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November 2001 State: California Area of Interest: California Governor Vetoes $4.7 Billion Workers’ Compensation Benefit Increase Despite his efforts to negotiate a balanced proposal, California Governor Gray Davis has vetoed legislation to raise workers’ compensation benefits for the third year in a row. The bill, SB 71, sponsored by John Burton D-San Francisco, failed to include cost- saving systemic reforms and would have levied a $4.7 billion increase on a workers’ compensation system that is already struggling with skyrocketing costs, according to the American Insurance Association (AIA). Source: American Insurance Association State: Illinois Area of Interest: Requirement to Freeze Assets of person or organization named on a federal list of persons who permit, threaten to commit, or support terrorism. Springfield, IL -- Illinois Insurance Director Nat Shapo today issued a bulletin to all Illinois insurance companies advising them to review their records and comply with an executive order signed by President Bush to freeze the assets of any person or organization named on a federal list of persons who permit, threaten to commit, or support terrorism. "The President's order requires insurers to freeze any and all funds of the named individuals and organizations," Shapo said. "In issuing this bulletin, I want to make explicit my understanding of industry obligations and to advise them that violators may be subject to sanction by the Department of the Treasury." President Bush issued the executive order September 24, 2001, instructing organizations to freeze U.S. assets of and block transactions with 27 individuals and organizations. This list is published on the U.S. Department of the Treasury, Office of Foreign Assets Control, website at http://www.treas.gov/ofac. "In addition, insurers should regularly review the U.S. Treasury's website for updates regarding those suspected of conducting or financing terrorist activities," Shapo noted. "President Bush's order requires that the Illinois insurance industry leave no stone unturned in the quest to starve terrorists of their funding and bring them to justice." Source: State of Illinois State: Massachusetts Area of Interest: Auto Insurance Rates Massachusetts Insurance Commissioner Linda L. Ruthardt today will sign an order in the 2002 Private Passenger Automobile Insurance rate case that will result in no change to the statewide average rate that policyholders will pay next year. The order affirms an agreement between the State Rating Bureau (SRB), Automobile Insurers Bureau (AIB), the Office of the Attorney General (AG) and the Massachusetts Association of Insurance Agents (MAIA) and comes more than two months before the statutory deadline for a decision in the rate case. The AIB, representing the state's personal auto insurers, recommended a +7.8% rate increase for 2002 back in August. The agreement has slight increases in the rates for compulsory (mandatory) coverages, offset in the statewide average rate by slight decreases in the rates for optional coverages. Commenting on the agreement by the parties, Commissioner Ruthardt said, "We believe the agreement reached is fair to all parties involved and still protects the interests of consumers. We hope insurers will still find a way to reward their safest drivers as they've done in recent years." Robert MacNicholl, Director of the State Rating Bureau, commented, " The 0% settlement confirms the points the SRB made in our statement at the public hearing. The industry calls for a 7.8% increase and agrees to 0%, i.e., no increase." SOME CONSUMER FACTS
Source: State of Massachusetts State: New York Area of Interest: Insurance Department Announces Creation of WTC Fraud Fighting Task Force to Protect New Yorkers from Potential Fraud Costs Governor George E. Pataki today announced that the Insurance Department has designed a comprehensive insurance fraud-fighting plan specifically designed to combat any incidents of insurance fraud resulting from the World Trade Center tragedy. "Although we have currently had no reports of fraud, this is a preemptive and preventative measure," Superintendent of Insurance Gregory V. Serio said. "By creating a task force that will work closely with insurance companies to identify potential fraudulent claims, we will prevent people from taking advantage of this tragic event." The Insurance Department has been working closely with the industry since the events on September 11th and has designed a fraud-fighting plan to identify potential fraudulent insurance claims and to eliminate the incidences of fraud resulting from the World Trade center tragedy. This fraud-fighting plan is three-pronged. A special task force has been created, specific coding for World Trade Center insurance claims has been instituted, and a dedicated hotline and fax line for potential fraud will be operational. Under the plan, insurance company "Special Investigation Units" (SIUs) will report any suspected fraudulent claims to the Insurance Department’s Frauds Bureau using a distinct code. A designated frauds investigator on WTC issues will coordinate all investigations, in cooperation with the Consumer Services Bureau, into alleged fraudulent claims including property, auto, homeowners, life, and any such claims arising out of the WTC disaster. The plan is on ongoing effort and continuing conversation with company will assist in the identification, management, and coordination of fraudulent claims. Source: State of New York State: Oregon Area of Interest: Standard Limits of Liability for Oregon Workers’ Compensation Policies. The Oregon Supreme Court, in Smothers v. Gresham Transfer, 332 OR 83 (2001), ruled that the employer exclusive remedy provision of the Oregon Workers’ Compensation Law does not apply to certain work- related injuries. Because of the court’s decision, the Director believes the current $100,000 Limits of Liability provision fails to adequately protect workers’ compensation policyholders for the following reasons:
For these reasons, the Director asked the NCCI to file an amendment to Oregon’s standard limits for employer liability under Part II of the standard workers’ compensation policy. The specific request was to increase the basic amounts to $500,000 for Bodily Injury by Accident and $500,000 for Bodily Injury by Disease. The NCCI honored this request with an August 31, 2001, endorsement filing. The filing was made on behalf of NCCI members and affiliates that are now writing, or will write, workers’ compensation insurance in Oregon. The effective date of this change is January 1, 2002, for new and renewal policies. This change will result in an increase of 1.7 percent, which will be included in the overall loss cost revision, also to be effective January 1, 2002. The NCCI plans during the next year to research the need to revise the Employer Liability Increased Limits Table. In the interim, since Oregon has an "Open Competition" ratemaking law for workers’ compensation insurance, insurers may file deviations to this schedule. Source: State of Oregon State: Texas Area of Interest: Mold Clean-Up Practices Inquiry Requested The Corpus Christi area's huge disparity in mold-related claims has led the Texas Department of Insurance to ask the Office of the Attorney General to look into mold clean-up practices that may be abusive, including the possibility of excessive pricing. "Nueces County's mold-related claims of $5,000 or more are way out of line with the rest of the state," said Commissioner Jose Montemayor. "The effect is to drive up homeowners premiums in the county that already has the highest homeowners rates in Texas. While many reputable individuals are involved in the claims and remediation process, we can't overlook the possibility that some may be taking advantage of consumers' fear of mold by charging excessive prices. We owe it to the consumers of the Corpus Christi area to make sure that everything is on the up and up." Data from the three largest home insurers (two-thirds of the market) indicate that mold-related claims of $5,000 or more cost an average of $520.66 per policyholder per year in Nueces County, compared to the statewide average of $81.71. Source: State of Texas State: Washington Area of Interest: Employers can now file industrial insurance reports on the Internet TUMWATER – Employers can now use the Internet to report and pay industrial insurance premiums to the Department of Labor and Industries. About 160,000 employers report and pay industrial insurance to L&I each quarter. “Employers in the pilot project found it was much easier to prepare and update their reports online,” said Kathy Kimbel, manager of L&I’s employer services program. “The electronic forms and automatic calculations also improve accuracy of the data.” Other benefits for employers who file their industrial insurance on the Internet include:
The new Internet system is called EXPRESS Filing. To use it, employers must sign up for a digital certificate or a logon ID and password. Then, they need to enroll their account and choose a payment method. Area of Interest: Cross Border Trucking Safety and Security Standards The American Insurance Association (AIA) urged delegates from Mexico, Canada and the United States meeting in Ottawa Monday under the North American Free Trade Agreement (NAFTA) to adopt and enforce more rigorous cross-border trucking safety and security standards in light of the threat of terrorism in North America. “Substantial improvements to cross-border safety and security must be an immediate priority for NAFTA,” said David Snyder, AIA assistant general counsel, who testified before NAFTA Monday. Snyder detailed items in need of urgent attention, including equipment and staffing for crossings; uniform safety standards coordinated at the highest levels; complete data systems on drivers, vehicles, motor carriers and cargo; financial data available to safety enforcers and insurers; and cooperative enforcement programs among the three countries. Source: American Insurance Association Area of Interest: Fleet Safety U.S. Transportation Secretary Norman Y. Mineta today sent to Congress proposed legislation that would strengthen security and safety in the transportation of the nation's hazardous materials. "We are proposing tough actions to address the serious problem of undeclared or hidden shipments of hazardous materials," said Secretary Mineta. "We are also asking for more authority to stop and inspect shipments, important to both security and safety." The Department of Transportation's (DOT) proposed legislation would:
“There are more than 800,000 shipments of hazardous material daily in the United States,” said Ellen Engleman, administrator of DOT’s Research and Special Programs Administration, which regulates hazardous material transportation safety. “What we are proposing today would strengthen the safety and security of these shipments, while preserving the mobility vital to our economy.” Source: Department of Transportation Area of Interest: Property and Casualty In a new report published today (October 18, 2001), Fitch looks at expected underwriting performance for 2001 and prospects for 2002. Following the catastrophic events of Sept. 11, the property/casualty insurance industry is faced with responding to the largest insured catastrophe in history. Analysts' loss estimates for the catastrophe remain in a very wide range of $30-$70 billion. Historical experience from other periods of extremely poor underwriting results indicates that a return to adequate profitable levels may take several years. Fitch notes in the report that 2002 operating results may be marred by continued recognition of losses related to the catastrophe, potential for adverse loss reserve development, and a less favorable investment climate. Source: insurancenewsnet.com Area of Interest: New OSHA Recordkeeping Rule Scheduled to Go Into Effect January, 2002 OSHA today announced that it will delay for one year the effective date of three provisions of its recordkeeping rule and establish interim criteria for recording cases of work-related hearing loss. The provisions, postponed until January 1, 2003, are: the criteria for recording work-related hearing loss; the rule's definition of "musculoskeletal disorder" (MSD); and the requirement that employers check the MSD column on the OSHA log. All other provisions of the rule become effective on January 1, 2002. "We want to make it as easy as possible for employers to accurately document workplace injuries and illnesses," said OSHA Administrator John L. Henshaw. "In order to do that, we have to evaluate these criteria and determine the best way to identify and record these particular cases." The final recordkeeping rule is the culmination of an effort that began in the 1980's to improve how the government tracks occupational injuries an illnesses. The rule increases employee involvement, creates simpler forms and gives employers more flexibility to use computers to meet OSHA regulatory requirements. OSHA will issue new recordkeeping forms that have been modified to remove the MSD and hearing loss columns from the OSHA 300 Log of Work- Related Injuries and Illnesses and the OSHA 300A Summary of Work- Related Injuries and Illnesses. The instructions accompanying the forms have also been modified to reflect the requirements that will take effect in calendar year 2002. Copies of the forms can be obtained on OSHA's web site at http://www.osha.gov or from the OSHA publications office. The agency will carry out a major outreach effort to help employers and workers understand the new changes, while providing assistance in complying with new recordkeeping requirements. To aid in that effort, OSHA launched a new page on its web site that highlights key provisions and major changes of the new recordkeeping rule. The page, at http://www.osha-slc.gov/recordkeeping/index.html, details training programs and provides various materials designed to aid employers and workers alike. Source: Occupational Safety and Health Administration Area of Interest: Outsourcing of Risk Management Services The dynamic changes in the commercial insurance market is requiring agents and brokers to provide services to its clients to ensure that premiums remain affordable, maintain losses at a minimum level and help ensure regulatory compliance. In addition, loss control services are now being reserved for “well priced” accounts while employees are becoming more demanding of their employers regarding what they perceive as less than adequate working conditions therefore making them more prone to report these conditions to regulatory agencies such as the Occupational Safety and Health Administration. When it comes to the bottom line cost, the client typically covers the cost of the service. However, the client also reaps the benefits such as control of insurance costs, reduced losses, and knowledge of compliance with regulatory agencies. A full service consulting firm are able to provide support in a variety of different professional arenas. These include:
Typically these services are directed by the consultant and not by the perceived need of the insurance carrier. Source: National Underwriter
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