Declarations

December 11, 2006

Award not warranted
“Awarding workers’ compensation death benefits to an estate conflicts with the underlying policy of the workers’ compensation scheme, which is to provide financial support to a worker and a worker’s dependents when the worker suffers job-related injury or death.”

— California’s Second Appellate Court, noting that a deceased employee’s estate is not entitled to workers’ compensation benefits. A previous labor code that required an employer to pay $250,000 to the deceased worker’s estate as a workers’ compensation death benefit was ruled unconstitutional by the appeals court.

Distributors not responsible for drunks
“Distributors are not required to determine the appropriateness of establishments’ policies when they sell them liquor, particularly when there is no indication the law is being broken.”

— New Mexico’s Appeals Court, ruling that liquor distributors cannot be held liable for a drunken driving crash during an Indian casino promotion that injured a Las Cruces, N.M., family.

Losses tricky without TRIA
The government is kidding itself if it believes the stand-alone market could make up for the capacity that would be removed if TRIA ends. “All of the available data shows the total size [of the stand-alone market] is around $10 billion. I don’t think that even comes close to the reality [of potential losses] in today’s terrorism environment.”

— Dr. James Valverde Jr., vice president of economics and research for the Insurance Information Institute, noting what would happen if TRIAis not renewed.

Losses unpredictable
“There are the mega-catastrophe events, which could deplete capital quickly and cause a loss of confidence in the stand-alone market. There is also the possibility of a ‘circle-swarm’ of attacks, which would be a large number of smaller events of a long period of time. Both situations would cause the market to act abnormally.”

— Martin Roberts, a managing director at Lloyd’s Market Association in London, discussing why terrorism losses are unpredictable. He said terrorism has the capacity to create losses across all lines of business that could run into the billions, which means the stand-alone market’s effectiveness is limited.

Federal charter not needed
“The system works exactly the way state legislators intended and can continue to handle all property/casualty insurer insolvencies, regardless of a [federal] charter.”

— Roger H. Schmelzer, president of the National Conference of Insurance Guaranty Funds, noting why a federal charter system is not needed.According to Schmelzer, the best choice for consumers is a guaranty fund system that is administered by the states.

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Insurance Journal West December 11, 2006
December 11, 2006
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2006 Program Directory, Vol. II