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Around the PIA Western Alliance States

Posted By staff reporter, Tuesday, January 29, 2019


 

California

Montecito Mudslides: Edison International says poorly designed and maintained debris basins are the reasons for the deadly mudslides that hit Montecito last year.

Over 20 people died. Damages to property is estimated at between $177 million and $204 million. The mudslides happened on January 18, 2018 when the first heavy rain of the season hit the top of the mountain above the city and loosed tons of mud and boulders onto the city.

Edison International has been sued for causing the mudslides because its equipment may have been responsible for the fire at the top of the mountain. The company — and its subsidiary Southern California Edison — countersued and blamed the city, the county and its inadequate infrastructure, and how that infrastructure was maintained.

In its complaint, Edison said, “With this cross-complaint we seek to ensure that there is a comprehensive review of the role many parties may have played in the large and tragic losses suffered by the community during the Montecito mudslides,” the company said. “It is well known that the Montecito area has always been at high risk for mudslides and debris flows. We believe that city, county and state governments, including flood control, water and transportation agencies, failed to ensure that Montecito’s infrastructure was adequate to reduce the impact of such natural disasters.”

 

Source link: Insurance Journal

 

Idaho

Medicare Workshops to be Offered in Bonners Ferry: A series of three (3) free Medicare Workshop for individuals turning 65 and those approaching Medicare eligibility will be held Friday, February 1 at the Fry Healthcare Education Center, located across from the main hospital building of the Boundary Community Hospital, 6640 Kaniksu St., in Bonners Ferry.  Workshops will be held at 2:30, 4:30 and 6 p.m.

Caregivers and all those interested in learning how Medicare works are encouraged to attend.

The workshop will be led by Senior Health Insurance Benefits Advisors (SHIBA), a unit of the Idaho Department of Insurance.  SHIBA presenters will introduce the various parts of Medicare and explain some of the vocabulary associated with the program. 

Topics to be covered include:

  Timeframes for enrolling in Medicare

  Enrollment periods for Medigap, Medicare Advantage and Prescription Drug Plans

  How the different parts of Medicare work together — and when they don’t

To register for the workshop, please contact the SHIBA office at 1-800-247-4422.

 

Washington

Wildfire Mitigation Plan: Public Lands Commissioner Hilary Franz has unveiled a 10-year, $55 billion wildfire control plan and given it to the Legislature. The plan will add 30-full time and 40 seasonal firefighters to the Department of Natural Resources. It also adds two helicopters to the firefighting air fleet.

A wildfire training academy that can be used by other agencies will also be set up.

Source link: Claims Journal

 

Commissioner’s Legislative Priority

Click here for Washington Insurance Commissioner Mike Kreidler’s legislative priorities.

Actions by the Commissioner

Insurance Commissioner Mike Kreidler issued fines in December 2018 totaling $192,050 against insurance companies, agents and brokers who violated state insurance regulations.

Insurance companies

Accordia Life and Annuity Co., Des Moines, Iowa; fined $130,000, order 18-0250

Kreidler received 57 complaints about the company in 2016 and 2017 and started an investigation into its practices. The law violations included:

 Failure to maintain full and adequate records of more than 8,600 customer accounts.

Underpaid interest on the death benefit of a policy and failed to correct the problem until the consumer complained to Kreidler’s office. State law requires that insurance companies pay 8 percent interest.

Failed to provide annual statements to 21 consumers.

State Farm Life Insurance Co., fined $10,000, order 18-0410

The company failed to pay the correct amount of interest on death benefits to 1,251 Washington consumers. State law requires that insurance companies pay 8 percent interest.

Kreidler fined the following companies for violating Washington state insurance regulations:

    GPM Health and Life Insurance Co., Spokane, Wash.; fined $2,000, order 18-0468

    Monterey Insurance Co., Monterey, Calif.; fined $30,000, order 18-0490

    American Automobile Insurance Co., Earth City, Mo..; fined $10,000, order 18-0494

    Unified Life Insurance Co., Dallas; fined $4,500, order 18-0529

 

Agents and brokers

Kreidler revoked the licenses of the following insurance producers:

  Romaine Smith, Prosser, Wash.; license revoked, order 18-0146

  Francisca Yadira Rios, Pasco, Wash.; license revoked, order 18-0507

  Jacqueline Cone, Washougal, Wash.; license revoked, order 18-0515

  Jodi S. Campbell, Lonoke, Ark.; license revoked, order 18-0475

  Gary M. Enciso, Long Beach, Calif.; license revoked, order 18-0476

  Rachel Glover, Collins, Iowa; license revoked, order 18-0477

  Drucilla Clorene Wilson, Las Vegas; license revoked, order 18-0479

  Paul B. Wells, Las Vegas, license revoked, order 18-0498

  Deandre Maze-Carter, Phoenix; license revoked, order 18-0499

  American Underwriting Services LLC, Kennesaw, Ga.; license revoked, order 18-0503

  Romeo Evan Fulton, North Riverside, Ill.; license suspended, order 18-0504

  James Luis Vasquez, Bothell, Wash.; revocation rescinded, license surrendered, order 18-0480

 

Kreidler fined the following insurance producers for violating state laws:

  David M. Connolly and David Connolly Insurance Agency, Silverdale, Wash.; fined $500, order 18-0355

  Ryan M. Focht, Pullman, Wash.; fined $500, order 18-0482

  Alina Frenkel, Bellevue, Wash.; fined $500, order 18-0483

  Robert L. Johnston, Spokane, Wash.; fined $500, order 18-0491

  Paul F. Dent and Griffin Mac Lean, Inc., Bellevue, Wash.; fined $1,000, order 18-0488

  John C. Haskell, Jr., Mill Creek, Wash.; fined $250, order 18-0397

  Xandrea Powell, Suwanee, Ga.; fined $250, order 18-0395

  Terran Watters-Fletcher, Lawrencville, Ga.; fined $250, order 18-0401

  Benchmark Administrators LLC, Wayzata, Minn.; fined $250, order 18-0429

  Lawrence M. Koresko, Collegeville, Penn.; fined $250, order 18-0436

  George Lewis Kengle, Springfield, Ore.; fined $250, order 18-0478

  Thomas A. Dus, Elyria, Ohio; fiend $500, order 18-0506

 

Continuing education providers

  Risk & Insurance Managers Society of Washington, Seattle; fined $800, order 18-0513

 

 

 

 

Source link: Washington Department of Insurance

Tags:  Around the PIA Western Alliance States  insurance content  insurance news  Weekly Industry News 

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Life’s Biggest Regret

Posted By Staff Reporter, Tuesday, December 18, 2018

We’re approaching New Year’s Eve and every year at that time we reflect and think and decide on resolutions. Many of us look back on the past and do so with regret.

That said, we all have regrets. The farther we travel down life’s — hopefully — long road the more the regrets pile up. Most of us think the biggest regrets are the things we did. Bagged a job. Broke up with what turned out to be the love of our life. Jumped the gun and bought that car or a home, or whatever when we knew it might be a bust.

The list goes on and on but you get the drift.

A study from psychologists at Cornell University titled The Ideal Road Not Taken counters that belief. In a story published in a publication called Emotion, the report says it’s not the things in life we did that cause the most regret, it’s the things we didn’t do.

The study starts with three things that make up who we are and our sense of self:

  Your actual self is the qualities you believe you possess

  The ideal self is the qualities we want to have

  The ought self is the person we feel we should have been according to the obligations and responsibilities thrust upon us

The researchers looked at six separate studies with hundreds of participants and found that 76% of those surveyed said their biggest regret in life is not fulfilling their ideal self.

The psychologists say this means we might have the wrong attitude toward how to avoid regret. Emphasis in our lives in this day and age is that if we just follow all the rules we’ll have a great life.

That means:

  Do all the things society expects of you

  Act like a good citizen

  Get married at the right time

  Make enough money to pay the bills

Do those things and you’ll be happy and fulfilled. However, those — they say — are associated with your “ought self” or the place where you have limited regrets. But when it comes to dreams and aspirations, people are more likely to let them go by unrealized.

That leads to regrets later in life.

The study said, “People are quicker to take steps to cope with failures to live up to their duties and responsibilities (ought-related regrets) than their failures to live up to their goals and aspirations (ideal-related regrets).”

Tom Gilovich — a Cornell psychologist — is the lead author on the study. He said, “When we evaluate our lives, we think about whether we’re heading toward our ideal selves, becoming the person we’d like to be. Those are the regrets that are going to stick with you, because they are what you look at through the windshield of life.” 

He terms the ought regrets as those potholes we run into in life. “To be sure, there are certain failures to live up to our ‘ought’ selves that are extremely painful and can haunt a person forever; so many great works of fiction draw upon precisely that fact. But for most people those types of regrets are far outnumbered by the ways in which they fall short of their ideal selves.”

His conclusion: It’s not enough to encourage people to just do the right thing. It’s important to let people know — and know early in life — that they need to act on their hopes and dreams.

It’s not normal to just keep putting them off indefinitely.

“In the short term, people regret their actions more than inactions But in the long term, the inaction regrets stick around longer,” Gilovich said.

That — it must be noted — implies we need to stop making excuses for inaction. Gilovich adds:

Learn the language you’ve always wanted to study

Take that backpacking trip through Asia you always wanted to do

Write that book

In other words the study said, don’t leave it for tomorrow. There’s only today.

 

Source link: MSN Lifestyle

Tags:  Insurance Content  insurance industry  life's regrets  Weekly Industry News 

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What's keeping your bosses up at night?

Posted By Staff Reporter, Tuesday, December 4, 2018


 

Many of you are officers of your company. What is your main worry? Cyber attack? Probably. Another worry? Regulatory claims that involve you and your directors and officers insurance.

Willis Towers Watson’s sixth annual D&O: Personal Exposure to Global Risk checked in with 161 directors and officers about cyber attacks and other subjects, and found 44% have experience a significant or sizable data loss in past year.

A year ago that figure was 24%.

The other top risks:

  Regulations

  Investigations

  Health and safety legislation

  Criminal and regulatory fines

 

This is where D&O comes into play:

  43% of large employers experienced a regulatory claim involving a director in the last year

  38% of all companies surveyed reported the same thing

  60% say company behavior is being changed because of a focus by regulators on personal accountability of directors and officers

 

The Willis Towers Watson report said many company leaders wonder whether a D&O policy will be able to respond to claims in all jurisdictions. That led to worries about:

  How claims against directors and officers will be controlled and settled

  A broad definition of who is insured in clear, easy to follow policy terms

  Whether there is coverage for the cost of advice in the beginning of an investigation

 

Source link: Business Insurance

Tags:  boss worries  company officers  cyber attack  Cyber Breach  insurance content  insurance industry  insurance news  weekly industry news 

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Around the PIA Western Alliance States

Posted By Staff Reporter, Tuesday, November 6, 2018


California

Proposition 103: From the California Department of Insurance

 Insurance Commissioner Dave Jones announced that Proposition 103, which became law 30 years ago, has saved California drivers $154 billion on their auto insurance and has lowered auto liability premiums in California by 5.7 percent according to an analysis by Consumer Federation of America.

 

Proposition 103, passed by California voters in November 1988, establishes the Insurance Commissioner's authority to reject excessive rate increases sought by insurance companies. The law requires the "prior approval" of California's Department of Insurance (CDI) before insurance companies can implement property and casualty insurance rates. Prior to Proposition 103, automobile, property and casualty insurance rates were set by insurance companies without approval by the Insurance Commissioner.

 

"As insurance commissioner and the leader of the largest consumer protection agency in the state, my top priority is protecting consumers," said Insurance Commissioner Dave Jones. "California voters gave me the responsibility under Proposition 103 to make sure that insurance companies do not charge consumers rates that are excessive. I am proud that actions by my department has continued to protect consumers and save them billions of dollars by lowering insurance rates."

 

Since Commissioner Jones took office in 2011, the CDI has processed over 54,000 property and casualty insurance rate filings under Proposition 103, reduced the overall amount of requested rate increases by $1.5 billion and obtained over $1.9 billion in rate reductions, totaling over $3.4 billion in savings to California consumers and businesses. This total includes approximately $1.26 billion in rate reductions for personal auto coverage and $947 million in rate reductions for personal homeowners' coverage.

 

Last year the department's consumer hotline received over 147,000 calls for assistance. Through the department's complaint handling efforts, staff recovered more than $62.4 million for consumers in 2017. Additionally, the department performed 125 market conduct examinations, resulting in more than $18.9 million in recovered claims or premiums being returned to consumers. Since Commissioner Jones took office in 2011, more than $469 million has been returned to consumers through consumer complaint investigations and market conduct examinations of insurance companies.

 

Pre-Emptive Wildfire Outage

 A couple of weeks ago Pacific Gas & Electric decided to cut power to 60,000 customers. The forecast in the area said winds would hit 25 to 45 miles per hour. That made it a danger to power lines and downed power lines start wildfires.

 

It is the first time the company has cut power over wind worries. PG&E is being blamed for several of the devastating wildfires that hit California a couple of years ago and is on the line for $13 billion or more in damages and deaths.

 

The power cuts caused customers some damages and 146 of them are demanding reimbursements. Food damage losses are the main reason.

 

Source link: Insurance Journal

 

Workers Comp Coverage Pricing

 Workers’ compensation insurance rates are falling in California. The combined ratio — however — is rising. The average per $100 of payroll premium price is $2.35. That is 7% below the 2017 average rate.

 

While it looks good rate wise, the combined loss and expense ratio is predicted to be 88% which is four points higher than the 2016 level.

 

This info comes from Workers’ Compensation Insurance Rating Bureau of California (WCIRB).

 

Source link: Business Insurance

 

Oregon

From the Department of Insurance

 Update to Adoption of the Valuation Manual for Principle-based Reserving

Rules affected: OAR 836-031-0605

Rule Summary:

Designates the version of the Valuation Manual insurers must use in establishing principle-based reserves beginning January 1, 2019, and confirms that the operative date of the Valuation Manual is January 1, 2017 under section 16(2) of Oregon Laws 2015 chapter 547.

Need for Rules:

Insurers in Oregon, like other states, must keep sufficient capital in reserve in order to pay claims, and use actual experience of policyholders when calculating claims reserves by means of principle-based reserving. The Director is authorized to prescribe use of the Valuation Manual, developed by the National Association of Insurance Commissioners (NAIC), to make those calculations, and has done so through rulemaking. To the extent that the NAIC revises the Valuation Manual from time-to-time, adoption of the Valuation Manual is updated accordingly. This rulemaking designates the version of the Valuation Manual insurers must use in establishing principle-based reserves beginning January 1, 2019, and confirms that the operative date of the Valuation Manual is January 1, 2017 under section 16(2) of Oregon Laws 2015 chapter 547.

Filed: October 29, 2018

Public hearing: November 27, 2018 9:00 a.m.

Last day for public comment: December 4, 2018, 5 p.m.

The agency requests public comment on whether other options should be considered for achieving the rule's substantive goals while reducing the negative economic impact of the rule on business.

For more information on this proposed rule, please visit the Division's website:

dfr.oregon.gov/laws-rules/Pages/proposed-rules.aspx

 

Update to morbidity standards for valuation of individual and group health insurance policies

Rules affected: OAR 836-031-0270

Rule Summary:

The rule sets forth the minimum standards to be used by insurers for the valuation of specified benefits, and the computation of contract reserves and claim reserves, for individual and group health insurance policies.

Need for Rules:

ORS 733.080 requires insurers to maintain reserves for health insurance policies “which place a sound value on its liabilities under such policies and which are not less than the reserves according to appropriate standards set forth in rules issued by the Director of the Department of Consumer and Business Services.” Adoption of such standards establishes clear guidelines for the industry and regulator alike and increases consumer protection through greater assurance of adequate reserves.

Filed: October 26, 2018

Public hearing: November 27, 2018 10:00 a.m.

Last day for public comment: December 4, 2018, 5 p.m.

The agency requests public comment on whether other options should be considered for achieving the rule's substantive goals while reducing the negative economic impact of the rule on business.

 

Implementing the Oregon Reinsurance Program

Rules affected: OAR 836-150-0010, 836-150-0020, 836-150-0030, 836-150-0040, 836-150-0050, 836-150-0060

Need for Rules:

These rules adopt definitions, reporting requirements, and payment processes for the Oregon Reinsurance Program, which was established by the Oregon Legislature in 2017 (Enrolled House Bill 2391). The rules also establish the attachment point, coinsurance rate, and reinsurance cap that will be used to calculate payments under the program for benefit years 2018 and 2019. The rules are necessary to ensure that the program is administered in a fair and equal manner for all participating issuers and to ensure that the program achieves its purposes of stabilizing rates and premiums for individual health benefit plans and providing greater financial certainty to consumers of health insurance in Oregon.

Filed: October 29, 2018

Public hearing: November 27, 2018 11:00 a.m.

Last day for public comment: December 4, 2018, 5 p.m.

The agency requests public comment on whether other options should be considered for achieving the rule's substantive goals while reducing the negative economic impact of the rule on business.

For more information on this proposed rule, please visit the Division's website:

dfr.oregon.gov/laws-rules/Pages/proposed-rules.aspx

 

Washington

From the Department of Insurance: Valuation of the Stock of a Subsidiary rule adopted

The rule takes effect on 11/25/18. The rule will amend WAC 284-16-150 through WAC 284-16-190 regarding the valuation of a stock of a subsidiary of a domestic insurance company to be compatible with the current version of the Insurance Holding Company Act.

For more information, including the adopted rule (CR-103) and the concise explanatory statement, please visit the rule's webpage. https://www.insurance.wa.gov/valuation-stock-subsidiary-r-2018-07

 

Eleven insurers approved to sell 74 plans in Washington's 2019 individual market

Washington state Insurance Commissioner Mike Kreidler has approved 11 health insurers to sell 74 plans in Washington's 2019 individual health insurance market. Health insurers requested a 19.44 percent average increase, but Kreidler’s office determined that only 13.57 percent was justified. All 39 counties in the state will have at least one Exchange insurer. 

“I’m grateful increases are down from last year and that we’re seeing some moderation of rate changes, but I know these costs may be hard for many to afford — especially if they don’t qualify for subsidies," said Kreidler. “Unfortunately, the Trump administration is focused on sowing uncertainty in the insurance markets and insurers are reacting. In addition, his administration and Congress have failed to address the underlying costs of health care in this country and until they do, individuals and businesses buying health insurance will be impacted.”

For more info: https://www.insurance.wa.gov/news/eleven-insurers-approved-sell-74-plans-washingtons-2019-individual-market?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

Tags:  Around the PIA Western Alliance States  insurance content  pia western alliance  Weekly Industry News 

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A Gathering of Agents & Insurers — PIA Washington/Alaska’s Annual Conference

Posted By Administration, Tuesday, September 25, 2018

They came from all over for the annual PIA Washington/Alaska and Independent Insurance Agents and Brokers of Washington (IIABW) conference. Some were there the whole three days. Others popped in just for the massive trade show.

Then there was golf, a world-class poker tournament, bingo, camaraderie and fun. And all of it in one beautiful setting at Renton, Washington’s Hyatt Regency Lake Washington.

PIA Washington/Alaska had a changing of the guard. Association Chairwoman Kristie English of Lynnwood, Washington’s English Insurance Group finished her term and Heidi Duncan of Duncan & Associates Insurance Brokers in Olympia, Washington assumed the association’s reins.

In her farewell speech, Kristie English said the end of any term is a time of reflection. She said a lot was accomplished during her tenure but there is much room for improvement.

“Our industry is working hard to keep up with the changes in both technology, and how people view insurance and the process by which they purchase coverage for their families and businesses. What can we as an association do to improve, and stay relevant to these changes and the needs of our agents?” she asked.

Her answer was simple.

“While we may be serving the larger agencies well, I think we could do a lot more to help the smaller agencies grow and succeed. I see a lot of small, new and those that have been around a while, independent insurance agencies, who are looking for an association or group that can help them learn how to run their business successfully,” Kristie concluded.

She said the PIA Washington/Alaska needs to be that group.

In her inauguration speech, Heidi Duncan said the PIA needs to find ways to help Millennials find their way into the business. To do that we need to make this business more appealing and more fun.

“Many younger people view insurance as a stuffy industry full of accountant types whose total focus is profits. Most of you have been in this business while. I don’t know what you think but I think some of the most fun people on the planet are in this room.

The business of insurance is a blast,” she said.

That the industry is fun is one thing. That it is diverse and has all kinds of jobs for Millennials is quite another.

“One of my goals will be to find better ways to explain the diversity of jobs available in insurance. We need to be able to explain that there is a job for everyone and not for just a few.  And we need to start by letting Millennials and other young people looking at the industry that insurance isn’t JUST about sales. Most Millennials think it is. We need to show the diversity in jobs available in insurance stretching from — yes, sales — but also to accounting to graphics to website construction and management to social media to technology,” Heidi added.

She said Millennials want positive careers. Insurance — she added — is a business that makes society better.

PIA Washington/Alaska also awarded its annual agent of the year. The Agent of the Year Award is the PIA’s way of saying thank you and recognizing that special individual whose accomplishments exemplify the best qualities an independent insurance agent can possess: integrity, dedication and commitment to the members and goals of the PIA. As an organization, we offer no greater recognition than the PIA Agent of the Year.

Lynn Peretti of Hub Insurance in Renton, Washington is this year’s recipient.  

She — along with her husband Ray — has been a PIA pillar for decades. Ray was the association’s president in 1994 and the agent of the year in 1995. Later in his career, Ray was the President of PIA National. As a team they helped shape the PIA Washington/Alaska and make it the success it is today.

That shaping came via tireless work on boards and committees.

In giving out the award, Heidi Duncan said, “All of that experience made you stronger and wiser. Best of all, you have shared your experience with us. From the political side of those travels and your time in Washington D.C. and at PIA National’s headquarters in Alexandria, Virginia, to the insurance basics gleaned from meeting agents from all over the country and in the State of Washington, the knowledge gained and given has blessed us all. We are forever grateful for your teaching and your sharing, and your willingness to pass on what you know to others.”

The PIA Washington/Alaska also gives out an annual Company Person of the Year award. Each year PIA members benefit from the contributions of time, money and expertise that come from our insurance company partners.  In recognition of those contributions, the PIA honors one individual whose active involvement with PIA helps drive their company to support our efforts with our members.

This year’s recipient is Gabe Gonzalez of Safeco. The reason? Agents love Gabe and his co-workers love Gabe. He is one of those people you call when you have a marketing question. You’ll get your question answered and lots of great suggestions — maybe even more suggestions than you really need.

In her announcement of the award, Heidi Duncan said, “That’s because our award recipient is an information junkie and — unlike most of us — he actually enjoys research. Our research guru uses that information to develop strategies to help the marketing efforts of agents everywhere.”

He’s also quite innovative. “One innovation is an advanced marketing group of agents. He put them in a non-competitive environment and asked them to share successes and strategies to benefit all. These are people in competition with each other! He must have a magic touch because it works,” Heidi said.

Amy Hays of Duncan & Associates Insurance Brokers received the 2018 National Alliance Customer Service Representative of the year.

The annual golf tournament’s winners:

First place

David Babbitt

Frank Lukacs

Paul Zeni

Ed Bukovinsky

 

Second place

Craig Field

Andy Hansen

Greg Boyd

 

Third Place

Mike Arnold

Brad Hickman

Kirk Rieker

Tyler Stoddard

 

Women’s closest to the pin — Mary Lemon

Men’s closest to the pin — Stephen Kern

Women’s longest drive — Kristen Horlacher

Men’s longest drive — Paul Zeni

This yeaf’s agent prize went to Jill Heath

New this year was the agent app and prizes were given for those doing the most posting and sharing of phone photos on the app: 

First Gary Morgan

2nd Michael Roberts

3rd Jill Heath

The annual Texas Hold ‘Em tournament winners:

First: Yvonne Mattson & Toddi Oberg

2nd: Ryan Porter

3rd Ryan Bettinger

Tags:  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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Flood — The Hurricane Spawned by Hurricane Florence

Posted By Administration, Tuesday, September 25, 2018

Hurricane Florence is going to be one of the costliest disasters in U.S. history. Moody’s Analytics has estimated the economic damage at $38 billion on the low end and $50 billion on the high side. If it hits $50 billion — which the hurricane’s damage easily could do — Florence will be the 7th largest storm we’ve experienced.

The Moody’s estimate includes property damage, vehicle losses and lost business output. The good news — if good news can be found in a disaster of this magnitude —  the last three hurricanes to land on U.S. soil were more expensive than Florence.

  Hurricane Harvey’s cost was $133.5 billion

  Hurricane Maria sits at $120 billion

  Hurricane Irma cost the industry $84.2 billion

The hurricane — as of Monday, September 24th when this is written — killed 41 people and drove thousands from their homes and into shelters. A lot of them are still sheltered and will be for the foreseeable future.

From an insurance perspective there is some good news. The losses to the insurance industry will be less than that of last year’s hurricanes. Adjusters have been in North Carolina, Virginia and the other states involved from the outset.

Insurance costs are still being estimated but most models have the losses at about $5 billion. That’s because Hurricane Florence was just a category 1 storm when it hit shore. Gary Marchitello of Willis Towers Watson said the winds were not as high as expected and wind — for insurers — is what drives losses.

“The well-capitalized global property/casualty insurance market will easily absorb losses in this new range, and barring successive storms this season, we would not expect any prolonged hardening of the market. However, we still expect to see some short-term disruption in the market,” he said.

The enormous flooding that followed is a different story. Those damages fall on the back of the National Flood Insurance Program (NFIP) and its administrator the Federal Emergency Management Agency (FEMA) and on people who didn’t have foresight enough to have flood insurance.

As of the end of July this year — says the Associated Press (AP) — there were 5.1 million participants in the federal flood insurance program. That’s up from 4.94 million in 2017. North Carolina has just 35% of its at-risk properties covered by flood insurance. That compares to 65% in South Carolina.

While the AP found there was a 3.5% gain in homeowners with flood insurance in North Carolina between this year and last, the number of homes covered is down 3% over the last five-years.

That leads to one of the biggest problems with the NFIP. It’s repeat flooding and rebuilding. Here’s an example. Since 1978 in Belhaven, North Carolina 120 homes — in a town of 1,600 — have been rebuilt.

The cost to the taxpayer via the NFIP? $13.4 million.

That’s a huge amount of money for very few homes says Rob Moore. He is the senior policy analyst of the National Resources Defense Council. His group wants this changed. “We spend all this money to rebuild these homes, and we spend very little money helping people get out of these homes — even when that’s what they want. Efforts to help move people move somewhere safer are seen as a last option, instead of a first option,” he said.

Moore noted the programs designed to give people offers to get them to move take too long to come to fruition. Thus people repair their homes and stay.

Here’s another statistic. North Carolina has 1,100 “severe” repetitive loss properties. They have cost the NFIP $163.9 million. His organization thinks it is time for a limit to the number of times a property can be made whole. Moore said the $163.9 million is 60% of the value of those homes and over 400 of them have received more in federal claims dollars than the home is worth.

R.J. Lehmann heads insurance for the R Street Institute. He said the severe repetitive losses Moore refers to add up to just 2% of all flood insurance policies but a third of all claims. The Congressional Budget Office (CBO) had a similar take on the issue. It said costs annually to administer the NFIP exceed premiums by a third.

The problem — Moore said — is the NFIP is designed that way.

In 2012 Congress passed major reforms to phase out those subsidies and that increased premiums to be more actuarially sound. Two years later — after a lot of complaints from homeowners and politicians — the changes were rolled back.

Another effort at reform was made last year in a bill in the House that sets a limit to the amount of money available for all flood claims on a home to three-times the value of the home. That bill didn’t make it very far in the Senate.

Moore said that’s just plain wrong. “People that live in this cycle of flooding and rebuilding may never even be offered assistance to move somewhere safer. If they have flood insurance, they’re always offered the option to rebuild in the same location,” he said.

By the way, if the flood costs of the National Flood Insurance Program and the Federal Emergency Management Agency aren’t enough, FEMA is under siege from critics saying it is not organized or its people well-trained enough to properly respond to crises.

Adding to that is FEMA’s head guy Brock Long is under attack for using FEMA vehicles for personal travel and for taking staff to his North Carolina home and putting them up in swank hotels.

Brock says he’s going to reimburse the government for that use.

Some in the Trump administration are pushing for his firing and rumors are circulating that exploration is in process to replace him.

Source links: The Wall Street Journal, Claims Journal, Carrier Management, Insurance Journal, Insurance Business America, The Hill

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GEICO’s Much-Watched Bad Faith Case

Posted By Administration, Tuesday, September 25, 2018

 

 

The auto accident was over 12-years ago. James Harvey was found at fault in a crash that killed John Potts. Harvey had $100,000 in coverage. GEICO issued a check. Where the bad faith comes into play is in how the claims adjuster failed to answer questions from Potts’ estate as to the extent of Harvey’s assets and whether he was working at the time of the accident.

The Potts’ estate rejected the $100,000 settlement and filed a bad faith lawsuit. As a result, the estate was awarded $8.7 million.

That’s a far cry from $100,000 and asks the question of whether GEICO properly addressed the interests of its customer. Harvey said no the company did not and he filed a bad faith suit against GEICO and was awarded $9.2 million.

The result of Harvey’s suit was then overturned by the Fourth District Court of Appeals. Harvey appealed that appeal and the Florida Supreme Court — by a 4 to 3 vote — said Harvey’s suit is justified.

GEICO is at fault.

In the opinion, Justice Peggy Quince wrote, “An insured [the customer] pays its insurance premiums with the expectation that the insurer will ‘act in good faith in the investigation, handling, and settling of claims brought against the insured. In this case, a jury found that GEICO acted in bad faith by failing to settle the estate’s claim against Harvey. Substituting its own judgment for that of the jury, the Fourth District erroneously concluded that the evidence was insufficient to show that GEICO acted in bad faith and that, even if it did, GEICO’s actions did not cause the excess judgment against Harvey.”

Chief Justice Charles Canady agreed. He wrote, “Finding bad faith in the circumstances presented here works a vast and unwarranted expansion of liability for bad faith claims. In Florida law, mere negligence has now become bad faith. I strongly dissent from this unjustified change in the law.”

William Large is from Florida Justice Reform Institute (FJRI). It is a business-backed group that joined in the action. He said this is proof that the state’s bad faith laws need changing.

“Today’s decision by the Florida Supreme Court in Harvey v. GEICO once again confirms that the Legislature must set clear, objective standards in statute for avoiding bad faith while settling insurance claims,” he noted. “In this case, GEICO tendered its policy limits in nine days, and the Fourth District Court of Appeal concluded that GEICO had fulfilled every obligation it owed its insured. Yet, the Supreme Court still found room under precedent to allow a jury to turn a $100,000 insurance policy into an $8.47 million judgment.”

Source link: PropertyCasualty360.com

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The National Alliance Names Hold CEO

Posted By Administration, Tuesday, September 25, 2018

William J. Hold — the son of founder and president William T. Hold — has been named the National Alliance for Insurance Education and Research’s chief executive officer. He will assume the day-to-day leadership of the organization and in two-years will assume the presidency.

Hold has been with the National Alliance since 2006 and has filled a number of positions including chief development officer. As chief development officer he led efforts to develop the Alliance’s University Associate Program for the CIC and Certified Risk Manager programs.

The younger Hold also took the lead on:

  Making the programs available digitally

  Making the James K. Ruble MEGA Seminars digital

  He assisted in developing new CIC courses

  He assisted in enhancing the Certified Insurance Service Representative (CISR) curricula

  He focused on corporate program growth and on the Advanced Continuing Education Series and online volume purchases

  He worked with carrier representatives and agency associates to create educational and training opportunities

In a statement, William T. Hold said, “The board members and I are confident that William will uphold The National Alliance’s legacy and history of continued success.”

Source link: Insurance Journal

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A Growth Spurt — Surplus Lines

Posted By Administration, Tuesday, September 25, 2018

A.M. Best has a new report — which is insurance traditionally long titled — Surplus Lines Push Through Various Headwinds for Higher Growth. It finds the surplus lines market grew by 5.8% in direct written premiums in 2017.

Best said surplus lines — because of that — will remain financially sound going forward. Here’s more of what the report found:

  A 5.8% growth in direct written premiums

  $642.1 million in direct written premiums total

  The 5.8% compares to 2.8% in 2016 and 2.5% in 2015

Best said, “One key challenge that remains for surplus lines carriers is the ongoing creep into the segment by standard market companies. Until standard market companies meet their underwriting expectations in their core lines, they will maintain an interest in competing for some surplus lines business, to complement their other operations.”

Another aspect of the report said consolidation of surplus lines insurers in 2017 impacted competition and will continue to reshape the market. “Acquiring insurers continue to use M&A as part of their strategies to carve out a bigger piece on the market. On the wholesaler side, the larger wholesalers have been growing in scale and expanding their profiles by acquiring smaller intermediaries,” the report continued.

This has led to businesses doing business with fewer wholesalers and wholesalers are now doing business with fewer insurance companies.

Best doesn’t see this trend slowing down in the near term.

Source link: Business Insurance

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Data Security Legislation — PIA National Objects

Posted By Administration, Tuesday, September 25, 2018

The House Financial Services Committee has passed a bill onto the full House to force federal financial regulatory agencies to adopt a national standard for data security measures. The bill also says that financial institutions will now put notification system standards in place for a breach or unauthorized access.

PIA National objects to the Consumer Information Notification Requirement Act — H.R. 6743 — as does the National Association of Insurance Commissioners (NAIC). Jon Gentile — PIA National’s Vice President of Government Affairs — said the association has two concerns.

The first is it undermines the state-based regulation of insurance and will impact independent insurance agents. The second objection is how the bill requires insurance commissioners and insurance departments to write data protection rules designed for banks and that are drafted by the regulators of banks.

“Many states are already advancing legislation on this issue and should be allowed to do so without federal interference. It also makes the mistake of applying requirements designed for banks on independent insurance agencies, when banking and insurance are inherently and fundamentally dissimilar,” he said.

He also points to the Capital Standards Clarification Act (Public Law No: 113-279) passed by Congress in 2014. Gentile said it is meant to prevent imposition of bank-based requirements on insurance and recognizes the disparities between banks and other entities.

And then there’s the impact on the independent insurance agent. The requirements are onerous for many agencies that are basically small businesses.

“This issue is best addressed by state legislatures and state insurance commissioners State regulators will always have a more thorough understanding of local insurance issues than the federal government,” Gentile concluded.

The NAIC agrees. It sent a letter to the House stating, “While we appreciate the legislation’s goal of promoting effective cybersecurity risk management and data protection safeguards, we have serious concerns that the bill’s language would significantly limit state insurance regulators from protecting consumers in their states.”

Like the PIA, the NAIC worries about the intrusion on the business of regulating insurance. “H.R. 6743 disregards the existing state insurance regulatory framework and would inhibit ongoing efforts in the states to adopt data security laws and regulations in the best interest of insurance consumers,” the NAIC said.

Part of the problem with this bill is a lack of understanding of how insurance works.

“The bill assigns enforcement of its federal data security requirements to an insurer’s state of domicile, which may be far removed from the location of consumers who are harmed by a data breach. Under current laws and regulations, if policyholders from one state are affected by a breach at an insurer domiciled in another state, both insurance departments work with the company to ensure all policyholders are appropriately protected moving forward, regardless of where they are located. Under this bill, only one regulator would have authority to require mitigation for policyholders from a breached insurer. This could leave consumers less protected,” the NAIC concluded.

Source links: PIA National, Business Insurance

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