Greenberg Will Not Face Criminal Charges:
Additional civil charges against former American International Group Inc. Chairman and CEO Maurice “Hank” Greenberg are possible, but no state criminal charges are expected, a spokesman for New York Attorney General Eliot Spitzer said late last month.
“The office decided months ago to pursue the case as a civil matter,” a Spitzer spokesman, Darren Dopp, told the Associated Press. “An amendment to the civil complaint is possible, but no final decision has been made,” he said.
The Wall Street Journal reported that a person familiar with the matter said Spitzer is expected to add to his civil complaint against Greenberg as early as this week.
Criminal charges are still possible, however, from federal prosecutors in two separate investigations of Greenberg, WSJ reported. Greenberg’s attorney already has argued against any charges to the federal prosecutors, the newspaper reported, citing two knowledgeable sources.
Congress Raises NFIP Borrowing Level:
The federal flood insurance agency, currently broke because of hurricane-related claims, will be able to resume payments to flood victims following a vote by Congress to increase its borrowing powers.
The Senate and the House last month both approved by voice vote legislation that raises the amount the National Flood Insurance Program can borrow to $18.5 billion every year. In September, Congress voted to raise the borrowing authority from $1.5 billion to $3.5 billion.
Butch Kinerney, spokesman for the Federal Emergency Management Agency, the NFIP’s parent agency, said insurers had been told to stop paying claims because the program had run out of money. Kinerney said current estimates are that there will be $23 billion in claims from Hurricanes Katrina, Rita and Wilma. The $23 billion is more than the total amount paid out in claims by the NFIP since its inception in 1968.
Big ‘I’ Says Hurricane Response Too Slow:
The insurance industry’s response to Hurricanes Katrina and Rita has been “too slow” and the job of adjusting claims is a long way from being completed, said William Stiglitz, president of the Independent Insurance Agents and Brokers of America. Stiglitz, also an independent agent in Louisville, Ky., said the recent catastrophes have exposed major problems with the federal flood insurance program.
“The sheer magnitude of this disaster has made it a very difficult process,” Stiglitz told a meeting of the Connecticut chapter of IIABA. “There were not enough adjusters; there are not enough adjusters.”
He said he has been a “little disappointed” in the industry’s response and that the process to deploy a sufficient army of adjusters “has been too slow.”
Among other lessons, the hurricanes exposed “real deficiencies” in the National Flood Insurance Program, according to Stiglitz.
He claimed his association has been alone in representing independent agents in trying to obtain improvements in the flood program. The association developed a set of 22 recommendations for improving the flood program.
Senate Passes TRIAExtension:
Moving just days after committees in the House and Senate advanced terrorism insurance bills, the full U.S. Senate passed its version of the Terrorism Risk Insurance Extension Act of 2005 (S. 467). By a voice vote, the Senate approved a new, two-year program to take the place of the Terrorism Risk Insurance Act of 2002, which expires Dec. 31.
Similar legislation to extend the program has passed a House committee but must still be passed on the House floor. After approval there, House and Senate negotiators would have to come up with a compromise.
Many Republicans, the Treasury Department and the White House have urged Congress to limit the federal government’s role in any terrorism insurance program. However, the bills have achieved bipartisan support and the Bush Administration has said it could support the Senate version.
Both bills would, however, raise the event size that triggers federal aid from the current TRIA’s $5 million to $50 million in the first year, and $100 million in the second year.
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