FARMERS RECEIVES APPROVAL FOR LOWER RATES FOR CALIF. HOMEOWNERS:
The Farmers Insurance Group® of Companies announced it has received approval for a rate reduction from the California Department of Insurance on homeowners business in the state of California. Beginning with renewals effective Feb. 16, 2004, many of Farmers' customers in California will see a rate decrease. While the actual rate change will vary depending on the location and other characteristics of the home, some customers will see a rate decrease of up to 15 percent. In addition to the rate decrease, Farmers will also be introducing a new Home/Life Discount and two new deductible options for its homeowners business. Customers who have both a life policy and a homeowners policy issued by Farmers will receive a five percent discount on their homeowners' policy. "We are committed to providing the best insurance value to our customers in a very difficult market. This discount is in addition to the many discounts available already," said Ron Coble, Farmers' California vice president and state executive director. Further, customers will now be able to select a $750 or $5,000 deductible to suit their own individual needs. "It's all about individual choice, and that is what we want to provide our customers," added Coble. The Farmers Insurance Group® of Companies insure over 1.1 million homes in California and constitute the state's second-largest home insurer group.
SURPLUS LINE PREMIUM SEES 82 PERCENT INCREASE, SAYS SLA:
Ted Pierce, executive director of the Surplus Line Association of California (SLA), released the association's nine-month total for processed surplus line premium showing an 82 percent increase over the 2002 premium total for the same period. The $3,884,507,930 in 2003 premium is attributed to the continued impact of the hard market. The Association processed a total of 278,613 insurance policies in the last nine months compared to 222,392 processed in 2002. "A third of this business was written for general liability coverage followed by commercial DIC, stand alone earthquake, commercial property, errors and omissions, and excess liability," Pierce said.
CDI OFFERS NEW ONLINE LICENSE APPLICATION SERVICE:
The California Department of Insurance (CDI) is now offering an Internet license application service that will allow online applications for a license to act as an insurance agent or broker. FLASH (Fast Licensing Applicant Services is Here) reduces the timeline for processing a license application by at least two weeks and helps applicants complete the application more accurately to ensure speedy processing. The service is now available on the CDI Web site at www.insurance.ca.gov. "One of my principal goals is to improve the efficiency of the regulatory process," said Insurance Commissioner John Garamendi. "FLASH illustrates how this Department can use technology to reduce regulatory costs and provide better services to consumers and the insurance industry." Applicants, when applying online using FLASH, will pay their license-filing fee using a credit card with no applicable surcharges. Credit card transactions are encrypted and only the applicant and his or her credit card company will have access to the credit card number. Applicants will receive an e-mail within 24 hours confirming that CDI received the FLASH application. This e-mail will also provide the applicant with a link to CDI's Online Examination Scheduling service that the applicant utilizes to schedule their examination. The Online Examination Scheduling service is also available to those applicants who need to re-take the examination. Applicants without computer access may still mail an application and applicable fees to CDI's Producer Licensing Bureau, P.O. Box 1139, Sacramento, California 95812-1139. For all questions regarding the application process, call the CDI Producer Licensing Bureau's toll-free number at 1-800-967-9331 or (916) 322-3555. Also, questions and concerns can be submitted via e-mail by accessing the following link: www.insurance.ca.gov/LIC/plbemail.htm.
ISO REPORTS INSURERS' Q3 CAT LOSSES ESTIMATED AT $2.9 BILLION:
Insurers are expected to pay $2.9 billion to homeowners and businesses for insured property losses from seven catastrophic events in the third quarter of this year—up more than 300 percent from the year-ago period—according to current estimates by Insurance Services Office Inc.'s (ISO) Property Claim Services (PCS) unit. Third-quarter 2002 catastrophe losses totaled $715 million. The quarter's losses are exceeded only by the $20.7 billion loss in third-quarter 2001, primarily from the Sept. 11 terrorist attacks in New York and Virginia, and $4.06 billion in the third quarter of 1998, when Hurricane George caused nearly $2 billion in damages along the Gulf Coast. Catastrophe losses for the first nine months of 2003 now stand at $9.4 billion, more than double the $4.1 billion for the same period last year. The seven catastrophic events during the quarter—Hurricanes Claudette and Isabel, four wind and thunderstorm events, and the widespread power outage during mid-August—are about average, based on an annual average frequency of 6.5 events over the past 10 years. Insurers can expect nearly 886,000 personal and commercial property and automobile claims in 30 states from this quarter's losses, PCS said. At $1.17 billion, Hurricane Isabel topped the list for this quarter's insured losses, followed by an estimated $815 million in damages from the severe thunderstorms that struck 14 southern and eastern states in late July. The power outage caused $75 million in property damage, but the estimate could be revised when the exact cause of the blackout is determined. PCS will resurvey Hurricane Isabel losses in 60 days, which is standard procedure when preliminary loss estimates from a catastrophic event exceed $250 million or special circumstances underlying the event require additional analysis. Virginia sustained the highest insured losses in the quarter—$460 million, mostly from Hurricane Isabel. Maryland and Tennessee each suffered insured damages of $410 million, followed by Illinois at $230 million and Ohio and Indiana, each with $185 million. ISO's PCS unit defines a catastrophe as an event within a particular territory that causes $25 million or more in insured property losses and affects a significant number of property and casualty policyholders and insurers. PCS estimates represent anticipated insured loss on an industry wide basis arising from catastrophes, reflecting the total net insurance payment for personal and commercial property lines of insurance covering fixed property, personal property, vehicles, boats, related property items and business-interruption losses. The estimates exclude losses insured by the National Flood Insurance Program and all loss-adjustment expenses.
BUILDING RELATIONSHIPS KEY AT NAAIA'S 2003 NATIONAL CONFERENCE:
In remarks at the recent National African-American Insurance Association's 2003 National Conference and Empowerment Summit in Las Vegas, NAAIA chairman Roosevelt Haywood III said that for insurance professionals to strengthen themselves, they must recognize and leverage their strengths but also reach out and build meaningful relationships. "Image is everything. An individual or business concern must look the part before it can assume the part it desires to play," said Haywood, who is president of Haywood and Fleming Associates, a commercial insurance and risk management firm located in Gary, Ind. NAAIA's annual summit attracted a wide range of insurance and risk management professionals from across the nation who attended seminars on leadership, professional development, and education courses on timely insurance topics. The conference also featured speakers such as author and motivator George Fraser and former National Association of Insurance Commissioners' president George Nichols, who is currently a vice president of New York Life Insurance Co. Jerald Tillman, the NAAIA's founder, said, "The workshops, keynote speakers, and panel discussions offered solutions to the challenges faced by minorities in the industry and provided a road map for companies looking to tap into the multicultural marketplace. Power networking and problem-solving discussions provided a great forum for corporate recruiters and others attending from many of the top U.S. insurance companies." In his address, Haywood commented, "This past year has been one of remarkable achievement and progress for the NAAIA, thanks to the tireless efforts of hardworking, talented and dedicated individuals of the Board and the general membership. The NAAIA is creating a powerful support system for African-American insurance professionals. Our purpose is to enhance the experience and perpetuate the existence of our people in the industry. This in turn allows us to better serve our communities and provides insurance companies a better means to link to the African-American buying sector of the emerging marketplace. In short, this has been an exciting year for the NAAIA as we strive to expand the organization's influence."
WTC CLAIMS WAR OF WORDS CONTINUES AS GOV. SEEKS SETTLEMENT:
Despite the earnest efforts of New York's governor George Pataki to find a quick solution to the dispute between Silverstein Properties and Swiss Re over the amount to be paid for the destruction of the World Trade Center, both sides seem determined to plow ahead with their litigation, in the courts and in the press. The dispute centers on whether the destruction of the Twin Towers constituted one event (Swiss Re's position), or two separate events (Silverstein's position). Approximately $3.5 billion rests on the answer, which a jury is now slated to determine in a trial scheduled to begin late this year at the earliest. The Governor is concerned that the protracted dispute will delay the start of reconstruction of the WTC site, but given the invective between the two sides, it's hard to imagine that any compromise can be achieved. Swiss Re ramped up the dispute with a press release detailing the efforts it has made to settle the matter, and citing Silverstein's intransigence as the main roadblock. "For two years Swiss Re has performed, and continues to perform, in accordance with the terms of our insurance contract. According to that contract, World Trade Center leaseholder Larry Silverstein can recover up to $3.5 billion of insurance proceeds paid out over time as he rebuilds," said the bulletin. "Meanwhile, Silverstein's litigation efforts continue to delay resolution, causing significant erosion of the money available for rebuilding. Silverstein is a private developer who wants to control Ground Zero. Toward that end, he has promised the public he is entitled to collect two policy limits from his property insurers. His promise rings false after the U.S. Court of Appeals categorically rejected his appeals and increased to five the number of insurers thus far conclusively liable for a maximum of one policy limit." Swiss Re charged that, "Silverstein continues to erode the insurance proceeds available so that he can pay lobbyists, lawyers and PR advisers who contribute nothing to rebuilding. The insurance companies have advanced $1.9 billion in insurance proceeds to date; $600 million has been allocated to Silverstein for WTC expenses." It went on to note that these expenses included: $100 million in legal fees; his claim for management fees (on buildings that no longer exist); his failure to account for insurance proceeds, and his fight with his principle lender GMAC. It also noted that the leasehold investors continue to profit from tax benefits built into the lease. Silverstein's lawyers fired back with a press release of their own, charging that, "Swiss Re's statement contains misstatements, distortions and half-truths. This bears the earmarks of a foreign insurer desperate to protect its pocket book to the detriment of New York." Howard J. Rubenstein, representing Silverstein, pointed out that the Port Authority was also a party to the lawsuits, as it recognizes "the insurance recovery is essential for the rebuilding of lower Manhattan." He went on to charge that Swiss Re has so far paid only $49 million, roughly 6 percent of the $3.5 billion and that its $1.9 billion figure was therefore misleading as the bulk of it had in fact been paid by other insurance companies. He also noted that motions filed by other insurers to avoid a jury trial had been rejected in four out of seven cases, and stressed his client's position that "the crashes of two airplanes into two buildings entitles Silverstein and the Port Authority to recover on a two occurrence basis is not an outrageous claim," as it "has been endorsed by Attorney General Spitzer, Gov. Pataki and the Property Loss Research Bureau, an insurance industry think tank." He also stressed that the ultimate decision still lies with the jury, and has not been decided yet. The bulletin defended Silverstein's position that the Travelers form controlled the parties obligations, not the WilProp form, and disagreed with Swiss Re's assertions that Silverstein hadn't provided an adequate accounting and was not using the insurance proceeds to pay legitimate expenses. The money had mostly gone to pay "rent to the Port Authority and debt service to GMAC and other lenders." It added that "Swiss Re's speculation that $100 million has been paid to lawyers is just that—speculation. And Silverstein is absolutely entitled to management fees to cover the costs of managing the rebuilding process." Perhaps Gov. Pataki is justified in trying to get the two sides to agree on a settlement. There is a real risk that rebuilding on the WTC site could be delayed, perhaps for years, while the litigation works its way through the courts. As the highest state official, it's his job to push for a solution that will most benefit the people of New York, and particularly lower Manhattan. Unfortunately, despite a lot of rhetoric to the contrary, neither Swiss Re nor Silverstein can afford to take such a position given the amount of money at stake. There isn't a single word in either of their press releases that would indicate they are ready to bargain in good faith. Given the extreme rancor the case has already produced, both in the courtroom and in the press, Gov. Pataki's quest for a settlement looks like a mission impossible.
