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Wednesday
07/16/08 |
Your Insurance News "Strategic
Relationship"
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1.
SEC Subpoenas Over 50
Hedge-Fund Advisers: Report |
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(Reuters) - The
U.S. Securities and Exchange Commission (SEC) has sent subpoenas
to more than 50 hedge-fund advisers as it investigates whether
individuals spread false rumors to manipulate shares in two Wall
Street firms, The Wall Street Journal said, citing a person
familiar with the matter.
The subpoenas,
sent as recently as Monday, are seeking trading and
communications data related to short-selling and options trading
in Bear Stearns Cos or Lehman Brothers Holdings Inc (LEH.N: ),
the person told the paper.
Rumors have
been blamed for the collapse of investment bank Bear Stearns and
for the 40 percent slide in Lehman shares this month.
Some of the
hedge-fund advisers have received subpoenas related to both
probes, while others were contacted with respect to only one.
Among the firms
that have received subpoenas are Citadel Investment Group LLC in
Chicago and SAC Capital Advisors in Stamford, Connecticut, the
paper said.
The subpoenas
relate to trading in securities of the brokers, as well as
correspondence between the hedge funds and other parties, people
familiar with the inquiry told the paper.
The subpoenas
are part of a broad inquiry, and firms that have received
subpoenas were told by the SEC that they are not necessarily the
focus of specific allegations, the Journal said.
Some hedge
funds received subpoenas Monday. Other subpoenas were sent
within the past few weeks, and several firms have turned over
information to the SEC already. The probe is still in its early
stages, the paper said, citing people familiar with the matter.
Separately,
NYSE Regulation Inc, the regulatory unit of stock-exchange
parent NYSE Euronext (NYX.N: ), sent a letter Monday to a number
of its "largest member firms" requesting details on how those
securities firms monitor compliance with rules prohibiting
circulation of false and misleading rumors that could roil stock
prices, the paper said.
The letter said
the review was being conducted jointly with the Financial
Industry Regulatory Authority, a Wall Street self-regulatory
agency.
The securities
firms that received Monday's letter were given a July 28
deadline to provide the information, including any disciplinary
actions taken against employees linked to false or misleading
rumors, the paper said.
Citadel
Investment, SAC Capital and the SEC could not be immediately
reached for comment.
(Reporting by
Pratish Narayanan; Editing by Louise Ireland)
© Thomson
Reuters 2008 All rights reserved |
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2.
While HMO Premiums
Remain High, Rate of Increase to Decline in 2009, According to Hewitt
Associates |
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To
Combat Continued High Premium Rates, Companies Implementing More
Aggressive Strategies to Mitigate Health Care Costs
LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--Preliminary information from Hewitt
Associates, a global human resources consulting and outsourcing company,
shows that HMO premium rates will increase by approximately 11.8 percent
in 2009—lower than last year’s initial rate increases, but still on
track to outpace inflation and underlying health care trends.
As
U.S. companies begin to negotiate HMO plan rates for 2009, data from
Hewitt Health Resource™ (HHR)—a Web site that captures HMO rate
information for 160 large companies representing approximately 1 million
participants—shows that initial 2009 HMO rate increases are averaging
11.8 percent, compared with estimates of 13.2 percent in 2008 and 11.7
percent in 2007. After plan changes, negotiations and terminations,
final average HMO rates in 2008 increased by 9.4 percent.
“While initial 2009 HMO premium rate increases remain high, we expect to
see that employers will once again be able to reduce overall
increases—by at least 2 or 3 percentage points—through aggressive
negotiations, changes in plan offerings and designs and an increased
focus on employee health and productivity,” said Jeff Smith, a senior
consultant and co-leader of Hewitt’s HMO rate analysis project. “As the
economy continues to weaken, and because salary increases are expected
to remain similar to last year, employers are becoming increasingly
sensitive to the effect higher health care costs have on employee
take-home pay and payroll deductions. As a result, we expect to see more
companies move away from traditional employer strategies—such as
employee cost-shifting—toward more aggressive and innovative steps that
not only help mitigate health care costs, but also keep more money in
employees’ pockets.”
Employer Response to Rate Increases
Building on the success of their efforts last year, employers will
continue to take aggressive steps in 2009 to mitigate the impact of high
HMO premium increases on their health care budgets. These steps include:
Consolidating Vendors and Moving to Self-Insured Plans: An increasing
number of companies are aggregating the lives from smaller and/or less
efficient HMO plans into a consolidated risk pool with their most
efficient health plan administrators. This creates more purchasing power
and leverage through the negotiation process and typically results in
more realistic assumptions around such factors as overhead and risk
margins, while also reducing overall cost by having a smaller number of
health plans to manage.
In
addition, employers are moving away from local and regional fully
insured HMO plan offerings, which have higher administrative costs and
are subject to state-mandated benefit requirements that drive up premium
costs. Instead, they are consolidating plan participants under
self-insured arrangements where they assume the full financial risk for
medical claim costs and pay the health plan an administrative fee for
services such as claims processing and provider network management.
“By combining HMO enrollment under a national or regional self-insured
platform, employers are able to streamline administration, offer more
consistent designs across their markets and reduce costs—all of which
help them avoid additional cost-shifting to employees, either in the
form of reduced benefits or higher payroll increases,” said Smith.
Increasing Focus on Improving Employee Health: Employer interest in
building employee knowledge and ownership for managing their health
continues to grow. Most employers believe that keeping employees healthy
has a direct impact on controlling health care costs, maintaining high
levels of productivity and mitigating absences.
Hewitt’s research shows more than 85 percent of companies invest or plan
to invest significant resources in long-term health and productivity
initiatives over the next three to five years. Health- and
wellness-related programs that address the spectrum of health risk from
the healthy to the chronically ill—including health risk assessments,
disease management programs, nurse help lines, and smoking cessation and
weight management programs—are the most widely offered; however,
emerging strategies such as value-based health plan designs and
biometric screenings are rapidly gaining interest among employers.
Aggressively Negotiating With Health Plans: As in past years, employers
continue to negotiate aggressively with their health plans to try to
reduce initial premium increases, and they are coming to the
negotiations table well-informed and ready to articulate their
requirements.
As
health and productivity becomes an increasingly important
cost-management strategy, employers are engaging their health plans in
multi-year partnerships to improve employee health. They are also
holding them accountable for delivering on specific program measures,
including participation levels, clinical outcomes, reductions in claim
costs, and member satisfaction levels. In fact, Hewitt research shows
that almost 60 percent of companies indicated that they plan to ask
their vendors for quarterly reports on their contribution to their
health and productivity strategy within the next five years.
Shifting Costs to Dependents: As employers struggle with making their
health care budget dollars stretch further in an environment of
continued high costs, some are beginning to cost-shift a portion of
their dependent subsidy dollars to employees. This is taking many forms,
whether through increased payroll contributions for dependent health
care coverage or by applying surcharges to encourage dependent spouses
to take coverage under their own employer’s plans.
In
addition, employers are becoming increasingly interested in conducting
dependent audits, which are designed to assess and remove plan costs for
dependents who don’t qualify for coverage based on the employer’s
eligibility requirements. More than 40 percent of Hewitt’s clients have
conducted a dependent audit in the past five years, and another 10
percent planned to conduct one in 2008.
“On average, covered dependents account for more than half of the cost a
company spends on health care, so while employers want to be viewed as
‘family friendly,’ they believe taking steps to reduce dependent costs
are necessary in order to continue to provide affordable coverage for
their workers,” said Bob Tate, chief health care actuary at Hewitt. “At
the same time, companies realize that cost-shifting is not a sustainable
long-term strategy for reducing health care spend, and they are moving
beyond health and wellness strategies that focus solely on employees to
ones that emphasize their entire covered population, which may include
spouses, children and other dependents.”
www.hewitt.com |
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3.
Towers Perrin and
Earnix Strategic Alliance on Pricing and Customer Value Optimization
Initiative to Create Competitive Advantage for Insurers |
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LONDON & STAMFORD, Conn.--(BUSINESS WIRE)--Towers Perrin, a global
professional services firm, and Earnix, a provider of customer value
optimization solutions for financial services, are launching a new
customer value and pricing optimization product. The joint offering will
enable insurers to enhance business performance by utilizing robust
market analytics to optimize interactions with customers based on their
needs.
Maintaining underwriting profits continues to be a challenge in the
insurance industry, where intense competition has made it increasingly
difficult for companies to produce acceptable returns. More strategic
approaches to pricing and customer value offer the best opportunities to
improve bottom-line performance, with proven results ranging from 1% to
4% of gross written premium (GWP).
Earnix Optimizer provides an integrated platform for pricing and
customer value optimization, incorporating a patented technology that
enables insurers to provide customers with real-time offers and price
quotations.www.earnix.com
www.towersperrin.com |
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4.
AOL Launches Personal
Finance Site |
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NEW YORK (Reuters) - Time Warner Inc's AOL will launch a personal
finance site on Tuesday, adding to a roster of new properties that do
not bear its name.
The new site, called WalletPop.com, is a spin-off of AOL's Money &
Finance channel and will focus on consumer and personal finance. AOL
Money & Finance will continue to business and investing news and tools.
The launch of another site not bearing the AOL brand is part of a plan
to create new online businesses courting younger audiences unfamiliar
with a company whose heyday ended with the popularity of high speed
Internet access.
TMZ.com, a celebrity entertainment site created by AOL and a unit of
Warner Bros, added 35 percent more users in May, now attracting about
9.2 million visitors monthly, according to comScore. Asylum, which the
company said is now the top men's site, attracted 2.7 million unique
visitors in May.
Walletpop offers "a comprehensive, accessible, and interactive web site
focused exclusively on the money matters of real people, such as debt
management, finding the best deals, saving, retirement, insurance, real
estate, banking, taxes and more," Marty Moe, Senior Vice President, AOL
Money & Finance said in a statement.
Walletpop's launch follows on the heels of the July launch of
BigDownload.com, a site targeting PC gamers.
(Reporting by Kenneth Li; Editing by Andre Grenon)
©
Thomson Reuters 2008 All rights reserved |
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5.
Mercer’s Enterprise
Momentum™ Brings State-of-the-Art, Affordable Benefits Management to
Small, Medium Employers |
|
NEW YORK--(BUSINESS WIRE)--Mercer today announced the launch of
Enterprise Momentum™, a new suite of employee benefits insurance
management offerings for small- to mid-sized employers.
Built upon Mercer’s substantial experience as one of the largest
insurance brokers serving this market, Enterprise Momentum provides a
cost-effective way for clients with 50–500 employees to avail themselves
of many of the tools, processes and expertise that large organizations
employ to successfully manage these programs.
“Enterprise Momentum is designed to contribute to the overall success of
companies through the effective and strategic management of their
benefit programs,” said Kerry Finnegan, US enterprise business leader.
“Much of this process is delivered through Mercer’s newly trademarked
Core Services Client Calendar™, which helps employers sustain benefit
programs year-round as they compete for talent in an increasingly
shrinking labor pool.”
Enterprise Momentum is focused on helping employers save money and time
and creating near- and long-term benefit program strategies that help
attract and retain qualified talent. Enterprise Momentum also provides
clients with benefits-related regulatory support and updates.
The offering includes a number of brokerage/consulting services,
including carrier services audits, cost forecasting software, benefit
communications, a consumerism readiness audit, a benchmark profiling
program, online renewal and placement support, and a dedicated local
service team. http://enterprisemomentum.com.
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6.
A.M. Best Special
Report: Fair-Value Standard Impacts Insurers’ Balance Sheets |
|
OLDWICK, N.J.--(BUSINESS WIRE)--Dislocation in the capital markets and
rising investment risk continue to place stress on the balance sheets of
publicly traded life and annuity companies. Despite a challenging first
quarter, A.M. Best Co. does not expect industry-wide distress.
*
Comparing the change in accumulated other comprehensive income (AOCI) of
year-end 2007 to first quarter 2008, there was a 5.7% overall decrease
in adjusted shareholders’ equity for this report’s group of companies.
*
Increased investment impairments and equity-market volatility were the
primary drivers of the first quarter, year-over-year net operating
income decline of 8% (on average).
*
Emerging risks related to commercial mortgages and rising corporate bond
default rates create the potential for additional stress on the
industry’s capital strength.
*
Current investment yields remain challenged despite a significant
widening of corporate bond spreads and a corresponding offset in the
10-year Treasury rate.
*
Continued equity market volatility and declines in subprime and Alt-A
loan values are likely to further stress second quarter results.
However, with a few exceptions, life insurers’ overall exposure to
subprime and Alt-A mortgages remains moderate and appears manageable.
www.bestweek.com |
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7.
Eastbridge Study
Recognizes Voluntary Sales Growth Leaders in the Small Carrier Category |
|
AVON, Conn.--(BUSINESS WIRE)--Voluntary sales have shown consistent
growth for the last few years. The rate of growth in 2007 for the
industry was just under seven percent, and total new voluntary sales
exceeded $5 billion ($5.038 billion). Twenty companies had growth rates
that exceed the average. Each year, Eastbridge Consulting recognizes the
companies that have led the industry in voluntary sales growth.
“This year, among small companies, HM Insurance, Texas Life, and Fort
Dearborn Life were the fastest growing companies based on voluntary
sales,” says Gil Lowerre, president of Eastbridge. Texas Life and Fort
Dearborn Life were on the growth leaders list in 2006 also. Earlier this
month, Eastbridge announced the winners in the large company group.
Parties interested in participating in next year’s study should email
Eastbridge at info@eastbridge.com. All participants receive a free copy
of the complete findings, including company-specific results.
Eastbridge Consulting Group, Inc. is a marketing advisory firm serving
insurance and financial services organizations in the United States and
Canada. Contacts: Eastbridge Consulting, Jennifer Davis, 860-676-9633 |
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8.
DTCC Reduces Payment
Risk in OTC Credit Derivatives Market |
|
Central Settlement Service Achieves 95% Average Netting Factor for
Payments
NEW YORK & LONDON--(BUSINESS WIRE)--The Depository Trust & Clearing
Corporation (DTCC) today announced significant strides in reducing risk
in the over-the-counter (OTC) credit derivatives market by successfully
executing payment netting for the industry. Over the past three
quarterly payment cycles, DTCC has reduced 1.62 million gross payments
valued at US$72.5 billion (£36.5 billion) gross to 823 net payments
valued at US$3.5 billion (£1.8 billion), achieving an average 95%
netting factor.
DTCC’s central settlement service, launched in late 2007 and provided in
collaboration with CLS Bank International (“CLS Bank”), addresses one of
the major concerns outlined by the Federal Reserve Bank of New York as
well as U.S. Treasury Secretary Henry M. Paulson, Jr.—the need for
further enhancements to the post-trade processing infrastructure for OTC
derivatives to reduce operational risks in this market. “To support
long-term growth, the processing infrastructure must be capable of
processing transactions efficiently through periods of sustained high
volume and market volatility,” the New York Fed said in a statement
issued in March 2008. Among the commitments industry participants have
made to enhance this infrastructure, the New York Fed noted, is the
implementation of centralized settlement.
www.dtcc.com
www.cls-group.com |
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9.
Citigroup CFO Says 2-3
Years Before Better Returns: Report |
|
NEW YORK (Reuters) - Citigroup Inc (C.N: ) Chief Financial Officer Gary
Crittenden said it could be two to three years before returns at the
largest U.S. bank by assets improve significantly, The New York Times
said on Tuesday.
"This isn't like a sprint," Crittenden said, according to the newspaper.
"This really is a marathon."
Citigroup did not immediately return a call seeking comment.
Analysts on average expect Citigroup on Friday to post a second-quarter
loss of 60 cents per share, according to Reuters Estimates.
Such a loss would equal more than $3 billion, and be on top of close to
$15 billion of losses in the prior two quarters.
Chief Executive Vikram Pandit is trying to improve operations. Since
mid-2007, the bank has suffered more than $46 billion of write-downs and
credit losses.
These losses have been tied to such matters as subprime mortgages,
complex debt, consumer credit and exposure to bond insurers. Citigroup
has also raised more than $40 billion of capital over that time.
(Reporting by Jonathan Stempel; Editing by Maureen Bavdek)
©
Thomson Reuters 2008 All rights reserved |
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10.
Economic Crisis Called
Worst Since 70s |
|
By
Daniel Trotta and Jennifer Ablan
NEW YORK (Reuters) - For many Americans this feels like the worst
economic crisis in their lifetimes, and some leading investors are
starting to say they may be right.
The bursting of the dot-com bubble in 2000 and 2001 seems tame by
comparison, and the savings and loan crisis of the late 1980s and early
1990s almost forgettable. Similarly, the global impact looks to be
greater than that of the Asian financial crisis of 1997 and 1998.
Most comparisons turn to the low growth, high inflation, weak dollar and
soaring energy prices of the 1970s, but this time with a housing crisis
and spiking commodities prices thrown in, all threatening a prolonged
recession.
"It is the most serious financial crisis of our lifetime," said
billionaire investor George Soros, noting a growing effect on the U.S.
economy as a whole, rather than just financial markets. "It is an idle
dream to think that you could have this kind of crisis without the real
economy being affected.
"We are facing a recession and it is slow in coming but the slower it
comes, the more powerful it is," Soros told Reuters.
The rapid erosion in confidence in Freddie Mac (FRE.N: ) and Fannie Mae
(FNM.N: ) underscores the toxic nature of the problems facing the U.S.
financial system. The publicly traded, government-sponsored enterprises
(GSE) own or guarantee $5 trillion of debt, close to half the value of
all U.S. mortgages.
With 8,000 to 9,000 American homes entering foreclosure every day, stock
in Fannie and Freddie lost nearly half their value last week, leading
the U.S. Treasury to open its discount window to the two firms to ease
fears over their capitalization.
This comes as U.S. stock indexes have fallen by more than 20 percent
from their peaks in October, while the pan-European FTSEurofirst 300 is
down 30 percent, the Shanghai Composite has dropped 45 percent since the
year began and Japan's Nikkei 225 is also significantly lower.
Experts who lived through the stagflation of the 1970s -- a mixture of
stagnated growth with inflation -- say it may be worse this time because
there are no safe havens in global markets.
Foreign central banks, mostly in Asia, hold almost $1 trillion of the
bonds and mortgage-backed bonds sold by Fannie Mae and Freddie Mac.
One investor who lived through the early 1970s noted that in those days
an equities investor could take refuge in the money markets.
"Now you're a stone loser in the money market fund whether it's before
tax, after tax, or after inflation," said Cummins Catherwood, managing
director of the broker-dealer Boenning & Scattergood.
Dan Fuss, 74, vice chairman of Boston-based Loomis Sayles, which
oversees more than $100 billion in fixed-income securities, said the
current situation is "eerily reminiscent" of the markets in 1974.
Economist Jeffrey Sachs, who advised Eastern European governments after
the fall of communism, also compared it to the early 1970s, which he
said noted led to years of slow growth and economic difficulty.
"The '70s were pretty bad," Sachs said. "There were serious dislocations
in the world economy. It was very tough and I hope we don't go through
that again."
But one person's crisis is another's buying opportunity.
While financials and companies sensitive to fuel prices are getting
hammered, many industries are attractive long-term holdings, said
investment manager Don Hodges of Hodges Capital Management, who has been
active in the market since 1960.
"I
think ultimately the consumer comes to the rescue," he said. "A lot of
them that say they are hurting have a TV in every room and a couple of
SUVs. It's not like they're on poverty street."
Inevitably, comparisons will be made with the Great Depression, a
worldwide economic downturn that lasted for most of the 1930s, until
World War II.
For George Schwartz of investment adviser Schwartz Investment Counsel,
the current situation is the worst he's seen in 40 years of managing
investments.
"I
can't tell you first-hand how it was during the Depression but people
have been saying to me for months now, 'Gee, it has to get better, it
can't get any worse than this.' And I keep saying I don't see why it
can't."
(Reporting by Daniel Trotta and Jennifer Ablan; Editing by Eddie Evans)
©
Thomson Reuters 2008 All rights reserved |
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11.
U.S. overseer says
IndyMac "safe and sound" |
|
By
Gina Keating
PASADENA, California (Reuters) - Three days into its receivership,
the former IndyMac Bank is "as safe and as sound as any bank in the
country right now," John Bovenzi, the U.S. banking official running the
failed bank, said on Monday, while conceding that he expects more bank
failures.
Bovenzi, who oversees bank receiverships for the Federal Deposit
Insurance Corp, was not surprised to see hundreds of customers waiting
outside the bank's Pasadena, California, headquarters Monday morning to
withdraw their money, but predicted the anxiety would quickly abate.
"I
think what people will see when they go in and get their money is that
it's safe," Bovenzi said in an interview outside the newly renamed
IndyMac Federal Bank. "There will be some lines until people see that."
But consumers should expect to see more bank failures as defaulted
mortgage loans shake out of the system, and should take steps to protect
their money, he said.
"There will be more bank failures," Bovenzi said. "I don't expect it to
be a large number. I don't expect there will be large bank failures.
There will be small bank failures."
An
unusually low number of bank failures in recent years may have lulled
consumers into forgetting about FDIC coverage limits that generally
protect up to $100,000 per account holder, he said. Higher deposit
insurance limits apply to some accounts.
Following the failure of a small Utah bank in June 2004, the banking
industry suffered no failures until February 2007, according to FDIC
data. Only three banks failed last year, and IndyMac is the fifth to
fail in 2008, the FDIC said.
The FDIC was returning up to 50 percent of funds over the $100,000 limit
to some depositors Monday, he said.
FDIC froze the remainder of those funds and handed out receivership
certificates to account holders Monday until claims experts determine
how much of that money is insured.
The certificates entitle IndyMac depositors to receive more of their
frozen funds as the FDIC sells off the bank's assets.
They will likely have to wait at least several months, if not years, as
the FDIC resolves IndyMac's fate.
"We'd like to see if we can sell the institution as a whole to one
healthy bank," Bovenzi said.
If
such a buyer cannot be found, the FDIC would sell off assets piecemeal,
including its Financial Freedom reverse mortgage business, 33 branches
and loan portfolio, he said.
"Companies like Financial Freedom have a great deal of value so there
will be a market for those assets," he said.
Former IndyMac Chief Executive Michael Perry will not participate in the
sale of the bank.
"We didn't ask him to have a position with the new bank ... which is
fairly typical," Bovenzi said.
FDIC had not approached any potential buyers or received any feelers
from suitors as of Monday because "we haven't focused on it yet,"
Bovenzi said.
Nor have federal overseers determined whether IndyMac's parent, IndyMac
Bancorp Inc, should seek Chapter 11 bankruptcy protection, he said.
"Our focus over the weekend was on transferring all assets to the new
bank" to ensure that customers would have access to their insured funds
when the bank reopened Monday, he said.
FDIC didn't bother to change signage on the IndyMac building in central
Pasadena or at branches because it does not expect to own the bank "for
more than a few months," he said.
(Reporting by Gina Keating; editing by Jeffrey Benkoe)
©
Thomson Reuters 2008 All rights reserved |
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13.
Wachovia Credit Default
Swaps Widen 75 Basis Points |
|
NEW YORK, July 15 (Reuters) - Debt protection costs for Wachovia Corp (WB.N:
) rose on Tuesday after Wall Street analyst Meredith Whitney downgraded
the stock to "underperform."
The cost to protect bonds of Wachovia, the fourth-largest U.S. bank,
with credit default swaps for five years rose to 375 basis points, or
$375,000 a year to protect $10 million of debt, from 300 basis points on
Monday, according to Phoenix Partners Group.
©
Thomson Reuters 2008 All rights reserved |
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14.
Insurance Commissioner
Failing to Enforce Against Discrimination |
|
Monday was the deadline for all auto insurance companies to comply with
regulations that phase out discriminatory zip code pricing in
California. According to the Greenlining Institute, a consumer
protection group, most auto insurers have failed to meet this deadline.
The latest Department of Insurance reports indicate that over 75 percent
of California’s auto insurers have not complied with the new
regulations. Moreover, all of Californian’s top ten auto insurance
groups by market share and 23 of the top 25 have not complied. These
companies make up over 90 percent of the California auto insurance
market and are likely continuing to determine rates using a
discriminatory method through the use of zip codes.
California Insurance Commissioner Steve Poizner had roughly two years to
enforce the regulations and remove what Greenlining believes is a
discriminatory tool against inner-city motorists. Greenlining attorney,
Kenechukwu Okocha said, “Basing premiums on where you drive instead of
how your drive means motorists in places like Los Angeles and San Jose,
rich or poor, pay more simply based on where they live. That just isn’t
fair.”
Okocha expects more auto insurance companies will comply after the
deadline, but expects compliance to be slow. “You have to wonder how
long it will take to get all insurers to comply if after two years only
two of the top 25 have done so,” said Okocha.
Greenlining criticized California Insurance Commissioner Steve Poizner
for not being more aggressive in enforcing the regulations. “My question
is, what has Commissioner Poizner been doing since he was elected in
2006?” questioned Okocha. “He calls himself the state’s top consumer
advocate, but 75 percent of all auto insurers are ignoring him.”
The regulations were enacted in 2006 by former Insurance Commissioner
John Garamendi before he left that office to become Lieutenant Governor.
The regulations were intended to enact the rate determining requirements
of Proposition 103, which was approved by California voters in 1988.
Proposition 103 directed insurance companies to use three primary rate
determining factors: 1) driving safety record, 2) annual mileage driven,
and 3) years of driving experience.
In
1996, then Insurance Commissioner Chuck Quackenbush enacted regulations
that would have allowed zip codes to take precedence over the three
aforementioned factors. The courts struck down Quackenbush’s regulations
finding that they invalidated Proposition 103’s aims. |
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15.
Today is Deadline for
New Auto Insurance Pricing System Based on Driving Record Not ZIP Code |
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SANTA MONICA, Calif., July 14, 2008 - PRNewswire
-- 20 Years After Vote, Insurers Must Show They are Complying With Prop
103 Rules
Today is the deadline for every auto insurer in the state to submit new
plans to the Insurance Commissioner detailing a new rate setting system
that complies with the rules of the landmark 1988 insurance reform
initiative Proposition 103. Auto insurance companies in California must
now set customers' premiums primarily on driving record and the number
of miles driven annually and significantly limit the impact of ZIP Code
on rates.
"If you have a good driving record, you shouldn't be forced to pay
hundreds and even thousands of dollars more for auto insurance just
because of your ZIP Code, and finally you won't have to," said Harvey
Rosenfield, the author of Proposition 103. "For 20 years, the insurance
industry stymied the will of the voters who passed Prop 103, but today
the insurance companies' defiance comes to an end and Californians will
be charged according to how well and how much they drive, not where they
live."
Under the terms of Proposition 103, and regulations issued by the
Insurance Commissioner in 2006, each auto insurance company must submit
a special application to the Department of Insurance showing that it is
complying with the new rules. In August of 2006, companies were given
two years to phase in the new safety record-based system. A few
companies have already completed the changeover, but the vast majority
of insurers have not fully converted. The new compliance filings will be
reviewed by the Department of Insurance -- and Consumer Watchdog's
lawyers. They are expected to take effect in the early autumn.
http://www.consumerwatchdog.org |
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16.
Clients Receive More
‘Than Just the Sale’ of Insurance, Says Agency Exec to Buffalo
Compensation Hearing
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Former Buffalo-area insurance trade group president rejects contingent
commission conflict of interest theory before a joint hearing
(DeWitt, New York, July 14, 2008) — Commitment to customer service and
providing clients with “our professional expertise” is the driving force
of Buffalo-area independent agencies and brokerages, rather than a
potential, end-of-year commission, said David M. Gelia. The past
president of the Independent Insurance Agents Association of Western New
York, Inc., testified in Buffalo July 14 before a joint public hearing
conducted by the New York State Insurance Department and New York State
Office of the Attorney General.
The hearing—one of three to be held throughout the state—offered
interested parties the opportunity to weigh in on a NYSID concern that
contingent commissions—sometimes referred to as profit sharing—create an
“irreconcilable conflict of interest.” Also in question is disclosure to
the client of this compensation.
Many insurance companies pay a contingent compensation at year’s end,
based on an overall performance involving growth, loss ratios and
profitability. These factors do not reflect specific policies. When
writing an individual policy, Gelia pointed out that it is unknown at
that time whether the agent or broker will “be eligible to receive
additional or supplemental compensation for placing that account.”
“As a Trusted Choice® independent insurance agency, my firm provides
much more...than just the sale of the insurance policy,” said Gelia. “We
are committed to providing customer service designed to help meet our
clients’ needs and to provide our professional expertise.” Gelia is also
executive vice president of the Amherst, New York-based United Insurance
Agency, Inc. as well as secretary-treasurer of the Independent Insurance
Agents & Brokers of New York, Inc.
When asked if he would place business with a carrier that paid profit
sharing but whose claims paying practices were poor, Gelia responded,
“We won't even quote those companies.”
Gelia’s testimony pointed out that organizations such as IIAAWNY, IIABNY,
the Independent Insurance Agents & Brokers of America and others believe
in a long-standing agents and brokers’ position that profit sharing is a
legitimate method of compensation. Also, according to Gelia, disclosure
of contingent commission should be voluntarily disclosed “when asked by
a customer.”
Liberty Mutual Insurance Company was victorious in a recent New York
State Supreme Court, Appellate Division, First Department decision that
determined “contingent commission agreements between brokers and
insurers are not illegal.” The decision further explained that Liberty
Mutual “had no duty to disclose the existence of the contingent
commission agreement.”
To
view his submitted testimony in PDF form, go to
http://ny.iiaa.org/externalcommunications/071408_Buffalo_Gelia.pdf.
Tim Dodge, IIABNY’s director of research and external communications,
updated his “Ask Tim” blog while in attendance at the hearing via a
laptop and internet connection. Dodge’s comments are available at
http://insurancegeek.typepad.com/ |
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17.
InsMark Launches a
Spanish Language Life Insurance Illustration System |
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San Ramon, CA ---- InsMark, Inc., the nation's largest
developer/publisher of Supplemental Illustrations for the life insurance
industry continues its tradition of providing marketing tools for its
user base by launching Version 4.0 of its Life Plan System with
illustration output in either English or Spanish.
Bob Ritter, CEO of InsMark, is quoted as saying, “The three key
ingredients of modern cash value life insurance are death benefit, cash
accumulation, and retirement cash flow through policy withdrawals and/or
loans. Life Plan is designed for easy explanation of these three
features -- in just two pages. We added the option for output in
Spanish due to the tremendous growth of the U.S. Hispanic population
which, according to the Census Bureau, is 45.5 million and growing. A
significant segment of this group prefers to transact financial business
in Spanish, and Life Plan 4.0 addresses this issue. We will be
converting more of our illustration modules to Spanish output in the
future.”
Please visit
http://www.insmark.com/ProductCenter/LifePlan/output.html to review
examples of Life Plan in English or Spanish.
Life Plan can be illustrated with Universal Life, Equity-Indexed
Universal Life, Variable Universal Life, and Whole Life.
For licensing information about Life Plan or other InsMark products,
individual producers should contact an InsMark Account Executive at
1-888-InsMark (467-6275). Institutional inquiries should be made to
David Grant, Sr. V.P. - Sales at 1-925-543-0513 (dag@insmark.com).
For detailed information about InsMark’s entire product line, please
visit
http://insmark.com/ProductCenter/index.html.
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18.
U.S. Firms Rely On Worldwide U.S. D&O Policies To Provide
Global Coverage, According To Towers Perrin Survey |
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Survey Also Finds Independent Director Liability Coverage Gains Interest
and Overall D&O Insurance Market Remains Soft
STAMFORD, CT, June 16, 2008 - Only 3% of survey participants with
international operations have purchased separate Directors and Officers
(D&O) liability insurance policies for other individual countries,
according to the 2007 Survey on Insurance Purchasing and Claims Trends
conducted by Towers Perrin. Forty-three percent of all survey
participants indicated that their firms are global.
Global D&O coverage has become one of the most recent emerging D&O
issues as a result of increased claim activity outside the U.S. and
changing corporate laws in many countries that now permit derivative and
shareholder lawsuits. In addition, legal changes have expanded the
responsibilities of directors.
"Many countries do not permit non-admitted D&O insurance policies to
cover local directors and officers," said Michael Turk, senior
consultant. "In these countries the non-admitted worldwide U.S. D&O
policy is not permitted to pay claims, regardless of the policy
language."
As
a result, the worldwide U.S. D&O policy does not provide the global
protection that many insureds may believe they have with their D&O
policy. There are many other complications as well, such as the need to
allocate insurance premiums in some countries and pay local premium
taxes.
"We are not surprised by the low percentage of survey participants who
have purchased local D&O policies," said Mr. Turk. "Many companies are
not yet aware of this emerging issue. And those that are aware are
struggling to determine the best approach to address this for their
organization. This can be a complicated decision. A company needs to
consider their own unique situation in each country and its local laws
to determine how they want to structure their D&O insurance program to
cover its global risks. This is, however, an issue that must be actively
addressed by organizations with global operations. I believe this issue
is only going to get bigger - it is not going to go away."
Towers Perrin provides D&O liability and insurance program reviews for
organizations seeking an independent review of its risks and coverage.
In addition, Towers Perrin places with insurers D&O and other insurance
coverage for our consulting clients. Contact Michael Turk at
203-351-5193 or via e-mail at
michael.f.turk@towersperrin.com
for more information. www.towersperrin.com |
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19.
Millions Believe
Personal Medical Information Has Been Lost or Stolen |
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Issue a Roadblock to Acceptance of Electronic Health Record Systems
ROCHESTER, N.Y., Jul 15, 2008 (BUSINESS WIRE) -- According to The Harris
Poll(R), four percent or an estimated nine million American adults
believe that they or a family member have had confidential personal
medical information either lost or stolen. Results of the poll of 2,454
adults surveyed online between June 9 and 16, 2008 by Harris
Interactive(R), which was designed in collaboration with Dr. Alan F.
Westin, Professor of Public Law and Government Emeritus at Columbia
University, include:
--
Among those who have heard about medical records being lost or stolen,
seven percent believe that either they (or a family member) may have had
their personal medical records lost or stolen. This represents about
four percent of all adults and translates into approximately nine
million people(1);
--
About seven in ten (69%) of adults have either read or heard about
medical records with personal health information being lost or stolen
from doctor's offices, clinics, hospitals, health insurers, employers or
government agencies. The remaining 31 percent have not read or heard
about this issue. For over two-thirds of the general public to recall
hearing about medical data breaches is a very high topic awareness
figure;
--
When asked which medical records - computerized or paper - they believe
may be lost or stolen most often, just under half (47%) think it is
computerized records. About one in six (16%) think that paper records
may be lost or stolen most often. Another quarter (23%) think that both
computerized and paper records may be lost or stolen about equally;
--
Among those who have either heard about medical information being lost
or stolen or have had the information lost, the percentage of those who
think computerized records are lost most often increase to 51 percent
and 54 percent.
So
What?
In
the past few years a number of health care facilities, employers,
government agencies or other organizations have acknowledged that
confidential personal medical information was stolen or lost. Recent
examples of these "medical breaches" include the University of Miami,
WellPoint, The National Institutes on Health, the Cleveland Clinic, CVS,
J&J Home Health and Baptist Health. Further, the Identity Theft Resource
Center (http://www.idtheftcenter.org/index.html)
reported over 50 breaches from health care providers in the first six
months of 2008.
Ultimately, while the responses in this poll may not represent actual
breaches of medical information, there are a significant number of
Americans who believe their personal medical information has been
compromised by organizations holding it.
According to Dr. Westin, "For this Harris Poll we were trying to measure
perceptions among the public of having suffered a loss or theft of
medical records or health information from health-information holders.
This is whether or not any outright medical identity theft (use of
stolen medical data to obtain valuable medical services) took place. The
harms involved in loss or theft of medical records involve not just
worries about medical identity theft but also feelings of personal
violation and fears of potential misuse or publication of sensitive
medical information."
Copyright Business Wire 2008 |
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20.
INSURANCE NEWSCAST "Pictures Of The Day"
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A view of the interior of the Burj Al Arab hotel
in Dubai, July 14, 2008. REUTERS/Jumanah El Heloueh
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Bernanke: Financial markets under heavy stress.
Chairman of the Federal Reserve Ben Bernanke walks to present his
Monetary Policy Report before the U.S. Senate Banking Committee on
Capitol Hill in Washington, July 15, 2008. REUTERS/Larry Downing
Read Entire Story!!!
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Sydney transformed by young Catholic pilgrims. A
night time projection of an image of Pope Benedict XVI illuminates one
of the southern pylons of the Sydney Harbour Bridge July 14, 2008. The
Pope arrived in Sydney on Sunday ahead of World Youth Day which begins
Tuesday. REUTERS/Tim Wimborne
Read Entire Story!!!
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Palestinian President Mahmoud Abbas (L),
accompanied by Malta's Foreign Minister Tonio Borg (R), arrives for a
meeting with Maltese President Edward Fenech Adami (not pictured) at the
Presidential Palace in Valletta July 15, 2008. Abbas arrived in Malta
Tuesday for a two-day official visit. REUTERS/Darrin Zammit Lupi (MALTA)
MALTA OUT. NO COMMERCIAL OR EDITORIAL SALES IN MALTA
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The Eiffel Tower is illuminated during the
traditional Bastille Day fireworks display in Paris July 14, 2008.
REUTERS/Benoit Tessier (FRANCE)
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Brunei's Sultan Hassanal Bolkiah, flanked by
Queen Saleha (L) and his second wife Azrinaz, sits on a royal dias
during his 62nd birthday celebration at Nurul Iman Palace in Bandar Seri
Begawan July 15, 2008. REUTERS/Bazuki Muhammad (BRUNEI)
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The bull sarcophagus containing the body of
Tjokorda Gde Agung Suyasa, a member of Ubud's royal family, burns during
the Pelebon procession, or The Royal Cremation Ceremony, in Ubud, on the
Indonesian island of Bali, July 15, 2008. The royal cremation procession
passes through Ubud bearing the bodies of Tjokorda Gde Agung Suyasa and
Tjokorda Gede Raka. Thousands of Balinese flocked to Ubud for the royal
cremation, the biggest in nearly 30 years. REUTERS/Beawiharta
(INDONESIA)
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Several buildings in the downtown core of
Vancouver, British Columbia remain dark after a a power failure earlier
in the day July 14, 2008. A fire in electrical switching station left
most of the downtown without power throughout the day. REUTERS/Andy
Clark (CANADA)
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People cool off at a water fountain near the
London Eye in London July 14, 2008. REUTERS/Alessia Pierdomenico
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