SYNOPSIS ALL INDUSTRY CONFERENCE CALL July 17, 2013

To recap the issues raised during today’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 24, please email Mike Barry at michaelb@iii.org.

 

Bob Hartwig participated in an A.M. Best video on social media use in the insurance industry and how it appears to be growing as companies seek to reach consumers in new ways. Speaking at the Insurance Marketing and Communications Association, Hartwig said social media is an important way for insurers to reach younger people.  

 

Bob Hartwig, Jeanne Salvatore and Elianne Gonzalez will do a satellite media tour on hurricane preparedness Tuesday, July 23 from 7:00 a.m. to 1:00 p.m. EST. The I.I.I. sent out a media advisory and tweeted about the tour on July 16 and 17

 

The I.I.I. International Fact Book has been updated and is available on the I.I.I. website.

 

The 2013 Federal Alliance for Safe Homes (FLASH)® annual conference will be held November 20-22 in Lake Buena Vista, Florida. Attendees will explore best practices, reflect on lessons learned, and discover innovations from disaster safety leaders from across the country. Space is limited to 200 attendees and special registration rates are available through September 20. Visit flashannualconference.org for a complete conference agenda and speaker roster.

 

Sen. Elizabeth Warren, the Massachusetts Democrat, showed obvious enthusiasm when she announced Cordray’s confirmation and said American consumers would now benefit from the agency’s strong oversight, according to this Tuesday, July 16 New York Times article. Under Cordray, the CFPB will regulate financial transactions between a wide range of borrowers and lenders, from the largest banks to small payday lenders, as well as the terms of mortgages and student loans. The confirmation comes two full years after Cordray was nominated by President Obama, who installed him as head of the agency when Congress was in recess. Some of the administration’s opponents contended that the agency could not fully exercise its authority until Cordray was confirmed. The CFPB has taken action against nonbank financial companies and payday lenders, steps that remained in question because Cordray’s appointment had not been confirmed. In June the Supreme Court agreed to hear challenges to the legality of other recess appointments made by the president, but the recent confirmation of Cordray means that the court’s ruling is not likely to have a significant effect on legality of the authority exercised by CFPB.

 

Fortune magazine’s July 22 issue noted that the top 10 insurance companies for revenue in 2012 ws led by Japan Post Holdings with $190.9 billion, followed by Berkshire Hathaway (U.S.), with $162.5 billion, AXA (France) with $154.6 billion, Allianz (Germany) with $130.88 billion and Assicurazioni Generalli (Italy) with $113.8 billion.

A judge is close to deciding if New York developer Larry Silverstein can recover $3.5 billion from airlines for damages to the World Trade Center on Sept 11, 2001, in addition to over $4 billion he received from insurers. The Mumbai Mirror reported that U.S. District Judge Alvin Hellerstein began a three-day trial on Monday, July 15, in which he will decide how much of the insurance payments should offset the damages Silverstein is seeking from the airlines, according to this Bloomberg News article. 

 

A motion to file a class-action lawsuit has been registered by two Lac-Megantic residents in the opening shot of what could be a years-long, multimillion-dollar legal battle. It comes just over a week after a deadly train derailment that has already prompted various investigations, including a provincial police criminal probe, and has attracted the interest of legal teams on both sides of the border. The motion was filed Monday by two men who want to sue the owners of the train that derailed in their town, killing an estimated 50 people, according to a Monday, July 15 Calgary Heraldarticle.

The piece, written by Russell Johnston and Steve Forbes for the Insight section of Forbes, noted that unimpressive macroeconomic conditions, record low interest rates and rising loss costs have been pushing up the rates for commercial property and casualty insurance. Bob Hartwig was interviewed and stated that the hardening during the last year to year-and-a-half in many markets has been obvious, although rates are still far lower than the highest levels of nearly a decade ago. 

U.S. financial regulators on Tuesday, July 16, moved insurer MetLife Inc. one step closer to being deemed “systemically important” and subjecting it to tougher government oversight, a move immediately criticized by Chief Executive Steven Kandarian, reported The Wall Street Journal.

Federal officials said the U.S. financial system remains vulnerable to shocks and called for better protection in several areas that exacerbated the 2008 financial crisis. The Financial Stability Oversight Council, a new body created by last year’s Dodd-Frank financial law, said several areas could pose broad risk to the financial system, including a $2.7 trillion short-term funding market used by Wall Street firms and money-market mutual funds. It also warned the U.S. faces risk related to Europe’s debt crisis and said U.S. financial institutions need to improve their balance sheets to protect against potential losses, according to this Wall Street Journal article, printed on July 26.

The family of a man killed by falling debris from a historic Brooklyn church filed a lawsuit on Tuesday, July 16, alleging that church officials failed to maintain and repair a building they knew had become increasingly dangerous. On July 26, 2012, Richard Schwartz was killed after a lightning strike caused falling debris as he walked by Cobble Hill’s Christ Church, according to New York City authorities. The lawsuit, filed in state Supreme Court in Brooklyn, alleges that church officials knew the structure had become unstable since a previous lightning strike in August 2000, according to a Tuesday, July 16, Wall Street Journal article. The lawsuit names the trustees of the estate belonging to the Diocese of Long Island as well as Christ Church and Holy Family and accuses them of showing “deliberate disregard for the health, safety and welfare for those present on and about the church grounds.”

 

Chicago Insurance Company, a former insurer of St. Joseph, the Catholic Diocese of Kansas City, is seeking to avoid paying for priest sexual abuse settlements, according to this July 12 Kansas City Business Journal article. The insurer said in a federal court filing that it has no obligation to cover a $2.25 million settlement the diocese reached with the parents of Brian Teeman who contended their 14-year-old son committed suicide in 1983 because of repeated sexual abuse by a Kansas City priest. The company also is seeking to deny coverage for six claims from a 2008 settlement in which the diocese agreed to pay $10 million to 47 plaintiffs who filed sexual abuse lawsuits against 12 current or former priests. 

The Hartford Courant spoke with Bob Hartwig to get a response to the announcement by Connecticut Insurance Commissioner Thomas Leonardi that Connecticut-based insurance companies will now be required to complete the annual Climate Risk Survey that was initially adopted in 2009 as a voluntary report by the National Association of Insurance Commissioners (NAIC)….I.I.I. has been getting calls asking how the industry views Eliot Spitzer’s entry into the NYC Comptroller’s race, given his past run-ins with the insurance industry. We’ve declined to comment. The Wall Street Journal has done several pieces on this including an article on July 12 which noted that on the same day former New York Gov. Eliot Spitzer moved closer to securing a spot on the ballot in the race for city comptroller, one of his wealthy enemies on Wall Street sued him for defamation and signaled plans to get involved in the race….Freeman Klopott with Bloomberg’s Albany bureau spoke with Bob Hartwig about whether a homeowners policy is made invalid by fracking….Lisa Gibbs senior writer for Money magazine interviewed Bob Hartwig about auto line profitability trends….Freelance Journalist Donna Fuscaldo is doing a story for FoxBusiness.com on how to save money on homeowners insurance and interviewed Loretta Worters on the subject….Roanoke Times reporter Dan Casey is doing a piece on flood insurance….Ted Sherman with the Newark Star Ledger is doing a story on burglaries and their impact on insurance rates in New Jersey, which was handled by Bob Hartwig….Jeanne Salvatore did a Skype interview with KGUN9-TV/KWBA-TV (Tucson, AZ) on July 16, on coverage for homes and cars after monsoon storms hit….Becky Yerak with The Chicago Tribune spoke with Loretta Worters, looking for information about Investment Advisor E&O Insurance and an explanation about the coverage, which protects the investment advisory firm, its officers, directors and employees in the event they are sued by clients for any actual or alleged negligent act, error or omission or breach of fiduciary duty committed in the scope of performing their professional services….Amy Danise with Insure.com/Quinn Street.com is doing a story on the differences between HO-3 and HO-5 homeowners insurance policies….Steve Weisbart was interviewed by Michelle Lerner from Bankrate.com on the life, disability and LTC ramifications of mistaken medical records.

 

The 2014 Senate Department Homeland Security Appropriations bill was approved by the Subcommittee earlier today, July 17, by a 9-2 vote. The full Senate Appropriations Committee is scheduled to vote on the bill on Thursday, July 18. According to a summary of the legislation, the bill “delays implementation of flood insurance increases for one year. This delay is for properties that were built in compliance with an effective flood insurance rate map but have since been remapped into a different flood risk zone or base flood elevation.” 

Consumer Watchdog is preparing a measure for the 2014 ballot that would overhaul the Medical Injury Compensation Reform Act (MICRA) of 1975, if passed. This opinion piece (dated July 19) discusses the program initiated by the Consumer Attorneys of California to push legislation increasing lawyer payouts in lawsuits against doctors, hospitals, nurses firefighters, EMTs and others providing care for patients. Such legislation would result in increased health insurance costs.

 

Florida remains the “epicenter” of all Forced-Place Insurance (FPI) policies in place in the U.S. with 35 percent of the countrywide FPI premium residing in that state alone, according to this Monday, July 15 article in Lawyers and Settlements.com. FPI is an insurance product that offers the consumer less protection than a standard policy, but with higher rates, the article noted. Robert Hunter was quoted saying that “[Forced-Place Insurance] rates are inflated by reverse competition and FPI insurers compete for business by larding premiums with expenses to provide kickbacks to mortgage servicers. The mortgage servicer passes the cost of the FPI on to borrowers, but takes a big piece of the premium in cash or subsidized services. The outrageous ASIC filing shows the results of reverse competition – massively excessive rates.”

Georgia insurance commissioner Ralph Hudgens accepted meals, golf from insurance industry, according to a piece reported in the Atlanta Journal Constitution on Wednesday, July 10. That spending is legal under Georgia law, though Gov. Nathan Deal and other elected leaders forbid or discourage it elsewhere in state government. The sums spent on Insurance and Safety Fire Commissioner Ralph Hudgens and his staff represent larger-than-average lobbyist spending on executive officials. While lobbyists frequently splurge on those elected to office, it is less common for them to pick up the tab for staff regulators who set and enforce rules. One of the entertainment expenditures will be illegal under a new lobbying law that takes effect next year.

 

From Gulfport to Washington, politicians are working to delay dramatic flood insurance rate hikes, reported Anita Lee in the Tuesday, July 16 issue of the Sun Herald. The Gulfport City Council passed a resolution Tuesday asking Mississippi’s congressional delegation to work for a delay in rate increases scheduled for the debt-ridden National Flood Insurance Program. Within minutes, Sen. Thad Cochran’s office sent out a news release about a Senate subcommittee vote to delay the increases for one year.

 

Louisiana’s U.S. senators applauded a measure approved by the Senate Appropriations Committee that would provide hundreds of thousands of dollars of relief to homeowners in low-lying areas of Louisiana and other states where new government surveys could produce flood insurance premium increases so big that people would not be able to afford their homes. This was reported in the News Star on Tuesday, July 16. Rep. Bill Cassidy, R-Baton Rouge, authored the measure, which was approved overwhelmingly by the U.S. House in June and moved through the Senate on Tuesday with provisions authored by Sen. Mary Landrieu, D-La. Articles about it were written in the Baton Rouge Advocate and KADC.com’s website, which was from an AP Washington report.

 

The Oklahoma Department of Insurance will hold seminars aimed at educating business owners, workers and insurance agents about the upcoming workers compensation changes. Insurance professionals who attend the seminar can receive one hour of Continuing Education credit at no cost, according to a press release issued on Sunday, July 14. The Administrative Workers’ Compensation Act, SB 1062, was signed by Gov. Mary Fallin in May 2013. It seeks to reduce the cost of workers compensation premiums and ensure that injured workers receive quality care in a timely manner.

Governor Cuomo announced on Monday, July 15, that FEMA will not be offering assistance to individuals who were impacted by the recent floods in Upstate New York, as reported in the Observer-Dispatch.

I.I.I.’s ‘I’s on Insurance’ video on how homeowners insurance coverage works continues to be popular on Twitter, as well as trivia on boat insurance from the I.I.I. The issue of climate change has been of interest this week. Time Inc. for example tweeted, “The insuranceindustry is scared of climate change” Hurricane Sandy made it clear: as the climate warms, population grows and sea level rises, extreme weather will hurt more.

 

On a somewhat more frivolous note, in the wake of last week’s premiere of the hugely popular SyFy Channel movie about killer sharks transported to LA via a tornado, the I.I.I. posted a reporter’s actual question about whether a homeowners or auto insurance policy would cover a “Sharknado”, causing a frenzy of activity on Twitter and Facebook—most users seemed pleased to learn that they would indeed be covered for damage caused by falling sharks.

 

The Tribune Company will spin off the publishing unit that includes The Los Angeles Times and Chicago Tribune. It earlier had explored a sale of the newspapers. The Tribune said the publishing assets will be spun off in a tax-free distribution to its shareholders, according to this USA Today article. It will be called Tribune Publishing Company, and its assets include The Baltimore Sun, Sun Sentinel (South Florida), Orlando Sentinel, Hartford Courant, The Morning Call.

The BBChas launched a new vertical: BBC Capital(@BBC_Capital). The section covers business, finance and career topics. Jennifer Merritt (@MerrittJennifer)and Chelsea Emery (@chelsea_emery) lead the section as managing editor and deputy editor respectively. Merritt previously served as wealth management editor at Reuters and Emery was news editor for the news service. To learn more, visit www.bbc.com.

Emily Holbrook has joined National Underwriter Life & Health as executive managing editor. She comes to the publication from Risk Management where she was the editor. Meanwhile, Caroline McDonald, who was with CFO magazine, has moved over to Risk Management magazine.

 

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.

 

For an I.I.I. Blog search, click here.