Месечни архиви: February 2015

Climate Change Modeling on Cusp of Paradigm Shift

Climate Change Modeling on Cusp of Paradigm Shift

In the face of growing interest in climate change impacts, several big catastrophe modelers said they’ve heard from more clients interested in receiving climate-related data and they believe the field is on the cusp of a change in the way modeling is done.

“It’s kind of like we’re in a paradigm shift,” said Karen Clark, owner of Boston-based Karen Clark & Co., a specialist in catastrophe risk, modeling and risk management.

Call it the weird weather we’re having, or all the media attention the topic of climate change gets, but modelers like Clark are hearing more from clients interested in modeling for the potential impacts of climate change.

Clark said her clients want new tools to test the impact of potentially more frequent extreme weather events on their portfolios. Her firm recently rolled out an add-on to its RiskInsight product, an open, global platform for catastrophe risk management.

The add-on, or module as it’s referred to, is HazardMapper, which among its other features can examine an event like a hurricane and increase its severity to give an insurer or reinsurer an idea of how that will impact its portfolio.

Such a tool may prove useful for hurricanes in particular, where a great deal of client interest in variability lies, many modelers say.

According to the National Oceanic and Atmospheric Administration, “anthropogenic warming by the end of the 21st century will likely cause hurricanes globally to be more intense on average by 2 to 11 percent.”

Beside helping clients figure out the potential impacts of more severe storms, which may or may not be driven by climate change, the module can be used other ways – such as creating events like a magnitude 9 earthquake on the San Andreas fault – and it is designed for use by clients in-house.

Therefore, Clark couldn’t say exactly how clients are using it, or if the majority of them are using it to model for the impacts of climate change.

“I would say that a goodly number are using it to test the sensitivity of their loss estimates to different assumptions,” she said, referring to her belief that many clients may be looking at the potential impacts of climate change on their portfolios.

“New paradigm” was also a phrase used by Tom Larsen, senior vice president and product architect at CoreLogic EQECAT.

“There is a greater recognition that we have to do more,” said Larsen, who has for some time been calling attention to the need for more progressive models to deal with a changing climate. “We’re in a place where the empirical models that we’re using to date…are not sufficient to help us understand what this risk is going forward.”

Requests to offer clients climate-related data in models hasn’t been overwhelming by any means, but Larsen did say “there is a lot more interest.”

That interest for the most part is limited, because property insurance contracts are renewed annually and long-term data on climate change is not useful – even taking into account insurers’ strategic horizons of two, five or 10 years on books of business, that’s a short time compared to the decades that will pass before climate change begins impacting exposed properties.

“In those kinds of timescales, there’s not a lot of change in there,” Larsen said. But, he added, there is enough of an anticipated change in the climate – added to the current abnormal weather patterns that regularly make the 5 O’clock news – to “cause a lot of anxiety and a lot of probing.”

That anxiety may be among the reasons that many in the field are now including conditional frequency models based on assumptions about ensuing weather patterns, such as the adoption of tools like Tail-Value-at-Risk measurement, which quantifies an expected value of loss outside a given probability level.

A TVaR measurement, Larsen explained, looks beyond the 100-year, and 200-year static catastrophe models, which don’t offer a complete picture of how bad can it be, giving insurance and reinsurance executives better answers to questions like “Am I steering my business prudently?”

Silicon Valley-based modeler Risk Management Solutions last year partnered on the Risky Business initiative, a year-long effort co-chaired by former New York Mayor Michael Bloomberg, former Treasury Secretary Henry Paulson, and Farallon Capital founder Tom Steyer, to quantify and publicize the economic risks the U.S. faces from the impacts of a changing climate.

For the initiative RMS provided an analysis of the impacts that climate change will likely have on coastal infrastructure and related assets. Risky Business issued a report late last year focused on the clearest and most economically significant risks: “Damage to coastal property and infrastructure from rising sea levels and increased storm surge, climate-driven changes in agricultural production and energy demand, and the impact of higher temperatures on labor productivity and public health.”

Paul Wilson, vice president of model development for RMS and leader of the firm’s North Atlantic hurricane modeling team, said clients are often asking the same question: “How much variability can we expect?”

“That’s a conversation RMS has very regularly with our clients,” Wilson said. “We need to think about to what degree climate change is impacting that variability, to what degree is climate change impacting that baseline around which we build our models.”

In response to these conversations, RMS will be incorporating more variability into more models in future, although it’s the overall concern over variability, and not necessarily climate change, that may be driving some of that interest, he added.

Wilson is getting increasingly sophisticated requests from RMS clients, who longer view models as just a “black box that just spits out a number.”

Those clients want to “Own their own view of the risk,” he said. “They want better numbers, but the volatility of extreme weather also has them more interested – hurricane activity, tornadoes, drought – it’s making the users dig in much deeper and they want more sophisticated models.”

Some of the interest may also be a result of pressure from regulators.

Insurance commissioners in several large states have for the past few years been requesting increased disclosures from insurers pertaining to their climate change exposure. And more recently, the National Association of Insurance Commissioners Climate Change and Global Warming Working Group has taken up topics like: “Review the enterprise risk management efforts by carriers and how they may be impacted by climate change and global warming.”

Jayanta Guin, executive vice president of AIR Worldwide, said the modeler’s clients are increasingly being asked by regulators and rating agencies to explain what they are doing to manage the risk.

“And, in turn, our clients are looking to us to keep them apprised of the current state of the science and to educate the regulators and rating agencies on what the catastrophe models currently capture,” Guin said.

It’s not like the modeling industry is running to catch up to climate change impacts. All modelers spoken with said that as models are updated they capture the most recent seasons of higher or lower activity, so any impact a warming climate has had to this point is reflected in those models.

“While clients would welcome more of these climate-conditioned models and investigations into extreme disaster scenarios, there is considerable uncertainty in establishing robust relationships between various climate signals and the frequency of occurrence of natural disasters,” Guin said.

However, it’s is an active area of research for AIR scientists, he added.

“There does seem to be wider consensus that climate variability may increase, but the current climate is already highly variable—witness the nine-year drought of Florida hurricane landfalls,” he said. “One thing is clear: we cannot identify climate change as the cause of any single event, whether it is the record snowfall and cold temperatures in Boston this winter, or Hurricane Sandy’s onslaught of the New Jersey coast in 2012.”

Clark believes that while it would be nice to have models that precisely predict how much losses an insurer may incur in any given year, such information isn’t likely to be available in our lifetimes.

“We may be able to get slightly better models,” she said. “In our lifetime the models are never going to be accurate, they’re never going to be giving precise answers.”

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NY’s Lawsky Cybersecurity Likely Most Important Issue DFS Will Face in 2015

NY’s Lawsky Cybersecurity Likely Most Important Issue DFS Will Face in 2015

Cybersecurity is likely the most important issue that the New York Department of Financial Services (DFS) will face in 2015, and perhaps for many years to come after that, New York Financial Services Superintendent Benjamin Lawsky said in a speech Wednesday.

Lawsky said financial regulators are concerned about a potential “Armageddon-type cyber event” in the financial sector within the next decade.

“A question we often get as financial regulators is: ‘What keeps you up at night?’ The answer is ‘a lot of things.’ But right at the top of the list is the cybersecurity at the financial institutions we regulate,” Lawsky said during his speech at Columbia Law School in New York, according to his prepared remarks.

“I am deeply worried that we are soon going to see a major cyber attack aimed at the financial system that is going to make all of us to shudder,” said Lawsky. “Cyber hacking could represent a systemic risk to our financial markets by creating a run or panic that spills over into the broader economy.”

“Indeed, we are concerned that within the next decade — or perhaps sooner — we will experience an Armageddon-type cyber event that causes a significant disruption in the financial system for a period of time — what some have termed a ‘cyber 9/11,’” said Lawsky.

“We worry that, when that major cyber event happens, we will all look back and say, ‘How did we not do more to prevent it?’ Of course, the question, then, is: What should we do to help prevent that nightmare scenario?”

He said DFS is spending a lot of time working on concrete actions to help strengthen cybersecurity at its regulated institutions.

“In particular, we are focused on ways to incentivize market participants to do more to protect themselves from cyber attacks,” he said. “This issue is also clearly at the top of the agenda for federal regulators. Sarah Bloom Raskin — the deputy treasury secretary — in particular has been a leader on these issues.”

But Lawsky said he believes this area is one example where — even though federal regulators are very focused on the problem — there is still room for financial federalism at the state level in experimenting with various solutions. “Given the magnitude of the problem, we need all the ideas and proposals we can get,” he said.

Examining Cybersecurity of Banks, Insurers

Lawsky outlined several DFS initiatives in this area. First, he said, DFS is revamping its regular examinations of banks and insurance companies to incorporate new, targeted assessments of those institutions’ cybersecurity preparedness.

“The idea is simple: If we grade banks and insurers directly on their defenses against hackers as part of our examinations, it will incentivize those companies to prioritize and shore up their cybersecurity protections,” said Lawsky.

He said institutions care deeply about their examination grades since those scores can impact their ability to pay dividends, or enter new business lines, or acquire other companies.

Cybersecurity Protections for Third-Party Vendors

Second, Lawsky said DFS is considering steps to address the cybersecurity of third-party vendors, which he said is a significant vulnerability.

“Banks and insurers rely on third-party vendors for a broad-range of services — whether it is a law firm that provides them with legal advice or even a company that is contracted to run their HVAC system,” he said. “Those third-party vendors often have access to a financial institution’s information technology systems — which can provide a backdoor entrance for hackers.”

In many ways, Lawsky said, a company’s cybersecurity is only as strong as the cybersecurity of its third-party vendors. And as such, DFS is considering mandating that the financial institutions receive robust representations and warranties from third-party vendors that those vendors have critical cybersecurity protections in place.

“In other words, those third-party vendors will have to strengthen their cybersecurity or risk losing out on business from those financial institutions,” he said. “That is tough medicine, but we believe it is likely warranted given the risks that cyber hacking presents to the stability of our financial markets and economy.”

Adopting ‘Multi-Factor Authentication’ System

Third, Lawsky spoke about adopting the “multi-factor authentication” system.

He said the internet architecture has grown up over the years with a username and password system for verifying users’ identities and that has proven to be a very vulnerable system.

“The password system should have been dead and buried many years ago. And it is time that we bury it now,” said Lawsky.

He said all firms should be moving towards — and many of them already are — a multi-factor authentication system.

“In a multi-factor authentication system, you still have a username and a password, but there is also a second layer of security,” Lawsky explained. “For example, when you attempt to log in, you could receive an immediate, randomly generated additional password that is texted to your phone.”

“As a result, if someone steals or guesses your password, they would not be able to get into the system unless they also have your cell phone. That simple, extra step can actually prevent a significant amount of hacking. And it is something all firms should do.”

DFS is currently considering regulations that would mandate the use of multi-factor authentication for its regulated financial institutions. “We would be the first financial regulator to take this step,” said Lawsky.

He said DFS still has some work to do in crafting its new cybersecurity examinations, as well as any potential regulations related to multi-factor authentication and third-party vendors. In particular, the regulators need to be careful to make sure that they do not place an undue burden on smaller institutions, such as community banks, he said.

“But if we get the balance right, perhaps these steps can serve as a positive model for other regulators as we all confront this critical issue,” he said. “We will never eliminate the risk of cyber hacking entirely. But we must do everything we can so that we do not look back years from now — after a devastating attack — and ask ourselves: ‘Why didn’t we see this coming? And why didn’t we do more?’”

Related Articles:

N.Y. Regulator Lawsky Says Banks Need Money-Laundering Spot Checks
N.Y. Announces New, Targeted Cybersecurity Assessments for Insurers
Barrage of Cyber Attacks Force Companies to Rethink Defense Strategies
Health Insurer Anthem Hit with Cyber Attack
P/C Insurers Rush to Meet Rising Demand for Cyber Insurance
New York DFS Announces New Cybersecurity Assessment Process for Banks


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XL Expects Increased Oversight From Global Regulators After Catlin Deal

XL Expects Increased Oversight From Global Regulators After Catlin Deal

XL Group plc, the insurer that agreed to buy Catlin Group Ltd. for about $4 billion, said it faces a risk label after the deal that could lead to increased oversight from global regulators.

“Following the completion of the proposed acquisition of Catlin, we believe that we would meet the criteria to be designated” an internationally active insurance group (IAIG), the Dublin-based insurer said on Wednesday (February 25), in its annual filing to the U.S. Securities and Exchange Commission.

The Financial Stability Board, a global group of regulators and central bankers that monitors systemic risks, has directed the International Association of Insurance Supervisors to create criteria for the IAIG label. The purchase of Bermuda-based Catlin will increase XL’s role in specialized lines, such as covering aviation and artwork, as Chief Executive Officer Mike McGavick focuses on commercial clients.

If XL receives the designation after the deal, “we may become subject to a proposed international capital standard and enhanced regulatory supervision,” according to the filing.

–With assistance from Yalman Onaran and Zachary Tracer in New York.

Copyright 2015 Bloomberg.

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New York to Be Reimbursed 32M for Ebola Readiness Treatment

New York to Be Reimbursed 32M for Ebola Readiness Treatment

U.S. Senator Charles Schumer (D-N.Y.) says the federal government is allocating $32 million to the state of New York to cover all expenses related to Ebola readiness and treatment.

Schumer says that money from the federal Department of Health and Human Services will reimburse the state’s designated Ebola treatment centers. New York City will receive $21.7 million and the rest of the state will receive $7.5 million.

The federal government will additionally pay for any expenses incurred by New York City’s Bellevue Hospital, which treated Ebola-stricken Dr. Craig Spencer for nearly three weeks. Spencer was diagnosed Oct. 23, days after returning from treating Ebola patients in Guinea with Doctors Without Borders. He recovered successfully from the deadly disease.


Copyright 2015 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Derailed Train in West Virginia Had Safer Tank Cars

Derailed Train in West Virginia Had Safer Tank Cars

The fiery derailment of a train carrying crude oil in West Virginia earlier this month is one of three in the past year involving tank cars that already meet a higher safety standard than what federal law requires – leading some to suggest even tougher requirements that industry representatives say would be costly.

Hundreds of families were evacuated and nearby water treatment plants were temporarily shut down after cars derailed from a train carrying 3 million gallons of North Dakota crude on Feb. 16, shooting fireballs into the sky, leaking oil into a Kanawha River tributary and burning down a house nearby. It was snowing at the time, but it is not yet clear if weather was a factor.

The train’s tanks were a newer model – the 1232 –designed during safety upgrades voluntarily adopted by the industry four years ago. The same model spilled oil and caught fire in Timmins, Ontario this month, and last year in Lynchburg, Virginia.

A series of ruptures and fires have prompted the administration of President Barack Obama to consider requiring upgrades such as thicker tanks, shields to prevent tankers from crumpling, rollover protections and electronic brakes that could make cars stop simultaneously, rather than slam into each other.

If approved, increased safety requirements now under White House review would phase out tens of thousands of older tank cars being used to carry highly flammable liquids.

“This accident is another reminder of the need to improve the safety of transporting hazardous materials by rail,” said Christopher Hart, acting chairman of the National Transportation Safety Board.

Oil industry officials had been opposed to further upgrading the 1232 cars because of costs. But late last year they changed their position and joined with the railway industry to support some upgrades, although they asked for time to make the improvements.

According to the Association of American Railroads, oil shipments by rail jumped from 9,500 carloads in 2008 to 500,000 in 2014, driven by a boom in the Bakken oil patch of North Dakota and Montana, where pipeline limitations force 70 percent of the crude to move by rail.

The downside: trains hauling Bakken-region oil have been involved in major accidents in Virginia, North Dakota, Oklahoma, Alabama and Canada, where 47 people were killed by an explosive derailment in 2013 in Lac-Megantic, Quebec.

Reports of leaks and other oil releases from tank cars are up as well, from 12 in 2008 to 186 last year, according to Department of Transportation records reviewed by The Associated Press.

Just two days before the West Virginia wreck, 29 cars of a 100-car Canadian National Railway train carrying diluted bitumen crude derailed in a remote area 50 miles south of Timmins, Ontario, spilling oil and catching fire. That train was headed from Alberta to Eastern Canada.

The train that derailed in West Virginia was bound for an oil shipping depot in Yorktown, Virginia, along the same route where three tanker cars plunged into the James River in Lynchburg, Virginia, prompting an evacuation last year.

The train derailed near unincorporated Mount Carbon just after passing through Montgomery, a town of 1,946, on a stretch where the rails wind past businesses and homes crowded between the water and the steep, tree-covered hills. All but two of the train’s 109 cars were tank cars, and 26 of them left the tracks.

Fire crews had little choice but to let the tanks burn themselves out. Each carried up to 30,000 gallons of crude.

One person – the owner of the destroyed home – was treated for smoke inhalation, but no other injuries were reported, according to the train company, CSX. The two-person crew, an engineer and conductor, managed to decouple the train’s engines from the wreck behind it and walk away unharmed.

The NTSB said its investigators will compare this wreck to others including Lynchburg and one near Casselton, N.D., when a Bakken crude train created a huge fireball that forced the evacuation of the farming town.

No cause has been determined, said CSX regional vice president Randy Cheetham. He said the tracks had been inspected just three days before the wreck.

“They’ll look at train handling, look at the track, look at the cars. But until they get in there and do their investigation, it’s unwise to do any type of speculation,” he said.

State officials do have some say over rail safety.

Railroads are required by federal order to tell state emergency officials where trains carrying Bakken crude are traveling. CSX and other railroads called this information proprietary, but more than 20 states rejected the industry’s argument, informing the public as well as first-responders about the crude moving through their communities.

West Virginia is among those keeping it secret. State officials responded to an AP Freedom of Information request by releasing documents redacted to remove nearly every detail.

There are no plans to reconsider after this latest derailment, said Melissa Cross, a program manager for the West Virginia Division of Homeland Security and Emergency Management.


Contributors include Joan Lowy in Washington, D.C.; Matthew Brown in Billings, Montana; and Pam Ramsey in Charleston, West Virginia. Mattise reported from Charleston.

Copyright 2015 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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SIAA Grew Premium to 57B Signed 410 New Member Agencies in 2014

SIAA Grew Premium to 57B Signed 410 New Member Agencies in 2014

SIAA (Strategic Insurance Agency Alliance) said it grew premium by $901 million in 2014 to $5.7 billion, with 80 percent of its growth coming from existing member agencies. Premium growth with SIAA’s strategic partner companies was up more than $576 million in 2014.

Along with this organic growth, SIAA signed 410 new member agencies in 2014, bringing the number of member agencies signed since its inception in 1995 to more than 5,300. SIAA said this growth marked the sixth consecutive year that SIAA has added more than 400 member agencies in one year.

SIAA also announced its involvement in several initiatives in 2014:

Business Insurance Advantage, an educational program on the small commercial lines business, launched and had 125 member agencies actively participating by year end.
Agency Foundation, a program to assist new member start-up agencies, rolled out nationally.
A new website with an enhanced member area was launched.
SIAA Training & Learning Center had more than 1,000 member agencies register in 2014.
Alliance MarketFinder, SIAA’s member agencies website for placing difficult-to-write excess and surplus lines and specialty market business, continues at a growth rate exceeding 20 percent.
Insurancedeals4u (ID4U), a consumer-facing web portal SIAA rolled out in 2004, had more than 25,000 site visits, providing 4,500 consumer leads to member agencies in 2014.

SIAA, a national insurance agency alliance, has signed more than 5,300 member agencies through 48 master agencies across the country since its inception in 1995. Of that member number, SIAA and its master agencies have created over 3000 new start-up agencies coming predominantly from former captive agents. According to SIAA, an estimated 13 percent of all independent agencies in the U.S. are or have been signed members of SIAA.

Source: SIAA (Strategic Insurance Agency Alliance)


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Weaver Joins Aegis Specialty Insurance Services in California

Weaver Joins Aegis Specialty Insurance Services in California

Sunnyvale, Calif.-based Aegis Specialty Insurance Services has named Brian Weaver vice president of sales.

Weaver has more than 34 years of insurance sales experience. Most recently, Weaver was vice president of sales for Pacific Specialty Insurance Co.

Weaver_BrianAegis Specialty is a part of Aegis General Insurance Agency. Aegis provides homeowner, condominium, townhouse, renters, mobile home, earthquake and motorcycle insurance, along with specialized products sold by powersport dealerships.

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Analyst Taxi Medallions No ‘Safe haven’ in Wake of Uber

Analyst Taxi Medallions No ‘Safe haven’ in Wake of Uber

Uber, the popular ride-hailing app, is hitting taxicabs where it hurts: The medallion business.

Taxi companies make money by charging drivers for medallions, or licenses to drive their cabs.

In a note to investors last week, Jefferies analyst Sean Darby said taxi medallions are not the “safe haven” in terms of investing that they used to be as taxi companies face increasing competition from Uber and similar services.

“After many years of rising prices due to limited supply, the average price of a single (New York City) taxi medallion fell around 20 percent from their peak in 2013” because of the growing popularity of Uber and other car-hailing apps, he wrote. He said the situation is similar in Boston and Chicago.

He said it might be time to bet against taxi medallions in 2015.

But the CFO of Medallion Financial Corp., which specializes in offering loans to buy the medallions, touted the taxi industry’s advantages.

The taxi industry “continues to retain its favored position with the riding public,” Larry Hall said on Feb. 17, in a statement containing Medallion Financial’s fourth-quarter results.

“Regulated medallion taxis are preferred for their fast, safe, and reliable service, insured vehicles, licensed drivers, and metered pricing that is consistent at all times of the day,” Hall said.

Uber, valued at $40 billion, is dealing with legal and regulatory challenges, concerns about rider safety and the screening of its drivers, and criticism of how it has raised prices during storms and other high-demand periods.

Medallion Financial’s fourth-quarter net income rose 22 percent to $8.1 million, as the New York-based company said it continues to diversify its business outside of medallion loans. It had portfolio growth in New York, Boston and Newark, but declines in Chicago and other markets.

Related Articles:

Bloomberg: Google Is Developing Competitor to Uber
Opinion: Florida Sending Mixed Messages About Uber Insurance Requirements
Boston Taxi Owner Suit Latest Legal Salvo in Rideshare Wars
Insurance Groups Criticize Massachusetts Rideshare Regulations
USAA to Offer Pilot Ridesharing Coverage in Colorado


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Conn Senator Urges DOJ to Investigate Auto Insurers’ ‘Preferred’ Repair Shops

Conn Senator Urges DOJ to Investigate Auto Insurers’ ‘Preferred’ Repair Shops

U.S. Senator Richard Blumenthal (D-Conn.) is urging the Department of Justice (DOJ) to investigate a recently aired CNN report’s allegation that auto insurers may be pressuring consumers to repair their vehicles at the insurers’ preferred repair shops.

“Contrary to what consumers may be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with quality repairs,” Blumenthal wrote in a letter sent to U.S. Attorney General Eric Holder last Friday.

“It seems to be common knowledge among auto repair shops that the best way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering consistent, quality service, but by agreeing to charge below-market labor rates and use cheaper, salvaged, used, or even counterfeit parts of questionable quality and safety,” Blumenthal wrote.

“Unfortunately, many consumers are also being misled into thinking that they are required to have their car repaired at one of these shops,” Blumenthal wrote in the letter. “This has the harmful effect of limiting consumer choice, creating a serious safety risk, and suppressing competition in the auto repair industry.”

The following is the full text of Blumenthal’s Feb. 20 letter to Attorney General Holder:

The Honorable Eric Holder

Attorney General of the United States

Robert F. Kennedy Building

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Attorney General Holder:

As a longtime advocate of consumer choice, I write to bring to your attention to troubling new evidence that our nation’s top auto insurers continue to engage in anticompetitive and possibly illegal tactics to pressure consumers into repairing their vehicles at insurer-preferred repair shops. As uncovered in a special investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a basic consumer right, but can also compromise the safety of vehicles on our nation’s roads—endangering motorists and their passengers.

I urge the Department of Justice (DOJ) to immediately investigate such practices by the auto insurance industry and act swiftly to protect the safety of consumers and preserve competition in the auto repair industry.

As junk yard, remanufactured, and used parts of substandard quality become increasingly widely available, auto insurers are adopting alarming new ways to save money at the expense of consumer safety. Contrary to what consumers may be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with quality repairs. It seems to be common knowledge among auto repair shops that the best way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering consistent, quality service, but by agreeing to charge below-market labor rates and use cheaper, salvaged, used, or even counterfeit parts of questionable quality and safety. Unfortunately, many consumers are also being misled into thinking that they are required to have their car repaired at one of these shops. This has the harmful effect of limiting consumer choice, creating a serious safety risk, and suppressing competition in the auto repair industry.

According to a 1963 consent decree with the DOJ, a number of insurers were ordered to stop: “sponsoring any appraiser; directing, advising or otherwise suggesting any person or firm do business with any independent or dealer-franchised automotive repair shop; exercising control over the activities of any appraiser; and fixing or otherwise controlling the prices charged by automotive repair shops for the repair of damage to the vehicle or for labor in connection therewith, by use of a flat rate.” Over 50 years have since passed, and consumers and auto repairers possibly remain victims of the very same misconduct insurers were directed to stop doing decades ago.

I urge the DOJ to investigate and make a determination as to whether such practices violate the 1963 consent order or any other current federal laws. As you investigate this matter, I urge you to use your authority to investigate the contents of contracts between insurance companies and facilities listed in their direct repair programs or preferred lists. I would also like to request an update regarding DOJ’s understanding of the current signatories of the 1963 consent decree and whether they continue to be bound by the consent decree in light of business transactions in the years since the decree was signed.

Thank you in advance for your prompt attention to this important matter harming consumers and the auto repair industry, and compromising vehicle safety.



United States Senator

Related Articles:

West Virginia Judge Dismisses Parts Suit Against Body Shop, Liberty Mutual
Oklahoma AG Warns Against ‘Steering’ to Repair Shops by Insurers
Louisiana AG Files Suit Against State Farm Over Auto Repair Practices
Indiana Body Shops Sue Insurers over Compensation for Vehicle Repairs


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IBTX Risk Services Opens Office in Houston

IBTX Risk Services Opens Office in Houston

San Antonio-based independent insurance agency, IBTX Risk Services, announced it has expanded into the Houston market.

IBTX will engage clients and prospects in this new market, working to expand their client base in the property and casualty, oil and gas, healthcare and risk management fields.

IBTX’s products and services include commercial and personal insurance, employee benefits, safety and loss control services, surety bonds, wealth management, human resources consulting and claims advocacy.

Tim Aguilar, risk advisor and Kathy Havey, account executive are the first two employees in the Houston office.

Aguilar brings more than 30 years of experience in the insurance industry to IBTX with expertise in property, automobile, workers’ compensation, director and officers, professional and general liability, and healthcare benefits coverages for a variety of businesses.

Havey has more than 30 years of experience in the oil and gas, and construction insurance fields. She has a comprehensive history of maintaining longstanding relationships with clients and sustaining high retention rates due to her ability to provide excellent customer service, trust and integrity.

In addition to Houston, IBTX provides risk management services across the state of Texas from locations in San Antonio and Irving offices.

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