PCI SEEKS CHANGES TO NEV.'S AB 315:
The Property Casualty Insurers Association of America is seeking amendments to Nevada legislation that would affect the availability of mechanical data recorded by newer model cars just prior to accidents. "We believe this data should be made available to insurance companies to improve claims handling and help prevent fraud," said Kate Diehl, legislative advocate for PCI. The legislation is AB 315, which will be considered by Nevada's Assembly Transportation Committee. "PCI and its members recognize that consumers are concerned about the privacy of their financial and health information, and accordingly, property/casualty insurers strictly adhere to all relevant federal and state privacy laws. Nevertheless, to assure that crash claims are administered efficiently and fairly, property/casualty insurers should not be precluded from having access to data from the Event Data Recorders--commonly called 'black boxes,'" Diehl said. EDRs can benefit everyone from drivers to traffic and safety-control officials, law enforcement agencies, vehicle manufacturers, repair shops and insurers. EDR data can help quickly verify or disprove claimant or witness accounts and help determine whether alleged injuries are consistent with the nature of the collision.
NEW MEXICO GOVERNOR SIGNS CREDIT LEGISLATION:
New Mexico Gov. Bill Richardson (D) signed into law SB 560, the Personal Insurance Credit Information Act, according to the American Insurance Association. The bill was passed by the legislature on March 19. SB 560 will provide New Mexico with some of the strongest consumer safeguards in the country that go beyond similar laws adopted in other states and are based on recommendations from the New Mexico Credit Scoring Task Force, a coalition of consumer and business groups established by the New Mexico Insurance Division. These safeguards include the following: insurance companies cannot deny, cancel or fail to renew coverage, or base a consumer's placement on the basis of credit information or an insurance score without consideration of other underwriting factors permitted by state law; insurance companies cannot consider an absence of credit information or an inability to determine credit information, except under certain circumstances; and insurance companies must take into consideration "extraordinary life circumstances," such as certain medical conditions, illness, injury or disease, divorce, the death of a spouse, child, or parent, involuntary loss of employment for more than three consecutive months, identity theft, a loss that makes a home uninhabitable, and other circumstances prescribed by the superintendent of the New Mexico Insurance Division. The new law becomes effective on Jan. 1, 2006.
CALIF. COMMISSIONER OK'S RATE REDUCTION FOR STATE FARM CUSTOMERS:
California Insurance Commissioner John Garamendi has approved a 4.2 percent reduction in personal auto policy rates for "loyal" State Farm customers, a savings of more than $110 million for those policyholders. The commissioner expedited his review of the proposed reduction in light of State Farm's 7.6 percent reduction in August 2004. State Farm has recently worked with the Department of Insurance to seek the most efficient way to provide these further reductions for policyholders. The Department's Rate Filing Bureau worked with State Farm actuaries to provide the further reductions by expediting a rate application process. Policyholders who have renewed with State Farm for more than six years will receive a 16 percent discount, and those who have renewed for three to six years will receive a discount of 8 percent. The savings will apply to 90 percent of State Farm's three million policyholders. The filing by State Farm was based on the outcome of a 3-year major reorganization of its operations in California, which has resulted in an improvement of its internal expense management. The rate reduction, effective May 1, 2005, will be applied to customer premiums as the policies renew.
MONTANA LEGISLATURE PASSES CREDIT SCORING BILL:
The American Insurance Association applauded the passage of an insurance scoring measure in Montana. This bill will ensure consistent use of personal credit information by insurers, while maintaining a tool that enables insurers to accurately predict risk and appropriately price coverage. "AIA worked very closely with Montana legislators to develop a measure that balances insurers' need to accurately assess risk with the need to provide protections for consumers' personal information," said Steve Suchil, AIA assistant vice president, western region. "Montana legislators considered several bills including a complete ban on insurers' use of credit information. Negotiations resulted in a better measure which will enable insurers to offer products at a price that reflects the consumer's potential for risk. Consumers who manage their finances do not want to pay increased costs in order to subsidize other higher risk consumers." SB 311, authored by Senator Duane Grimes (R), is based on the National Conference of Insurance Legislators Model Credit Scoring Act. The Montana House approved the measure by a vote of 98 - 1. The bill now goes to the desk of Governor Brian Schweitzer (D) for signature. "AIA urges Governor Schweitzer to sign SB 311 into law," Suchil said. "This bill includes many important consumer protections and allows insurers to offer a wide variety of policies, providing consumers with more choices."
GARAMENDI TO ADDRESS DANGER OF UNINSURED VEHICLES FROM MEXICO:
Seeking better coordination of insurance programs so that people on California and Mexican highways are protected, Insurance Commissioner John Garamendi lead a delegation to Mexico on April 11 to participate in trilateral negotiations with Mexican and Canadian authorities. The commissioner is the co-chair elect of the Tri-National NAFTA Working Group of the National Association of Insurance Commissioners. "Conflicting and uncoordinated insurance requirements in our three countries have a damaging impact on the flow of trade, and create damaging situations for Californian, Mexican and Canadian motorists," Commissioner Garamendi said. "Policies sold in one country can be worthless once you cross the border, so many truckers simply drive without insurance. This confused regulatory state is a ripe environment for fraud to thrive." During his Mexico trip, which built upon principles announced during the recent meeting between President Bush, Mexican President Vicente Fox, and Canadian Prime Minister Paul Martin, the commissioner and New Mexico Superintendent of Insurance and co-chair elect of the working group Eric Serna discussed the problem of cargo insurance to protect against frequent hijackings. Presently there is no insurance product that covers cargo as it crosses the Mexico/U.S. border. "We need to find a way to allow these truckers to get cargo coverage from the beginning of the trip to the end," Garamendi said. The commissioner and the delegation also looked at solutions to the problem of policy sharing. Trucking companies have been known to buy 10 insurance policies to share with a fleet of 20 or more, merely swapping photocopied certificates to pass inspection or register vehicles.
NO CRIMINAL CHARGES LIKELY AGAINST AIG:
New York Attorney General Eliot Spitzer reassured the business world and those affiliated with American International Group that criminal charges are not likely to flow from his department's continuing investigations of AIG. Also, the attorney for former AIG Chairman Maurice Greenberg said the industry leader committed no fraud and never would have agreed to certain reinsurance transactions if he thought they were improper. Spitzer issued a statement that a civil resolution of all complaints against AIG was likely given the cooperation of the insurer's management. "An investigation of certain American International Group financial transactions and the way these transactions were reported is proceeding," Spitzer stated. "The board and current management of the company are now cooperating with this investigation. Based upon these efforts, and based upon our knowledge to date, we believe that a civil resolution with the corporation will ultimately be achievable." Spitzer has been investigating AIG's accounting practices primarily related to reinsurance transactions with General Reinsurance and other offshore reinsurance companies. Former AIG Chairman Greenberg, who resigned after authorities began probing transactions between AIG and General Reinsurance, thought the transaction was legal and proper, according to his attorney, David Boies. Spitzer and the SEC have been looking into whether the reinsurance was utilized not to transfer risk but to manipulate AIG's finances. Boies said Greenberg did not know the accounting of the product might be questioned. AIG has since acknowledged that the accounting of the General Re reinsurance purchase was improper and that it and other reinsurance deals may have misrepresented AIG's net worth by as much as $1.7 billion over 14 years. AIG admitted that the General Re transaction added $500 million to its premiums and reserves for claims. It unwound $250 million of the deal last year's fourth quarter.
