SYNOPSIS ALL INDUSTRY CONFERENCE CALL July 13, 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, July 20, please email Mike Barry at michaelb@iii.org.

 

Bermuda-based reinsurers will provide some of the resources needed to rebuild tornado-damaged parts of the U.S., the I.I.I.’s Hartwig told the Bermuda Royal Gazette, in this Wednesday, July 13, interview: Alabama’s editorial boards, Hartwig added, were surprised to hear that reinsurers in places like Bermuda, Switzerland and Germany would be the source of monies many U.S. home insurers would, in turn, give to their policyholders when settling tornado-related claims. 

40 percent of coastal U.S. respondents believe they are unlikely to see storm surge damage from a major hurricane; 34 percent believe wind is more likely to cause loss of life: The National Center for Atmospheric Research (NCAR) in Boulder, Colorado, interviewed more than 1,200 people in 155 coastal counties in eight states from Texas to North Carolina in November 2010, and the federally funded project’s findings were the subject of this Tuesday, July 12, USA Today article. The counties the NCAR selected had some degree of storm-surge risk from hurricanes as strong as Category 5. Jamie Rhome of the National Hurricane Center in Miami told the paper that storm surge is the largest single killer in hurricanes and every city along the Gulf or East Coast in the U.S. is at risk of storm surge, the massive amount of water which builds up as a hurricane moves over the ocean and then pushes ashore.

Employment changes in the insurance industry in May 2011 presented a mixed picture: Preliminary property/casualty (P/C) carrier employment data for May 2011 was essentially flat–a rise of 100 people (0.02 percent)—compared to May 2010, whereas life insurance carrier employment in May 2011 dropped, compared with a year earlier by 1,500.  Life insurance carrier employment is now down 5,600 in the past 12 months. Health insurance carrier employment was down 600 (-0.1 percent) in May 2011 and down 17,200 for the past 12 months, the I.I.I. found, when analyzing federal figures. Employment among U.S. reinsurance carriers rose by 100 (0.4 percent) but, despite head count increases in four of the first five months in 2011, the number of Americans working for reinsurance carriers is still below the industry’s employment level as of December 2010. The I.I.I.’s source material is drawn from the U.S. Labor Department’s Bureau of Labor Statistics (BLS), The BLS data does not separate life agents from P/C agents or agents from brokers. The number of agents and brokers rose by 4,100 (0.6 percent) in May 2011 to the highest level so far this year and even with the level in December 2010. Agent/broker employment normally increases in May over April, but typically not by this much. The PowerPoint presentation on these trends was posted on Tuesday, July 12, at the I.I.I. website, and placed in the context of industry employment dating back to 1990. 

Crate & Barrel, Children’s Place want to use policies to defend themselves in lawsuits alleging they violated customer privacy by collecting ZIP codes from credit card purchases: The Hartford’s disagreement with these two retailers may be the first of many disputes in which insurers ask courts to rule that their liability policies do not require them to pay what is expected to be millions of dollars to defend against a growing number of lawsuits related to the use of ZIP codes, according to this Tuesday, July 12, Wall Street Journal article (subscription required) . Since February 2011, when the California Supreme Court ruled that ZIP codes qualify as personal identification information under California’s privacy statute, lawsuits involving the use of ZIP codes have been filed in California against more than 100 merchants. The I.I.I.’s Hartwig spoke with the WSJ’s Erik Holm for this story but was not quoted in the article.

 

The overall global insurance market remains well-capitalized and generally competitive despite major natural catastrophe losses in 2011: “Insurers, however, are being more selective in the capital they deploy and have in some cases withdrawn from catastrophe affected regions and loss-making sectors of business,” Marsh writes.  This Monday, July 11, news release links to Marsh’s second quarter 2011 report.

Esther Adler’s 2009 death resulted in a $5 million death benefit to the investors who purchased her life insurance policy, the Wall Street Journal reported last weekend: The problem was that Ms. Adler had assets at the end of her life totaling less than $100,000, even though her life insurance application stated her estate was valued at almost $12 million, this Saturday, July 9, WSJ article, which was also posted at Smart Money, stated. Jurors in a courthouse in Manhattan heard the details of Ms. Adler’s interactions with AXA Equitable last fall as the investors who bought the policy while Ms. Adler was still alive fought to force AXA Equitable to pay them the $5 million. AXA Equitable wanted the jurors to void the life insurance policy on the grounds that it was secured fraudulently. The jury’s verdict: a full payout to the investors.

 

Kansas City-based Associated Press (AP) reporter examined the issue amid this summer’s Missouri River floods:  Federal officials are confusing property owners by encouraging them to buy flood insurance policies that may not cover damage from the current flooding, according to this AP article, which appeared in the Monday, July 11, edition of The Washington Post as well as The Kansas City Star. The Federal Emergency Management Agency, which administers the NFIP, is encouraging landowners to buy NFIP policies anyway since some damage may be covered under the rules of the flood insurance program. The confusion is complicating the concerns of property owners in six states, from North Dakota to Missouri, as the threat of flooding continues, particularly among property owners who have waited to buy flood insurance and do not normally face the risk of having a flood impact them, the AP reports.

This Monday, July 11, I.I.I. news release offers details and links to the updated white paper. The Florida Citizens Property Insurance Corporation’s total book of business constituted about half of the 2.841 million policies in-force in the U.S. last year that were issued by a state-run property insurer of last resort.

 

Lauren Dupuis and Josh Barnes, U.S. Department of Commerce researchers who have been reassigned temporarily to FEMA, spoke with the I.I.I.’s Hartwig this week about the the insurance repercussions and economic impact of the Alabama tornadoes. Dupuis said FEMA saw Hartwig’s Thursday, July 7, interview on Birmingham’s Good Morning, Alabama program and thought he might be a good resource.

 

The I.I.I.’s Jeanne Salvatore briefed Associated Press reporter Candace Choi (Office: 212-621-7267, email: cchoi@ap.org) on the basics of auto insurance in advance of a story Choi was readying on General Motors’ new deal with MetLife Auto & Home. The I.I.I.’s Salvatore had breakfast with Bloomberg intern Brooke Sutherland (Cell #: 785-550-1920, email: bsutherland5@bloomberg.net) on Friday, July 15. Sutherland has been tasked with writing insurance stories this summer.

 

The session hosted on Tuesday, July 12, by the U.S. Senate committee on Health, Education, Labor and Pensions is archived here, and the American Council of Life Insurers’ (ACLI) statement, which touted the importance of purchasing annuities as a long-term financial planning tool, was posted at ACLI’s website on the same day as the hearing.

The American Enterprise Institute (AEI) sponsored the event:  The gathering was held on Thursday, July 14, in the U.S. Capitol Visitor Center in Washington, D.C., and the panelists included Dr. Vincent Smith and Dr. Myles Watts, both of whom are economics professors at Montana State University in Bozeman, Montana, and Dr. Bob Young, chief economist at the American Farm Bureau Federation in D.C. 

The Los Angeles Times reports that some luxury car drivers are perpetrating insurance fraud by claiming that their vehicles are housed on farmland:  Auto insurers offer discounts of up to 20 percent to people who use their cars almost exclusively on a farm, where the chances of a crash or theft are far less likely than in urban settings, according to this Saturday, July 9, Los Angeles Times article. Quality Planning, a company that verifies policyholder data for auto insurers, looked at 80,000 vehicles nationwide that had qualified for a farm-use discount and found that about 8 percent of them were parked in ZIP codes with practically no agriculture.  The LA Times article was posted at The Drudge Report over the weekend of July 9-10.

Florida Citizens saw its premiums rise $15.5 million last year as unwarranted loss mitigation discounts were rescinded: Florida Citizens Property Insurance, the state-backed insurer, launched a program in 2010 to inspect the homes of Citizens policyholders suspected of having reported wrongfully that they’d taken measures to strengthen their homes when, in fact, they had not done so. Citizens, after conducting nearly 33,000 home inspections last year, said its premiums rose by $15.5 million, an average $476 per policyholder. In a report to Citizens’ Market Accountability Advisory Committee on Tuesday, July 12, Citizens noted it took away discounts for 60 percent of the policyholders inspected, added discounts for 8 percent and kept the same premiums for the rest. It also projected that premiums would rise by $23 million in 2011, when all its planned inspections are completed. The Julie Patel story in the South Florida Sun-Sentinel was also posted on Monday, July 11, at The Miami Herald’s website.

St. Petersburg Times reports that Florida is targeting staged accidents as part of a larger auto insurance fraud crack down: The Florida Department of Financial Services’ insurance division has arrested more than 200 people for personal injury protection (PIP) fraud so far in 2011, marking an increase of about 55 percent from the 130 arrests during the same period last year, according to this Wednesday, July 13, St. Petersburg Times article. Florida Chief Financial Officer (CFO) Jeff Atwater issued a news release on that same day, officially announcing the arrests of two individuals cited in that newspaper story.

Alabama’s governor appoints 24 individuals to the Affordable Homeowners Insurance Commission: The commission, to be chaired by Baldwin County Probate Court Judge Tim Russell and which includes Insurance Commissioner Jim Ridling as one of its members, will recommend improvements to the state’s property insurance market to make coverage more affordable. After Alabama was hit by severe tornadoes in April of this year, Governor Bentley expanded the commission to cover more than just the state’s coastal counties. In a story that appeared on Saturday, July 9, in the Mobile Press-Register, the governor said he wants the commission to listen to consumers before formulating solutions.

Anita Lee wrote that the U.S. Chamber of Commerce-backed project had its debut on the Reelz Channel on Monday evening, July 11. The Sun-Herald reporter noted that Mississippi native and one-time trial attorney Dickie Scruggs appeared prominently in the film, which bills itself as being about “greed and corruption in America’s lawsuit industry.”

 

Missouri insurance director says similar actions have been taken in Iowa, Nebraska and North and South Dakota: “To avoid penalizing policyholders facing the threat of predicted flooding and in disaster areas who take measures to protect and secure their property, the director strongly encourages insurance companies to extend the full limit of personal property (contents) coverage to property stored off premises,” Director John Huff writes, in a notice publicized in a Thursday, July 7, Missouri Insurance Department news release. The notice concludes as follows: “To enable the Department to effectively address consumer inquiries and concerns regarding their property and insurance coverage, the director requests any insurer not extending additional coverage to promptly notify the Division of Consumer Affairs at consumeraffairs@insurance.mo.gov.”

Governor Cuomo signed into law on Tuesday, July 12, a bill that allows police to stop motorists they see texting while driving. In a related development, the New York Times posted this item on Monday, July 11, in its Business, Innovation, Technology, Society (BITS) blog about how a combination of law enforcement and public education has reduced instances of distracted driving in Syracuse, New York, and Hartford, Connecticut. “Those conclusions are courtesy of the United States Department of Transportation, which helped finance the enforcement and the research in the two cities, and which under Secretary Ray LaHood has made a big issue of distracted driving,” the article notes.

Former CNBC anchor Erin Burnett’s new program will debut on Monday, August 8, followed by Anderson Cooper 360 at 8 p.m., ET.  Cooper’s program will then re-air at 10 p.m. ET, and Burnett’s at 11 p.m., ET.  The schedule changes in CNN’s prime-time line-up came after the cancellation of former New York Governor Eliot Spitzer’s show, In the Arena. Meanwhile, CNBC announced on Monday, July 11, that it had revamped the anchor lineup for its morning program Squawk on the Street, filling the vacancies left by the death of long-time host Mark Haines and Burnett’s departure to CNN. The financial news network named two new hosts, Melissa Lee and Carl Quintanilla, to the 9 a.m. to 11 a.m. program. Quintanilla will leave his previous job as co-anchor of the early morning Squawk Box while Lee will continue working on CNBC’s 5 p.m. program Fast Money, according to The New York Times.

 

–Julie Patel of the South Florida Sun Sentinel tweeted a number of times about Florida Citizens Property Insurance. The first tweet stated that “Citizens Property Insurance policyholders’ premiums rose $476 on average after inspections to verify hurricane discounts.” These inspections were part of a program created after Citizens suspected some policyholders were getting discounts they didn’t deserve for fortifying their homes against hurricanes. There are some policyholders who are very upset over this and feel their legitimate discounts were revoked. Patel’s other tweet this week about Citizens stated, “If Citizens Property Insurance isn’t charging enough, why did it earn more than $7 billion the past five years?” Due in part to a hurricane-free past 5 years in Florida, Citizens reported operating gains of $793.4 million in 2010, Patel writes. But in spite of this, insurance industry representatives say that Citizens doesn’t charge enough to pay the potential claims it would be liable for after a major Florida hurricane.”

 

–A popular insurance story this week in social media is about a partnership between GM and MetLife Auto & Home and how people can get free auto insurance for one-year when they take delivery of certain GM vehicles in Oregon and Washington between now and Tuesday, September 6, 2011. The GM-MetLife story is appearing in lots of automotive and insurance blogs online.

 

–The I.I.I. released a Businessowners Policy video last week; the video is getting some good pick up online via Facebook and Twitter sharing.

 

–The I.I.I.’s Spanish language press representative Elianne Gonzalez is featured in two Allstate online videos that deal with auto insurance fraud. Both are also being promoted as public service announcements.   

 

Since our call, a “lunch and learn” opportunity has become available to this group. The New York Publicity Club (Jeanne Salvatore is a board member) has announced that there will be a live webcast of its luncheon featuring daytime TV talk show producers on Thursday, July 21 from noon to 2 p.m., ET, since the luncheon itself sold out in record time. It will feature: Patty Neger, coordinating producer, ABC’s Good Morning America; Kelly Burkhard, senior talent booker, Live! With Regis & Kelly; Angela LaGreca, producer, NBC’s Today Show; Tommy Crudup, senior talent producer, The Rachael Ray Show and Rena Popp, senior producer, The Wendy Williams Show. To get more information and/or sign up for the webcast go to www.publicityclub.org  The live stream webcast costs $24.95.

 

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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