Месечни архиви: July 2015

California Executive Life Insurance Settlement Ends 16 Years of Litigation

California Executive Life Insurance Settlement Ends 16 Years of Litigation

A settlement has been reached with the last remaining defendant in a 16-year-old lawsuit brought by the California Department of Insurance that arose out of the 1991 liquidation of Executive Life Insurance Co.

The French company Artemis S.A. has agreed to pay $200 million in addition to $110 million it paid previously bringing the total recovery against all defendants to over $930 million. The National Organization of Life and Health Guaranty Associations and the California Life and Health Insurance Guarantee Association also joined in the settlement.

“This settlement agreement closes the last chapter in the long dispute between the Department of Insurance and Artemis S.A., one of the purchasers of the Executive Life Insurance Co.,” Califronia Insurance Commissioner Dave Jones said in a statement. “As a result of the Department of Insurance’s efforts with this settlement agreement the total recovery in the Executive Life Insurance litigation against all defendants is over $930 million.”

California Insurance Commissioner Dave Jones

California Insurance Commissioner Dave Jones

California-based Executive Life Insurance Co. became insolvent in 1991. The California insurance commissioner at the time, John Garamendi, solicited bidders to buy its assets, including its multibillion dollar portfolio of junk bonds as well as the insurer’s life insurance policies and annuities. In a competitive bidding process, the commissioner selected a joint bid from a consortium of French companies that included Altus S.A., a subsidiary of Credit Lyonnais, which was owned by the French government.

In winning the bid, Altus bought Executive Life’s junk bonds and its consortium partners ostensibly set up and owned a new California insurance company that took over Executive Life’s policies.

California law prohibited a foreign government from owning a California insurance company, which meant Altus, as a subsidiary of a French government-owned bank, could not legally own the new California insurer. Despite this legal prohibition Altus entered into a conspiracy and agreements with its consortium partners in which Altus owned the new insurance company, according to the Department of Insurance. The conspirators allegedly concealed Altus’ ownership and lied about it to the California Department of Insurance and the Federal Reserve Bank of New York. Artemis joined the conspiracy later.

The Department of Insurance discovered the conspiracy and sued all conspirators, which began a lengthy legal fight.

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New Hampshire Law Grants Immunity to People Who Report Overdoses

New Hampshire Law Grants Immunity to People Who Report Overdoses

As part of New Hampshire’s effort to address the ongoing drug abuse problem, Gov. Maggie Hassan has signed a bill that will spare people from criminal prosecution in certain cases if they are reporting a drug overdose.

Hassan is calling the state’s rising rate of heroin and opioid overdoses “one of the most pressing public health and safety challenges” facing New Hampshire.

Under the bill, anyone who seeks emergency medical assistance for themselves or someone else experiencing an overdose cannot be arrested or prosecuted for possession of an illegal drug. The bill is intended to encourage more people to report overdoses and potentially save lives.

The immunity bill as written will be repealed in 2018.

Hassan also signed a bill this year expanding access to naloxone, an opioid blocker.


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

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JLT Specialty USA Hires Taccetta as Executive VP in New York

JLT Specialty USA Hires Taccetta as Executive VP in New York

JLT Specialty Insurance Services Inc. (JLT Specialty USA), a U.S. subsidiary of London-based Jardine Lloyd Thompson Group plc., hired Joe Taccetta as executive vice president.

Taccetta will be based in New York where he will be part of the management team for the aerospace practice at JLT Specialty USA.

Taccetta comes to JLT Specialty USA from Global Aerospace Inc. where he served as senior vice president and practice leader for the Airlines Claims Department. Prior to joining Global Aerospace, he served as senior vice president of the Central Claims Office at United States Aviation Underwriters Inc.

JLT Specialty USA said Taccetta’s appointment comes as the company continues its strategy in expanding its core capabilities in the key industry specialty areas of aerospace, construction, energy, entertainment and hospitality, private equity, real estate and technology.

JLT Specialty USA is the U.S. platform of Jardine Lloyd Thompson Group, a provider of insurance, reinsurance and employee benefits-related advice, brokerage and associated services.


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Bunch Named an Ernst Young Gulf Coast Entrepreneur of the Year

Bunch Named an Ernst Young Gulf Coast Entrepreneur of the Year

Richard “Gordy” Bunch, founder, president and chief executive officer of The Woodlands Financial Group (TWFG) in The Woodlands, Texas, has been named an Ernst & Young Entrepreneur of the Year 2015 for the Gulf Coast area.

Bunch was announced as winner in the products and services category. The Gulf Coast awards recognize the Entrepreneur of the Year for the geographic area covered by all of Houston, South Texas, Louisiana and Mississippi.

Bunch founded The Woodlands Financial Group in The Woodlands. Today, TWFG reports $320 million in premiums, generated by more than 300 branches in 21 states with more than 3,000 additional agents affiliated with TWFG nationally. TWFG writes policies in 49 states from its headquarters in The Woodlands.

Gordy Bunch

Gordy Bunch

As the product and services Entrepreneur of the Year, Bunch and nine other category winners from the Gulf Coast region are eligible to be named National Entrepreneur of the Year at the EY “Strategic Growth Forum,” attended by some of the nation’s top corporate officers and multiple celebrities in Palm Desert, Calif., in November.

Gulf Coast area Entrepreneur of the Year awards were also recognized in the fields of Industrial & Construction Services, Energy Related Products, Transformation CEO, Health Care, Energy Services, Family Business Award, Energy, Business Services, and Technology.

Source: TWFG

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QA As Obama Health Law Survives Republicans Divided Over Next Move

QA As Obama Health Law Survives Republicans Divided Over Next Move

Having lost their latest war against President Barack Obama’s health care overhaul, Republicans must decide how to wage battles that could fan the issue for the 2016 elections.

Last month’s Supreme Court decision upholding the statute’s federal subsidies, which help millions of Americans afford health care, shattered the GOP’s best chance of forcing Obama to accept a weakening of his prized law. Without that leverage, Obama would likely veto any major changes they’d send him.

They could, however, try sending him veto-bait legislation designed to show voters how they’d reshape the nation’s health care system — if only Republicans could agree on what to do.

With the GOP-run Congress back from a July 4 break, here’s a look at their problematic path:

Q: Republicans say they want to repeal and replace the health care law, but how would they revamp it?

A: The House has voted over 50 times to repeal all or part of the law. Yet five years after enactment, Republicans have yet to rally behind a replacement plan.

Several GOP lawmakers have introduced bills or vaguely described what they’d prefer. Details vary, but Republicans generally want to weaken federal coverage requirements, such as which procedures must be insured, and give more flexibility to the states. Many also want to cancel the law’s requirements that people get policies and that many employers offer coverage to workers — moves Democrats say would wreak havoc on insurance markets and leave millions without coverage.

Q: What’s preventing Republicans from coalescing behind one plan?

A: Republican lawmakers face varying political imperatives back home.

Some from strong GOP areas need to worry about satisfying deeply conservative voters, who despise Obama’s law. Others from closely divided states don’t want to abolish parts of the statute — like its subsidies and other consumer safeguards — that help millions of voters.

And that’s just the congressional races. The campaign for the GOP presidential nomination adds more complications.

Several hopefuls are senators and might use the health care issue to distinguish themselves from competitors — perhaps making them less inclined to heed party leaders and back a consensus plan. And the eventual GOP presidential candidate will likely offer his or her own plan, leaving some congressional Republicans wondering why they’d push a proposal their own nominee’s would overshadow.

Republicans also face thorny decisions about their proposals. How far would the measure go? How much would it cost, and crucially, how would they pay for it?

Q: Can Republicans even get a replacement to Obama’s desk?

A: That’s unclear. House Speaker John Boehner, R-Ohio, would not commit recently to holding a House vote this year on a GOP alternative.

The Senate presents an additional problem. Republicans have 54 of the chamber’s 100 seats, and Democrats might kill any GOP plan by filibuster — procedural delays that can derail legislation lacking 60 votes.

Q: Can Republicans get around that?

A: Potentially.

The Senate can use a streamlined process called reconciliation that prevents filibusters. It would let Republicans pass something with a simple majority of Senate votes.

So far, they’ve not decided whether to use the accelerated process for a broad health overhaul that Obama would definitely veto, or a narrower bill drawing some bipartisan support that he might sign, like repealing the law’s taxes on high-cost insurance and medical devices.

Or they might use it for a different issue, like deficit reduction or a tax overhaul.

Q: Why not use it to repeal the entire health law?

A: This procedure comes with show-stopping restrictions.

Most significantly, bills using the process must reduce the deficit.

Unfortunately for Republicans, the nonpartisan Congressional Budget Office last month projected that repealing Obama’s law would increase deficits by at least $137 billion over the coming decade.

That’s because the law’s subsidies for lower-earning people, expanded Medicaid coverage and other spending increases are outweighed by its savings. Those include cutting Medicare payments to providers, collecting fees from the pharmaceutical and other health-care industries and raising taxes on higher-income people and others.

That means that to repeal the entire law using the reconciliation process, Republicans would have to find over $137 billion in savings — a major challenge.

Q: Can’t they use this streamlined process to simply repeal pieces of the law they oppose?

A: Yes, but that’s also problematic.

Republicans could eliminate the law’s subsidies and expansion of Medicaid. That would save money, but also throw millions of Americans off insurance unless the bill also offered alternative aid.

Repealing the mandates for individual and employer-provided coverage — a favorite GOP goal — would cost money because the government collects fines from people and companies who disobey those requirements. Once again, these rules require the bill to reduce the deficit, not increase it.

Do Republicans repeal the law’s tax increases? Most would want to, but that would make it harder for their bill to reduce the deficit.

The reconciliation process also forbids provisions not directly aimed at deficit reduction. That could preclude language sought by many Republicans restricting abortion coverage or allowing health insurance sales across state lines.


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

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Spate of Climate Change Reports Ahead of Global Summit

Spate of Climate Change Reports Ahead of Global Summit

Ahead of December’s big and much-talked about United Nations Climate Change Conference, COP21 or CMP11, it seems there’s been an information ramp up of sorts.

I’m not just talking about Pope Francis’ crusade to call attention to climate change – he most recently said humanity’s reckless behavior has pushed the planet to a breaking point, and that Earth is beginning to resemble an “immense pile of filth” – or actor Robert Redford’s recent appeal to U.N. ambassadors.

Beyond the catchy headlines and big names, the pace of reports and studies on climate change seems to have accelerated recently.

Last month Lloyd’s of London produced a stark report, “Food System Shock: The Insurance Impacts of Acute Disruption to Global Food Supply,” which refers a great deal to the potential impact of climate change.

The report states that a shock to the global food supply could trigger significant claims across multiple lines of insurance – terrorism and political violence, political risk, business interruption, marine and aviation, agriculture, product liability.

While there are other factors outlined in the report that may contribute to this global food system shock, climate change is thrown out there as a big question mark, and a possible exacerbating element.

“Although there is a large amount of uncertainty about exactly how climate change might impact world food production over the coming decades, there is general consensus that the overall effect will be negative,” the report states. “Increases in the intensity and frequency of extreme weather events such as floods, droughts and wildfires, coupled with a rise in conditions amenable to the spread and persistence of agricultural pests and diseases, are expected to have a destabilising effect on world food production. This is further exacerbated by the growing issue of water scarcity, which is accelerating at such a pace that two-thirds of the world’s population could live under water stress conditions by 2025.”

More on that report at another time.

Swiss Re has been big on climate change reports.

One of its latest reports, “Natural catastrophes and man-made disasters in 2014: convective and winter storms generate most losses,” focuses on the 189 natural catastrophes last year and notes that number of victims of disaster events in 2014 was one of the lowest recorded.

This is despite the number of natural catastrophes being the highest in a single year.

The report attributed the minimal victim total to improvements in early warning systems and emergency preparedness, and resilience measures.

“Progress in local prevention and mitigation measures to strengthen resilience will be a key variable in total victim numbers in the future, especially if climate change leads to more frequent natural catastrophe events,” the report states.

Beyond insurance-related reports there have been numerous documents, papers, and authorities weighing in on climate change.

A paper just out on Australia’s defense system, “The Longest Conflict: Australia’s Climate Security Challenge,” flags the consequences of environmental pressures as a significant security risk for the country. The report cites the consequences of climate change, extreme weather events and environmental pressures as a security risk for Australia that is second only to the risks of terrorism.

A report from the Nippon Foundation, “Predicting Future Oceans: Climate Change, Oceans & Fisheries,” suggests that world’s future seafood supply will be “substantially altered” by climate change, overfishing and habitat destruction if no actions are taken.

The U.S. Environmental Protection Agency released a report quantifying the economic, health and environmental benefits of reducing global carbon pollution. “Climate Change in the United States: Benefits of Global Action,” offers two futures: one with “significant global action on climate change,” and one without.

The report shows that in the former scenario a savings of up to $7 billion dollars annually by 2100 in the U.S. could be realized in road maintenance alone. In a future without greenhouse gas reductions, estimated damages from sea-level rise and storm surge to coastal property in the lower 48 states will be an estimated $5 trillion dollars through 2100, according to the report.

As reports go, most have of course been fairly dire – this makes for good reading and helps sell whatever point the authors wish to make – but one of the most dreadful outlooks was recently delivered by Nafeez Ahmed, an international security scholar, who points to the risks of civilization’s collapse by 2040.

Fittingly for the topic of global warming, Ahmed, the author of several controversial books, has had his credibility often attacked, some even calling his past assertions “half baked.”

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RIC in California Names Gans Chief Operating Officer

RIC in California Names Gans Chief Operating Officer

Santa Rosa, Calif.-based RIC Insurance General Agency Inc. has named Jeff Gans chief operating officer.

Gans reports to Gary Kitchen, president and CEO.

Gans joined RIC in February 2015 as vice president of business development.

He was previously with Capital Insurance Group as president of Nevada Capital Insurance Co. Before that he was senior vice president of Employers Insurance Group, senior vice president of Aon, senior vice president of CNA, vice president of general liability and umbrella at USF&G and vice president of diversified risk at Fireman’s Fund.

RIC is a wholesale insurance agency providing products to nine states.

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NYC Legislators Seek to Put Limits on Rideshare Vehicles During Study

NYC Legislators Seek to Put Limits on Rideshare Vehicles During Study

Staff and drivers for ride-hailing company Uber gathered outside City Hall on Tuesday, June 30, to protest legislation that would put limits on for-hire vehicles while the city conducts a study on whether the sharp growth of the industry has an impact on traffic congestion.

Such a cap would stifle Uber’s growth in the nation’s largest city and cost the city nearly 10,000 jobs, company representative Matthew Wing said.

The bill, introduced by Democratic Councilman Ydanis Rodriguez, would temporarily cap the number of for-hire vehicle licenses issued in the city while the Taxi and Limousine Commission, the Department of Transportation and the Department of Environmental Protection study the impact of the growth of the e-hail industry.

According to Rodriguez’s testimony, the number of e-hail taxis, or black cars, on the city’s roads has nearly tripled in the last 18 months.

Uber has said it plans to add 10,000 drivers in the city by the end of the year, but that growth would be hindered because the cap would most impact Uber’s bases, resulting in only an additional 200 vehicles. Uber didn’t say how many drivers there are but said it has more than 18,000 cars in service.

The taxi commission’s chair, Meera Joshi, said at the hearing that city planners should be able to study congestion without adding to it in the meantime. She said the cap is necessary to establish a baseline.

Uber’s policy manager, Michael Allegretti, took issue with the city’s approach, saying that the focus shouldn’t be just on for-hire vehicles but the entire traffic picture of the city and that the study could be completed with existing models and data without capping the number of licenses.

“The point of the legislation, to be clear, is to make the for-hire industry mirror the yellow taxi industry,” Allegretti said. “To make people who are small business owners become shift workers.”

Uber doesn’t consider its drivers employees but rather driver partners, who are their own small-business owners.

Rebecca Walls, spokeswoman for the Who’s Driving You? campaign of the Taxicab, Limousine & Paratransit Association, said everyone else already has caps and regulations implemented.

“Right now, Uber has free rein,” she said.

Rodriguez said that the city wants to continue to support the thriving industry but Uber and the drivers have to adhere to the same rules as everybody else.

“They will not be able to get everything they want at this moment,” he said.

Rodriguez may face some opposition to the bill from other council members.

Democratic Councilman Robert Cornegy, who represents parts of Brooklyn, said in his written testimony that a thriving for-hire vehicle industry has had great benefit for people in his Bedford-Stuyvesant and Crown Heights communities. He said the Federal Trade Commission has weighed in on similar proposals in other jurisdictions and counseled against imposing limits.


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

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Vermont Issues Bulletin on Price Optimization in Personal Lines Ratemaking

Vermont Issues Bulletin on Price Optimization in Personal Lines Ratemaking

Vermont regulators issued a bulletin last week addressing the issue of “price optimization” in personal lines ratemaking.

The Vermont Department of Financial Regulation (DFR) noted in the bulletin that some property/casualty insurers have been relying upon the practice of price optimization to help determine the premiums that they will charge to policyholders.

But DFR warned property/casualty insurers that adjustments to rates may not be based on non-risk-related factors and that going forward, all personal lines rate filings must disclose whether the company uses non-risk-related factors such as “price elasticity of demand.”

The DFR Insurance Bulletin No. 186 was issued on June 24 and is applicable for all property/casualty insurers issuing personal lines policies in Vermont.

DFR also noted that the National Association of Insurance Commissioners’ (NAIC) Casualty Actuarial and Statistical (C) Task Force is currently in the process of drafting a “white paper” analyzing price optimization and its use in insurance ratemaking.

“While there is no universally-accepted definition of price optimization, the practice, in some of its applications, involves the judgmental use of factors not specifically related to a policyholder’s risk profile to help determine or adjust his or her insurance premium,” the bulletin said.

“An example would be using an individual policyholder’s response to previous premium increases to determine how much of a premium increase the policyholder will tolerate at renewal before engaging in comparison shopping or switching to a different insurer,” the bulletin said. “This practice can result in two policyholders receiving different premium increases even though they have the same loss history and risk profile.”

DFR reminded property/casualty insurers doing business in Vermont that all ratemaking must conform to the statutory requirements contained in Chapter 128 of Title 8 V.S.A.

“Specifically, insurers are reminded that, under Section 4685(d) of Title 8, unfair discrimination is considered to exist if price differentials ‘fail to reflect equitably the differences in expected losses and expenses’ for different classes of policyholders,” the bulletin noted. “In classifying policyholder risks for ratemaking purposes, insurers are allowed to use rating plans ‘which provide for recognition of probable variations in hazards, expenses, or both.’”

DFR pointed out that both base rates and rating classes must be based on factors specifically related to an insurer’s expected losses and expenses.

And while insurers may employ judgment in setting their rates, judgmental adjustments to a rate may not be based on non-risk-related factors such as price elasticity of demand, which seek to predict how much of a price hike a policyholder will tolerate before switching to a different insurer, DFR noted.

“The use of such factors not only unfairly discriminates between policyholders of the same risk profile, but is also directly in conflict with the statutory principles that underlie Vermont’s ‘open and competitive’ property and casualty marketplace,” the bulletin said.

DFR said it recognizes that not all insurers have adopted the practice of price optimization. DFR also said that to help identify the possible use of inappropriate rating factors, insurers are directed that henceforth all personal lines rate filings must disclose on the SERFF general information page whether the company uses non-risk-related factors such as price elasticity of demand to help determine the insured’s final premium.

Rate filings currently under review by DFR should be amended to disclose this information, the bulletin said. The authority for this requirement is contained in 8 V.S.A. § 4688(a)’s language that “every insurer shall file with the commissioner all rates and supplementary rate information, and supporting information which are to be used in this state.”

Several other states including Florida, Maryland, Ohio and California have addressed the practice of price optimization in recent months.

Consumer advocacy groups the Consumer Federation of America (CFA) and the Center for Economic Justice (CEJ) issued a statement Thursday applauding Vermont DFR Commissioner Susan L. Donegan for the action and called on all insurance commissioners around the country to prohibit price optimization.

“Most Americans are required by law to buy auto insurance and by their mortgage company to buy homeowners insurance, and it is terribly unfair and entirely illegal for insurance companies to vary premiums based on whether or not they are statistically likely to shop around,” said J. Robert Hunter, director of insurance for CFA and former Texas insurance commissioner. “It is the obligation of insurance commissioners to protect consumers from this kind of price gouging, and we applaud Commissioner Donegan for her action.”


Florida Bans Price Optimization; Insurers Question Definition
New York DFS Opens Inquiry Into Price Optimization
California Commissioner Tells Insurers to Cease Price Optimization
Ohio Insurance Director Warns Insurers Against Use of Price Optimization
Maryland Insurers Using ‘Price Optimization’ Ordered to File Corrective Action Plan

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Cummins Named Exec Director of IICF – Midwest Division

Cummins Named Exec Director of IICF – Midwest Division

Mary Cummins has been tapped to lead the Insurance Industry Charitable Foundation – Midwest Division. Cummins will serve as the group’s new executive director and will be instrumental in charting and implementing the future growth of the Midwest Division and the Ohio Chapter.

Cummins reports directly to Bill Ross as an IICF employee. She is directly responsible for all aspects of the division, including the development of plans/strategies, board relationships and all operations of the division.

Cummins brings to the Foundation a strong marketing and events background having worked in profit and non-profit environments.

Source: IICF – Midwest Division

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