News Briefs

MASSACHUSETTS

Health Insurance Rates Rising: The state’s largest health insurers say most Massachusetts companies and their workers will see increases of 10 percent or more in their health insurance premiums beginning next year. The expected increase would follow five consecutive years in which premiums increased by at least 10 percent. Since 1999, the average total annual cost of health insurance for a Boston-area worker nearly doubled, to $8,000 this year, according to Hewitt Associates.

Hospitals Weighing Apology Policy: Some of Harvard Medical School’s teaching hospitals may add a lesson for their doctors: how to say sorry. The Boston Globe reported that a national specialist on patient safety, Dr. Lucian Leape, has helped the hospitals draft the policy for physicians to acknowledge medical errors to their patients. The policy, if adopted, would create a uniform response to some of medicine’s most difficult situations at Massachusetts General Hospital, Brigham and Women’s Hospital, Beth Israel Deaconess Medical Center, Dana-Farber Cancer Institute and Children’s Hospital Boston.

CONNECTICUT:

School Insurer Says Bully’s Parents Should Pay: The insurance company for Stonington, Conn., has filed a legal complaint claiming that if school officials lose a bullying lawsuit, then parents of the alleged bullies should pay as well. A lawsuit filed by a Pawcatuck Middle School student claims that during a trip to Washington, D.C., in March 2004, the boy was struck and pushed several times by four students while in his hotel room and was sprayed in the face with deodorant. Connecticut Interlocal Risk Management Agency, the town’s insurer, is claiming that the parents of the four boys were responsible for their sons’ alleged actions.

VERMONT:

20 Years Later, Ambassador Award: A federal jury has awarded Vermont’s insurance commissioner $119.9 million to distribute to creditors of the Ambassador Insurance Co., which failed more than two decades ago.

The defendants are accounting giant PricewaterhouseCoopers, which Vermont accused of negligent audits of Ambassador; and the estate of the late Arnold Chait, the Ambassador president accused by Vermont of mismanagement. A PricewaterhouseCoopers spokesman said the firm will challenge the verdict.

In 1983, Vermont seized control of Ambassador because it was insolvent. The company was incorporated in Vermont, but was based in North Bergen, N.J. Vermont filed the lawsuit in 1985, charging that Ambassador’s financial statements concealed the company’s weakness from regulators. The company was liquidated in the late 1980s after Vermont courts upheld the receivership. Because Ambassador was a surplus lines company, it lacked guaranty fund protection in case of insolvency.

NEW YORK

Auto Leasing Gets New Life: DaimlerChrysler, Ford Motor Company and General Motors announced their return to car leasing in New York State the same day President Bush signed a federal highway bill that included a provision ending the state’s vicarious liability, a legal concept that holds a leasing company liable for the actions of a negligent driver.

Car manufacturers say the bill signing heralds the likely return of 20 manufacturers, banks and finance companies that exited leasing in New York because of the old law. Buick, Cadillac, Chevrolet, Chrysler, Dodge, Ford, GMC, Hyundai, Jeep, Lincoln, Mazda, Mercury, Pontiac, Porsche, Saab, Saturn, and Subaru are all expected to start leasing again soon in New York State.

The passage of the bill ended a long-running battle with the trial lawyers who supported vicarious liability and brings New York in line with the other states that have eliminated it.

Physician Decertification Hailed: Insurance companies are applauding New York Gov. George Pataki for signing legislation that they say will assist them in their efforts to fight insurance fraud. Pataki signed A.8376, which decertifies physicians from receiving payment under the no-fault system when the physician engages in deceptive billing or fraudulent practices.

“This is a great victory for insurers, consumers and patients,” said Kristina Baldwin, regional manager for the Property Casualty Insurers Association of America. “Passage of this bill will help rid the no-fault system of medical mills and unscrupulous medical providers.”

MARYLAND

Insurers Sue Security Firm: The insurers for the company building the Hunters Brooke development in Charles County, Maryland have filed a lawsuit against the security firm that employed one of the men who allegedly set fire to the subdivision last December. The suit accuses Security Services of America of negligence and breach of contract.

SSA was hired to provide security for Hunters Brooke as it was under construction. An early morning arson fire on Dec. 6 damaged dozens of homes, causing $10 million in damage. One of the men accused of the crime, Aaron Speed, worked for SSA and was on duty that night. Speed has since pleaded guilty to conspiracy to commit arson.

The lawsuit was filed by Lloyd’s of London and Axis Specialty Europe Ltd., the insurers for builder Patriot Homes. It claims there was “an express and/or implied” agreement “that SSA would provide security personnel who were of the highest moral character, and whose backgrounds and fitness for the job had been properly vetted, and that SSA provided appropriate professional training and supervision to its security personnel.”

Sedan Owners Protest Rates: Already reeling from one insurance rate increase still under appeal, independent sedan transportation operators in Maryland have been told rates will be going up again. The Maryland Automobile Insurance Fund sent notice of a 32 percent rate increase effective with the next renewals, according to Connie Galiani, co-owner of Towson Sedan Inc. An increase of 52.8 percent was approved in September, something sedan owners have been fighting ever since.

Galiani’s 11-car company pays $4,000 a year in insurance on each car. The latest increase would push the tab to about $5,300. The insurance hikes have caused a crisis in the industry, according to Ira Cooke, executive director of Sedan Transportation Association of Maryland Inc. Sedans differ from taxicabs in that taxis are allowed to pick up fares on the street while sedans must be summoned by a telephone call to a dispatcher. Cooke said independent sedan owners would like to self-insure and are seeking advice about how to do this.

VIRGINIA

Workers’ Comp Hearing Set: Virginia’s State Corporation Commission has scheduled a Nov. 9 hearing to consider a request filed by the National Council on Compensation Insurance Inc. to adjust the premium levels charged for workers’ compensation insurance.

NCCI has proposed an increase in the overall premium level for industrial and federal (“F”) classifications in the voluntary market and the industrial classifications in the assigned risk plan. Overall premium levels would decrease for the coal classes in both the voluntary and assigned risk markets, as well as for the “F” class assigned risk rates.

The proposed changes, which would become effective on April 1, 2006, for voluntary market loss costs “F” are as follows: Industrial +8.7%; “F” (Federal) +9.0%; Coal Mines (Surface) -7.9%; and Coal Mines (Underground) -4.6%. For assigned risk rates, the proposed changes are: Industrial +1.5%; “F” (Federal) -0.4%; Coal Mines (Surface) -13.4%; and Coal Mines (Underground)-10.7%.

DELAWARE

Homeowners Renewals Restricted: Delaware Insurance Commissioner Matthew Denn wants to restrict insurers from canceling homeowners’ insurance policies because they have made a few claims and require insurers to more fully disclose to insureds whether they have coverage for floods, theft and replacement value on their homes. He is also implementing a new law authorizing tougher penalties on insurance companies that run afoul of regulations.

One of Denn’s proposed regulations would only allow non-renewals based on claims if there has been a “substantial change in the hazard or the risk” from the time that the policy was issued, or there have been claims for weather-related damage that are the result of the homeowner not making repairs that the insurer had asked for.

Denn also wants insurers to send homeowners annual notices about potentially costly gaps in insurance coverage and what they need to do to get flood insurance, adequate theft insurance, and real replacement value of their home. The expanded disclosures from insurance companies will start in January.

Denn is implementing tougher financial penalties for insurance companies, as well as a shortened statutory time frame for responding to the insurance commissioner’s office when a consumer has made a complaint. The changes are a result of the signing of House Substitute 1 for House Bill 90.

Topics Lawsuits Carriers Auto New York Legislation Claims Homeowners Maryland Vermont