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Newsbriefs

CEA APPROVES RATE APPLICATION AND REINSURANCE PROGRAM


The California Earthquake Authority (CEA) announced successful placement and approval of its reinsurance program for 2008 and submission of an application for a 3.5 percent base program rate increase.


At its June Governing Board meeting, the CEA, unanimously approved reinsurance contracts with 43 reinsurers for the CEA's program that will provide $2.268 billion in reinsurance coverage for 2008. This reinsurance is part of the claim-paying capacity recommended to allow the CEA to pay, at a minimum, all claims from a one-in-600-year earthquake or series of earthquakes, and a financial structure that continues to provide a 99.833 percentage probability of paying all claims that might arise from any earthquake, or series of earthquakes, that might occur through November 2008, the Authority said. Because the ability to assess participating insurers for the first assessment layer is disappearing in December 2008, the CEA decided not to pursue multi-year reinsurance contracts.


The Governing Board also approved submission of an application to the California Insurance Commissioner for an overall 3.5 percent rate increase to the base program. If approved, new rates will take effect Jan. 1, 2008.


The change replaces a previous approved "dwelling" rate change scheduled to become effective July 1, 2008, as part of a three-year rate plan implemented July 1, 2006.

NEVADA LAUNCHES CAMPAIGN AGAINST FRAUDULENT ANNUITIES INSURANCE


The Nevada Division of Insurance has launched a campaign to address fraudulent annuities insurance programs.


According to the Division, there has been a recent increase in fraudulent annuity investment claims in Nevada and nationwide. To help educate consumers, its advertising campaign, titled "Bad Animals" simulates conversations between annuity "sales people" who are really "animals" underneath the surface. The kitschy yet serious message should encourage consumers to understand their annuities and clearly know its benefits and risks, as well as who they are purchasing from, the Division said.


The campaign also informs consumers that to research their investment/annuities company, they can log on to www.nvinsurancealert.com, or call 888-467-4195 to verify whether their provider is an authorized and legitimate supplier of annuity products.

THE NONADMITTED INSURANCE AND REINSURANCE REFORM ACT OF 2007 (HR 1065)


The bill would establish national standards for how states regulate the surplus lines market and reinsurance.


HR 1065 creates:


  • a uniform system of premium tax allocation and remittance for surplus lines premium taxes;

  • uniform national standards for surplus lines insurer eligibility;

  • one-state compliance on multi-state surplus lines risks;

  • direct access to the surplus lines market for sophisticated commercial purchasers;

  • more efficiency in licensing surplus lines brokers through use of a national data base, and;

  • authority for states to enter into a compact or create procedures to allocate surplus lines premium tax among themselves.


The bill also contains reinsurance provisions which charge the ceding insurer's home state regulator with making the so-called "credit for reinsurance" determinations. It also would prohibit state insurance regulators from applying their laws to reinsurance agreements of ceding insurers domiciled in other states.

U.S. P/C INSURERS PAY $2.1 BILLION IN CAT LOSSES


U.S. property/casualty insurers are expected to pay homeowners and businesses an estimated $2.175 billion for second-quarter property losses resulting from a total of six catastrophes in 25 states -- tying the record for the second-lowest number of catastrophes in a second quarter in the past 10 years, according to preliminary analysis by ISO's Property Claim Services (PCS) unit.


PCS estimates the six catastrophes of second-quarter 2007 generated 504,000 claims. Year to date, the estimated number of claims is 709,000.


At $435 million, Texas topped the list of the five most severely affected states, followed by Minnesota at $322 million, Kansas at $210 million, New Jersey at $160 million, and New York at $130 million.


The costliest event of the quarter -- caused by strong winds, large hail, tornadoes, and flooding -- occurred in mid-April and affected 18 states and the District of Columbia. The current PCS estimate of insured property damage for this event is $1.225 billion.


ISO's PCS unit defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of policyholders and insurers. PCS estimates represent anticipated insured loss and exclude loss adjustment expenses.