WCIRB WILL NOT FILE FOR A JULY 1, 2004 PURE PREMIUM RATE CHANGE:
The Workers' Compensation Insurance Rating Bureau (WCIRB) Governing Committee met to consider the recommendation of the WCIRB Actuarial Committee with respect to filing for a change in the pure premium rate level effective July 1, 2004. The Committee reviewed recent medical and indemnity loss experience valued as of Dec. 31, 2003. The updated experience produces projections that are consistent with the projections that underlie the WCIRB's Jan. 1, 2004 recommended pure premium rate decrease of between 2.9 percent and 5.3 percent. In lieu of the 2.9 percent to 5.3 percent decrease recommended by the WCIRB, the insurance commissioner approved a decrease in pure premium rates of 14.9 percent effective Jan. 1, 2004. Inasmuch as a review of the Dec. 31, 2003 experience indicated no significant change in the indicated inadequacy of the approved pure premium rates relative to the rates proposed by the WCIRB in its Jan. 1, 2004 rate filing, the Governing Committee adopted the recommendation of the Actuarial Committee that no July 1, 2004 pure premium rate filing be made. However, both committees recognized that if workers' compensation legislation affecting benefit costs is enacted, a rate filing might be necessary. Nevertheless, it should be noted that based on the methodology used in the WCIRB's Jan. 1, 2004 filing, the WCIRB continues to believe the approved Jan. 1, 2004 pure premium rates are inadequate by between 8 percent and 12 percent.
COLORADO SENATE PASSES NCOIL INSURANCE SCORING LEGISLATION:
The Colorado Senate passed legislation, SB 216, that follows the National Conference of Insurance Legislators (NCOIL) credit-based insurance scoring model act. "This legislation provides lawmakers a positive alternative to banning insurers' use of credit information in personal lines insurance," said Michael Harrold, assistant vice president and regional manager for the Property Casualty Insurers Association of America (PCI). "We urge the House to pass this bill. It preserves insurers' ability to use this highly predictive information and contains several consumer protections. If the bill passes both chambers, we expect that the governor will sign the legislation. Governor Owens and his administration have expressed its opposition to a complete ban on insurance scoring and understand the negative impact it would have on the overall marketplace. Enacting the NCOIL model will benefit most Colorado consumers by preserving the discounts that policyholders with good insurance scores have earned. Efforts to ban insurance scoring are counterproductive because they will force consumers who are less likely to file a claim to pay more for insurance in order to subsidize higher-risk consumers." Senate Bill 216 closely follows the NCOIL model by specifying how credit information may be used. It requires insurers to disclose if credit information will be used for underwriting or rating. Insurers are required to file scoring models with the insurance commissioner and the bill provides for the model to be treated as a trade secret. An insurer that takes an adverse action based on credit information must provide the consumer with reasons for the adverse action. In addition, the bill provides two consumer safeguards not included in the NCOIL model. Under SB 216, individuals are protected from being adversely affected by identity theft or the negative credit information of a former spouse. "This legislation offers a viable alternative to a provision that was added to House Bill 1292 that would ban insurance scoring. The NCOIL model addresses the most frequent complaints of consumers and agents by instituting strong consumer protections and strengthens the personal lines market by maintaining competition, choice and accuracy of risk measurement," Harrold said.
MONTANA STATE FUND AUTHORIZES DIVIDEND:
The Montana State Fund Board authorized a dividend payment to qualifying policyholders. At their meeting, the Board approved a $2 million dividend distribution. This will be the sixth consecutive year MSF has rewarded customers with superior safety records. Nearly 12,000 policyholders of record for the period of July 1, 2001 - June 30, 2002 are eligible to receive the dividend. "We are pleased to once again reward our safety conscious employers with a dividend payment," said Herbert Leuprecht, chairman of the Board of Directors. "This is money that stays in Montana and is put back to work in our businesses and communities." Since 1998, $33 million has been returned to deserving policyholders. Those who meet the criteria for a dividend will be notified by mail in late April/early May. Funds will be distributed by mid June. Montana State Fund provides workers' compensation coverage to nearly 28,000 employers in the state, making it the largest workers' compensation insurance company in Montana.
CIWA ENDORSES CIVIL JUSTICE ASSOCIATION OF CALIFORNIA'S BALLOT INITIATIVE:
The California Insurance Wholesalers Association (CIWA), an industry group of wholesale insurance brokerage operations, has endorsed the Civil Justice Association of California's Ballot Initiative to Reform California's Unfair Competition Law. "Many CIWA members specialize in providing insurance coverage for small 'mom and pop' businesses of the type being victimized by these so-called shakedown lawsuit mills," stated Hank Haldeman, president of CIWA. "While we're seeing that no business sector is really insulated from these suits, CIWA is taking a stand on the reform initiative as the type of businesses being targeted more frequently is at the core of CIWA's business, including auto repair shops, convenience stores, nail salons, travel agents and restaurants. We're all too aware of the economic damage--and heartache--caused by this outrageous practice." The Stop Shakedown Lawsuits Initiative seeks to close a legal loophole in the Business and Professions Code Section 17200. '17200' has become shorthand to describe California's Unfair Competition Law, regularly used by public prosecutors to protect consumers and firms from unfair business practices. The loophole in the current law also allows private lawyers to file suit against a business even though it has not injured, damaged or misled anyone, and a consumer or other business has made no request for a lawsuit. Typically, lawyers who abuse the loophole never intend the frivolous 17200 suit make it to court, but use threatening form letters demanding a business owner pay a several-thousand dollar settlement or face an even more costly lawsuit. "We're pleased to be a part of this effort...it's one more issue confronting California that absolutely must be addressed," Haldeman said. "The current legislature has failed to act, so the initiative process appears to be the only remedy in correcting yet another obstacle to doing business in this state. CIWA encourages not only its members, but all Californians to support the initiative."
COLORADO LEGISLATURE PRESERVES ACCESS TO MOTOR VEHICLE REPORTS:
The Colorado Legislature defeated a bill (SB-52) that would have kept Motor Vehicle Reports (MVRs) confidential for up to the first six points of driving violations, according to the American Insurance Association (AIA). "By defeating this bill, insurance companies are able to preserve access to a valuable tool that helps carriers more accurately determine the risk of its customers and set appropriate rates," said Fred Bosse, vice president, Southwest Region, AIA. "Insurers will be able to better differentiate between good and bad drivers and continue to offer good driver discounts to those Colorado drivers who obey the law and drive safely." SB-52 would have "hidden" the first five points from a driver's MVR. Violations such as driving without insurance, failure to yield to an emergency vehicle, failure to yield to a pedestrian, driving on the wrong side of the road, running a red light and speeding up to 19 miles over the speed limit would not have been accessible by insurance companies if this bill had passed. Research shows that drivers with previous moving violations are more likely to have accidents, which is a good indicator of risk. "The legislature was wise to defeat this bill which will keep the roads of Colorado safer," Bosse said. "Dangerous and aggressive drivers need to be held accountable for their actions." SB-52, sponsored by Sen. Jim Dyer was overwhelmingly defeated on the Senate floor.
HAWAII NOT TO PURSUE STUDY ON AUTO REPAIR SHOP OWNERSHIP RESTRICTIONS:
A resolution that calls for a study of the need to prohibit insurance companies from owning auto repair facilities was deferred indefinitely following a hearing on the issue in Honolulu recently. Senate Concurrent Resolution 94 would direct the Legislative Reference Bureau to conduct the study and submit it to the Legislature 60 days prior to the 2005 session. Testifying before the Senate Commerce, Consumer Protection and Housing Committee, PCI vice president and western regional manager Sam Sorich said the resolution was based on inaccurate or incomplete assertions and was not justified. The issue of insurance carriers owning auto repair facilities has been a hot topic in other states as well. Sorich noted that the resolution cites two states that have passed legislation dealing with insurance company ownership of auto repairs shops, including Texas and North Carolina. Sorich pointed out that the Texas legislation was the subject of a court ruling which issued a preliminary injunction against the enforcement of several provisions of the bill and the court observed that the Texas law failed to advance its backers' stated goals of consumer protection and the promotion of fair competition. The North Carolina law simply requires an insurer to notify customers that the insurer has an ownership interest in a repair shop. Sorich told the committee that this is a reasonable requirement that PCI supports. PCI has 158 member companies doing business in Hawaii, including 25 that write about 44 percent of the auto insurance in the state.
