CALIF COMMISSIONER SEEKS 'FAIR CLAIMS' REG. CHANGES
Acting to provide greater protection for consumers who file insurance claims, California Commissioner John Garamendi has proposed amendments to the Fair Claims Settlement Practices (FCSP) regulations, which govern how insurers handle claims. "Protecting the consumer is our top priority at the Department of Insurance," said Garamendi. "These amendments make the FCSP regulations applicable to all types of insurers and strengthens control of how claims are handled." The FCSP regulations provide clear standards of conduct for insurers and other licensees on how to comply with the Insurance Code's unfair claims settlement practices statutes. The Commissioner's filing with the Office of Administrative Law (OAL) would expand the scope of the regulations to the entire surety industry and require that insurers be held responsible for the accuracy of information they use to evaluate insurance claims. It would also enhance restrictions on certain clauses in policies that result in unfair claims practices, prohibit unfair penalties against motorists who use non-preferred provider auto repair shops, and broaden language that defines what constitutes non-compliance by insurers. The OAL has 30 working days to act on the proposal. If approved, the changes are submitted to the Secretary of State's office and become effective after 90 days.
CWCI SEMINAR TO LOOK AT POST AB 749 STRATEGIES
The California Workers' Compensation Institute (CWCI) has announced it will conduct a one-day case law seminar in May in San Francisco and Long Beach. The program will examine trends in case law in light of the recent passage of AB 749, and discuss appropriate negotiation and defense strategies for claims personnel, attorneys, hearing reps, and others workers' compensation professionals. CWCI general counsel Mike McClain is coordinating the program, the latest in the Institute's case law seminar series that began five years ago. McClain noted, "With AB 749 now in effect, workers' comp claims and legal professionals need to take a fresh look at the impact of case law in areas such as earnings and benefit calculations, new WCAB rules—including the benefit printout rule, the increased threat of penalties, and medical lien litigation. Our faculty has experience from both the applicant and defense sides, so we'll again use a debate-style format to showcase different views on recent rulings and to provide practical strategies for those trying to deliver benefits or defend claims." The Institute will present its seminar from 9 a.m. to 3:30 p.m. on Wed., May 7 at the Sheraton Palace in San Francisco, and Fri., May 9 at the Renaissance Long Beach Hotel. The cost is $295 for CWCI nonmembers, $195 for member company employees. CWCI members registering three or more attendees together with a single payment postmarked or transmitted by April 18 are eligible for a discounted rate of $175 per person. The fee includes course materials and lunch. Space is limited, so registrations will be on a first-come first-served basis. Details and registration forms can be accessed on CWCI's Web site (www.cwci.org) or by calling Mel Long at 510-663-1063.
AAI CONTINUES TO FIGHT EFFORTS TO BAN CONFIDENTIAL SETTLEMENT IN CALIF
A bill introduced in the California Senate is the latest in a series of attempts by the trial bar to restrict the use of confidentiality and settlement agreements in certain legal actions, according to the Alliance of American Insurers (AAI). The AAI is opposing SB 466, which would essentially bar the use of court-approved confidential settlement agreements in actions alleging damages caused by a defective product or an environmental hazard. "California is the eleventh state to see legislation introduced on behalf of the trial bar this year," said Peter Gorman, vice president and Western regional manager for the Alliance. "We believe that the judiciary must be able to maintain its discretion to issue protective orders on a case-by-case basis. The Alliance will make every effort to ensure this bill does not become law." "Much of the legislation that the states are currently considering is contrary to U.S. Supreme Court decisions that have held that evidence produced in discovery may not become public documents," said Joyce Kraeger, Alliance staff attorney. "Eliminating the ability to issue a protective order serves one purpose—it allows the trial bar access to the discovery process so that they can generate more fodder for more litigation. "Eliminating protective orders will slow down the discovery process, increase the costs of litigation, and discourage settlement of cases. It will also further burden the already overcrowded court dockets and turn the judiciary into an information agency by requiring courts to review and supervise the distribution of thousands of documents currently exchanged between the parties in the discovery process without the courts supervision. Limits on protective orders could have a chilling effect on new product development."
SWISS RE SIGMA STUDY PUTS 2002 CAT LOSSES AT $13.5B
A new Swiss Re sigma report, "Natural catastrophes and man-made disasters in 2002," estimates the cost to the industry at $13.5 billion, $1.5 billion more than the company's preliminary estimates released last December. "The increase was mainly due to higher storm losses, which totaled USD 6.7 billion. However, the annual loss burden on insurers was substantially down form USD 35 billion in 2001," said Swiss Re. "While natural catastrophes in 2002 caused the majority of losses, USD 11.4 billion, man-made losses totaled USD 2.1 billion. This marks the return of natural catastrophes outweighing man-made disasters, a trend which was only broken in 2001, due to the September 11 terrorist attack." The report noted that, "Property losses were below the long-term average, according to Swiss Re sigma statistics which started in 1970. Flood losses, however, cost insurers a record USD 4.1 billion. Floods are posing a growing challenge to the insurance industry and the state." Most of the $4.1 billion in flood related losses were due to the two flood events in Europe during the summer, which cost insurers an estimated $3.2 billion. "The previous records for flood losses also stem from the recent past: USD 2.9 billion in 2000 and USD 2.7 billion in 1993," said Swiss Re. "The economic losses caused by the floods are significantly higher than the insured losses: sigma estimates that the two European floods alone triggered an economic loss of USD 15 billion." After the floods the four next most costly events were: the spring storms and tornadoes in the U.S., $1.7 billion; windstorm Jeanett in Europe, $800 million; Hurricane Lili in the Caribbean and the U.S., $700 million, and Tropical Storm Isidore in the same region, $500 million. "For property insurers, threat scenarios still include terrorism, and September 11 gave the public a clear reminder of its ominous dimensions," said the report. "In 2002, the attacks on Bali and Djerba further proved that international terrorism is a lurking threat. However, potential insured losses have been reduced considerably for private direct insurers and reinsurers. Terrorism cover has been restricted, and some markets have introduced new types of cover, e.g. the U.S., Germany and France, in which the state carries a substantial share of any loss." The full report may be obtained in PDF Format on the company's Web site: http://www.swissre.com, or by e-mail at: sigma@swissre.com.
INSURANCE BUREAU OF CANADA SAYS INDUSTRY REACHED A 'NEW LOW' IN 2002
Borrowing a phrase from Britain's Queen Elizabeth the Insurance Bureau of Canada labeled the year 2002 an "Anni horribiles" as it reported that the financial results for the country's P/C insurers "plunged to a new low." The IBC is the national trade association of the private property and casualty industry. It represents the companies that provide more than 90 percent of the non-government home, car and business insurance in Canada. According to the annual financial report "2001 was the worst year on record for the industry but final financial results for 2002 are even weaker." Paul Kovacs, IBC's chief economist, indicated that, "higher prices over the past 12 months were not enough to make up for mounting claims costs and a significant slump in investment income. The past two years for Canadian insurers have been absolutely terrible." The report did note that nearly 60 percent of Canada's insurers reported some improvement in their combined ratio last year. "However," it said, "underwriting results are still unsustainably weak, mainly for auto insurance." Kovacs noted, "The market remained very difficult for the whole year. Seventy-seven percent of companies reported lower investment income last year which caused a deterioration of return on equity (ROE) for 53 percent of the companies." The industry ROE dropped to 1.6 percent—the lowest level on record. IBC data is based on year-end regulatory findings for some 90 percent of insurers and reinsurers. "On a region-by-region basis, significant differences are evident in the distressed auto insurance market, and some provinces are starting to address the urgent need for legislation to deal with the rising costs of providing auto insurance. Atlantic results are dreadful and have been unprofitable for more than a decade. Ontario is the weakest insurance market in the country. Results for Alberta are poor and continue to deteriorate, while the Quebec market remains healthy. More than 95 percent of the BC market is closed to private auto insurers," according to the bulletin.
