WCIRB REPORT ON INSURER EXPERIENCE RELEASED:
California's Workers Compensation Insurance Rating Bureau has completed its quarterly report summarizing the most current insurer loss and premium experience as of Dec. 31, 2004. Among the highlights of the report are the following: The average statewide insurer rate per $100 of payroll for policies written in the second half of 2004 is $5.32, which was 16.5 percent below the average rate charged for policies incepting in the second six months of 2003. The WCIRB is estimating a combined loss and expense ratio for accident year 2004 of 72 percent. (The 2004 premiums used in this combined ratio, in large part, reflect rates charged on policies incepting in 2003 and early in 2004 and, for the most part, do not reflect the 16.5 percent reduction in average rates noted above.) This is the second consecutive accident year with an estimated combined ratio below 100 percent, following eight years for which the estimated combined ratios ranged from 121 percent to 186 percent with an average of 154 percent. Indemnity claim frequency for accident year 2004 is estimated to be 18.6 percent lower than for accident year 2003. Currently, the 2004 indemnity claim frequency is estimated at approximately 45 percent of its all-time high in 1991. The WCIRB projects the average cost of a 2004 indemnity claim will be approximately $52,000, which is 1 percent greater than the average cost of a 2003 indemnity claim and approximately 150 percent greater than the average cost of a 1994 indemnity claim. The WCIRB's current estimate of ultimate losses on all injuries that occurred on or before Dec. 31, 2004 exceeds the amount reported by insurers for those injuries by $6.1 billion. This represents a significant decrease from the differences currently estimated for the immediately preceding five years, which ranged from $9.7 billion to $14.5 billion.
COLO. GOV. VETOES CAP INCREASE FOR DAMAGES:
Colorado Gov. Bill Owens vetoed legislation, SB 25, that would have put in place automatic inflation adjustments for the cap on non-economic damages, according to The Property Casualty Insurers Association of America. "PCI urged Gov. Owens to veto the bill which would have increased the cap on non-economic damages from $366,000 to $440,000 next year and allowed for additional increases on an annual basis," said Michael Harrold, assistant vice president and regional manager for PCI. "The cap on non-economic damages has been very effective at keeping Colorado's tort reform system in balance. The current system provides protection for injured individuals without the excessive damage awards experienced by other states." In his veto letter to the Senate, Gov. Owens expressed opposition to the linkage of non-economic damages to inflation as a way to mitigate any perceived reduction in value of the award over time. "While these inflationary adjustments may seem benign, they are actually unwarranted and harmful," Owens said. "Colorado's cap on general non-economic damages is the centerpiece of our current civil justice system, which helps limit increases in Colorado's litigation and insurance costs. The award of non-economic damages is designed to be a supplemental form of compassionate compensation that is not related to economic damages."
HIGHWAY SAFETY, TERRORISM EXCLUSION HIGHLIGHT IDAHO LEG. SESSION:
Idaho's 2005 legislative session was marked as much by what legislation was passed as by what was not passed, according to the American Insurance Association. "Idaho legislators and Gov. Dirk Kempthorne (R) approved HB 160, a measure creating an exclusion from commercial property coverage for losses from foreign terrorism. AIA advocated for this exclusion in the event that Congress fails to extend the Terrorism Risk Insurance Act this year, leaving insurance companies exposed for incalculable risk from terrorist acts," said Steve Suchil, AIA assistant vice president, western region. Many measures affecting highway safety were considered by the Idaho legislature this year. "Lawmakers approved two important highway safety bills that had failed passage repeatedly over the last three years," Suchil said. "Children under the age of six will now have to ride in booster seats and young people under eighteen will have to wear helmets when riding motorcycles or all-terrain vehicles." Gov. Kempthorne quickly signed both HB 178 and SB 1130 into law.
SB 899 MAKES A DIFFERENCE TO WORK COMP SYSTEM:
April 19 marked the anniversary of the signing of SB 899, the third of three significant workers' compensation reform measures enacted during the past few years by California's elected officials. Together, these measures are reforming the Golden State's workers' comp system, changing a litigious, abuse-ridden environment into a healthy, predictable system, the American Insurance Association said. "California's workers' compensation market is changing from the most litigious, unpredictable and subjective system in the country to a market which will benefit the state's employers and their workers," said Ken Gibson, AIA vice president, western region. "The good news is that all signs indicate that the reform effort is substantially reducing costs, decreasing inefficiencies and attacking abuse in the system. The Workers' Compensation Insurance Rating Bureau and Commissioner John Garamendi are considering the fourth rate decrease since the first reforms were signed in 2003. New carriers are entering the market, and insurers that stopped writing are taking a second look at California," Gibson said.
COLO. GOVERNOR APPOINTS NEW COMMISSIONER:
Colorado Governor Bill Owens announced the appointment of David Rivera as Colorado Insurance Commissioner. Rivera has been part of Owens' administration since August 2001. In his position as senior policy advisor, Rivera developed and helped to implement the governor's agenda on health care, auto insurance and higher education policy issues. Prior to his current position, Rivera served as the manager of advocacy for the American Heart Association in Colorado. Rivera spent the first seven years of his professional life working on actuarial issues in Washington D.C. He was responsible for coordinating public policy issues for the American Academy of Actuaries, a 14,000-member professional association. His appointment was effective April 20; he must be confirmed by the Senate.
ARIZ. TO GET FEDERAL HELP FOR STORM RECOVERY:
Federal disaster funds have been made available for Arizona to help local governments recover from the effects of a round of severe storms that struck the state in February, the head of the U.S. Department of Homeland Security's Federal Emergency Management Agency announced. The assistance was authorized by President Bush under a major disaster declaration issued following a review of FEMA's analysis of the state's request for federal aid. The declaration covers damage to public property from severe storms and flooding that occurred over the period of Feb. 10-15. The state was declared for federal disaster assistance earlier this year for the series of storms that happened in late December and early January. The following jurisdictions are eligible for federal funds to pay the state and affected local governments and certain private non-profit organizations 75 percent of the approved costs for emergency work and the restoration of damaged facilities: the counties of Gila, Graham, Greenlee, Mohave, Pinal, and Yavapai, and the Havasupai Tribe, the Hopi Tribe, the San Carlos Apache Tribe and the portion of the Navajo Tribal Nation within the state. Federal funding will be available on a cost-shared basis for approved hazard mitigation projects in the counties of Gila, Graham, Greenlee, Maricopa, Mohave, Pinal and Yavapai, and the Gila River Indian Community, the Havasupai Tribe, the Hopi Tribe, the San Carlos Apache Tribe and the portion of the Navajo Tribal Nation within the state.
MONTANA LEGISLATURE PASSES CREDIT SCORING BILL:
The American Insurance Association applauded the passage of an insurance scoring measure in Montana. The 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. 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 for signature.
