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May 2002 State: Illinois Area of Interest: Legion Indemnity Company Ordered into Conservation Chicago, IL - Illinois Insurance Director Nathaniel S. Shapo announced today that he obtained an Order of Conservation against Legion Indemnity Company on April 3, 2002. The conservation of Legion was precipitated by Rehabilitation Orders entered in the state of Pennsylvania against two Legion Indemnity Company affiliates, Legion Insurance Company and Villanova Insurance Company. Because Legion Indemnity's business operations, including its claims and policy administration functions, are closely integrated with the Pennsylvania affiliates, those receiverships could impact the ability of the Illinois company to fulfill its contractual obligations in a timely manner. Legion Indemnity is a member of a reinsurance pool through which it ceded a substantial portion of its premium writings to Legion Insurance Company. With the Rehabilitation Orders entered by Pennsylvania, the collectibility of those reinsurance proceeds is now in question, thereby potentially hindering the ability of Legion Indemnity to meet its contractual obligations. The Director's complaint alleged that Legion Indemnity is impaired in an amount in excess of $1 million and as such is unable to meet its minimum capital and surplus as required by Illinois statute. The Director therefore determined that conservation would be in the best interest of the company, its policyholders, creditors, and the public. Legion Indemnity was originally incorporated in January 1987 as the Wacker-Randolph Insurance Company. The name was changed to Dearborn Insurance Company in March 1987 and changed to its current name in May 1996. Legion Indemnity is a wholly owned subsidiary of Legion Financial Corporation, which in turn is owned by Mutual Group Ltd. of Delaware. The ultimate holding company for all of the insurance operations is Mutual Risk Management, Ltd., a Bermudian corporation. The company is licensed only in the state of Illinois, however; it operates on a surplus lines or non-admitted basis in the District of Columbia, U.S. Virgin Islands, and 49 other jurisdictions. At December 31, 2001, the company reported direct written premium of $89,307,000, and assumed reinsurance premium of $11,500,000. The Conservation Order allows the Director to conserve the assets of the company for the protection of its claimants and creditors, pending further recommendation to the supervising court. The order also contains an injunction prohibiting suits against the company outside of the conservation proceedings, as well as a moratorium upon the payment of claims and loss adjustment expenses, with the exception of discretionary payment of certain workers' compensation and accident and health claims. Conservation proceedings are being handled by the Office of the Special Deputy Receiver representing the Director of Insurance, 222 Merchandise Mart Plaza, Suite 1450, Chicago, Illinois 60654; (312) 836-9500 Source: State of Illinois State: Massachusetts Area of Interest: Bowler Sworn-In As Massachusetts Commissioner Of Insurance Julianne M. Bowler was officially sworn-in today as Commissioner of Insurance for the Commonwealth of Massachusetts. Designated by Governor Jane Swift on March 15, 2002 to succeed her predecessor Linda L. Ruthardt, Bowler assumed the helm of the regulatory agency following an afternoon swearing-in ceremony at the Governor's office. "Insurance consumers can be assured that this agency's employees remain dedicated and diligent in their efforts to protect policyholders and monitor the insurance marketplace in Massachusetts," said Commissioner Bowler. "We have a great team here. The strides we've made in recent years and those we will continue to make are a direct reflection of this talented staff," Bowler said. As First Deputy Commissioner since 1998, Bowler was the point-person for the Division's review of the John Hancock Mutual Insurance Company's Plan of Reorganization under the state's demutualization statute as well as the Berkshire Life/Guardian Life merger. Bowler also oversaw the design and implementation of the first-in-the-nation on-line agent license renewal system, the implementation of electronic receipt of policy form and rate filings for all lines of insurance and the development of a web-based checklist system that expedited the review of new insurance products. Prior to joining the Division of Insurance, Bowler consulted for the Division of Medical Assistance where she assisted in the development of health insurance premium assistance plans for small businesses and children of low-income families. From 1994 to 1996, Bowler worked in government relations for Blue Cross/Blue Shield of Massachusetts. Prior to that, she served as research and budget director for the Massachusetts House of Representatives Republican Leader's Office. Bowler, a native of West Springfield, Massachusetts, received her B.A. in philosophy from Assumption College in Worcester in 1985. She received her M.A. from the University of Dallas in 1987, an M.B.A. from the University of Massachusetts, Boston, in 2001 and is a doctoral candidate in Biomedical Ethics at Georgetown University. Source: State of Massachusetts State: New York Area of Interest: Department Provides Aid To Consumers Affected By Weekend Earthquake Superintendent of Insurance Gregory V. Serio today announced that the Insurance Department is available to help New Yorkers whose property was damaged by the earthquake that affected the North Country on Saturday. Consumers are encouraged to call the Insurance Department’s toll-free emergency hotline for assistance with any earthquake-related inquiries or complaints or visit the Assistance Center set up in the town of Blackbrook. Consumers who have an insurance related question or problem can speak personally with a Consumer Services Examiner beginning this afternoon. The examiner will be located at US Air Force Base in Plattsburgh on Emergency Drive daily from 8am to 8pm. In addition, the Department’s Disaster Hotline, toll-free 1-800-339-1759, is staffed from 9am to 5pm by insurance experts from the Department’s Consumer Services Bureau. The Department will also be working with the State Emergency Management Office (SEMO) to provide assistance to New Yorkers affected by this disaster. The Department reminds New Yorkers with damaged property that they should be contacting their individual insurer representatives as soon as possible. They should also be making every effort to protect their homes from further damage, such as covering any roof damage that has occurred as a result of the earthquake. Source: State of New York State: New York Area of Interest: Court Rules: Regulation 68 In Effect Unanimous Win for New York Drivers Stay Denied, Serio Calls For An End To Litigation Superintendent Gregory V. Serio today announced that the Insurance Department’s fraud-fighting Regulation 68 will be implemented immediately, following an Appellate decision lifting a stay on the Regulation imposed last month. Superintendent Serio also called for an end to the litigation over the initiative so New York drivers can reap the benefits of the Regulation. "On behalf of all New Yorkers, we applaud the Court’s decision to allow Regulation 68 to take effect immediately," said Serio. "This regulation, together with the Department’s legislation to combat auto insurance fraud, will go a long way to stabilize rates, assure continued availability of coverage and assist in the de-population of the Assigned Risk Plan. This is not just good news for New York drivers, it is great news for them." On February 19th, a lower court upheld the legality of Regulation 68 and the Superintendent’s powers to impose time limits for submission of medical bills by providers to insurers. However, a temporary stay was imposed the following day pending a hearing on whether the Regulation should be delayed. Today’s decision denied the request for a longer stay, making the Regulation effective immediately. The Department plans the following:
Source: State of New York State: Ohio Area of Interest: Governor Taft Signs Agent Licensing Legislation COLUMBUS - Governor Bob Taft has signed legislation streamlining the insurance agent licensing process in Ohio. Senate Bill 129, sponsored by Senator Scott Nein (R-Middletown), is an essential part of Ohio Insurance Director Lee Covington’s program to improve services to agents. "This legislation is a crucial component of achieving our mission to improve services to one of the Department’s most important constituencies – licensed insurance agents and prospective new insurance agents in Ohio and across the country," Covington said. Ohio was one of two original pilot states for the National Insurance Producer Registry (NIPR) that allows an agent one-stop nationwide licensing through a state-of-the-art system. Ohio was also one of the first states to use the Producer Database (PDB) to verify home state licensing rather than requiring a paper home state certification from a non-resident application. "Senate Bill 129 streamlines the agent licensing system for non-resident agents," Covington said. "It has become obvious in recent years that insurance agents operate across state lines. This legislation will help insurance agents licensed in Ohio and other states to more easily acquire their agent licenses across the country in states that have adopted this model. It will enable Ohio agents to become licensed in multiple states literally with the touch of a button." This legislation adds to the Department’s efforts to provide the highest level of service to insurance agents which includes:
"When Governor Taft appointed me in 1999, I asked the Insurance Department staff to assess the agent licensing system and determine what improvements were necessary. This evaluation concluded that our system of licensing agents sometimes, took four to six months and was very paper and time intensive," said Covington. "Now agents can be licensed in just five business days, delivering on Governor Taft’s promise to move our customers from standing in line to being online." Senate Bill 129 also makes Ohio compliant with the provisions of the federal financial services modernization act of 1999, known as the Gramm-Leach-Bliley Act (GLBA). GLBA, adopted in November 1999, requires that states adopt full reciprocity provision for agent licensing to avoid the creation of a quasi-federal organization, the National Association of Registered Brokers and Agents. GLBA required that a minimum of 29 states adopt reciprocity provisions by November 2002. In addition, the bill incorporates the National Association of Insurance Commissioners’ (NAIC) Producer Licensing Model and the NAIC Safe Harbors model, making Ohio the 40th state to adopt reciprocity provisions and one of the first states to codify the Safe Harbors model that regulates the sale of insurance by banks and other lending institutions. With the passage of GLBA and the elimination of barriers between banks and insurance companies, banks and other organizations will proactively pursue customers who want to purchase insurance products. The statutory regulations included in SB 129 are designed to ensure the consumer is fully educated regarding the choices they have when purchasing insurance from these companies. "This legislation confirms Ohio’s commitment to complying with the provisions of the financial services modernization act and demonstrates the Department of Insurance’s dedication to providing the highest level of service to our customers – Ohio’s professional insurance agents," Covington added. Source: State of Ohio State: Texas Area of Interest: Farmers Must Refund Millions to Consumers A dispute between Farmers Insurance Group and the Texas Department of Insurance (TDI) ended today with an agreement that will refund about $15 million to customers who paid too much in surcharges after being involved in traffic accidents. The consent order, signed by Insurance Commissioner Jose Montemayor and Farmers officials, requires full restitution to consumers amounting to $10.6 million, plus 10 percent interest per year, for overcharges dating back to 1991. Montemayor also fined the company $500,000 but, noting that Farmers self-reported the surcharge problem to TDI, he agreed to waive $400,000 of the fine. "The restitution with interest makes this a very consumer-friendly agreement," Montemayor said. "I am glad we were able to work things out without a protracted hearing that would have delayed the refunds." The order cites 261,884 instances of policyholders being surcharged too long for accidents between 1991 and 2001, when Farmers completed implementation of an automated system for removing surcharges. This number is derived from Farmers' records available for those years. All present or former Farmers policyholders for whom there is a record of an overcharge will be mailed checks and explanatory letters within 45 days of the signing of the order. Within 30 days of the date of the order, the company must make a database available by telephone for individuals to check to see if they are eligible for restitution. In August 2000, the company self-reported to TDI that it had overcharged thousands of drivers whose premiums increased after being involved in at-fault traffic accidents. Under Texas law, insurance companies must levy surcharges for three years against policyholders who caused traffic accidents. The order said Farmers' manual system for removing driving record surcharges did not remove all surcharges as they expired. The dispute between TDI and Farmers centered on the amount of restitution and the penalty to be assessed, with TDI pressing for the greatest restitution amount that could be accounted for. Hearings on the dispute were scheduled several times at the State Office of Administrative Hearings but were delayed while more attempts were made to reach an agreement. Farmers sells auto insurance through three companies: Mid-Century Insurance Co. of Texas, Texas Farmers Insurance Co. and Farmers Texas County Mutual Insurance Co. Source: State of Texas Area of Interest: OSHA Announces Comprehensive Plan To Reduce Ergonomic Injuries The Occupational Safety and Health Administration today unveiled a comprehensive plan designed to dramatically reduce ergonomic injuries through a combination of industry-targeted guidelines, tough enforcement measures, workplace outreach, advanced research, and dedicated efforts to protect Hispanic and other immigrant workers. "Our goal is to help workers by reducing ergonomic injuries in the shortest possible time frame," said Labor Secretary Elaine L. Chao. "This plan is a major improvement over the rejected old rule because it will prevent ergonomics injuries before they occur and reach a much larger number of at-risk workers." Guidelines Occupational Safety and Health Administrator John Henshaw said his agency will immediately begin work on developing industry and task-specific guidelines to reduce and prevent ergonomic injuries, often called musculoskeletal disorders (MSDs), that occur in the workplace. OSHA expects to begin releasing guidelines ready for application in selected industries this year. OSHA will also encourage other businesses and industries to immediately develop additional guidelines of their own. Enforcement The Department's ergonomics enforcement plan will crack down on bad actors by coordinating inspections with a legal strategy designed for successful prosecution. The Department will place special emphasis on industries with the sorts of serious ergonomics problems that OSHA and DOL attorneys have successfully addressed in prior 5(a)(1) or General Duty clause cases, including the Beverly Enterprises and Pepperidge Farm cases. For the first time, OSHA will have an enforcement plan designed from the start to target prosecutable ergonomic violations. Also for the first time, inspections will be coordinated with a legal strategy developed by DOL attorneys that is based on prior successful ergonomics cases and is designed to maximize successful prosecutions. And, OSHA will have special ergonomics inspection teams that will, from the earliest stages, work closely with DOL attorneys and experts to successfully bring prosecutions under the General Duty clause. Compliance Assistance The new ergonomics plan also calls for compliance assistance tools to help workplaces reduce and prevent ergonomic injuries. OSHA will provide specialized training and information on guidelines and the implementation of successful ergonomics programs. It will also administer targeted training grants, develop compliance assistance tools, forge partnerships and create a recognition program to highlight successful ergonomics injury reduction efforts. Hispanic Outreach As part of the Department of Labor's cross-agency commitment to protecting immigrant workers, especially those with limited English proficiency, the new ergonomics plan includes a specialized focus to help Hispanic and other immigrant workers, many of whom work in industries with high ergonomic hazard rates. Ergonomics Research The plan also includes the announcement of a national advisory committee; part of their task will be to advise OSHA on research gaps. In concert with the National Institute for Occupational Safety and Health, OSHA will stimulate and encourage needed research in this area. "Bureau of Labor Statistics' data show that musculoskeletal disorders are already on the decline. This plan is designed to accelerate that decline as quickly as possible," said OSHA Administrator John Henshaw. "Thousands of employers are already working to reduce ergonomic risks without government mandates. We want to work with them to continuously improve workplace safety and health. We will go after the bad actors who refuse to take care of their workers." The new plan was announced barely a year after Republicans and Democrats in Congress rejected the previous Administration's rule, which was developed over a period of eight years and was broadly denounced as being excessively burdensome and complicated. Over the course of the last year, the Department of Labor conducted three major public forums around the country and met with scores of stakeholders, collecting hundreds of sets of written comments and taking testimony from 100 speakers, including organized labor, workers, medical experts, and businesses. Source: Occupational Safety and Health Administration Area of Interest: OSHA Offers International Travel Guidance To Help Business Travelers Avoid Health Risks WASHINGTON - OSHA today provided safety and health information for international business travelers and listed sources for additional guidelines on helpful strategies to reduce health risks. "Many employees now travel to countries where they risk contracting infectious diseases that could be prevented through vaccinations and simple precautions while traveling," OSHA Administrator John L. Henshaw said. "Our new technical information bulletin will help international travelers take care of their health while they take care of business." The OSHA bulletin suggests that international business travelers follow recommendations for immunizations published by the Centers for Disease Control and Prevention that are available at http://www.cdc.gov/travel/. In addition, the new OSHA guide urges business travelers to consult the U.S. Department of State consular information sheet for individual countries they plan to visit. These country guides and other helpful State Department publications are available at http://travel.state.gov. Some travel tips applicable for all travelers include washing hands frequently, walking and driving defensively and wearing seatbelts, avoiding dairy products that may not be pasteurized and eating only food that has been properly cooked. For example, OSHA recommends that travelers visiting developing areas drink only bottled water or carbonated drinks, avoid going barefoot, refrain from eating food purchased from street vendors and avoid handling animals that may carry infectious diseases-especially monkeys, dogs and cats. Source: Occupational Safety and Health Administration
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