FRONTIER PACIFIC LIQUIDATED
Frontier Pacific Insurance Company, which was conserved because it is insolvent, was finally given the Liquidation Order on Dec. 3. Frontier Pacific, which is domiciled in California, is headquartered in San Diego and is a wholly owned subsidiary of Frontier Insurance Company, a New York domiciled company. The stock of Frontier Insurance Company is owned by Frontier Insurance Group, Inc., an insurance holding company domiciled in Delaware. All policies will be effectively cancelled on Jan. 2, 2002. The company wrote private passenger auto liability, auto physical damage, licensing, surety, and bail bonds. Frontier Pacific also wrote a few workers' compensation policies.
NAII OPPOSES NV AMENDMENTS
According to the National Association of Independent Insurers (NAII), several amendments the Nevada Division of Insurance is considering to underwriting and rating regulations would result in huge administrative expenses for insurers and could hurt consumers who find it difficult to afford automobile coverage, forcing some good drivers to unfairly subsidize premiums for higher risk motorists. Dana Bennett, local counsel for NAII, testified before Department of Insurance officials that the proposals would restrict insurer underwriting and rating practices, and impose additional notice requirements on insurers. The three proposals under consideration that NAII opposes include revised rating tiers, coverage for permissible drivers and chargeable accidents.
CEA MARKS 5th ANNIVERSARY
The California Earthquake Authority (CEA) announced it is celebrating its five-year anniversary, having recently surpassed the $1 billion milestone for cash reserves. Back in December 1996, the CEA began providing earthquake coverage for residential property owners, condominium owners, mobile home owners and renters across California. The CEA stated it has more than $7.2 billion available to pay claims, including $1 billion in cash reserves should an earthquake hit California.
SAFECO EXPECTS ENRON LOSSES
Insurer SAFECO Corp. stated that it expects fourth-quarter profits to be cut by insurance policies sold to Enron Corp., investments it held in the bankrupt energy trader, and worse-than-expected losses in its homeowner insurance business. According to a Reuters report, Seattle-based SAFECO said its pre-tax operating income would be trimmed by about $20 million, or 10 cents per share, as a result of surety bonds issued to Enron. SAFECO joins rival insurers Chubb Corp., CNA Financial Corp. and St. Paul Cos. in expecting to pay out on Enron-related surety bonds. SAFECO also said its fourth-quarter operating profit would be hit by $16 million more than it expected in catastrophe losses on homeowner insurance policies. The firm also said it is projecting $20 million of nonoperating losses due to write-downs or sales of Enron bonds held in SAFECO's investment portfolio.
REGULATORY SYSTEM ANALYZED
The California system held up by a consumer group as a model for auto insurance regulation in fact may have kept California consumers from enjoying billions of dollars in premium reductions over the past decade. That's among the key findings of an analysis of California's regulatory system by one of the country's most respected insurance researchers. In his paper released at the winter meeting of the National Association of Insurance Commissioners (NAIC), David Appel, Ph.D., concluded that it was possible California consumers would have saved more than $10 billion over the last 10 years if a competitive market had been permitted to function in the state instead of the restrictive regulations of Proposition 103. Earlier this year, a report by the Consumer Federation of America concluded that the state of California, under the provisions of 1988's Proposition 103, should serve as a model for state insurance regulation. At the request of the Alliance of American Insurers, the American Insurance Association, the National Association of Independent Insurers and the National Association of Mutual Insurance Companies, Appel conducted a review of the CFA study. In his study, Appel found that the political uncertainty imposed on the auto insurance rate approval system by Proposition 103 cost California auto insurance buyers between $8.6 billion and $13 billion.
INSURERS TO RESOLVE 9/11 DISPUTES
A number of major U.S. insurance companies agreed to resolve inter-insurer disputes in relation to the Sept. 11 acts of terrorism through unfacilitated negotiation and mediation, rather than in court. The CPR Inter-Insurer Dispute Resolution Commitment for Disputes has been signed by CNA, Chubb Group of Insurance Companies, Allstate Insurance Co, Fireman's Fund Insurance Companies, Great American Insurance Company, Kemper National Insurance Companies, Nationwide Insurance Company, REM (on behalf of Home Insurance Company) and Royal & SunAlliance USA. Including these entities' affiliates, more than 60 companies have joined the effort. For signatory companies, the CPR Commitment covers disputes of any nature related to the terrorist attacks that occurred in New York, Pennsylvania and Virginia on Sept. 11. It applies to all claims arising under all policies of insurance. Participants have agreed to work through such disputes, but do not give up their rights to arbitrate or litigate.
