SYNOPSIS ALL INDUSTRY CONFERENCE CALL December 16, 2009

State Farm Florida (see attached press release) and the Florida Office of Insurance Regulation (OIR) announced on Wednesday, December 16, that they had reached a settlement, following months of discussions over State Farm Florida’s January 2009 plan to withdraw from the state’s residential property insurance market. The resulting Consent Order, which replaces the OIR’s conditional approval of State Farm Florida’s filing to withdraw from the Florida property insurance market, establishes a plan for State Farm Florida to non-renew 125,000 of its more than 810,000 property insurance policies. It also provides for the implementation of a base rate increase of 14.8 percent on homeowners and condominium unit owners policies. The I.I.I.’s Robert Hartwig was interviewed for this Wednesday, December 16, Bloomberg news wire story on the issue.

The U.S. Labor Department found in its latest consumer price index (CPI) survey that auto insurance premiums are up 4.5 percent (November 2008-November 2009), with hospital services remaining the biggest apparent cost driver (a 7.7 percent year-to-year increase over this same time period). 

Colorado State University and Tropical Storm Risk (TSR) offered this month their initial looks at the 2010 hurricane season. The I.I.I.’s Claire Wilkinson offered an analysis of their forecasts in her Monday, December 14, Terms + Conditions blog entry.

The details are in this Wednesday, December 16, NICB press release.

Owing to the ongoing legislative and media scrutiny of its Hurricane Ike claims-handling, TWIA has set aside $300,000 for PR/Media Services expenditures next year. TWIA has spent $142,000 year-to-date for these services, which are coordinated through Elizabeth Christian & Associates Public Relations in Austin, Texas.

TWIA general manager Jim Oliver sent a letter to state lawmakers on the Windstorm Insurance Legislative Oversight Committee regarding the attorney fees which may arise out of lawsuits filed against TWIA by Houston attorney Steve Mostyn. The Houston Chronicle summarized the letter’s contents as well as Mr. Mostyn’s response on Friday, December 11.

Wall Street Journal editorial board critiques proposed expansion of Federal Trade Commission (FTC):

One of the least-noticed provisions in the U.S. House’s financial regulatory reform package was a measure that would strengthen the FTC and greatly expand its mission, allowing the agency to impose civil penalties on first-time offenders, create new rules more easily and litigate civil penalty cases without going through the Department of Justice, the WSJ’s editors believe. This Tuesday, December 15, WSJ editorial (subscription required) argues that the proposal to create a more activist regulatory model, like the Securities and Exchange Commission (SEC), is not necessary because the FTC already has the authority to sanction repeat offenders and, in fraud cases, to get an order from a judge tying up assets, making civil penalties redundant.
 

The Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173) passed the U.S. House of Representatives, 223-202, and Representative Paul Kanjorski (D-Pennsylvania), chairman of the U.S. House’s Financial Services Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises, specifically mentioned FIO’s inclusion in the legislation in this press release (see fourth paragraph).

The National Flood Insurance Program (NFIP) would be extended through February 28, 2010, as part of the Fiscal Year 2010 Defense Appropriations Bill, a Tuesday, December 15, House Appropriations Committee memo indicated.

GL Homes “agreed to make repairs at no cost, installing new drywall after tearing the home’s interior down to the studs,” reporter Paul Owers writes, in a South Florida Sun-Sentinel story published on Tuesday, December 15. Twenty-nine Florida homeowners have benefited to date from GL Homes’ decision, the article states.

Coach Sean Payton has become the lead plaintiff in a class-action lawsuit against Knauf Plasterboard Tainjin Company Limited (KPT), the Chinese drywall manufacturer whose products are believed to be corroding homes and making people sick, a Friday, December 11, Times-Picayune story reports. The suit was filed on Wednesday, December 9, in U.S. District Court in New Orleans. About 2,100 plaintiffs signed up to be included in the litigation but another 600 were too late to join the suit, according to the article. Attorney Daniel Becnel, Jr. said Payton was picked to be the lead plaintiff because the coach was among the first people in Louisiana to link reports about the drywall to electrical equipment failing in his home and to his family becoming ill.

Michigan’s Office of Financial and Insurance Regulation (OFIR) held a Wednesday, December 16, public hearing in Lansing to receive public comments on a “proposed rule set that requires any insurance policy clause that authorizes an independent medical examination to include minimum standards for physicians and health professionals conducting exams. It also prohibits any clause in an insurance policy to assess examination related costs to the person being examined.” The rules are to take effect in May 2010.

Detroit Free Press op-ed says “auto insurance reform is within reach:”

Michigan state Representative Barb Byrum (D-Onondaga), who chairs the state’s House Committee on Insurance, and Melvin Butch Hollowell, Michigan’s automobile and home insurance consumer advocate, co-wrote this Sunday, December 13, editorial. The piece’s opening sentence: “Michigan’s auto insurance companies get preferential treatment over consumers and other businesses.” Representative Byrum touted the House’s passage of various auto insurance reform bills in this Wednesday, December 16, press release.

Bloomberg News prepping piece on U.S. insurer losses due to hurricanes; Albany Times-Union looking at private mortgage insurance (PMI):

London-based Bloomberg News reporter Kevin Crowley is researching an article about Atlantic weather patterns and insured losses due to hurricanes dating back to the 1940s. Meanwhile, Kristi Gustafson (kgustafson@TimesUnion.com) is preparing a look at PMI (what it is, who buys the product, and why) for the Sunday, December 20, edition of the Albany (NY) Times Union. 

California’s insurance commissioner to contribute $15 million of his own money to 2010 gubernatorial campaign:

Commissioner Steven Poizner, one of three candidates in the state’s June 2010 Republican gubernatorial primary, has decided to give himself a financial boost, the Associated Press reports.

The New Orleans Times-Picayune talked about some of the insurance repercussions of the city’s heavy rainfall in this Tuesday, December 15, article, which quotes Insurance Commissioner James Donelon.

John Wortman, CEO of Louisiana Citizens Property Insurance Corporation, disputed the Commission on Streamlining Government’s assertion that abolishing Citizens would save Louisiana money in a Wednesday, December 9, Shreveport Times story (see paragraphs 8 and 9).

In an interview withThe (Pascagoula) Mississippi Press, Commissioner Mike Chaney defended his recent decision to grant State Farm a 19.5 percent premium rate increase in the state’s three coastal counties. The commissioner points out that State Farm originally sought a 45 percent premium rate hike, and that 26,000 State Farm policies could have been non-renewed on the Gulf Coast with no other private insurer willing to write coverage for these homeowners. Chaney also told the Press a public hearing on Allstate’s request for a 65 percent premium rate increase for some of its Mississippi homeowners policies could be held early next year.

Installed on NASA’s orbiting Aqua spacecraft, the New York Times reported in its Wednesday, December 16, edition that AIRS has provided a large amount of valuable data to meteorologists on the movement of carbon dioxide in the atmosphere. AIRS records infrared emissions across the globe twice a day to measure temperature and cloud cover while also showing the levels of carbon dioxide, methane, ozone and other gases in the atmosphere between three and seven miles above the earth’s surface.