COMP WEST LAUNCHES WORKERS' COMP OPS IN CALIF.:
CompWest Insurance Company announced that it has been licensed as a workers' compensation insurer by the California Department of Insurance, responding to the significant capacity shortage in the California market. Trident III, L.P., a private equity fund managed by MMC Capital, is the lead investor in CompWest, with members of the management team also investing in the new company. CompWest Insurance is being capitalized initially with $50 million and will commence underwriting immediately. CompWest, headquartered in San Francisco, will focus on serving the needs of mid-market employers throughout California. The company will work in partnership with a select number of regional independent brokers with significant operations in California and large books of workers' compensation business. The CompWest management team is led by William J. Mudge as CEO and Stephen C. Pogue as CFO. Previously, Mudge served as the CEO of Golden Eagle Insurance Corporation and as chief underwriting officer of Industrial Indemnity. Pogue was previously a senior vice president of American Re-Insurance Company. "The recently enacted legislative reforms represent a significant step towards addressing the problems with the state's workers' compensation system and ensuring continued access to insurance capacity for California's business community," said Meryl D. Hartzband, senior principal and investment director, MMC Capital. MMC Capital Inc. is a global private equity firm and serves as the manager of the Trident Funds. MMC Capital has been the sponsor of more than fifteen insurance companies, including ACE Limited, XL Capital Ltd. and AXIS Capital Holdings Limited. Visit www. compwestinsurance.com for more information.
GOV. SCHWARZENEGGER VETOES DRIVER'S LICENSE BILL:
Governor Arnold Schwarzenegger vetoed a bill by Senator Gil Cedillo (D-Los Angeles) that would allow undocumented aliens access to California driver's licenses, according to the Pasadena Star-News. AB 2895 is essentially an amended version of last year's SB 60 (also authored by Cedillo), which was approved by former Governor Gray Davis and subsequently rescinded by the Legislature this year under pressure from the governor. Sponsors of AB 2895 said they amended the bill to address security concerns of law enforcement, including a requirement that drivers who cannot prove legal residency submit fingerprints, undergo background checks and be sponsored by an adult with a valid California driver's license. Additionally, screeners would have been mandated to check the applicant's name to see if they are on the Department of Homeland Security's terrorism watch list. Opponents of the bill have stated they would press for a ballot initiative restricting driver's licenses to legal California residents.
OREGON ARCHDIOCESE FILES COMPLAINT AGAINST INSURERS:
The Archdiocese of Portland filed a complaint in U.S. Bankruptcy Court in an attempt to force insurance companies to reimburse it for the $53 million it paid in settlements concerning clergy sex abuse, according to the Associated Press. The archdiocese filed for protection from creditors earlier in the year and is also petitioning the court to make insurance companies obligated to pay future claims. Nine companies are named in the complaint and there are a number of unnamed companies that insured the archdiocese from 1941 and 2000. The archdiocese is also seeking help paying for legal defense in the clergy sex-abuse lawsuits. No explanation was given for why insurers withheld payments.
SAFECO ESTIMATES LOSSES FROM HURRICANE FRANCES:
Seattle-based Safeco announced that its pretax catastrophe losses stemming from Hurricane Frances are estimated at $28 million. This figure represents the estimated losses both from claims received through Sept. 20, 2004 and future expected claims from policyholders with damage from the storm. The effect on third-quarter net income is estimated at $18 million after tax, or $0.13 per diluted share. The estimated pretax losses include $13 million in personal lines, primarily homeowners claims and $15 million in small-business claims. Safeco previously announced that its pretax catastrophe losses stemming from Hurricane Charley are estimated at $45 million. Hurricane Charley's effect on third-quarter net income is estimated at $29 million after tax, or $0.22 per diluted share. The total impact of Frances and Charley on third-quarter net income per share is estimated at $0.35 per diluted share. Safeco does not anticipate reimbursements from the Florida Hurricane Catastrophe Fund or Safeco's property catastrophe reinsurance for damages from either Hurricane Frances or Hurricane Charley. The company will announce its third-quarter financial results on Oct. 19, 2004.
AMA JOINS PUSH FOR WASH. MED-MAL REFORM:
The American Medical Association (AMA) joined the Washington State Medical Association (WSMA) for a National House Call to urge voters to sign on to Initiative 330 to help restore fairness and balance to Washington's broken medical liability system and protect patients' access to care. Washington is one of 20 states in crisis, according to the AMA, where physicians are forced to limit vital services such as delivering babies, reading mammograms and providing trauma care and brain surgery because of the fear of being sued and the uncontrolled costs of the legal system. Specific provisions of I-330 include maximizing the amount of money patients, not personal injury lawyers, recover when monetary damages are awarded; compensating patients for 100 percent of their economic losses while creating a $350,000 limit (up to possibly $1.05 million) for noneconomic damages; and guaranteeing payments over time to ensure injured patients receive on-going benefits. "Our patients want medical liability reform," WSMA President Jeff Collins said. "A recent survey found that 72 percent of Washington voters support limits on the amount of money juries can award for non-economic damages, and 78 percent of voters feel that without limits on non-economic damages, the price of health care will increase significantly."
WCIRB RECOMMENDS 3.5 PERCENT INCREASE IN RATES:
At a Department of Insurance rate hearing in San Francisco on Sept. 15, the Workers' Compensation Insurance Rating Bureau recommended that insurers raise workers' comp rates by 3.5 percent in January 2005. Governor Arnold Schwarzenegger signed reform package SB 899 in April but so far the legislation has not resulted in significantly lower premiums. Insurance company representatives said that full cost savings would not be realized until permanent disability benefits are recalculated early in 2005. After the hearing, labor unions and lawyers renewed plans to petition the Legislature for rate regulation, according to the Los Angeles Times. Insurance Commissioner John Garamendi will shortly make a recommendation to insurance companies on whether to raise or lower their rates. "Today the Workers' Compensation Insurance Rating Bureau (WCIRB) has proposed a 3.5 percent increase in the pure premium rate, to become effective January 1, 2005. This is only half the story," Garamendi said in a statement. "I have also received valuable information from experts and industry concerning the status of the workers' compensation system. SB 899 requires that regulations be written before it can be fully implemented. The Division of Workers' Compensation Administrative Director stated that the regulations should yield cost savings. When the regulations are in place we may find sufficient savings to more than offset the WCIRB'S recommended 3.5 percent increase, and continue the rate reductions that commenced with the 2003 reforms." The recommendation that Garamendi makes is not binding on the insurance companies.
GARAMENDI APPOINTS MEMBERS OF ARMENIAN INSURANCE SETTLEMENT FUND BOARD:
Insurance Commissioner John Garamendi announced three appointments to the Armenian Insurance Settlement Fund Board. The board was created to oversee the settlement of claims against New York Life Insurance Company as directed in the settlement of a class-action lawsuit on behalf of heirs and descendants of policyholders who were killed during the Armenian Genocide more than 90 years ago. The board members, Viken Manjikian, Paul Krekorian and Berj Boyajian, will evaluate claims and determine which are to be paid pursuant to the terms of the settlement agreement. The board's decisions will be final with no right of appeal. Early this year, Commissioner Garamendi, after long negotiations, was able to secure a $20 million fund to help fund the payment of claims in the case. New York Life compromised in order to reach a detailed agreement that will benefit both the survivors of the policyholders as well as the Armenian community. Of the $20 million fund, at least $3 million will be put into the 'Unclaimed/Heirless Fund,' which will be contributed to court-approved charitable organizations - as set forth in the settlement agreement - whose activities advance the Court-approved charitable interests of the Armenian community. Manjikian, of Lancaster, is director of Inpatient and Emergency Radiology, and director of Vascular and Interventional Radiology at Antelope Valley Hospital. Boyajian, of Beverly Hills, operates Boyajian and Associates in Los Angeles. Krekorian, of Burbank, is a founding partner of the law firm Fisher & Krekorian in Los Angeles.
CALIF. GOV. VETOES SB 494:
Continuing to act on his pledge to improve California's business climate and prevent expensive litigation and abuse by special interest groups, Gov. Arnold Schwarzenegger has vetoed legislation sponsored by personal injury attorneys that would have increased the cost of insurance for all Californians, according to the American Insurance Association (AIA). "Gov. Schwarzenneger is making good on his promise to protect California's consumers from special interest legislation," said Janine Gibford, AIA assistant vice president, western region. "This legislation was sponsored by the personal injury attorneys and was designed purely to line their pockets with more money at the expense of California policyholders." The measure, SB 494 authored by Sen. Martha Escutia (D), would have given medical providers a direct right of action against insurers for the "reasonable and necessary" costs incurred for medical treatment provided for an injury caused by a third party, when the injured person was a Medi-Cal recipient. "This measure was touted as a way to help public hospitals that are struggling to keep up with rising costs and low reimbursements. In reality, SB 494 was a cash grab by personal injury attorneys looking to increase the amount of money they can sue for," Gibford said. "This bill would not have given injured people a penny more, but it would have been a windfall for lawyers."
