negligence, the judge would be empowered to lift the damage cap. Also, under the bill, the limitation would not apply to lawsuits filed for a wrongful death.
TEXAS MOLD CLAIMS HIT $4 BILLION:
Texas insurance companies paid out around $4 billion for mold claims in the past three years. According to the Insurance Council of Texas, an insurance trade association, mold claims have represented a larger monetary loss for Texas insurers than any weather catastrophe. Mold claims began to mushroom in January 2000. Texas' comprehensive homeowner policies had insurers paying for families to relocate in other homes or motels for up to a year, while their homes were taken apart piece by piece and then completely rebuilt. The ICT said mold claims were reported in every corner of the state, but claims per policyholder in Corpus Christi were twice as high as any other city. Mold claims in Texas grew from $420 million in 2000 to just over $1 billion in 2001. In 2002, mold claims exceeded $2 billion. The cost of mold claims peaked in July 2002 with insurers paying $215 million on 24,000 claims. Since then, the cost of mold claims has been declining with most homeowner policies now either limiting or excluding mold claims all together.
OKLA. AGENT LOSES LICENSE:
Oklahoma Insurance Commissioner Carroll Fisher revoked the license of a Bartlesville agent accused of both lying to clients to cover up the fact that he was unable to find coverage for them and taking cash from his employer. The insurance department said Beebe Stephenson admitted he misled several Bartlesville institutions into believing they had insurance coverage when, in fact, they did not. No evidence was presented indicating whether the establishments paid money for non-existent insurance coverage. One of the entities suffered a $3,500 loss, for which Stephenson's employer ultimately paid. In another instance, a museum had to be closed for three days after it was learned it had been without insurance coverage some four months.
