SYNOPSIS ALL INDUSTRY CONFERENCE CALL August 1, 2012

If there is a subject you would like to see addressed on Wednesday, August 8, please email Mike Barry at michaelb@iii.org.

 

Despite the severe drought that is destroying crops across the midsection of the U.S., many farmers will not face significant declines in income because of crop insurance and record prices for corn and soybeans, the Wall Street Journal reported (subscription required). Economists do not expect the income of commodity farmers to fall greatly and predict that one of the strongest sectors of the U.S. economy will remain stable. Joseph Glauber, chief economist for the U.S. Department of Agriculture, said that most growers will be able to manage the losses.

 

The Smart Money piece, which was written by AnnaMaria Andriotis, was posted on July 30. The 10 things include: consumers are usually given their generic FICO score, not their true one; more and more large lenders create their own custom scores using data from the three major bureaus (Equifax, Experian and TransUnion); and the power of credit scores can be more important than most people think, influencing decisions about mortgages, renting, and homeowners and auto insurance. In the case of insurance, credit-based insurance scores help determine whether clients are approved and what they are charged. The I.I.I. was quoted in the piece, saying that insurers use a variety of information to determine coverage and premiums, adding that they consider only those items from credit reports that are relevant to insurance loss potential.

FOX/INSURE.COM STORY ON PROPOSED BILL TO ELIMINATE CREDIT SCORES USED BY INSURERS.

Fox Business News.com published an article from Insurance.com, Credit Scores and Car Insurance: If You Don’t Succeed, Try Again which notes that three congressmen recently proposed a bill that would ban the use of credit-based insurance scores by auto insurers when determining rates. The bill, H.R. 6129, titled the Ban the Use of Credit Scores in Auto Insurance Act, would amend the Fair Credit Reporting Act so that reports on consumer credit cannot be used in the underwriting process. It was sponsored by Reps. Hansen Clarke (D-Mich.), John Conyers Jr. (D-Mich.) and Bennie Thompson (D-Miss.) and was referred to the U.S. House of Representatives’ Financial Services Committee. “The cost of insurance for everyday people is simply too high,” Clarke said in a July 16 post on his Facebook page. “We have to end insurance rating factors that are unfair. Companies penalizing citizens for their credit score and other ‘redlining’ practices must end.”

The Wall Street Journal’s(subscription required) Leslie Scism and Serena Ng reported that AIG has agreed to pay Hartford Financial Services Group Inc. as much as $90 million for Woodbury Financial Services, an independent broker-dealer based in Minnesota. The deal is part of Hartford’s plan to respond to pressure from some shareholders by divesting itself of numerous businesses. The acquisition of Woodbury, which has approximately 1,400 financial advisers, is the first for SunAmerica Financial Group, AIG’s domestic life and retirement services division, since the financial crisis. Hartford Chief Executive Liam McGee said that Hartford will also receive a $25 million dividend from the Woodbury unit, bringing the total proceeds to as much as $115 million when the deal is made final before the end of the year.

 

Karen Blumenthal, who writes the Getting Going column for the Wall Street Journal (214-503-6348; email: blumenthal.karen@gmail.com) is doing a piece on insurance claims and deductibles based on a new report from the Texas Office of Public Insurance Counsel that says that the longer consumers stay with an insurance company, the more likely they are to be overcharged….USA Today’s Jayne O’Donnell (703-854-5330; email: jodonnell@usatoday.com), is doing a story on salvaged vehicles….Elizabeth Ody, a freelancer for Barron’s (718-436-0634; elizabeth.ody@gmail.com) is working on a story regarding private placement life insurance….Bonnie Rubin with the Chicago Tribune is doing a story on homeowners liability insurance and backyard swimming pools….Mark Ruquet of the National Underwriter (mruquet@sbmedia.com; 201-526-1241) is looking for the industry’s perspective on the new quarterly numbers that came out from CIAB….Amy Wadas with WCPO-TV in Cincinnati (amy.wadas@wcpo.com) is doing a story on public adjusters in light of a couple that was scammed after a tornado where the public adjuster charged them a fee equal to 50 percent of their claim proceeds. The I.I.I. provided tips when dealing with public adjusters: what to look for, what the cost typically is….Michael Diamond with the Asbury Park Press (MDiamond@njpressmedia.com) is doing a story on the one-year anniversary of Hurricane Irene and the insurance impact on New Jersey….Chris Kissell (kissellchris@yahoo.com is doing a story for Bankrate.com on uninsured/underinsured drivers….Terry Sheridan from Bankrate.com (teresher@gmail.com) is doing a story on winter storms, looking at slip-and-falls and roof damage. 

 

Summer is a big season for travel, especially with the Olympics going on so the topic of travel insurance is trending this week. Insurance agents and consumer groups are tweeting and blogging about the importance of having travel insurance with the I.I.I.’s press release from last week being used as a resource for tips and information.

 

Home evacuation is another topic  popping up in online conversations this week in the aftermath of the Colorado wildfires and the continuation of hurricane season. Insurance organizations and journalists are sharing ways to prepare yourself and your home in case you have to evacuate. I.I.I. resources on this topic are being cited.  

Judge Reggie Walton of U.S. District Court in Washington, D.C., overturned the stricter water quality standards issued by the Environmental Protection Agency (EPA) last year that were intended to limit environmental damage from surface coal mines in Appalachia, according to a Wall Street Journal story on July 31. The mining industry has been challenging the Obama administration’s efforts to restrict mountain removal, a mining approach involving the blasting of mountains to extract coal and pushing large amounts of rock and soil into streams. The National Mining Association opposed the new limits set by the EPA on the amount of minerals that can be deposited in streams from surface mining, contending that the agency had overstepped its authority by avoiding the federal government’s formal rule making process. Judge Walton also ruled that the EPA had infringed on the authority granted to states under the Clean Water Act and the Surface Mining and Reclamation Act.

 

The Chevron Corporation failed to persuade a federal judge in New York to find an $18.2 billion judgment by an Ecuadorean court unenforceable, but the judge left an injunction against the award in place pending further litigation. The story was reported by Bloomberg News and picked up by The New York Times on July 31. The judge, Lewis A. Kaplan of United States District Court in Manhattan, declined to rule on Chevron’s request, saying it remained to be seen whether the judgment was based on fraudulent evidence. The oil company is suing lawyers for Ecuadorean plaintiffs who claim Chevron is responsible for pollution in the Amazon rain forest, contending that they fabricated evidence in the case in violation of racketeering laws. Judge Kaplan said the questions still to be resolved included whether the judgment was enforceable under New York law. As part of his ruling, Judge Kaplan found an expert report recommending billions in damages against Chevron was potentially fraudulent.

The Sun-Sentinel’s Julie Patel is leaving the paper to be a stay-at-home mom. Today is her last day. Starting Wednesday, August 1, please send news tips to Assistant Business News Editor Michael Cumella at mcumella@tribune.com and press releases and announcements to business reporter assistant, Cindy Kent, at ckent@tribune.com.

 

Proponents of California’s Proposition 33—a voter initiative that would allow motorists who change insurers to continue to receive the loyalty discounts they got from their former insurance company—have filed a lawsuit accusing the state attorney general and their opponents of submitting inaccurate language for the official ballot pamphlet. This was reported by the Los Angeles Times’ Marc Lifsher. The language in question is the use of “to set prices” in the phrase “to allow insurance companies to set prices,” with proponents of the initiative saying that the term has negative connotations related to illegal price fixing. Opponents of the initiative argue that Proposition 33 would hurt low-income and new drivers by making first-time insurance coverage more expensive. The auto insurer Mercury General is a major financial backer of the proposition.

 

A Capital Public Radio segment, Not Much Money in This Year’s Calif. Budget to Fight Fires warns that this year’s California state budget only set aside $93 million to cover the costs of fighting wildfires. Only once in the last five years has the state spent this little, and in some years it has had to spend three or four times that much.

 

Seeking to bolster the nation’s dangerously depleted aerial firefighting fleet, a group of U.S. senators is pressing new legislation to shift 14 aircraft unwanted by the Pentagon to the U.S. Forest Service. According to this July 27, Riverside Press Enterprise article, the U.S. Forest Service would acquire 14 tanker aircraft in a transfer from the U.S. Air Force if the plan put forth by a group of senators is approved. In the last decade, the U.S. Forest Service’s fleet of tankers has dropped to nine from 44 as a result of crashes or grounding.

 

 

Farmers Insurance said on July 30 that it plans to drop coverage on more than 2,900 properties in Mobile and Baldwin counties that it considers rentals. Also on Monday, The Farmers Insurance Exchanges said that it would raise rates statewide, though the cost of some policies will decrease, it was reported in the Press-Register.

 

Starting August 1, Alabama becomes the 38th state with a law banning texting and driving, according to the Press-Register.The fines are not steep—$25 for a first offense, $50 for a second, and $75 for a third—however it also includes two penalty points on your driver’s license and a possible auto insurance hike.

The Missouri Supreme Court struck down a $350,000 limit on jury awards for “pain and suffering” in medical malpractice cases, saying the law violates a patient’s right to a jury trial. According to the article, which was published on August 1 in the St. Louis Dispatch, the cap on malpractice awards was established by a 2005 state law that was championed by Republicans as part of a tort reform push. In a 4-3 decision, the court said the cap “infringes on the jury’s constitutionally protected purpose of determining the amount of damages sustained by an injured party,” in cases involving medical errors. The case stemmed from a lawsuit filed by Deborah Watts of Springfield, Missouri, whose son, Naython, was born with catastrophic brain injuries at Cox South Hospital in 2006 after a delay in receiving an emergency C-section. A Greene County jury last year awarded Watts nearly $5 million, which was then reduced under the law. The high court decision “ensures that Naython will receive the benefit of the jury’s award for future medical care,” according to the ruling written by Chief Justice Richard B. Teitelman.

The Daily, a tablet-only publication introduced with much fanfare last year by Rupert Murdoch of the News Corporation and the Apple executive Eddy Cue, said Tuesday it would lay-off almost one-third of its 170 full-time staff members, according to an article in yesterday’s New York Times. The cutbacks will mostly affect the publication’s sports and opinion sections, which see the lightest traffic. The Daily will no longer have a stand-alone opinion section and will get its sports coverage from partners like Fox News, according to a memo sent to the staff. Last year, The Daily ranked third among the highest-grossing paid apps, behind Angry Birds and Smurfs’ Village, according to Apple. But it did not bring in the attention or advertising dollars needed to elevate it to the level of more established brands.

 

The I.I.I. is cited regularly in the media as an authoritative source of insurance information. To access the current I.I.I. press clips, click here

 

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