San Diego Fire Destroys Housing Structure, Damage Estimated at $50M:
A fire last month that gutted a 206-unit condo project under way in the San Diego community of University City is being blamed on a radical environmental group that is reported to have damaged resorts and homes in other parts of the country. The group, Earth Liberation Front or "ELF" is reported to have left a message behind at the scene that took credit for the blaze. While damages are expected to hit $50 million, including a $7 million crane, no injuries were reported in the pre-dawn fire. According to Leslie Halik, public information officer for the San Diego Fire Department, "By the time the crews got there and we got our first call which was around 3:03 (a.m.), it was actually well engulfed. We didn't put water on the fire, what we did was redirect our efforts to the structures around it. The fire was so intense that it melted the plastic shutters, blinds and some of the plastic furniture that was close to the windows from the radiant heat." Halik noted that the Department has pretty much finished its investigation into the blaze. "We have worked with the owner of the building and between the two, determined what was in there and what burned." Halik added that three company workers were on site at the time of the fire, but, "It doesn't sound like to me from talking to our arson investigator that they were in charge of security, they were just there. They were the people that first started rousing nearby people and trying to evacuate and alert people to the fire." San Diego Councilman Scott Peters reacted to the fire, noting that, "This is an outrage. Some people are calling this eco-terrorism. I call it terrorism plain and simple. When a group puts people's lives and property in jeopardy they are not activists they are criminals. The people behind this despicable act will be found and held accountable." A representative for the project developer, Garden Communities, offered a "no comment," when contacted by Insurance Journal, and would not identify the insurance company for the site.
Ariz. Director of Insurance Resigns:
Charles Cohen announced that he is resigning as Arizona State Director of Insurance, effective Oct. 24. Cohen, an attorney, began representing the Department of Insurance as an Assistant Attorney General in 1987. From 1992 to 1998 he held several positions on the Department's executive staff, and served as Deputy Director of the agency for four different Directors. Governor Hull appointed him as Director for the remainder of a term in 1998, and then appointed him for a full six-year term in 2000. Cohen said that it is his own decision to resign to seek new challenges and opportunities. As Director of Insurance, Cohen led the Department of Insurance to numerous achievements to enhance consumer information, assistance and protection, to promote competitive insurance markets, and to improve the operations and efficiency of the Department. In his letter of resignation, Cohen stated, "I cannot adequately express what it has meant to me to have the honor of serving as Arizona's Director of Insurance, to work with the fine people of the Department of Insurance, and to serve the Governor and the people of Arizona. I will regard with great pride and pleasure the many improvements to, and accomplishments of, the Department of Insurance, and the many instances of needed assistance and protection rendered to Arizona insurance consumers, while I have been the Director." Cohen has not yet determined what he will do next. "I have ideas, but this announcement is the start of exploring real opportunities and making decisions," he explained.
AIA Calls on N.M. Blue Ribbon Commission to Reduce Tax Toll on Insurers:
The American Insurance Association (AIA) led a delegation of property-casualty trade associations recently in urging New Mexico's Blue Ribbon Tax Reform Commission to recommend real improvements to the state's insurance tax system. Reportedly, insurance companies doing business in New Mexico currently pay more than their fair share into state tax coffers. New Mexico reportedly imposes one of the highest premium tax burdens in the nation on property-casualty insurance, increasing costs for both individual New Mexicans and businesses operating in the state. Among the essential insurance coverages that are reportedly negatively impacted by the excessive taxation: workers' compensation, automobile property and liability coverages, and protection against catastrophic losses. "Recommendations coming from the Blue Ribbon Commission will carry significant weight with the governor and state legislature," noted Fred Bosse, AIA Southwest Region vice president. "The members of the Commission should recognize that, in every state, property-casualty insurers make huge, positive contributions to state economies through creation of good, high-paying jobs—in a clean, non-polluting industry—and significant infrastructure investment. Unfortunately, because of the effects of the nationwide system of retaliatory taxation unique to the insurance industry, New Mexico's current premium tax burden (higher than all but three other states) stands as a formidable barrier to attracting insurance industry jobs and investment to this state." The industry trade groups testified that the Commission now has the opportunity to follow other states that have reduced premium tax rates and added appropriate tax credits— even in today's stressed budgetary environment—in order to provide these economic incentives. Bosse stated that, "the trend toward insurer tax equity is clear. Many states are embracing pro-competitive insurance tax policies in order to attract insurance industry investments and jobs, as well as to reduce insurance costs for both commercial and personal insurance policyholders." On the other hand, the industry testimony noted that any suggestion by the Commission to increase New Mexico's tax burden on insurance would only worsen the retaliatory tax impact [on New Mexico companies] and distinguish New Mexico as the state that burdens property-casualty insurance with the highest taxes in the nation.
Alliance Sees Class Action Reform as Top Priority in Congress' Return:
In anticipation of an early vote on class action reform legislation as Congress returns this month, the Alliance of American Insurers is urging its member companies to contact Senators in support of S 274, the Class Action Fairness Act. The move is reportedly part of a significant effort undertaken by the business community to show the need for this reform. The Senate leadership has indicated the legislation will be considered as Congress returns following its annual August recess. "Essentially, inappropriate class action litigation has become a tax on the American economy," said Ken Schloman, Alliance Washington Counsel. "It is a hidden tax that impacts everyone. By hindering the development of new products and increasing the cost of existing ones, such litigation is becoming a burden on local economies as well as the national economy." He noted that S 274 would "sharply curtail the abusive practice of forum shopping by assuring that class actions that affect the entire nation are heard by federal judges and not in a few carefully selected state courts. This legislation is procedural reform that affects process. It does not affect the substantive rights of class members. It should be characterized as 'court' rather than 'tort' reform." The bill also reportedly provides protections to consumers that currently do not exist in many instances. The legislation requires that legal notices sent to class members explaining their rights be written in "plain English." It also prohibits settlements of class actions that result in a net loss to class members and requires coupon settlements to be carefully reviewed by the courts. "The Class Action Fairness Act, along with medical malpractice reform and asbestos litigation reform, are key legislative priorities of the Congress. S 274 is ready for Senate action and we believe that the case for enactment of this needed reform has been made. Its passage will help the American economy grow," Schloman said. "The Alliance has sought significant reform of class action abuse since 1999," added Ann Spragens, Alliance senior vice president and general counsel. "It has been one of the highest priorities on our civil justice reform agenda."
Deutsche Bank Sues Allianz, AXA on Sept. 11 Building Claim:
Deutsche Bank (DB) has filed suit against Allianz and AXA over a claim for damages to its building at 130 Liberty Street in New York City caused by the collapse of the World Trade Center towers. The suit claims that the damage is so severe that the entire building must be razed and reconstructed at an estimated cost of $1.9 billion. DB acquired the property, which was built in 1974, when it purchased Bankers Trust in 1999, but the bank had no offices located there when the attacks occurred. The building carried policies totaling $1.715 billion in coverage, with Allianz and Chubb having a 30 percent share and AXA and Zurich 20 percent. DB had earlier reached an agreement with Chubb and Zurich based on a "total loss" estimate of $1.05 billion, and has been in negotiations with Allianz and AXA in efforts to reach a similar accord. The two companies, however, have reportedly refused to recognize the building as a total loss, and have estimated that it could be cleaned and structurally repaired for around $500 million. According to news reports the building, which faced the twin towers, sustained significant damage when they collapsed, most prominently a 15-story gash. The dust and debris also contained significant amounts of asbestos, and the property is now said to be infected with mold. DB is seeking the full amount of the claim from AXA and Allianz, a total of $858 million. However, the companies maintain that payment for the damages are all that is required of them under policy terms. According to a report from Reuters, an Allianz spokeswoman indicated that although "there may be very good reasons for the building to come down," her company's obligation is "to reimburse Deutsche Bank with insured losses associated with damage. But that's all." The insurers have reportedly offered to settle the claim for $315 million and $210 million respectively, a total of $525 million, based on the same agreement concluded with Chubb and Zurich, but DB has so far apparently refused a settlement on this basis.
