SYNOPSIS ALL INDUSTRY CONFERENCE CALL December 7, 2011

To recap the issues raised during Wednesday’s conference call, here are some of the key media stories, and the messages we’re conveying.

 

If there is a subject you would like to see addressed on Wednesday, December 14, please email Mike Barry at Michaelb@iii.org

 

The I.I.I. developed a presentation regarding the U.S. Labor Department’s Bureau of Labor Statistics (BLS) recently published detailed data as of October 2011 on insurance industry employment. The I.I.I. slides show employment trends for property/casualty (P/C), life and health insurers, reinsurers, agents and brokers, claims adjusters and third party administrators. In October, employment at insurance carriers rose overall, but employment at carriers in various segments of the insurance industry differed. Employment at property/casualty insurers was down 900 (-0.2 percent). Life insurer employment was up by 1,400, a rise of 0.4 percent vs. September. The presentation, including updated multi-decade trend data and full commentary are posted on the I.I.I. website.

 

Bob Hartwig will be testifying in Montgomery, Alabama, before the Governor’s Commission on Affordable Homeowners Insurance on Monday, December 12. His presentation will be posted at that time.  

 

A new personal lines presentation, Is the World Becoming a Riskier Place?  Economic Overview and Commercial Lines Outlook for 2012 & Beyond,was posted on the I.I.I. website.

 

The I.I.I. issued a press release which indicates that Florida drivers are expected to pay a cumulative “fraud tax” of more than $650 million this year because of widespread criminal activity in, and abuse of, the state’s no-fault insurance system. The I.I.I. also developed an article, Understanding Your Deductible.

 

Steven Ruby, an assistant U.S. attorney for the Southern District of West Virginia, said that under the terms of the settlement, the families of the men killed and miners who were injured will receive $46.5 million from Alpha, but not Massey Energy, the subsidiary that operated the mine, according to this Tuesday, December 6, New York Times article. Massey Energy executives will be protected from criminal prosecution. Many of the families of the victims wanted to see those who were responsible for the decisions made by Massey to face criminal charges for the worst mining disaster in the U.S. in 40 years. A review by federal authorities found that the mine’s operators placed their workers at risk knowingly. 

 

USA Today’s Adam Belz reported in this December 6 article that auto repair shops are increasing the pressure in their disputes with insurance companies, who they contend are controlling the prices of auto repairs by steering policyholders toward shops that cooperate with insurers. The auto repair industry is supporting bills in state legislatures from Massachusetts to Iowa that would limit the influence of insurance companies on the prices charged by repair shops. Although laws and prices vary by states, repair shops complain that they lose business if they do not charge what insurance companies decide is appropriate, decisions that sometimes steer policyholders to shops that use substandard parts. Insurance companies say that they pay for thousands of vehicle repairs each year and save money for consumers by determining which repair shops can do the best work at the lowest cost. Lawmakers in Iowa considered three bills involving auto insurance and repair prices, but none of the measures was approved. 

 

The influence of the insurance industry on lending terms is already making credit more widely available and more affordable, according to this December 7, Wall Street Journal article (subscription required). Members of the property industry warn that insurance companies will not replace traditional lenders and that credit will continue to be difficult to obtain for an extended period. According to estimates from CB Richard Ellis, a property services company, insurance companies will represent approximately 20 percent of the lending market next year. The insurance industry has played a prominent role in the global real estate market for many years and now underwrites approximately 30 percent of commercial property deals in the U.S., but insurance companies have not been major players in Europe’s real estate market since the 1980s.

 

Erik Holm’s article in the Wall Street Journal Online December 7 (subscription required), said that after several years of difficulty, the commercial insurance market is now showing new strength. Terms + Conditions’ Claire Wilkinson blogged that according to the latest analysis from online insurance exchange MarketScout, after six years and eight months the soft market cycle is finally over. MarketScout reported that the composite rate for U.S. based property/casualty insurance was up 1 percent in November 2011. Ms. Wilkinson also noted that a benchmarking survey from Marsh Inc. found that nearly half of all U.S. property insurance renewals in the fourth quarter to-date have experienced rate increases.

 

Business Insurance awards spotlighted 25 women who are doing outstanding work in commercial insurance, reinsurance, risk management, employee benefits and related fields, such as law and consulting. Gloria Steinem, the famed writer, lecturer, editor and feminist activist was the keynote.

The symposium was featured in the Dallas Morning News and Politico.com. EVP of Public Policy, Joan Woodward, is quoted on how access to capital is challenging small business owners, even in business friendly states like Texas. Small businesses create two-thirds of net new jobs but carry an unreasonable share of regulatory burdens compared with larger ones, according to a research report by the institute.

The McKinsey report, sponsored by the Insurance Industry Charitable Foundation, shows that in 2010 the insurance industry gave more than $500 million to charity. Most of this giving was in the form of direct cash contributions from companies (80 percent); the remaining 20 percent includes estimated employee donations of cash or volunteer hours. This level of giving is comparable to other industries. As a percent of pre-tax earnings, the industry’s contributions are slightly above average at 89 basis points, compared to 78 basis points across all industries.

 

David Brinkman of Aon Benfield and Randall Clouser of Zurich Financial Services discussed the Insurance Industry Charitable Foundation’s annual fundraising event for the NY/Northeast division in an A.M. Best video interview.

Bob Hartwig did an interview at the NASDAQ Market Site in New Yorkwith World Risk & Insurance News TV on reinsurance capital markets…Loretta Worters did an interview with Ann Carrns, who does the Bucks blog for The New York Times, on auto deer collisions and glass coverage…She also was interviewed by Carole Feldman with the Associated Press on the cost of natural disasters that have hit the United States in 2011. Other interviews included Bankrate Insurance and Daily Finance on holiday hazards, fires and the insurance implications; texting laws and insurance for a Bankrate.com story; and auto insurance claims that could drain your bank account, either because you did not have adequate coverage or lacked coverage completely.

 

There is a Senate Banking hearing on Wednesday, December 7, Enhanced Supervision: A New Regime for Regulating Large, Complex Financial Institutions.

 

The U.S. Treasury Department’s Federal Insurance Office conference to discuss Modernizing and Improving the Insurance Regulatory System will be heldat Treasury on Friday, December 9.

 

The Sun-Sentinelreported that some Florida homeowners who spent thousands of dollars strengthening their homes to better withstand damage from hurricanes in order to get insurance discounts lost them because of changes the state made last year. But new revisions approved by the state Financial Services Commission on December 6 may help some homeowners get the credits back, while others could lose them because of other changes.

 

CNN reported on December 7 that former Illinois Gov. Rod Blagojevich was sentenced to 14 years in federal prison for corruption convictions. Blagojevich, a Democrat, was accused of trying to profit as he considered whom to appoint to succeed Barack Obama when the president vacated his Senate seat to move to the White House. Blagojevich was convicted of corruption in June after a jury returned 17 guilty verdicts against him.

The Clarion Ledger reported on December 4 that tort reform has resurfaced with the GOP in control. Texas Gov. Rick Perry has bragged his state’s new “loser pays” law goes a long way to telling “trial lawyers to get out of your state.” Governor-elect Phil Bryant has already expressed support for “loser pays.” He continues to monitor the effect of that change in Texas, said spokesman Mick Bullock. Also in The Clarion Ledger, an op-ed looks at the ongoing tort reform wars in Mississippi, requiring a careful balancing of interests to provide fairness in the judicial system.

The deadline is approaching for New York flood victims to apply for federal aid, according to this AP article. The Federal Emergency Management Agency (FEMA) says there are only eight days left for New Yorkers affected by Hurricane Irene and Tropical Storm Lee to register for possible federal disaster assistance.

 

A Dallas Morning News article reported that State Farm will begin switching many of its 1.2 million homeowner policies in Texas to a higher deductible on Thursday, December 7, after the change was approved by state Insurance Commissioner Eleanor Kitzman. The commissioner found no reason to overturn the company’s new minimum deductible of 1 percent of a home’s insured value. Optional higher deductibles will range up to 5 percent. Consumer advocates say the higher deductible amounts to a rate increase because State Farm customers will have to shoulder a greater share of their property losses. The commissioner, in her first major decisions since taking office in August, also let stand a 10 percent increase in overall rates.

 

David Randall joined Reuters as a senior reporter and columnist covering financial markets. He previously worked at the Associated Press as a financial markets reporter since September 2010. Prior to that, he served as a personal investing reporter at Forbes.

Mark Bernikerhas leftBloomberg Televisionwhere he served as a producer of Bloomberg West. The show focuses on innovation, technology, media and the future of business.

The topic of auto insurance fraud was trending in the blogosphere the week of December 5, with bloggers writing specifically about Florida. Coinciding with this trend was the I.I.I. December 7 press release about the increase in Florida’s “fraud tax” which gained some attention on Twitter. 

 

I.I.I.’s tweet of the week went to tweets about the recently released article on auto and homeowners insurance deductibles. The topic of deductibles is something insurance agents and journalists are tweeting about and sharing via Facebook.    

 

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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