STATE FUND SAYS MODEST RATE CUTS ARE LIKELY:
The head of workers' comp insurer State Compensation Insurance Fund said on May 20 that employers can expect to see only modest premium cuts this year, signaling that the workers' comp reforms passed in April may take longer to materialize, according to the Los Angeles Times. Dianne C. Oki, president of State Fund, said in a Senate Insurance Committee hearing that she could not promise a big rate cut come July 1, when insurers must file rates for policies that start or renew in the second half of the year. Oki said that the State Fund, which writes about 53 percent of the workers' comp policies in California, had not yet decided how much it will lower premiums. State Fund is reportedly waiting until Insurance Commissioner John Garamendi releases his own recommendations, expected to come in the near future. Garamendi said that he planned to recommend all workers' comp insurers reduce their rates by 18 to 20 percent. His recommendation is based upon the workers' comp savings estimated by the Workers' Compensation Insurance Rating Bureau. Governor Schwarzenegger, who signed the workers' comp overhaul legislation in April, said that he expects to see premiums decrease 30 percent as the savings from the reforms are realized. Insurance companies said that it was too soon to commit to significantly lower premiums. Committee members Assembly Speaker Fabian Nunez (D-Los Angeles) and Sen. Jackie Speier (D-Hillsborough) were reportedly disappointed with State Fund's rate forecast.
CDI DISMISSES STATE FUND LAWSUIT:
The California Department of Insurance (CDI) said it dismissed the lawsuit against State Compensation Insurance Fund (SCIF) May 18. The suit was originally filed because SCIF allegedly refused to allow the Department's designated examiners to conduct an examination of SCIF's operations. The legislative mandate (SB 228) requires that the Insurance Commissioner report on SCIF's financial condition, underwriting practices and rate structure and report to the Legislature and the Governor on the potential of reducing rates by July 1, 2004. The CDI designated three examiners who have special expertise that make them uniquely qualified to assist the CDI in conducting an operational review of SCIF, but said SCIF refused to allow them in to conduct the necessary exam. Due to SCIF's refusal to permit the examiners to conduct the exam and the delay that has resulted, the CDI said it is now too late for them to perform their examination properly and prior to the July 1 deadline. "Due to SCIF's delays, we do not want the Court to engage in what is now a pointless act," Commissioner John Garamendi said. "We will therefore attempt to obtain the information we need by using Department staff and assuming that we receive cooperation from SCIF, we believe that we can produce an adequate report for the Legislature by the July 1 deadline. However, we still believe that the report would have been more complete and effective if our designated examiners had been available to assist us."
COLORADO POLICYHOLDERS SEEK LAWSUIT OVER AUTO INSURANCE PREMIUMS:
In a class-action suit, a group of Colorado drivers claim that they have overpaid auto insurance premiums over the past 25 years and that they should be reimbursed for the overcharges. The 2003 suit was filed in Boulder District Court. The drivers allege that insurance companies did not inform them that a household must only pay once for uninsured motorist coverage, instead of on a per-vehicle basis. A 2001 state Supreme Court decision upheld the principle that uninsured motorist coverage follows the policyholder and not the vehicle, but lawyers say that the drivers in the suit have paid two or three uninsured motorist premiums. Insurance companies said that it has been their practice for decades to furnish uninsured motorist coverage on a per-vehicle basis. A lawyer for one of the insurance companies said that it would be unmanageable for companies to review 100,000 insurance transactions to determine if the drivers were informed about uninsured motorist coverage options. The judge in the case is expected to issue an opinion following the insurance companies' request to dismiss the lawsuit.
MARINE UNDERWRITERS ASSOCIATION REVISES CARGO CLAUSES:
The American Institute of Marine Underwriters (AIMU) has revised the association's cargo clauses for the first time since 1966. AIMU chairman David French said the revisions would make the forms more consistent with modern usage. The revisions were approved by AIMU's board of directors at a meeting held April 28 in San Francisco. With the proliferation of individual company forms over the years, it is hoped that these clauses can establish a standard form of reference when referring to different types of basic cargo coverage, he said. "The clauses may prove helpful in defining terms in regards to coverage based on the consensus of leading underwriters in the industry," French said. Four forms were created providing the needed protection for the insured. They are: All Risks; Free of Particular Average - American Conditions; Free of Particular Average - English Conditions; and With Average. An ocean marine cargo policy is a contract between the insured and the insurance company that provides automatic protection on all shipments coming within the contract coverage. Cargo clauses are the insuring agreements in a cargo policy.
WCIRB SUBMITS EVALUATION OF SB 899 AND PROPOSED REDUCTION IN PURE PREMIUM RATES:
At the California Department of Insurance (CDI) public hearing on May 13, the WCIRB submitted its July 1, 2004 regulatory filing reflecting the WCIRB's analysis of the provisions of Senate Bill 899 and the impact of those provisions on advisory pure premium rates. In its filing, the WCIRB estimated that the provisions of SB 899 that are currently effective will reduce projected statewide benefit costs by approximately 15 percent, or $3.0 billion, and loss adjustment expenses by approximately 9 percent, or $0.3 billion. Based on this projected reduction in benefit costs, the WCIRB proposed advisory pure premium rates that are approximately 13 percent to 15 percent less than the Jan. 1, 2004 pure premium rates proposed by the WCIRB in its Nov. 3, 2003 filing letter. These rates are 2.9 percent less than the Jan. 1, 2004 approved pure premium rates. All WCIRB regulatory filings may be viewed by visiting www.wcirbonline.org/filings.
ACORD LAUNCHES NEW ADVANTAGE WEB SITE:
ACORD's new Advantage Web site (www.acordadvantage.org), which was launched recently at the ACORD LOMA Insurance Systems Forum, will reportedly improve ACORD Advantage agents and brokers access to ACORD's products and services. More than 15,000 Advantage users reportedly access the site regularly. The new site is customized to the needs of ACORD's Advantage Program members. Members previously accessed program features through the ACORD Web site (www.acord.org), but by separating the Advantage Program features from the ACORD site, access is reportedly vastly improved. Users will find that they can navigate more quickly through a simplified menu of options. The primary purpose of visitors to the site is to access and download ACORD Standard Forms for Property and Casualty and Life, Annuity and Health insurance. The new navigation reportedly represents an improved workflow for the many agents and brokers that use it as their main source for ACORD forms to process new and existing business. The new site was launched in conjunction with ACORD's release of its first fillable forms. More than 500 forms are now available that can be filled out online or downloaded, and e-mailed, faxed or printed and mailed to customers and business partners. A key new feature of the site's user-friendly interface is a Forms search function (search by form number, form name, frequently used, line of business, or by state). Users will also find it easier to access the full suite of Advantage products and services. These include The Forms Instruction Guide, agency evaluation tools, technology and agency management information, online education, user group information and agency best practices. Creating an interactive community that can provide constructive feedback to the Advantage program and ACORD's industry forms development process is also a goal of the site. Users will reportedly find it easier to make suggestions from within the ACORD Forms for improving the forms and enhancing other Advantage services.
UTAH COMMITTEE CONSIDERS UNINSURED DRIVERS PROBLEM:
A committee of insurance representatives and state lawmakers met recently and came up with a possible solution to the state's uninsured driver problem that is similar to the way that financial institutions deal with uninsured vehicles: have the state insure Utah's 120,000 uninsured drivers. The suggestion was voiced by state Sens. Dan Eastman (R-Bountiful) and Bill Hickman (R-St. George). The committee discussed ways for the state to recoup the money it would pay out for the uninsured cars. One method would be to collect an extra fee on vehicle registrations that would fund the uninsured. Ideally, any money that the state paid out would be repaid when the uninsured registered the vehicle. Insurance representatives did not want the state to pay, saying that motorists should insure themselves against uninsured drivers. Eastman said that the real goal is to get everyone insured. It is estimated that about six percent of Utah's two million registered cars are uninsured. The committee will meet again in June.
AWIA TO HOLD 2004 CONVENTION:
The Association of Wyoming Insurance Agents will hold its 50th annual convention from June 16-18 at the Holiday Inn in Sheridan, WY. The conference will feature six hours of CE credits on June 17, while June 18 will give agents and brokers the opportunity to earn two hours of CE credits. Activities include golf, fishing, a young agent event and breakfast with Wyoming Insurance Commissioner Ken Vines. Call (307) 283-2052 for more information or visit www.awia.com for registration materials.
