Newsbriefs

GEMSTAR SUES INSURER

Gemstar-TV Guide International Inc. has sued an insurer, seeking to recover $50 million in liability coverage the media and technology company claims it is due to help cover judgments stemming from lawsuits about inflated revenues.

In its complaint, filed in U.S. District Court in Los Angeles, Gemstar contends its coverage with National Union Fire Insurance Co. of Pittsburgh was paid through Oct. 10, 2002, the same year that an audit revealed Gemstar had overstated company revenue.

The coverage should apply to claims brought over Gemstar's accounting practices against its directors or the company itself, Gemstar claims.

The insurer, a division of American International Group Inc., has "neither denied coverage nor provided it" for claims related to the accounting issues, the lawsuit states.

Settling shareholder lawsuits over the inflated revenues has cost Gemstar more than $70 million. The company has also paid a $10 million fine to the Securities and Exchange Commission.

The SEC also filed fraud charges against two former Gemstar executives--CEO Henry C. Yuen and ex-financial chief Elsie Leung--claiming they overstated company revenue by $248 million between March 2000 and September 2002 to boost the company's stock.

The SEC's civil case against Yuen and Leung is pending.

The company publishes TV Guide magazine and licenses its interactive program guide to cable operators and to consumer electronics companies. It is partly owned by News Corp.

WASH. COMMISSIONER KREIDLER WANTS FRAUD UNIT TO INVESTIGATE STAGED ACCIDENTS

Washington State Insurance Commissioner Mike Kreidler wants to create a new fraud unit to investigate staged traffic accidents. Those can involve a network of lawyers, doctors, chiropractors and physical therapists.

Kreidler says he'll request about $2 million in funding from the Legislature to create a five-person insurance fraud unit in his department. He says 41 other states have such fraud units.

The National Insurance Crime Bureau estimates that Washington insurers paid more than $404 million in bogus claims in 2004. That figure is based on what the industry believes is a standard 10 percent fraud rate in claims.

INSURERS HAPPY CALIF. MOTORCYLE HELMET LAW NOT WEAKENED

Earlier this month, legislation was introduced by Sen. Denise Ducheny, D-San Diego, to permit motorcyclists 18 years and older to ride without helmets if they could show proof of having medical insurance. The bill was considered Tuesday, Jan. 10, by the Senate Transportation and Health Committee, and rejected.

The Association of California Insurance Companies (ACIC) opposed the legislation, saying the law change would increase the number of injuries and deaths resulting from motorcycle accidents.

"Medical insurance will not save lives," said ACIC President Sam Sorich. "Weakening the law would have resulted in a great many more injuries, and perhaps death. We think the committee that rejected the bill did the right thing, as we are pleased with the result."

He noted that helmet laws that apply only to young or inexperienced drivers are not effective in reducing death rates.

LAWSUIT REVIVED AGAINST STAPLES CHAIN OVER INSURANCE CHARGES

A California appeals court has reinstated a lawsuit that claims office supply chain Staples Inc. cheated customers by charging them for insurance when shipping some products.

The 2nd District Court of Appeals, in a 2-1 decision, ruled that Staples was acting as an unlicensed insurance agent when it doubled the shipping insurance costs on some packages and took half of the premium.

Staples automatically covered products worth up to $100 but charged customers additional money to insure anything over that amount.

Staples offered the insurance through United Parcel Service. UPS charged Staples 35 cents per additional $100 of declared value. The lawsuit claimed Staples charged consumers 70 cents and pocketed the difference.

The suit, which seeks class-action status, alleged that Staples violated the state's insurance regulations and unfair business practices law.

Staples argued it was simply making a profit on a product.

A Superior Court judge agreed with Staples, but the appellate court reversed the decision and said the extra charge was a "commission" for Staples.

ARIZ. SENATOR WANTS TO DENY FUNDS TO DRIVERS WHO LEAVE KEYS IN CAR

Glendale, Ariz., Republican Sen. Linda Gray is pushing legislation that would allow insurers to refuse to reimburse drivers if companies can prove that the keys were left anywhere in the vehicle, and not just the ignition, according to The Arizona Daily Star.

Gray's proposal also would allow insurers to refuse to pay for items stolen from cars in similar circumstances, the paper said.

Arizona has the second highest rate of auto theft in the nation, according to. Enrique Cantu, director of the Arizona Automobile Theft Authority. AATA estimates that one in five stolen vehicles were unlocked. Cantu estimates theft of running vehicles was no more than 2 percent of all stolen cars. He said there is no data on how many thieves had access to car keys.

GEICO REDUCING COLO. AUTO RATES

GEICO began reducing auto insurance rates for new policyholders in Colorado on Jan. 5. The company also said it would be reducing rates for existing policyholders beginning Feb. 20.

According to the company, Colorado's average rate decrease is 7.1 percent for GEICO and GEICO General policyholders. Premium changes for individual motorists are expected to vary based on coverages purchased, geographic area, type of vehicle, risk characteristics, and discounts for which drivers qualify.

With that latest premium reduction, GEICO said its average rates have decreased by a total of 25.7 percent since the state's auto insurance reforms from a no-fault to tort system took effect in July 2003. Rates will be decreasing for GEICO Indemnity policyholders by -7.5 percent, and GEICO Casualty policyholders by -4.8 percent, bringing the total decreases to 31.3 percent and 29.2 percent, since the change to a tort system from no-fault system, the company said.

ARIZONA DEPT. OF INSURANCE CHANGES PHONE NUMBERS

The Arizona Department of Insurance has changed its phone numbers. The new main switchboard number is (602) 364-3100. The Producer Licensing Section number is (602) 364-4457. The Property & Casualty Division can be reached at (602) 364-3453. For a complete list of new department phone numbers, visit www.id.state.az.us/publications/ new_phone_directory_1-06.pdf.