SYNOPSIS ALL INDUSTRY CONFERENCE CALL January 6, 2010

In what was billed as one of the biggest changes to its warning system in decades, the National Oceanic and Atmospheric Administration’s (NOAA) National Hurricane Center announced on Tuesday, January 5, that its forecasters “will now send watches advising that tropical storm conditions could be expected there in 48 hours, instead of 36 hours.  Warnings of tropical storm or hurricane conditions will be issued 36 hours ahead, not 24 hours,” according to this Associated Press article.

The 2010 debut of this program, which had its origins in a 1992 federal law and is aimed at protecting consumers from buying ‘rebuilt wrecks,’ was the subject of a story in the Sunday, January 3, Chicago Tribune.  One of the piece’s main angles: Illinois was the only state which chose not to participate in NMVTIS.

Life insurers will be required to set aside about $8.75 billion, rather than $14.5 billion, to cover declines in bonds they hold related to home mortgages, based on a preliminary analysis provided to state insurance regulators by Pacific Investment Management Co. (Pimco), according to this Tuesday, January 5, Wall Street Journal article (subscription required).  The National Association of Insurance Commissioners (NAIC) retained Pimco after discontinuing its policy of using ratings firms to assess insurers’ risks, the article adds.  The exact reserving requirement figure will be finalized when life insurers file their year-end 2009 reports at the end of February 2010.

President Obama ordered that federal aid be made available to state and local governments to supplement Tropical Storm Ida (November 12-14, 2009) recovery efforts in New York’s Nassau and Suffolk counties on Long Island as well as Alabama’s Barbour, Butler, Clarke, Coffee, Conecuh, Covington, Crenshaw, Dale, Escambia, Geneva, Henry, and Pike counties, due to the severe storms and flooding which hit that part of Alabama between December 12 and December 18, 2009.  The White House statements were issued on Thursday, December 31, 2009.

U.S. Senators Dodd and Dorgan announce their retirements:

Senator Christopher Dodd (D-Connecticut) is chairman of the U.S. Senate Banking committee, and his successor will be Senator Tim Johnson (D-South Dakota), if the next chairman is chosen on the basis of seniority.  Senator Byron Dorgan (D-North Dakota) is expected to remain in Washington, D.C. after his term ends at year-end 2010 because his wife is the chief lobbyist for the American Council of Life Insurers, this Friday, January 8, Wall Street Journal (subscription required) article reports.

In this Tuesday, January 5, letter to the Boston Globe’s editor, acting insurance commissioner Joseph Murphy says that the Patrick administration’s auto insurance regulatory changes have since April 2008 prompted 11 new companies to enter the Massachusetts market, boosting the total to 30, and saved drivers an average of 8.2 percent on auto insurance premiums.  

Swiss Re executive and former Alabama insurance commissioner Walter Bell had a letter published in the Palm Beach Post calling for opposition to U.S. House Resolution 3424, writing it “proposes a punitive tax on internationally based reinsurers as a supposed ‘tax haven’ crackdown.” The proposal, however, would have a negative impact on all international reinsurers, even those in jurisdictions with equal or higher taxes than in the United States, Mr. Bell adds.

The trustee for the WCI Chinese Drywall Trust filed a lawsuit against 14 insurance companies in U.S. District Court for the Eastern District of Louisiana. The trust, formed in July 2009 following the bankruptcy of homebuilder WCI Communities, assumed liability for claims from more than 700 homeowners whose homes were built with Chinese drywall. The suit states that WCI’s insurance companies, its subsidiaries and subcontractors have denied coverage, reserved their rights, or failed to reply to WCI’s notice letters or otherwise failed to acknowledge coverage. WCI built homes in Florida, New York, New Jersey, Virginia, Maryland and Connecticut. Some additional details on the lawsuit against insurers were in the South Florida Sun-Sentinel.

Leaders of Associated Industries, United Way of Florida explain how Catastrophe Fund assessments hurt businesses, non-profits:

Their letter on assessment impacts was published by the Lakeland Ledger on Sunday, January 3.  

DeKalb County, Georgia car crash victims will soon have to pay a $250 fee if they need to be extricated from their damaged vehicle by the county’s fire department.  The service had previously been offered free of charge.  DeKalb County said the new fee will generate $750,000 annually in revenue, according to this Monday, December 28, AP article.

The Second District Court of Appeal in Los Angeles ruled late last month that consumer groups that have won challenges to insurance rate increases can recoup their legal fees from insurers, according to this Tuesday, January 5, San Francisco Chronicle story.  The decision applies even when insurers withdraw their requests or accept a compromise.  The ruling focused on a provision in Proposition 103, the 1988 voter initiative, concerning whether reimbursement only covered formal rate hearings before the state insurance commissioner or applied to all rate proceedings. 

Commissioner Michael Kriedler’s 2010 Legislative Agenda was released on Tuesday, January 5.  At the top of his P/C agenda is the passage of HB 2513/SB 6252, House and Senate bills “prohibiting the use of credit history, education and income for rating and underwriting personal insurance.” 

Since the call, the I.I.I. has worked with MSN Money insurance writer Peter Lewis (peter.lewis@yahoo.com) on an article he’s developing about the premium rates charged by state-run property insurers of last resort.

The four TV affiliates who aired all or part of the I.I.I.’s ‘Five Insurance Mistakes’ VNR were: KAKE (Wichita, KS), KHGI (Lincoln, NE), WKRC (Cincinnati, OH) and WZTV (Nashville, TN).