NATIONWIDE INFRINGED UPON'
Nationwide filed a federal trademark infringement suit against Florida-based companies, which, using the names Nationwide Insurance Group Inc. and The Nationwide Companies, recently started to offer financial and insurance services under the Nationwide mark, including via the Internet. Nationwide filed for a preliminary injunction in Federal District Court in Columbus. Nationwide is requesting that the Florida-based companies cease using the name and trademark; surrender for destruction all copies of materials bearing the Nationwide name; advise all state insurance regulatory bodies and policyholders that the companies are not connected or affiliated with Nationwide; pay compensatory and treble damages to Nationwide; and turn over all domain names, including the word Nationwide.
S&P GIVES FRONTIER 'R'
On Aug. 28, Standard & Poor's assigned its 'R' financial strength rating to Frontier Insurance Co. after the New York State Insurance Department and Frontier reached an agreement for Frontier to enter into voluntary rehabilitation. By a vote of the board of directors, Frontier consented to entry by an order of rehabilitation pursuant to Article 74 of the New York State Insurance Law. On approval of the rehabilitation by the New York State Supreme Court in New York County, the Department will take control of the property/casualty insurance company. Frontier, formerly rated "BB+" prior to their rating withdrawal on March 24, 2000, were cited by S&P as having weakened capitalization coupled with weak earning levels. S&P placed the ratings on CreditWatch with negative implications on March 17, 2000, because of concerns regarding future profitability, capitalization, and financial leverage.
WORKERS' COMP BILL FALLS SHORT
According to Insurance Brokers and Agents of the West (IBA West), SB 71 (Burton & Calderon), a bill moving through the California Legislature, doesn't go far enough in attempts to reduce costs to reform the troubled workers' comp system. Without compromise, Governor Gray Davis could veto the bill, postponing the problem for another year and allowing an already troubled situation to worsen. SB 71 proposes a benefit increase of approximately $2.7 billion, but some estimates place the bill's total cost as high as $3.6 billion. One analysis suggests an increase beyond $440 million would have a negative impact on the economy. Also, attempts to change the board of the State Compensation Insurance Fund could politicize one of the few working segments of the industry. Significant increases in workers' comp insurance rates could force many small employers to go out of business, scale back operations or expand operations outside of California. To prevent continued deterioration of the system, the bill needs to be amended to provide a benefit increase for severely injured workers, and contain real, substantive reforms that address administrative and legal costs. With concerns over the financial well being of several major insurers in California and other companies which have been withdrawing from the state's market, competition in the marketplace is being significantly affected, and the bill could compound that.
8 INSURERS FEEL FIRE RISKS
In seven western fire-prone states, eight large property and casualty insurers are exposed to 74.5 percent of the home insurance risk, according to a recent analysis by Weiss Ratings Inc. States ranked by acres burned from Jan. 1, 2001, to Aug. 19, 2001, according to the National Interagency Fire Center, were Nevada (570,755); Oregon (448,509); California (227,149); Alaska (221,940); Washington (153,948); Idaho (118,129); and Utah (114,376). At year-end 2000, eight carriers commanded 85.9 percent of the market in Alaska; 77.1 percent in California; 60.4 percent in Idaho; 76.4 percent in Nevada; 71.3 percent in Oregon; 65.4 percent in Utah; and 63 percent in Washington. Those eight companies are: State Farm Group; Zurich Financial Services Group; Allstate Group; Safeco Group; USAA Group; CA State Auto Group; Allianz; and Auto Club of Southern California. Just three companies—State Farm, Zurich, and Allstate—controlled 55.8 percent of the total market share in the western fire-prone states last year. Their combined homeowners exposure ranged from a low of 37.6 percent in Washington to a high of 70.6 percent in Alaska.
CREDIT SCORING PONDERED
Positive aspects of how the use of credit scores in insurance underwriting benefits consumers were recently demonstrated to Colorado state legislators by the National Association of Independent Insurers (NAII). NAII Northwest Regional Manager Michael Harrold said NAII and its member companies hope to work with the Colorado Division of Insurance to fashion a regulation on the use of credit scores that contains reasonable disclosure and grievance provisions without unnecessarily intruding into legitimate insurance underwriting and rating practices. Deputy Insurance Commissioner Maryellen Waggoner told the forum some of the division's concerns included that credit scores and credit history are not the same and that the use of credit scores might not allow for exceptions, such as for a person who pays all bills in cash. Other factors, she said, are that credit reports may be inaccurate and consumers are not given enough information on what creates problems with their credit score or how to remedy it.
LAAA JOINS NAAA
At its Board meeting in Atlanta, Ga., the National Auto Agents Alliance (NAAA) accepted an application for affiliation from the Latin American Agents Association (LAAA). The LAAA is a three-year-old organization headquartered in Los Angeles. LAAA brings more than 300 California members to the NAAA, increasing the membership to over 2,000.
PROGRESSIVE UNVEILS IBPP
The Professional Liability Group of the Progressive Corp. introduced an Internet Banking Protection Package (IBPP), providing coverage for community banks engaged in Internet banking. Comprised of two interconnected policies, the Internet Banking Liability Policy and an enhanced version of the existing Financial Institution Bond, the IBPP product designed is to fill the potential gaps in banks' traditional banking insurance policies. The Internet Banking Liability Policy broadly covers liability losses arising from the provision of Internet banking services. The enhanced version of the Financial Institutional Bond extends coverage to the Internet realm—including loss resulting from the fraudulent transfer of funds through the Internet or a PC/home banking program by a dishonest employee, a customer or a third party. Reconstruction costs due to the destruction of data or programs caused by hacker or virus activity are also covered. The IBPP is available through the American Bankers Association-sponsored insurance program.
FIRST NEVADA GETS 'R'
Standard & Poor's assigned its "R" financial strength rating to First Nevada Insurance Co. (FNIC). S&P took this rating action after learning that Judge Janet Berry of the Second Judicial District Court of the State of Nevada issued an order placing FNIC into liquidation, in response to a motion filed by Nevada Insurance Commissioner Alice A. Molasky-Arman as the court found FNIC to be statutorily insolvent and unable to be rehabilitated. FNIC, licensed only in Nevada, received its certificate of authority as a property/casualty insurer from the Nevada Division of Insurance in June 1995.
ARGONAUT ENDS QUEENSWAY PACT
On Aug. 30, Argonaut Group Inc. announced it had terminated the purchase and sale agreement with Queensway Financial Holdings Ltd. previously announced on April 18, 2001. Under the agreement, Argonaut Group was to have acquired certain U.S. subsidiaries of the Canadian holding company. Argonaut Group indicated that following the appointment of an interim receiver for Queensway by a Canadian court, the parties were unable to satisfy certain conditions to closing within the time frame set out in the original agreement.
FBI ARRESTS PRIEST IN FRANKEL CASE
Monsignor Emilio Colagiovanni, an 81-year-old Catholic Priest, is being held in Bridgeport, Conn., following his arrest by FBI agents in connection with the investigation of the multi-million dollar fraud and embezzlement case against financier Martin Frankel. According to a report in the Hartford Courant, Colagiovanni, an Italian who lives in Rome, allowed Frankel to use the name of the Monitor Ecclesiastus Foundation, which he heads, as part of his scheme to wrongfully transfer the funds of several insurance companies Frankel controlled. Federal prosecutors in Conn. obtained a warrant for Colagiovanni's arrest when they learned that he was visiting relatives in Ohio.
