SEVERAL CONVENTIONS CANCELLED
In the face of the tragedies which occurred on Sept. 11, several insurance trade associations announced cancellations of previously scheduled events. The National Association of Professional Surplus Lines Offices cancelled its Annual Convention in San Antonio, Texas, scheduled for Sept. 12-16. "We express our deepest sympathies to all those who are affected by this tragic act of terrorism," NAPSLO stated. The National Association of Mutual Insurance Companies Board of Directors voted to cancel its 106th Annual Convention, originally scheduled for Sept. 23-26 in Washington, D.C. NAMIC Chairman James A. Blum stated, "Since 1895, NAMIC has suspended its annual convention only once—in 1943—in the middle of World War II. That underscores how very seriously we take this assault on innocent people…We are not merely canceling our convention, but rather are redirecting our efforts toward support in this time of national tragedy." In addition, the Executive Committees of co-sponsors The Council of Insurance Agents + Brokers and The Council of Insurance Company Executives announced the cancellation of the 88th Annual Insurance Leadership Forum, scheduled for Oct. 5 -10 at White Sulphur Springs, W. Va. The "Greenbrier Meeting," as it is known in the industry, has been held every year since The Council's founding in 1913. "Cancellation of the Greenbrier meeting represents a tremendous program and financial loss for our association and members," stated Ken Crerar, The Council's president. "However, since Sept. 11, 2001, any collective professional sacrifice we make pales in comparison to the personal and professional tragedies unfolding in New York and at the Pentagon."
GOV. SIGNS CIGA BILL
California Governor Gray Davis signed legislation to raise the assessments on workers' compensation insurers. The bill, AB 1183, sponsored by Assemblyman Tom Calderon (D-Montebello), will raise the assessment charged to workers' comp premiums from 1 percent to 2 percent. The additional funds will go toward California's guarantee fund, which pays for the outstanding claims of insolvent workers' comp carriers. The Senate voted 27 to 3 in favor of AB 1183 and the Assembly voted 59 to 3 to concur on the amendments. Davis signed the measure on Sept. 12. AB 1183 includes an urgency clause so the bill will take effect immediately.
NAAA DENOUNCES CREDIT SCORING
The National Auto Agents Alliance recently issued a statement that credit scoring is "unreliable, inaccurate, and so against public interest as to endanger the insurance industry to the wrath of the public." NAAA President James W. Holthaus commended Georgia Commissioner of Insurance John W. Oxendine's plan to investigate the use of credit scores for underwriting and/or rate determination in Georgia. "Credit scoring, while new to insurance rate making, should at the very least have to be substantiated by no less rigorous actuarial standards than other rate making criteria. The recent effort by insurers to hide behind the third-party provider of the data is unacceptable," Holthaus stated. "Credit scoring is a 'black box' procedure that may deny otherwise acceptable insureds insurance coverage at rates that are appropriate to their risk rating factors."
SAFECO TO BUY ACE USA DIVISION
SAFECO Corp. and ACE USA announced an agreement for SAFECO Select Insurance Services Inc. to acquire ACE USA's Financial Institution Specialists (FIS) division. The acquisition of FIS' $80-million book of premium will more than double the size of SAFECO Select, a wholly-owned subsidiary of SAFECO Corp., and make the operation one of the nation's largest providers of lender-placed hazard insurance, outsourcing, and other insurance products and services for financial institutions. While terms of the agreement were not disclosed, SAFECO Select will acquire most of FIS' nationwide insurance programs, its Irvine, Calif., headquarters and its insurance servicing center in Latham, N.Y. ACE USA will retain FIS' Direct Specialists business unit that markets optional insurance programs, including Disaster Mortgage Protection(SM), through financial institutions and other direct consumer opportunities.
CALIF. PRIVACY BILL DEFEATED
Following a late night debate, the California State Assembly voted to defeat a controversial financial privacy measure that would have given California the most complicated and confusing privacy law in the nation, according to the American Insurance Association (AIA). "This bill would have been unworkable for the industry and would have caused a host of unintended consequences for consumers," said Bill Gausewitz, AIA assistant vice president, western region. The measure, SB 773, sponsored by Senator Jackie Speier (D-Hillsborough), would have created an opt-out system for information sharing among affiliated companies and an opt-in system between non-affiliated companies. "SB 773 was drastically amended this week. But the amendments did not solve the fundamental problems with this bill," Gausewitz said. "This bill would have disrupted e-commerce, given an unfair competitive advantage to some businesses, and imposed extraordinary new costs on the financial services industry. Despite the defeat of SB 773, the issue of information sharing by the financial services industry will continue to be under debate in California." The State Assembly voted 32 to 26 to defeat SB 773. The measure needed 41 votes to pass.
ONLINE MARKETS CHASE SMALL BIZ
According to a new report, online insurance marketplaces are now actively pursuing the historically underserved small business customers, who are turning to the Internet to locate coverage. International Data Corporation's (IDC) new report, "Small Business: The New Darling of eInsurance Marketplaces" discusses the evolution of small business as a target market for carriers and financial institutions, and looks at the roles insurance marketplaces are playing in the development of the small business insurance market. The report suggests 7 percent of small businesses with Internet access have already used the web to shop for insurance. The survey also indicates businesses with fewer than 50 employees have a greater propensity to utilize the Internet for insurance needs than their counterparts with 50 to 100 employees. Partnering with online insurance marketplaces can be an attractive and cost-effective option for insurance carriers to reach the small business customer segment. Marketplaces offering products from multiple carriers are a positive development in the small business market, as individual carriers typically do not offer coverage in all states for all types of coverage. Marketplaces also facilitate access to small businesses through a carrier's agents, nontraditional distributors, such as banks and industry associations, and Internet portals.
FRAUD LURES 10% OF CONSUMERS
Progressive Insurance recently conducted a telephone survey on more than 31,000 Americans, asking respondents how likely they would be to commit insurance fraud and other indiscretions if they knew they would not be caught, and whether they would report someone they knew who had committed fraud. The results indicate that while most respondents are honest, a relatively small percentage are willing to cheat and commit these crimes. According to the survey: 9 percent of all respondents said they would commit insurance fraud if they knew they would not be caught; and 29 percent of respondents said they would never report insurance fraud committed by someone they knew. Respondents were four times more likely to say they would report someone if there was a monetary reward of up to $500 than if there was a reward of only $250. Six percent of respondents would report fraud only if they didn't like the person who committed it.
PENN TREATY SUSPENDED IN AZ
Arizona Insurance Director Charles Cohen suspended the license of Penn Treaty Network America Insurance Company, prohibiting the company from issuing any new policies in the state. The action came as a result of a finding that the insurer is in hazardous financial condition from excessive losses through June 30 of this year, the most recent date for which it has filed financial results with the state's Department of Insurance. Penn Treaty serves as the second largest carrier of long-term care insurance in the state, insuring more than 10,000 policyholders as of Dec. 31, 2000. The order does not affect in-force policies already issued by Penn Treaty in Arizona, and the insurer must continue to renew current policies along with paying claims arising under policies currently in place. Based in Pennsylvania, Penn Treaty was not declared insolvent and its assets look to be adequate to meet its forecasted claim obligations. The order, however, is being issued to prevent the insurer from taking on additional insurance obligations in Arizona.
