Месечни архиви: March 2015

Anti-Insurance Fraud Measures Needed in Minnesota and Michigan

Anti-Insurance Fraud Measures Needed in Minnesota and Michigan

Minnesota and Michigan both are confronting significant problems with scammers defrauding auto insurance systems they perceive have relatively soft defenses.

Minnesota faces a surge in organized fraud rings that fleece auto insurers with large and fake injury claims. The state needs more fraud laws to help close the enforcement gaps.

Michigan has no anti-fraud agency to serve as an essential enforcement and coordinating body. Varied scams against auto insurers are widespread; the state urgently needs an agency to add an important layer of defense.

Concerned legislators and fraud fighters in both states are championing bills that will both degrade the ability of swindlers to defraud insurers and deter would-be scammers.

The legislation will tackle diverse auto schemes. They range from complex rings to medical mills, to average everyday drivers who try to illicitly reduce high auto premiums by lying to their insurers that they garage and drive their vehicle in states with lower premiums.

Minnesota’s surge of organized fraud rings is especially pronounced in urban areas such as Minneapolis/St. Paul. These gangs stage crashes and operate medical mills that impose on no-fault auto insurers large volumes of expensive claims for worthless and inflated injury treatment.

Many ring members are hardened operatives who’ve moved in from other states. They perceive that Minnesota lacks a strong law-enforcement infrastructure. Other rings are homegrown. They also view Minnesota as a source of large fraud profits with relatively little downside risk.

The legislature created a task force in 2013 to recommend new fraud laws giving Minnesota more enforcement teeth. Three measures the Coalition Against Insurance Fraud recommended during those talks now are proposed as companion bills in the Senate and House. They would:

Limit access to police crash reports. Fraud rings use the reports to identify crash victims. Recruiters typically hound the victims to get bogus treatment at shady clinics aligned with the rings.

Impose large civil fines. The state Department of Commerce would gain fining authority. The state thus would have agility to fine fraudsters without waiting for the uncertain and often lengthy criminal process to wind its course.

Large civil fines also could bankrupt ringleaders, collapse their operations and send a deterrent message to other would-be scammers.      Kick fraudsters out of the insurance system. The commerce department could forbid dishonest medical providers to receive auto-insurance payouts. Many medical mills likely would fold, starved of ill-gotten income.

New York has booted nearly 20 dishonest medical providers from the state’s no-fault system since passing a similar law.

There is strong momentum to enact these measures in Minnesota. Fraud fighters are working with the Insurance Federation of Minnesota to push for passage.

The fraud bills still must slide past well-mobilized special interest groups, however. Chiropractors say the state chiro board should have ultimate fining authority. The trial bar contends that limiting access to crash reports for 30 days would impel victims to settle their insurance claim before they can hire an attorney to negotiate settlements.

Fraud fighters have enough statehouse support to potentially place opposing lobbies on the defensive throughout the debates.

Several hundred miles east lies Michigan. The state also is a natural magnet for medical mills and other automobile scammers. Fraud fighters generally agree that scamming is widespread, especially in urban areas such as Detroit.

Yet Michigan has no anti-fraud agency tasked with hunting down swindlers. The vast majority of states do have fraud bureaus; they grasp the many benefits an agency brings to combating fraud.

Michigan has America’s most-generous no-fault auto insurance system. Injured drivers can receive unlimited lifetime payouts. That honeypot encourages swindlers to lodge inflated claims for lengthy treatment regimens. Often the treatments are on paper only, with forged medical documents and phony patients.

Michigan’s large size invites heightened opportunity to defraud. The state has America’s 8th largest population (nearly 9.9 million residents) and 8th largest number of licensed drivers (slightly more then 7 million). Importantly, Michigan also is the second-largest state without an anti-fraud infrastructure of any kind.

A properly funded state anti-fraud agency adds much-needed investigators to the enforcement mix. It’s also a vital coordinating body. And the agency gathers actionable field intelligence that can inform fraud fighters about the size and impact of fraud trends. Fraud fighters thus can more accurately determine the resources they need. Prosecutors also will take on more fraud cases if there is a significant trend afoot.

The Massachusetts fraud bureau adroitly plays this role. No-fault rings have been rolled back in major urban areas. Auto premiums have fallen, saving drivers tens of millions of dollars.

Momentum is strong to create the auto fraud authority this year. The Insurance Institute of Michigan is playing a lead role.

A larger reform bill tackling spiraling no-fault medical costs, aside from fraud, is likely to be introduced. The auto-fraud authority may be rolled into that package.

The Coalition Against Insurance Fraud urges that the authority be a stand-alone bill because it stands a better chance of becoming law. Fighting fraud is a white-hat, tough-on-crime issue. It can draw wide bipartisan and consumer support.

The reform package carries far more baggage. Medical providers, attorneys, auto insurers and other interest groups likely will have difficulty agreeing on reforms. The large bill could fizzle because of its size and complexity, thus drowning the auto authority like a passenger on the Titanic. Fraud fighters are working to decouple the fraud authority from the reform bill.

Shepherding these anti-fraud bills into law in Minnesota and Michigan will send a loud message that defrauding auto insurers is a dead-end street whose only exit ramp goes straight to jail.



About Howard Goldblatt Goldblatt is Director of Government Affairs for the Coalition Against Insurance Fraud, www.InsuranceFraud.org.

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Mercury Agrees to 1M Settlement With California Department of Insurance

Mercury Agrees to 1M Settlement With California Department of Insurance

California Insurance Commissioner Dave Jones announced a $1 million settlement with Mercury Insurance Co., Mercury Casualty Co. and California Automobile Insurance Co. over findings that Mercury violated California laws on rating and underwriting practices.

The settlement stems from a market conduct exam based on which the California Department of Insurance found that Mercury violated California law more than 350,000 times based on more than 50 illegal rating and underwriting practices.

In addition to the $1 million fine, Mercury agreed to business practice reforms.

California Insurance Commissioner Dave Jones

California Insurance Commissioner Dave Jones

“This routine market conduct exam of Mercury Insurance resulted in payment of a penalty and business practice reforms, and serves as an important reminder to all insurers to uphold commitments made to policyholders,” Jones said in a statement.

The CDI exam concluded, among other things, that Mercury failed to provide reasons for non-renewals and cancelations, used unapproved and unfiled rates, failed to consistently follow their own rating and underwriting rules, and failed to make certain required disclosures in Spanish.

CDI conducts market conduct examinations of insurance companies to ensure the companies are complying with the California insurance code and the code of regulations with respect to rating, underwriting and claim practices.

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Networked in California Promotes Carrington Duong to Vice President

Networked in California Promotes Carrington Duong to Vice President

Grass Valley, Calif.-based Networked Insurance Agents has promoted Michael Carrington to vice president of service and Tam Duong to vice president of commercial lines account management.

Carrington leads a team of 30 customer service representatives and business processors. Duong leads a team of 33 account managers. These member Berkshire

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Comparecom Confirms Partnership with Google Insurance Comparison Site

Comparecom Confirms Partnership with Google Insurance Comparison Site

Online auto insurance comparison site compare.com is now working with Google on its auto insurance compare and buy platform, Google Compare, in California.

Andrew Rose, CEO of Virginia-based compare.com, said the search engine giant approached the company because it was having trouble attracting carrier partners to its search panel and wanted to offer more carrier options to users.

The partnership will work by giving Google Compare users access to some of Compare.com’s 41 carrier partners through the Google Compare site.

“They ultimately made the decision that we were a short cut to building a panel themselves,” said Rose.

Google is offering compare.com’s providers in addition to forming their own carrier panel, said Rose. However, all of compare.com’s carrier partners are not available through the Google Compare site.

“Google Compare will collect user info and forward that information to us and we will forward it on to any of our participating carriers that want to have their rates shown on Google [Compare],” he said.

Rose said not all of compare.com’s carrier partners wanted to participate in the new Google Compare venture as some had concerns. He wouldn’t name or give an exact number of compare.com’s carriers that agreed to participate, but did say it is “somewhere in between” its 41 partners.

“In some ways, this is quite scary for insurance companies. There is concern among them about what happens if Google controls one of the avenues where they get their business,” he said.

The relationship is also non-reciprocal, meaning Google Compare opted not to share its carrier partners with compare.com. Rose said that was Google’s decision.

The partnership will work by showing Google Compare users multiple insurance quotes after they input their information – some quotes will come from compare.com’s carrier partners, and some from Google.com’s partners. Quotes may also be provided by Google’s other partner, CoverHound.com. When a user chooses to purchase an auto policy on Google’s site from a compare.com carrier they leave the Google site and go to that carrier’s webpage to finish the transaction, just as it works on compare.com’s site. Customers can also choose to call and purchase their policy over the phone.

Compare.com is compensated by the carrier just as they would be if they went straight to compare.com.

“From the carrier’s standpoint, the policy still came from compare.com and they will compensate us. Then we pay Google a share of what we were compensated by the carrier,” said Rose.

Compare.com doesn’t charge customers to use its site and the same is true on the Google Compare platform. Compare.com charges carriers a flat fee per sale that is based on the segment of business. Carriers are only charged if a customer actually buys the policy from the company. Compare.com then uses that money to advertise on behalf of the carriers.

Also just like the compare.com site, the rate doesn’t change when the customer leaves the Google Compare site or calls the listed phone number to purchase. Rose says this has been a critical part of his company’s success so far because the consumer can finish their transaction without any other costs.

Compare.com was established in 2013 and is the U.S. version of confused.com that started back in 2002 in the UK and is also owned by parent company, Admiral, the former owners of esurance.com. Compare.com began writing business in the U.S. market in 2014 with auto insurance and just recently changed its name from comparenow.com, which Rose said was unrelated to the partnership.

Rose said compare.com partnered to power the back-end of Google Compare because they thought it was a good opportunity for compare.com’s insurance company partners and would help elevate comparison sites like compare.com.

“This creates a big win for the insurance company. They can integrate with us once and then can also get Google’s traffic as well,” he said. “It was a very big decision for us to say yes we want to partner with them, but we think that the more consumers that use comparison shopping for insurance the better it will make it for us all.”

Rose says it will also help compare.com enhance and build its brand, as compare.com will be mentioned with each rate that is returned by them.

“We are going to be the brand name that consumers actively choose,” he said. “It’s a different strategy and we would rather be a part of it than not.”

Rose said it is possible that compare.com’s carriers could eventually choose to work directly with Google Compare rather than go through compare.com, but he doesn’t see that happening because, “Our current panel members value their relationship with compare.com and we value them.”

His message to agents is also one of optimism – he encourages them to work with compare.com because the company accommodates agents through its process, saying, “We know how important and powerful they are.” He says agents shouldn’t consider comparison sites a death to their business and rather find ways to work with them.

“This is a reality you are not going to be able to stop, so work with a partner that knows the insurance business and values the agency proposition,” he said.

Currently, the partnership between compare.com and Google Compare is just for auto insurance in California, but Rose says they are open to working with Google in other states when it expands, though nothing has been decided on now. Compare.com currently offers auto insurance comparison quotes in 48 states and plans to expand into homeowners and renters insurance later this year.

Rose said some of his carrier partners are taking a wait-and-see approach to the Google Compare platform and the companies that have opted to participate can change their minds at any time or just not return a rate – they are not locked in to participating. But he thinks as time goes on more carriers will become comfortable and want to take part in comparison model platforms.

“Just as with our business, it took some time to get the first five carriers and now we are on our way to four dozen. Once you start gaining momentum the insurance carriers don’t want to be left out,” he said.

Compare.com isn’t locked in to the Google Compare deal either – while they have a contract, which details cannot be disclosed, Rose said they can get out of the deal “in a reasonable period of time, like with any contract.”

He doesn’t expect that will be the case, however.

“We all have spent a lot of time and effort to make it work and are invested in it and want to see it succeed. And we did it because we want to see comparison models succeed,” he said.


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About Amy O’ Connor O’Connor is associate editor of MyNewMarkets.com. More from Amy O’ Connor

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Norman-Spencer Marine Launches TradeWinds Yacht Insurance Program

Norman-Spencer Marine Launches TradeWinds Yacht Insurance Program

The Norman-Spencer Agency, Inc.’s marine insurance services division has launched the TradeWinds Yacht Insurance Program.

According to Paul Sexton, vice president of Norman-Spencer’s marine insurance services division, the addition of the new TradeWinds yacht program will drive Norman-Spencer’s growth in boat and yacht program management.

TradeWinds will provide flexible pricing and underwriting guidelines for yachts up to $2 million; including high limits for standard coverages at no cost, and also a suite of other endorsed options.

“The new program for large yachts will greatly expand our 35-year-running AquaPac program that serves small to mid-sized vessels,” added Sexton.

Both programs provide coverage for a full spectrum of boats, from personal watercraft to large sail and power yachts. Norman-Spencer is also the endorsed consumer insurance product of the Marine Retailers Association of the Americas (MRAA). The MRAA is a national association representing boat and engine dealers and other retailers across North America.

Norman-Spencer provides insurance services to clients and insurance buyers nationwide with over 10 proprietary in-house property and casualty insurance programs covering industries including marine, construction, transportation and professional lines.

Norman-Spencer’s Marine Insurance Services division has provided marine dealers, agents and tens of thousands of boat owners and fishermen with innovative, cost-effective insurance policies for more than 30 years.


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Arthur J Gallagher Acquires Excel Insurance Metcom Excess in NJ

Arthur J Gallagher Acquires Excel Insurance Metcom Excess in NJ

Arthur J. Gallagher & Co. announced the acquisition of two New Jersey-based wholesale brokers: Excel Insurance Services Inc., located in Hamilton; and McCloskey Surplus & Excess Inc. (d/b/a Metcom Excess), located in Ridgefield Park. Terms of the transactions were not disclosed.

Established in 1999, Excel Insurance Services is a commercial property/casualty and personal lines wholesale broker that offers coverages for hard-to-place risks to its agent and broker clients throughout the Northeastern U.S. The firm specializes in the hospitality, real estate, construction and auto industries. Dennis Pellegrino, Jr. and his associates will continue to operate from their current location under the direction of Joel Cavaness, president of Risk Placement Services Inc., a subsidiary of Arthur J. Gallagher & Co.

Founded in 1979, Metcom Excess is a managing general agent and wholesale insurance broker that provides excess and surplus, property/casualty, commercial binding and brokerage, professional liability and other specialty insurance products and services to its agent and broker clients throughout the Northeastern U.S. The firm also specializes in personal lines and insurance coverages for the transportation industry. Charles McCloskey, Jr. and his colleagues will also operate from their current location under the direction of Risk Placement Services’ Cavaness.

Headquartered in Itasca, Illinois, Arthur J. Gallagher & Co. is an international insurance brokerage and risk management services firm. It has operations in 30 countries and offers client service capabilities in more than 140 countries through a network of correspondent brokers and consultants.


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Former Penn Commissioner Consedine Joins Transamerica to Lead Gov’t Affairs

Former Penn Commissioner Consedine Joins Transamerica to Lead Gov’t Affairs

Michael Consedine

Transamerica, headquartered in Baltimore, Maryland, has appointed former Pennsylvania Insurance Commissioner Michael F. Consedine as senior vice president, deputy general counsel and executive director of government affairs.

At Transamerica, Consedine will oversee all aspects of the company’s state and federal government relations.

Consedine has spent his 20-year career in the insurance industry, as a regulator, policy advisor and counsel. He served as Pennsylvania’s insurance commissioner from 2011 to 2015. Consedine served as president-elect and in other officer positions within the National Association of Insurance Commissioners (NAIC), during which time he chaired a number of NAIC committees.

Prior to his time as commissioner, Consedine was partner and vice chair of law firm Saul Ewing LLP’s Insurance Practice Group. While in private practice Consedine counseled insurance companies, reinsurers, producers, and commercial policyholders in complex insurance regulatory and corporate matters.

From 1995-1999, he was department counsel for the Pennsylvania Insurance Department, where he represented the department in litigation proceedings and on transactional filings.

Transamerica companies are providers of life insurance, savings and retirement and investment services, serving millions of customers throughout the U.S. Transamerica is part of the Netherlands-headquartered Aegon group of companies, one of the world’s largest providers of life insurance, pension services and asset management products, operating in over 25 markets worldwide with some 28,000 employees.


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Terrorists Have Shifted from Attacking Airlines to Mass Transit Study

Terrorists Have Shifted from Attacking Airlines to Mass Transit Study

Successful terrorists have shifted their focus in recent years away from attacking airlines to attacking subway and rail systems, according to an analysis of terrorist attacks over a 30-year period from 1982 to 2011 by a leading health and safety researcher.

In his study—“Has Successful Terror Gone to Ground?”—Professor Arnold Barnett of the Massachusetts Institute of Technology Sloan School of Management writes that strong, statistically significant evidence points to a growing focus of terrorist attacks against ground mass transit.

By far, the deadliest attacks against air and rail in the decade 2002−2011 were against subway and commuter rail systems, taking 200 lives apiece, Barnett says.

In a previous analysis for the period 1968 to September 10, 2001, the author concluded that air travel within the United States entailed a greater risk of a terrorist attack than “virtually any other activity.”

The latest Barnett paper with a different conclusion recently appeared in the online version of Risk Analysis, a publication of the Society for Risk Analysis.

The author notes that the statistical risk posed to travelers by criminal/terrorist acts against air and rail are minuscule, but he argues that successful acts of terror have ramifications far beyond their immediate consequences. For example, many observers believe that the Madrid commuter-train bombings in 2004 changed the outcome of the Spanish national election shortly thereafter. Barnett contends that “if terrorists give weight to demonstrated success,” then the vulnerabilities illustrated by recent rail bombings from Great Britain to Sri Lanka could be precursors to further attacks.

And because there is scant evidence that attacks on rail systems can be thwarted while in progress, the greater terrorist interest in railroads “heightens the urgency” of intercepting terror plots in advance, he writes. Barnett concludes by noting that a planned 2009 New York subway attack was thwarted by good intelligence work, not by security measures at Times Square or Grand Central Station.

In his analysis, the author excluded the 2,765 ground deaths suffered during the September 11, 2001, terrorist attack against the United States because his analysis focused on risks to air and rail passengers. He said the 9/11 casualties would have overwhelmingly dominated the analysis had they been included, raising the danger that the understandable preoccupation with the 9/11 calamity would “obscure less extreme patterns related to acts of terror.” Identifying such patterns was the main point of the article, the author notes.

Source: Risk Analysis: An International Journal is published by the nonprofit Society for Risk Analysis (www.sra.org), an international society that provides an open forum for all those who are interested in risk analysis.

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Massachusetts Official Surveys Storm Damage Along Coast

Massachusetts Official Surveys Storm Damage Along Coast

Parts of the Massachusetts coastline could face a lengthy recovery process after being pummeled by severe winter storms, the state’s top environmental official said on Feb. 27.

Secretary of Energy and Environmental Affairs Matthew Beaton was joined by local state legislators as he toured beaches in Sandwich and Barnstable on Cape Cod.

The visit came as state officials tallied up damage assessments and snow removal costs in anticipation of filing a disaster assistance request with the federal government. Some areas of Massachusetts have received more than 8 feet of snow in the past 30 days.

Dunes at Town Neck Beach in Sandwich were washed out by the first major snowstorm in late January, Beaton said in a telephone interview after last Friday’s tour. Sand was pushed into a tidal marsh and blocked the mouth of nearby Mill Creek, cutting off a vital part of the area’s ecosystem, he said.

Several homes in the town were damaged.

Sandy Neck Beach in Barnstable has also suffered significant erosion, Beaton said, threatening the main parking lot of the beach, which is a popular summer attraction.

The storms also wreaked havoc elsewhere along the coast, including damage to seawalls in Marshfield and Scituate.

“Each coastal community is facing their own challenges,” Beaton said. “Overall it’s a story of the coastline being pounded.”

It isn’t clear when Massachusetts formally planned to submit its disaster assistance request to the Federal Emergency Management Agency, which, if approved, could funnel millions of dollars to the state and its cities and towns. Many communities have already spent well beyond their budgets dealing with the storms.

Massachusetts Gov. Charlie Baker met with FEMA officials during a visit to Washington earlier in the week, and members of the state’s congressional delegation have promised to push for quick approval of any disaster request.

Beaton noted that many coastal areas face challenges from beach erosion that go well beyond the recent storms and will require long-term and potentially expensive solutions.


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MetLife to Pay Government 1235M in Mortgage Settlement

MetLife to Pay Government 1235M in Mortgage Settlement

MetLife’s home lending unit will pay $123.5 million to end an investigation into allegations it gave government-backed mortgages to people who didn’t meet federal requirements.

The Justice Department said on Feb. 25 that MetLife knew the business was issuing hundreds of loans that didn’t meet federal requirements, which means they were not eligible for insurance by the Federal Housing Authority. But MetLife granted the mortgages anyway, and the agency says the FHA and taxpayers were stuck with the bill when defaults followed.

According to the agency, during some periods between January 2009 and August 2010 MetLife Bank knew that a majority of the loans it was originating had material or significant deficiencies. While those rates improved later, it says MetLife also altered its practices so fewer mortgages appeared to be deficient.

The Justice Department says MetLife Bank’s CEO, board of directors, and other members of senior management were aware that many of the mortgages didn’t meet government standards.

The New York company says it cooperated with the investigation and set aside money for the settlement. It exited the business in 2012.

MetLife Bank was also among 16 major mortgage lenders and servicers cited by U.S. regulators in April 2011 for improperly foreclosing upon homeowners in 2009 and 2010. The Federal Reserve imposed $3.2 million in penalties against MetLife.


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