MONTANA MAY HAVE TO PAY PRE-1990 WORKERS' COMP CLAIMS:
The state of Montana may have to pay up to $584,000 in workers' comp claims because the 2003 Legislature, in an effort to balance the 2004-2005 state budget, diverted $18 million from Montana State Fund. When the state took the $18 million out of the insurance fund, it agreed to cover any unfunded liability that the Old Fund, which covers injuries occurring prior to 1990, incurs. Montana State Fund recently announced that the "Old Fund" will be over budget by approximately $500,000 by June 30. The state asserted that it would come up with the money if necessary. In 1990, lawmakers shut down the Old Fund to claims because it owed a half a billion dollars more in insurance claims than it could pay. The New Fund handles claims from July 1, 1990 onward.
OCTOBER WILDFIRE SURVIVORS FILE CLASS ACTION SUIT AGAINST INSURANCE COMPANIES:
A class-action lawsuit was filed on May 5 against four major insurance companies who write homeowner's insurance in California. The lawsuit filed against State Farm, Allstate, Farmers and Safeco alleges that the insurance companies acted in bad faith, committed fraud and engaged in unfair and unlawful business practices by charging their insureds a full renewal premium for their homes and personal property that burned in last October's wildfires and no longer exist. The lawsuit was brought by: Lavonne Luscombe-Schwab, a State Farm insured; Pamela Gardner, an Allstate insured; Peter Gaffney, a Farmers insured; and Robert Fine, a Safeco insured; all residents of San Bernardino County and John Caliri, an Allstate insured, a resident who lost two homes in Los Angeles County. "In effect, the insurance companies are selling snake oil-coverage on homes they recognize no longer exist," attorney Michael Bidart said. "Some agents have basically told these already victimized families to either pay the thousand-plus dollar premium or risk complete cancellation of their homeowner's insurance policy," attorney Harvey Levine said. "These tactics represent another layer of unlawful and fraudulent conduct being perpetrated against policyholders by certain insurance companies." The lawsuit, filed under California's Business and Professions code section 17200, was filed as a class action on behalf of all California residents who have suffered a total loss of their home and personal property and have been charged an insurance premium for their home, personal property, and loss of use coverage for 2004 through 2005, at a time when the structure and property no longer exists. "These insurance companies are punishing fire survivors by charging full premiums on their homeowner's insurance when their homes don't exist and at a time when they need the extra money to rebuild their lives," attorney William Shernoff said.
CEA FORGES HISTORIC REINSURANCE PACT:
The California Earthquake Authority's (CEA) Governing Board took a historic step April 29 when it revised its financial structure for 2005 and obtained commitments from reinsurers to collateralize the first $300 million of the CEA's 2005 reinsurance program. Elaine Bush, CEO, said "the reinsurers' agreement to collateralize a portion of the reinsurance program is unique and provides more security at a lower cost to CEA policyholders." The CEA negotiated $1.5 billion of reinsurance coverage and will benefit from a blended rate-on-line of 5.84 percent, a drop of more than 50 percent in the rate-on-line obtained for the CEA's first year of operations in 1997, when the rate was 12.5 percent. "This is a win-win for the CEA and for the reinsurance community," said Tim Richison, CEA CFO and director of Insurance Operations. "We will continue to work together to achieve fair pricing and terms on the CEA's book of business." The agreement calls for the reinsurer to set up a trust account with a U.S. bank acting as trustee. Before Jan. 1, 2005 the reinsurer will deposit in the account U.S. treasury securities with a remaining maturity of no more than three years and with a market value of at least 105 percent of the reinsurer's share of the Collateralized Reinsurance Contract Limit. "By in effect putting cash in the bank, the reinsurance community will provide added security for CEA policyholders," Richison said. "This action is a strong signal from reinsurers that they are strongly committed to meeting their obligations following a catastrophic event." Richison noted that other organizations had attempted to purchase collateralized reinsurance but those attempts had failed. Clark Kelso, CEA board chairman, congratulated the CEA on forging the money-saving agreement. "This is a very good transaction for all parties," Kelso said. To view the materials used in the discussion, visit the CEA Web site at: http://www.earthquakeauthor-ity.com/4-29-2004-GB-Attachments/GB4-29-2004AI-9.pdf.
CIWA CHANGES VENUE FOR ANNUAL MEETING:
California Insurance Wholesalers Association (CIWA) has a new venue for its annual meeting. The meeting will take place at the Pan Pacific Hotel at 500 Post Street in San Francisco on June 17 and June 18. The meeting schedule features a Board of Directors meeting and cocktail reception on Thursday, June 17. On Friday, June 18, there will be a continuing education session on SL2 Forms presented by Christy Weiler Dean, Esq. A panel discussion will follow. The Annual Meeting and Election of Officers followed by a lunch and Committee Day wraps up the meeting. For more information, visit www.ciwa.net.
