New Mexico passes regulatory modernization bill

The New Mexico legislature has passed a bill that would establish a file and use rate regulatory system for most personal lines of insurance. The Insurance Rate Regulation Law, SB 483, applies to all kinds and lines of direct insurance written on risks or operations in the state by any authorized insurer, except wet marine and transportation insurance; life insurance; variable and fixed annuities; and health insurance.

"These are important developments in the march toward creating insurance markets all across the country where prices are governed by the market competition," said Ann Weber, vice president and regional manager for the Property Casualty Insurers Association of America. The law should help to "streamline insurance regulation and more fully embrace free-market principles," she indicated.

Under New Mexico's file and use law, property/casualty insurers would be required to file rates with the Division of Insurance, but the rates would not be subject to prior approval regulation. However, the bill maintains prior approval requirements for rates in insurance markets that the superintendent determines are not adequately competitive as well as for workers' compensation.

New Mexico had operated under prior approval systems where all rates, rules and rating plans had to be filed and approved before going into effect.

PCI believes that type of system makes the insurance marketplace less competitive and more expensive.

The bill had the support of the insurance department and is expected to be signed by Gov. Bill Richardson.

Workers' compensation bills head to House floor in Colorado

The Colorado House Business Affairs and Labor Committee has approved two workers' compensation bills: one affecting employee's choice of physician and another affecting firefighters.

House Bill 1176 would change the workers' comp system to allow an injured employee to choose a treating physician from a list, prepared by the injured employee's employer, of at least two physicians or one or more networks of health care providers. And it would allow a health care provider or governmental entity that has its own health care network to designate that network as a treating physician.

According to the Property Casualty Insurers Association of America (PCI), the change would increase costs to the workers' comp system. Currently under Colorado's workers' compensation law, employers designate the physicians that will treat injured workers. There are also provisions that allow workers to request a change in medical providers. But HB 1176 would require insurers and employers to provide injured workers a choice of an "unaffiliated" doctor, PCI said.

"This legislation sounds simple on its face, but it is filled with ambiguous terms and unclear practical application which are aimed at breaking down some of Colorado's 16 year-old reforms of the workers' compensation system," said Kelly Campbell, regional manager for PCI. "This legislation is unnecessary because the current system already contains a process for injured workers to make a change in their treating physician. However, it would add administrative costs and may be impractical to implement in rural areas of the state."

Additionally, the committee passed HB 1008, which notes that if a firefighter contracts cancer of the brain, skin, digestive system, hematological system, or genitourinary system, the condition or impairment shall be deemed to have occurred within the course and scope of employment unless a physical examination of such firefighter shows evidence of such condition or impairment that preexisted employment.

"By moving these bills forward, lawmakers are making a direct attack on Colorado's workers' compensation system and the state's economy," Campbell said. "Workers' compensation rates have been stable over the past 16 years, but business will feel these changes in their pocketbooks if these measures are enacted."

Both bills were headed to the House floor for debate at press time.

Court ruling indicates claims made policy language ambiguous

A recent San Diego Superior Court ruling serves as a potential warning to legal malpractice insurers to review policy language to ensure their claims made policies can't be more broadly construed as occurrence policies.

In a ruling handed down in late January, the court found exclusions in a claims made policy issued by Lawyers' Mutual Insurance Co. (LMIC) rendered the policy ambiguous since it could be reasonably interpreted as an occurrence policy.

At issue in the ruling was the policy's definition of a claim. It excluded claims reported by the insured prior to the effective date of the policy or potential claims known to the insured prior to the effective date of the policy.

The court concluded, "logic dictates that in some, and perhaps many, instances an attorney will be aware of an act, error or omission upon which a claim, whether anticipated or unanticipated by the attorney, is later based." Thus, the court concluded, the "exclusion of claims as contended by LMIC here would effectively turn LMIC's claims made policy into an occurrence policy for some claims."

Guy Kornblum of San Francisco's Guy Kornblum & Associates represented the insured in the case, Kenneth Sigelman. Sigelman is a San Diego-based physician and plaintiffs lawyer who also served as chair of the medical malpractice committee of the Consumer Attorneys of California in 2004.

LMIC, which insured Sigelman since 1987, sought reimbursement from Sigelman for $1.2 million plus interest to cover the cost of defending and settling legal malpractice claims brought against Sigelman during the 2004-2005 policy year.

LMIC argued those were not claims first made during the applicable coverage period because Sigelman had knowledge of acts, errors and omissions that led to the claims both before the application for renewal coverage was completed and before the policy's effective date.

LMIC's attorney, Kenneth Katel, a Los Angeles partner at Musick, Peeler & Garrett, said from his client's perspective, the policy language isn't the issue. Rather, it's whether statements made by Sigelman on his application for coverage were truthful. Katel said LMIC is evaluating whether to appeal the ruling finding the policy is "not sufficiently conspicuous, plain and clear to be enforceable."

"The issue had to do with whether or not he knew when he filled out the application he had committed malpractice," Katel contended. "He admitted [in court] he knew he committed malpractice. Given that admission, he was obligated to disclose it to the insurance company when he filled out the application."

The court held Sigelman answered truthfully on his application when asked if he had knowledge of "any error or omission or any disagreement with the client which might reasonably give rise to a claim or suit against him or her or against the applicant law firm." Sigelman attested he did not. The court also found the question itself is "somewhat ambiguous and is subject to the interpretation of the reader."

Relying on an insured's subjective response on a policy application question regarding circumstances that might potentially result in a malpractice claim is the crux of the problem, said Donn McVeigh, principal consultant and managing director of Oakland-based Creative Risk Concepts International.

Indeed, it arguably verges on speculation. Some unhappy clients might contemplate bringing a malpractice claim. But how can an attorney subjectively disclose in good faith which clients might actually file a claim? he indicated.

The conundrum extends to other professional liability coverages. "This question concerning prior acts that might lead to a claim is found on almost all E&O policies as well as D&O policies," McVeigh said.

McVeigh said a redrafting of both LMIC's application and policy language might be in order. But he cautioned "a perfect solution will never be found" because an attorney's determination of whether or not he faces a potential malpractice claim absent any conclusive evidence to the contrary will always be subjective."

Kornblum maintained the LMIC policy language is problematic and compels LMIC to revise it. "It's clear they are on the horns of a dilemma, because if they continue to use the policy they've got now, they're going to be subject to more claims of ambiguity," he said. Kornblum added given the ruling, LMIC could face bad faith claims from insureds if they tried to enforce the exclusion at issue in the case.

"The policy's 20 years old; it's clearly outdated; it's clearly not well written and the judge told them that, so I think they're obliged to rewrite it otherwise they're going to get in some real trouble," Kornblum said.

Thus far, however, LMIC has given no indication it intends to revisit its legal malpractice policy language and didn't respond when asked if it planned to do so. According to the Web site of the Burbank-based mutual insurer, it was formed in the mid-1970s amid an availability crisis in legal malpractice coverage for California attorneys.

Calif. jury returns asbestos verdict of more than $868,000

A San Francisco jury has ruled in favor of the family of a drywall taper in a products liability case against a former manufacturer and supplier of asbestos-containing joint compound, spray texture and acoustical ceiling spray. The jury determined in Aline Ivance, Vicky Woolley, and Lindy Schluter v. Rich-Tex Inc (San Francisco Superior Court, Case No. 419435) that defendant Rich-Tex Inc.'s asbestos-containing products were defectively designed and assessed $368,787.64 in economic damages and $500,000 in non-economic damages.

According to law firm Brayton Purcell LLP, which represented Douglas Ivance's family, Douglas died on April 20, 2003, from respiratory failure caused in part by asbestos and severe asbestos-related pleural disease. He had been a career drywall taper throughout the San Francisco Bay Area for 47 years.

According to the case, Ivance worked with asbestos-containing drywall products, including joint compound, spray texture and acoustical ceiling spray.

Based in Richmond, Calif., Rich-Tex Inc. was a manufacturer and supplier of asbestos-containing drywall products, including joint compound, spray texture and acoustical ceiling spray, from 1963 to 1977. The company supplied asbestos-containing drywall products to the majority of Ivance's employers during that time period, when Ivance used the products.

At trial, plaintiffs presented evidence showing that when used as intended, Rich-Tex Inc.'s asbestos-containing products had to be mixed, applied, sanded, and cleaned up -- all of which released hazardous asbestos dust, according to Brayton Purcell.

The trial began on Jan. 16, 2007. Defendant Rich-Tex Inc. was represented at trial by Michael J. Boland of Imai, Tadlock, Keeney & Cordery LLP. The Ivance family was represented by James P. Nevin and Laurel Halbany of Brayton Purcell LLP.

The jury decided 11-1 that there was a design defect in Rich-Tex's products, and noted the company failed to warn the plaintiff.

Judge Julie Tang of Department 303 of the San Francisco Superior Court presided over the case.

Idaho Senate passes bill to require underinsured motorists coverage

A bill to require Idaho insurers to offer coverage for accidents involving underinsured drivers passed the Senate, overcoming objections from two insurance agents who said it could increase costs.

The measure was scheduled to the House at press time.

Underinsured motorists coverage pays for property damage and bodily injury caused by another motorist who doesn't carry enough insurance to cover damages in an accident. It pays the difference between the injury suffered and the liability covered by the insurance of the driver at fault.

Sen. Brent Hill, R-Rexburg, argued that Idaho is one of just a few states that doesn't require insurance companies to offer such coverage. With the minimum liability in Idaho $25,000, medical costs commonly exceed that amount, he said.

"All too often, people think they have full and comprehensive coverage when they don't," Hill said, adding the proliferation of low-cost insurance makes it difficult to know if underinsured coverage is included in a policy.

Sens. Dean Cameron, R-Rupert, and John Goedde, R-Coeur d'Alene, who sell insurance, argued that Hill's bill could boost the cost of policies, potentially leading to more uninsured motorists.

Hill countered that his bill would only require insurance companies to offer the coverage. Buyers could turn it down.

A separate auto insurance-related bill, also sponsored by Hill, passed 33-2. It would prevent insurance companies from reducing their coverage limits when a member of the insured's family, a household member or another authorized user of a vehicle is in an accident.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

UCLA study indicates most Calif. workers OK with workers' comp care

The vast majority of injured workers in California have access to quality medical care, yet a majority still suffer from injuries even after a year of care, according to a study conducted by the UCLA Center for Health Policy Research for the California Division of Workers' Compensation. The recently released study evaluated injured workers' access to care since legislation went into effect in 2004 to reform the state's workers' compensation system.

The study showed that the majority of injured workers are satisfied with their care, and levels of satisfaction appear unchanged from a similar study done in 1998.

"This study shows that, following the introduction of evidence-based medicine and treatment guidelines, most injured workers feel they are getting the care they need," said Dr. Anne Searcy, executive medical director of the Division of Workers' Compensation. "It also points out where we need to improve and gives us a baseline to measure the impact of changes we make going forward."

While some doctors surveyed for the study perceived a decline in access to quality care since the 2004 reforms, 82 percent of injured workers reported having access to quality medical care for their injury.

"The fact that physicians report perceived declines in quality as a result of the 2003 and 2004 reforms isn't surprising," said Gerald F. Kominski, associate director of the UCLA Center for Health Policy Research and lead author of the study. "Some doctors are understandably dissatisfied because these reforms placed limits for the first time on the volume and type of services that can be used to treat injured workers. What's important is that these negative perceptions of doctors regarding access and quality do not reflect the actual experience of most injured workers."

According to the report, of among the nearly 1,000 injured workers surveyed in 2006, 87 percent visited a health care provider within three days of reporting their injury, 92 percent were able to see a specialist when referred and 94 percent were able to see a physical or occupational therapist when referred.

Among the nearly 1,100 medical providers surveyed, the majority reported that they intend to continue providing treatment to workers' compensation patients. Providers who left the system or intend to decrease the number of workers' compensation patients they see cited payment or fee schedule issues, paperwork and administrative issues, and utilization review issues as reasons.

Some of the other findings:

• More than half of injured workers (55 percent) were not fully recovered from their injuries more than a year after the injuries occurred.


• Injured African American, Latino and Asian American workers were more likely than whites to report not receiving quality care, pointing to a possible disparity.

Recent "opt-out" settlements challenge D&O severity, limits assumptions

A recent wave of individual institutional investor securities lawsuit "opt-out" settlements is raising troubling new questions about both D&O carriers' claims severity assumptions and D&O policyholders' limits adequacy.

An opt-out action involves a separate lawsuit brought by an individual investor who elects not to participate in the settlement of a securities class action lawsuit brought on behalf of all investors that supposedly have been harmed as a result of alleged securities fraud. In a series of recent settlements of opt-out actions, individual investors have secured massive individual settlements, the expense of which for the settling defendants must be added on top of the cost of defending against and resolving the class action lawsuit.

For example, in Time Warner's class action litigation, the class reached a settlement of $2.65 billion. Although the settlement represented one of the largest class action settlements, several individual institutional investors elected to opt out of the class settlement. Over the past few months, several of the investors who opted out have announced very large individual settlements, in each case accompanying their announcement with the added assertion that their individual recovery greatly exceeded what they would have recovered from the class settlement.

Thus, the state of Alaska announced a $60 million settlement with the Time Warner defendants, which it said represented "50 times what we would have gotten if we remained in the class." The California State Teachers' Retirement System (CalSTRS) announced that it had reached a $105 million settlement in its individual action against the Time Warner defendants, which CalSTRS said represented 6.5 times what it would have recovered from the class settlement. And then on Feb. 28, 2007, the University of California, in what is believed to be the largest opt-out settlement in history, announced a $246 million settlement with Time Warner, which the amount also represented a large multiple of what the University would have recovered in the class settlement.

Institutional investors also have recently announced significant settlements in individual actions involving Qwest Communications and WorldCom, in each case, after the individual investors had chosen to opt out of very large shareholders' class action settlements. According to the settling parties, each of the individual settlements represented a much larger recovery than the parties would have recovered from their share of the class action settlement.

The emergence of large separate opt-out settlements represents a potentially very significant development in securities fraud litigation. Certainly, if institutional investors perceive that they can substantially increase their recovery by proceeding individually rather than participating in the class action settlement, the utility of class action litigation could be significantly reduced, for all parties. If a company is forced to defend itself against both a class lawsuit and multiple individual lawsuits, the costs of defense escalate. And if individual investor recoveries really do exceed class recoveries as a percentage of putative investor loss, then the aggregate cost of final resolution could escalate significantly as well.

To be sure, the incentive for an individual investor, or his or her counsel, to pursue a separate action rather than participating in a class action may be limited to cases where the prospective recovery is very large. According to the National Economic Research Associates, the median securities fraud class action settlement in 2006 was $7.3 million. With half of all class actions settling below $7.3 million, there may be relatively few occasions when individual investors (or their lawyers) have sufficient financial incentive to pursue individual actions.

Nevertheless, at least with respect to the larger cases, the emergence of opt-out settlements could require a reassessment of the range of potential D&O claim severity. It may no longer be sufficient for D&O carriers to look at class action settlement data alone to assess the probable range of claims severity. The possibility of additional opt-out cases, with the added defense and settlement expense, also must be taken into account.

The added potential exposure could also have important implications for policyholders' D&O limits selection. The limits required to defend a company and its directors and officers in a multi-front war involving both a shareholder class actions and separate individual investor actions could be significantly higher than has been assumed in the past. Similarly, the aggregate cost required to resolve a class lawsuit and separate individual actions could be significantly greater than the cost of resolving the class action lawsuit alone.

Yet the emergence of these large individual investor opt-out settlements is a relatively recent phenomenon. For that reason, there may be good reason to hesitate before jumping to too many conclusions about the likely future impact of those settlements. All of the recent opt-out settlements were in connection with the huge cases arising from the wave of corporate scandals that emerged earlier in the decade. It is entirely possible that once the cases arising from the corporate scandals have worked their way through the system, the individual investors may be less interested in pursuing separate actions.

The long-term significance of opt-out settlements may remain to be seen. But in the meantime, it is difficult to argue with the recent assessment of Columbia Law School professor John Coffee, who called the recent emergence of large opt-out settlements "probably the most significant new trend in class action litigation."

Kevin M. LaCroix is an attorney and a director of the OakBridge Insurance Services, Beachwood, Ohio, office. An earlier version of this article appeared on LaCroix's Internet Web blog, the D&O Diary. http://dandodiary.blogspot.com. E-mail: klacroix@oakbridgeins.com. Phone: 216-378-7817.

Vanek promoted to CEO of NLASCO

Affordable Residential Communities closes acquisition of Texas-based insurer

Affordable Residential Communities Inc. of Englewood, Colo., closed its previously announced acquisition of Waco, Texas-based NLASCO Inc., a privately held property and casualty insurance holding company, and reported the promotion of Greg Vanek, NLASCO's president and chief operating officer, to CEO of NLASCO.

NLASCO specializes in providing fire and homeowners insurance to low value dwellings and manufactured homes primarily in Texas and other areas of the south, southeastern and southwestern U.S. Through its two insurance subsidiaries, National Lloyds Insurance Co. and American Summit Insurance Co., NLASCO underwrites its insurance policies through approximately 6,600 independent agents in 27 states.

NLASCO, with its current management team in place, will remain in Waco and operate as an independent wholly owned subsidiary of ARC.

C. Clifton Robinson, NLASCO's current chairman and CEO, will serve as non-executive chairman of NLASCO's board of directors. Additionally, NLASCO Vice Chairman Gordon B. Robinson will serve in an advisory role to NLASCO for two years.

Prior to joining NLASCO, Vanek worked in the mobile home manufacturing industry and in the underwriting department of the Farm Bureau Insurance Co. Vanek came to NLASCO in 1986 and was promoted to his current position in 2001.

Affordable Residential Communities, which specializes in manufactured home communities, currently owns and operates approximately 57,264 homesites in 275 communities in 23 states.

Wash.'s Gregoire declares "rate holiday"

Washington Gov. Chris Gregoire announced that a partial "rate holiday" has been finalized by the Department of Labor and Industries, designed to save workers and employers about $315 million in workers' compensation insurance premiums.

Beginning July 1, employers and workers will not pay the Medical Aid Fund premium for work performed from that date through Dec. 31, 2007. On average, the savings will represent about 34 percent of total premiums paid into the workers' compensation system for work performed in the second half of the year. Because employers and workers pay equally into the Medical Aid Fund, both will benefit equally, L&I said.

Combined with this year's overall 2 percent decrease in workers' compensation rates, which L&I adopted in December, employers and workers will pay about $346 million less in premiums in 2007. The rate holiday is temporary and will end Jan. 1, 2008, L&I said.

"In the global economy, we need to do everything we can to create and retain family-wage jobs by recruiting businesses to our state and helping existing businesses to expand," Gregoire said. "The rate holiday will help businesses, and will also put money into the pockets of workers."

L&I Director Judy Schurke said a number of factors made the rate holiday possible. "Our investment returns are higher than we expected, and we have had good success at controlling health care costs," she said. "In addition, employers and workers continue to improve workplace safety, which reduces what we pay out in benefits to injured workers. All this means we can use some of the money to reduce premiums for our customers."

Swiss Re sigma study details 2006 natural, man-made disasters

in its just released sigma study, "Natural catastrophes and man-made disasters in 2006", Swiss Re notes that "losses due to natural catastrophes and man-made disasters were below the long-term trend in 2006." Cat losses totaled around $48 billion, of which approximately $5.9 billion was covered by insurance.

Swiss Re also noted that "insurers have modified their catastrophe simulation models, where appropriate, to bring them into line with higher expected damage -- especially in the light of the record loss years 2004/05 and an increasingly volatile climate."

Although 2006 was a relatively benign year in economic terms, "natural catastrophes and man-made disasters claimed more than 31,000 human lives worldwide," according to the report. There were 349 catastrophes. However, "unlike in the two previous years, natural catastrophes affected mainly developing countries where property values are low," said Swiss Re, "resulting in comparatively light economic losses of $48 billion. Low insurance penetration in developing countries also meant that only one third of these economic losses in 2006 was actually covered by insurance."

The $15.9 billion insured loss figure produced the "third-lowest losses of the past 20 years -- only 1997 and 1988 were less expensive (after allowance for inflation)." The total for natural catastrophes was $11.8 billion and man-made disasters around $4 billion, mainly attributable to "the calm hurricane season in the U.S. and the absence of any highly damaging events in Europe."

Swiss Re doesn't see the 2006 results as a reversal of the trend towards higher losses over the past decades, which have been due "mainly to weather-related catastrophes." The "increasing concentration of property values and urban encroachment into highly-exposed regions" has also raised loss figures.

The trend is also linked to climate change. "Going forward, the effects of global warming are also likely to aggravate the loss situation," the report explained.

This is the first time the Swiss Re sigma report has included statistics from flood losses in the U.S. "The historical series as of 1970 have been revised accordingly," said the report. As a result of this change, the insured loss of Hurricane Katrina was revised upward to $66 billion from $49 billion without National Flood Insurance Program.

Washington warming to national disaster plan idea

Sen. Dodd says hurricane and flood disasters are not just a local issue, but a national one

A proposal for a national disaster plan to backup private hurricane and flood insurance markets appears to be gaining momentum in Washington.

This month, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, expressed his support for a national disaster program.

"It is clear that the government has got to step in," said Frank during a press conference where he was flanked by Rep. Ginny Brown-Waite, R-Fla., and Rep. Carol Maloney, D-N.Y., who are advocating a federal role.

Citing the federal government's role in providing a backstop for terrorism insurance, Frank said, "We believe that we have reached a similar point with regard to what happens with floods and hurricanes. ... I believe that some federal backstop is necessary."

U.S. Sen. Chris Dodd, D-Conn., chairman of the Senate Committee on Banking, Housing and Urban Affairs and a Democratic presidential candidate, is also interested. Dodd has said he will hold hearings on insurance issues on April 11 either in Washington or the New Orleans area.

"This is not a local issue. It's a national one," Dodd told The Associated Press. He noted that more than 60 percent of the country's population lives within 100 miles of the coast. "What happened here could happen in my state. It could happen to an awful lot of people in this country."

Industry watching closely
The insurance industry tends to agree that policymakers must address this issue but is watching closely how Congress responds.

The Property Casualty Insurers Association of America (PCI) is hoping lawmakers will respect the role of private insurers and come up with state-specific remedies that provide releif where it is most needed.

"Insurers, regulators, and consumers all want the same thing: a healthy and competitive insurance market in which consumers can choose a variety of coverage options from a variety of financially secure insurers," said June Holmes, PCI's interim CEO. "PCI is a strong believer in the power of market systems and signals to solve most problems. At the same time, we believe there are some risks in some areas that market solutions alone may not have the tools to address. Mega-catastrophe hurricane and earthquake risks fall into this category. Mega-catastrophe risks, if not addressed, can undermine the economies in these critical areas of the country and insurers need to work with state and federal policymakers to develop innovative solutions that promote increased insurance availability and responsible economic development."

Holmes said solutions should meet the unique needs in each state. She maintained that a one-size fits all approach is not likely to work.

"Conditions in Florida are unique from any other state," said Holmes. "Over 80 percent of the insured property in Florida is located along the Gulf and Atlantic Coasts and the total value of insured property there is nearly $2 trillion and growing. Florida is the most hurricane-prone state in the U.S., accounting for roughly half of the total U.S. annual aggregate storm losses. The solution to market disruptions in Louisiana, South Carolina, or Massachusetts will look much different from one crafted by Florida legislators. That's why we favor a state-by-state approach backed up at a very high level by federal liquidity protection."

R.I., Mass. safest while Wyo., Ark. deadliest states for truck crashes

Wyoming and Arkansas are the deadliest states for truck crashes, according to a safety group that has called for tougher federal regulation to reduce fatalities hovering above 100 a week nationwide for years.

The safest states for truck crashes are Rhode Island and Massachusetts, based on the number of fatalities per 100,000 residents in 2005, the most recent year with complete figures.

Seven years since its creation by Congress to improve the safety of trucks, the federal Motor Carrier Safety Administration "is still putting cargo over people," said Joan Claybrook, chair of Citizens for Reliable and Safe Highways. "This federal agency has failed miserably."

In 1999, when the agency was created, 5,380 people died in crashes with big trucks, Claybrook told a news conference by the Truck Safety Coalition. "That figure has barely budged." It was 5,212 in 2005. The agency's spokesman, Ian M. Grossman, was not available to respond.

Speakers at the event called on the agency to reduce the hours that truckers are allowed to drive without rest, increase safety inspections of big trucks, require on-board electronic monitors to ensure compliance with hours-of-service rules, and train drivers better.

The group said that in 2005 Wyoming had 6.09 deaths in big truck crashes per 100,000 residents, followed by Arkansas at 4.17, Oklahoma at 3.41, New Mexico at 3.27, Mississippi at 3.12, and West Virginia at 3.03.

The safest state, Rhode Island, had 0.09 fatalities per 100,000 residents, followed by Massachusetts at 0.38, Connecticut at 0.48, District of Columbia at 0.54, Hawaii at 0.71, Alaska at 0.75, New York at 0.76, New Hampshire at 0.84 and Delaware at 0.95.

Largest increases
The largest increases in truck fatality rates between 2004 and 2005 came in Oklahoma, South Carolina and Louisiana. The greatest drops were in Alabama, Indiana and South Dakota.

"We spend millions of dollars on food safety. Nearly 61 people die from E.coli (infections) each year, which is equivalent to the four-day death toll from truck crashes," said Jacqueline Gillan, vice president of Advocates for Highway and Auto Safety. "Anytime there is an E.coli outbreak, the federal government uses every resource available to stop this public health threat. Yet, unsafe big rigs kill and maim tens of thousands each year because truckers are pushed to drive long hours under unsafe conditions while the federal response has been silence and indifference."

Gillan and Claybrook criticized the motor carrier administration for increasing the number of hours a driver can operate a truck by 28 percent since 2003, up to as much as 88 hours over an eight-day tour of duty.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

A.M. Best says commercial P/C outlook stable

Pricing remains rational for now despite increasing competition

A.M. Best Co. has completed its assessment of the U.S. commercial market and revised the outlook to stable from negative for 2007. Although Best says there continues to be evidence of pricing deterioration, the level of deterioration thus far has been gradual as irrational pricing has yet to surface.

The outlook change also considers the level of rate adequacy in the sector, the record underwriting profits recorded in 2006 and an expectation of stabilized reserve development over the near term.

Best anticipates that there will be few rating upgrades or positive rating outlooks assigned in 2007 as most commercial lines companies will need to demonstrate their so-called underwriting discipline through the next soft market, which Best believes is inevitable.

Price discipline
Through 2006, Best believes that many U.S. commercial lines insurers were the recipients of much improved pricing, proving the old adage, "a rising tide lifts all boats." With the beginning of a new soft cycle now underway, however, many companies will be put to the test in proving their underwriting discipline, according to the rating organization.

Over the near term, Best says price discipline remains rational. It is over the longer term that Best is wary of price competition intensifying to a level where price discipline is compromised for the sake of growth.

In 2007, Best expects commercial lines premium to decline a modest 1 percent. While on the surface this level of deterioration is quite modest, it does not consider actual pricing changes such as terms and conditions, premium credits and exposure growth. Nevertheless, Best expects commercial lines to produce a net underwriting profit in 2007.

The outlook for the commercial lines market is intended to span over the next 12 to 36 months and is a prospective view that considers the effects of potential internal and external pressures, the sector's ability to optimize capital and its ability to preserve capital while maintaining balance sheet integrity over that period. While Best said it expects the inevitable lowering of the tide will happen again, thus far the commercial lines sector seems to be maintaining a rational level of price discipline while keeping the integrity of the balance sheet intact.

Navigating the cycle
Best believes a trend should not be measured by any single cycle -- hard or soft -- and believes rating upgrades will be few in number until companies can truly demonstrate their underwriting acumen through the soft as well as hard market cycles. Those companies that are able to navigate through these cycles will benefit from rating upgrades over time. On the other hand, those companies that have insufficient price monitoring tools, relaxed underwriting standards and are aggressive during soft markets are certain to face negative rating actions in the future.

Best said it will continue to take a "more rigorous approach in its due diligence when evaluating companies' capitalization, cycle management and risk management controls." Exposure to terrorism, its impact on capitalization and the uncertainty surrounding a long-term solution to this issue are key concerns.

The rating firm says that catastrophe models will continue to be "valuable tools for the quantification of risk but are not the only barometers."

As part of enterprise risk management and cycle management, companies will need to demonstrate their ability to monitor and measure risk and provide quality data and adequate underwriting and risk controls, the firm adds.

Three ways to bag more personal lines sales

The Post Office isn't the only way to deliver insurance marketing materials. Inserts, e-mails, Web site downloads, and hand delivery are some of the other options that are available. The first three methods are regularly employed; the last is often overlooked. Basically, it involves placing promotional materials in plastic bags and handing them to, or dropping them off for prospects. This style of delivery is common at trade shows, so why not employ it outside of the exhibit hall? It distinguishes the aggressive personal lines agency from other marketers who limit themselves to the more traditional avenues of distribution.

Here are a few possibilities.

Auto litter bags
These transitory trash receptacles serve as short-term insurance billboards. Once in use, they usually hang in full view of the driver for weeks before they are filled and discarded. The colorful plastic bags cost about 20 cents each, custom imprinted with your logo, agency information, and sales message. Print different bags with messages that promote auto, home, boat, and life insurance. Then add your prospect's first pieces of trash: a custom marketing memo that ties in with the bag's message, a free pen, and a business reply card. Prospects can then fill out the card with the pen and drop it off at the nearest mailbox, all without leaving the car.

• home
• boat
• life] insurance rates."

Distribution possibilities: Supply select business clients and commercial prospects with litter bags to give to their customers. Invite them to join in the promotion by inserting a coupon or marketing brochure of their own. Potential distribution sites: Gas station shops, car washes, repair/collision/muffler shops, and parking lots. Persuade restaurants with drive-up windows to hand out your bags by inviting them to add a copy of their take-out menu. To promote watercraft insurance, encourage marinas and dockside restaurants to distribute your boat litter bags as a free environmental service.

Plastic newspaper bags
Gone are the days when children on bicycles pedaled from door to door delivering carefully folded newspapers. Now they are rolled up and placed in weatherproof plastic bags and tossed from moving mini-vans. So check with your local daily or weekly's ad department to learn if you can provide these bags for subscribers who live on routes that match up with your desired demographic. If they agree (for a fee) supply them with imprinted bags from a vendor or purchase them directly through the paper, if they offer the service. Either way, the approach is most effective when you also advertise in the paper that's being delivered in your bag. Emblazon it with a message that guides the reader to your ad's location. Or, if you prefer to place an agency insert, use the bag to let readers know it's there. Either way, this bag-to-ad tie-in can favorably increase your response rate.

Door-hanger bags
These bags can contain any type of insurance solicitation that you want, such as an auto policy rate comparison graph or a coverage checklist for homeowners. You can even provide sample rates and facts on renters or condominium-unit owners policies. Apartments and condos are especially quick to deliver to by this method, due to the close proximity of their doors. Furthermore, many of these prospects don't carry any property insurance at all, mistakenly believing that the landlord or the master condo policy protects their personal belongings. Consider enclosing an agency certificate for a free gift along with your promo material as a reward for dropping by your office for a new or comparative quote.

Here's a different twist on this concept. Team up with other neighborhood businesses or your own commercial lines clients to put together specially imprinted "coupon bags" that are hung on the doorknobs of pre-selected prospects. You might even support your efforts with a postcard that tells people to look for a special discount coupon bag this week. Test out various themes such as automobile services containing discounts for auto parts, detailing, tires, etc. Home safety bags might include discount coupons for first aid kits, burglar alarms, etc. As for who physically hangs the bags on the doorknobs, hire your clerical staff, employee's kids, or a professional delivery firm.

Conclusion
Try thinking outside of the mailbox, inbox, and Web. Hand delivery may not be the most sophisticated marketing method there is, but it has a key advantage. You know that it won't be blocked by a spam filter or misdelivered by a letter carrier; as it is physically transported to its destination. However, it still comes with its own set of cautions. Always check first with your state insurance department and local government to see if the above types of promotional gifts and delivery activities are freely permitted in your marketing territory.

Alan Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the 1001 Agency Ideas book series and other popular P/C sales resources. He may be reached at 800-724-1435 or by e-mail shulman@agencyideas.com. Visit: www.agencyideas.com.