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May 2005 State: New York Area of Interest: New York State Settles Probe of Willis -Third-Largest Insurance Broker to Pay $50 million and Adopt Reforms Attorney General Eliot Spitzer and Acting State Insurance Superintendent Howard Mills today announced an agreement to resolve concerns about fraud and anti-competitive practices by the nation’s third largest insurance broker. Under the agreement, Willis North America, Inc. will provide $50 million for restitution to policyholders and is adopting a new business model designed to avoid conflicts of interest. The Attorney General’s Office and Insurance Department began a joint investigation of Willis last spring as part of a broad investigation of “contingent commissions” and the steering of insurance contracts by insurance brokers. The investigation revealed internal communications about efforts to maximize Willis’s revenue and insurance companies’ revenues without regard to the interest of clients. For example, in an October 2003 e-mail to Willis’ regional marketing officers titled “Contingent Income Push,” a senior Willis executive said: “I need you to drive this initiative - - I want to see you directing the flow of business to these companies” and then named the insurers with which Willis had contingent fee agreements. The agreement with Willis is modeled after earlier agreements with Marsh & McLennan and Aon. Among the reforms adopted by Willis is a new policy whereby the company will accept one payment only for an insurance contract at the time of placement, and that such payments will be fully disclosed to and approved by customers. Willis had begun to implement many reforms prior to the agreement announced today. Willis N.A. is a division of Willis Group Holdings, a multinational financial services company based in New York. The Attorney General’s Office and Insurance Department continue a broad investigation of the insurance industry. To date, ten executives from four companies have pleaded guilty to criminal charges stemming from the probe. Source: State of New York State: New York Area of Interest: Mills Urges Congress to Extend Terrorism Insurance Act Acting Superintendent of Insurance Howard Mills testified today before a U.S. Senate committee and urged Congress to extend this year the Terrorism Risk Insurance Act (TRIA) at least through 2007 because the private sector currently has neither the means nor the capacity to underwrite sufficient terrorism coverage without a Federal backstop. Passed by Congress and signed into law by President Bush in 2002, TRIA’s intent was to ensure the availability of commercial property and casualty insurance coverage for losses resulting from certain acts of terrorism through Dec. 31, 2005, the date upon which the current law expires. TRIA provides for a sharing of terrorism losses between insurers and the Federal Government after satisfaction of an insurance company deductible. Moreover, lawmakers anticipated TRIA would allow for a transitional period during which private insurance markets stabilized and built capacity to absorb any future losses. Source: State of New York State: California Area of Interest: Insurance Commissioner Takes Strong Regulatory Action To Stop Insurers’ “Use it and Lose it” Practices in Homeowners Insurance Market The Commissioner proposes new regulations in his two-year battle to protect policyholders from unfair and discriminatory practices by insurers Calling insurers “dead wrong” for canceling or non-renewing homeowners who file a legitimate insurance claim, Commissioner John Garamendi on Thursday announced new regulations to protect homeowners from unfair “use it and lose it” practices. The Commissioner made his announcement at the home of Marguerite and William Strain in Faircrest Heights. The Strain’s, 15-year Allstate policyholders, filed just two claims during that time – for a burst bathroom water pipe in 2002, and for a theft of tools from the couple’s truck in 2003. Despite that record, Allstate has informed them that their policy will not be renewed when it expires. The regulation requires:
Source: State of California Area of Interest OSHA, Formosa Plastics Settle Citations Issued Following Illiopolis, Ill. Explosion - Agreement Carries National Implications for Safety at Formosa The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) has reached agreement with Formosa Plastics Corporation, Illiopolis, Ill., resolving citations issued following an investigation into an April 23, 2004 explosion that took the lives of five workers, seriously injured three others and destroyed much of the facility. Among key elements in the settlement are Formosa's agreement to employ at least one independent, qualified consultant with expertise in chemical process safety management to work with design engineers on a new Formosa facility and to work with software engineers to reduce the possibility of human error at a new plant now under consideration by the company. Many of OSHA's citations issued after the investigation centered around process safety management deficiencies. The company further agreed to retain a process safety management specialist to assist with training Formosa workers on safety at a new plant. Formosa will also conduct audits at its other polyvinyl chloride manufacturing facilities to determine if hazards similar to those identified by OSHA in Illiopolis exist elsewhere. The audits will be performed by persons outside the facility being audited. In return, OSHA has reduced the original penalty of $361,500 to $300,000; changed seven of 43 serious citations to other-than-serious; and reclassified willful citations to unclassified. Changing citation classifications has no bearing on any other related litigation that might arise. Formosa Plastics has also withdrawn its Notice of Contest before the independent Occupational Safety and Health Review Commission. Source: Occupational Safety and Health Administration Area of Interest OSHA Offers New Guidance for Reducing WASHINGTON -- Reducing Worker Exposures to Perchloroethylene in Dry-Cleaning is the name and goal of a new publication unveiled today by the Occupational Safety and Health Administration (OSHA). Perchloroethylene is a commonly used chemical in the dry-cleaning industry that can pose serious health hazards. Perchloroethylene is a volatile organic chemical that can cause serious health hazards. Dry-cleaning workers who routinely breathe the solvent's vapors or spill it on their skin are at risk of developing health problems, including skin, liver, and kidney damage, and possibly cancer. The inhalation of the chemical has been shown to cause numerous health effects such as dizziness, loss of coordination, memory loss, and blistering of skin. The new document provides information on the health hazards and current regulations, as well as recommendations on methods for reducing worker exposures. It also provides information on training, personal protective equipment, and some of the new technologies available in the dry cleaning industry. Source: Occupational Safety and Health Administration Area of Interest: OSHA Issues Final Rule on Whistleblower Procedures Under the Pipeline Safety Improvement Act of 2002 The Occupational Safety and Health Administration today published final procedures for handling whistleblower complaints under the Pipeline Safety Improvement Act of 2002 (PSIA). The final rule is identical to an interim final rule published a year ago. Signed on Dec. 17, 2002, the Pipeline Safety Improvement Act applies to pipeline facilities that transport natural gas or hazardous liquids in interstate commerce. Provisions of the Act prohibit pipeline operators from firing or taking adverse action against workers who report concerns about pipeline safety to either the employer or the government. Complainants have 180 days from the alleged discrimination to file with OSHA. The final rule includes procedures for submitting complaints, conducting investigations and issuing findings and preliminary orders. This rule details litigation procedures and the process for objecting to findings and requesting a hearing. The final rule also contains provisions covering withdrawals of complaints and settlements along with judicial review and judicial enforcement. Source: Occupational Safety and Health Administration Area of Interest: OSHA Participates in TOPOFF 3 Terrorism Response Exercise in Connecticut and New Jersey The simulated release of biological and chemical agents in New Jersey and Connecticut set the stage for this year's TOPOFF 3 exercise involving top level public and private officials, including those from the Occupational Safety and Health Administration (OSHA). TOPOFF 3, sponsored by the U.S. Department of Homeland Security's (DHS) Office of State and Local Government Coordination and Preparedness, was the third Congressionally-mandated biennial exercise designed to strengthen the nation's capacity to prevent, protect against, respond to, and recover from terrorist attacks involving weapons of mass destruction. OSHA joined numerous other Federal departments and agencies, the United Kingdom, Canada, the states of Connecticut and New Jersey, and representatives of the private sector during the weeklong exercise that began April 4. OSHA's participation centered on its overall role in emergency response which is to ensure that threats to worker safety and health are anticipated, recognized, evaluated, and controlled consistently so that response and recovery workers are properly protected. This role is highlighted in the Worker Safety and Health Support Annex included in the DHS National Response Plan (NRP). Consistent with the annex, OSHA worked with other safety and health professionals at the federal and state levels to address worker safety and health issues. Employees from OSHA's Boston and New York regions and the agency's chemical and biological response teams were sent to the incident sites as well as the various response coordination centers in New Jersey and Connecticut. OSHA personnel participating in TOPOFF exercises are familiar with chemical, biological, physical and structural collapse hazards, and include occupational safety and health specialists, industrial hygienists, safety engineers, occupational physicians, occupational nurses, and health physicists. Source: Occupational Safety and Health Administration
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