SYNOPSIS ALL INDUSTRY CONFERENCE CALL July 28, 2010

Bloomberg Markets magazine offers critique of life insurers’ administration of Veterans Affairs program:

Released online on Wednesday, July 28, and scheduled for publication in Bloomberg Markets magazine’s September 2010 hard-copy edition, this lengthy article reports on the practice of some life insurers of keeping money intended for life insurance beneficiaries of federal workers and military personnel in retained asset accounts that are not FDIC-insured and that earn less interest than the amounts insurers earn on these funds, which are held in their general accounts. The article discusses whether these accounts may be in violation of federal bank law, what might happen if an insurer is unable to meet its obligations and the lack of federal legislation addressing the accounts, among other things. The story also notes that seven states—Arkansas, Colorado, Kansas, Maryland Nevada, North Carolina and North Dakota—have rules dealing with retained asset accounts.  The CBS Evening News broadcast a segment pegged to the Bloomberg piece on Wednesday night, July 28, and the New York Times had a condensed version of the Bloomberg article in its Thursday, July 29, hard-copy edition.  The I.I.I. is working with the insurance companies involved to coordinate a response.

I.I.I. gives interview to nationwide radio network on ways to save money on auto insurance:

Since the call, the I.I.I.’s Jeanne Salvatore was interviewed by Randy Meyer of InfoTrack, which distributes content nationwide, with Meyer’s interest in the topic piqued by the tips the I.I.I. offered in this June 2010 USA Today article.

The seven-page document, which discusses the auto, home, business and flood insurance repercussions of the hurricane, was released this week and placed in the spotlight on the I.I.I. website’s home page.

Distributed on Monday morning, July 26, the advisory highlights the $41.1 billion in private-sector Katrina claims that were paid in the aftermath of the August 2005 hurricane, the largest natural disaster in U.S. history.  It also links to the aforementioned white paper.

The I.I.I.’s facts and figures on Katrina may be incorporated into the Washington, D.C., exhibit as the I.I.I. had sent the information from the Monday, July 26, media advisory to Newseum officials several weeks ago.  The Newseum’s media relations office has told the I.I.I. that a press preview event will be held at the Newseum on Thursday, August 26, to generate coverage.

The special program, to be hosted by Soledad O’Brien, is getting a major on-air promotional push. 

Chicago Sun-Times prepping piece on distracted driving within the city of Chicago:

Chicago Sun-Times automotive reporter Mary Wisniewski is likely to weave information from the I.I.I.’s Tuesday, July 27, news release on distracted driving and auto insurance, and an interview with the I.I.I.’s Salvatore, into an upcoming story on enforcement of a law that forbids motorists in the city of Chicago from driving while talking on a phone.  The fine is $100 per offense.  Wisniewski indicated the article will appear on Monday, August 2.

Jean Chatzsky, a regular contributor to NBC’s Today Show and Money magazine, is looking forone data point: what is the auto insurance premium each year for typical U.S. teen boy/girl? Jeanne Salvatore provided additional information to Chatzsky for the article.

Former SEC chairman tells Wall Street Journal’s editorial board it misinterpreted court’s ruling on SEC’s indexed annuity rule:

Christopher Cox, chairman of the SEC between 2005 and 2009, had a letter to the WSJ’s editor published on Tuesday, July 27, responding to a WSJ editorial which appeared on Thursday, July 22.  The court decision cited in the WSJ’s editorial was not focused on whether indexed annuities were not securities under the law but rather on the fact that the rulemaking process did not comply with administrative procedural requirements, a compliance that the court allowed the SEC to correct, Cox writes. Cox also took issue with the editorial’s statement that the only risk indexed annuities present to investors is that they might make more money than expected.  Investors can lose a large part of their investment because of the large penalties they must pay to obtain their money when they need it, according to the former SEC chairman, a Californian who was a Member of the U.S. House of Representatives between 1989 and 2005.

U.S. Senator from Mississippi preparing bill aimed at resolving future wind versus water claims disputes:

With the fate of the Multiple Peril Insurance Act unclear in the U.S. House of Representatives (House Resolution 1264), U.S Senator Roger Wicker (R-Mississippi) is readying legislation designed to streamline the interactions between the National Flood Insurance Program and private-sector property insurers, according to this Wednesday, July 28, National Underwriter story. The Property Casualty Insurers Association of America (PCI) reiterated its opposition to HR 1264 in this Wednesday, July 28, news release.

California’s governor declares ‘state of emergency’ in Kern County because of wildfires:

Hundreds of firefighters made significant progress in their battle against the most destructive of the two large wildfires that have destroyed houses and forced the evacuation of 2,300 residents, according to this Wednesday, July 28, USA Today story, written by an Associated Press reporter.  More on Governor Schwarzenegger’s declaration is here. Kern County, home to Bakersfield, CA, is about 70 miles north of Los Angeles. 

The board’s recommendation, together with adjustments for commercial property owners and renters, will now go to Florida’s Office of Insurance Regulation (OIR) for review and action, according to this Monday, July 26, Palm Beach Post article. If the hike is authorized, the increase will be the second following the end of a three-year rate freeze imposed by state lawmakers (2007-2009). Under Florida law, Citizens, which insures nearly two million homeowners, renters and commercial property owners, cannot raise rates more than 10 percent per year. The proposed rate increase includes a 9.4 percent adjustment for Citizens plus an assessment on behalf of the Florida Hurricane Catastrophe Fund (FHCF).  The new rates will take effect in January 2011, if they win the OIR’s regulatory approval, the article states.   The I.I.I.’s Bob Hartwig did a radio interview with a Miami-based National Public Radio (NPR) reporter on Tuesday, July 27, regarding the board’s rate decision.  Also, the Palm Beach Post said Citizens has nearly two million in-force policies statewide but the actual number is closer to a million, according to the Citizens 2008 annual report (see page 7 of the 20-page pdf file, under Quick Facts).

Wall Street Journal chronicles Miami high-rise building that developer says can withstand a Category 5 hurricane:

Alan Ojeda, a Miami-based developer, completed earlier this year an office tower at 1450 Brickell Avenue in Miami, Florida, and claims it is the first high rise office building that is fully protected against hurricanes to be built in the state, according to a story in the Wednesday, July 28, edition of the Wall Street Journal (subscription required). Windows on all 35 stories of the building are debris resistant, and Ojeda says the building could withstand a Category 5 hurricane without being significantly damaged. Some of the office buildings in the Miami financial district were extensively damaged from hurricanes Katrina and Wilma in 2005, the story notes, when tens of thousands of windows were shattered. Ojeda acknowledges the installation of these features significantly increased the building’s construction costs.

Richard Robertson, general manager of the Michigan Basic Property Insurance Association in Detroit since 1990, is Commissioner James Donelon’s choice to succeed retiring CEO John Wortman as the head of Louisiana’s state-run property insurer of last resort, according to this Friday, July 23, news release.  The Times-Picayune reported on Monday, July 26, that Citizens’ governing board affirmed Donelon’s pick, and Robertson could start in his new post as early as mid-September 2010.

Technological advances, such as encrypted key codes, bait cars and public awareness campaigns have helped reduce auto thefts in the Baton Rouge, Louisiana, metro area by nearly 38 percent over the last five years, according to the Louisiana Insurance Department. Insurance Commissioner Jim Donelon told the Baton Rouge Advocate in this Tuesday, July 27, article that theft rates in the state’s four largest metro areas—New Orleans, Baton Rouge, Lafayette and Shreveport-Bossier City—declined 16.8 percent from 2008 to 2009.

Farmers Insurance Group, the largest auto insurer in California, said premium rates for policies issued by its Farmers Insurance Exchange subsidiary would be cut by an average 14.5 percent, according to this Wednesday, July 28, Los Angeles Times story.  California Insurance Commissioner Steven Poizner held a press conference in Los Angeles on Tuesday, July 27, to announce the news.  One correction to the LA Times text: a car’s age is not one of the three primary rating factors in California.  The top three factors in California are miles driven, years of driving experience, and a policyholder’s driving record. The Los Angeles Daily News offered a more accurate portrayal of what Farmers’ action means for its California auto policyholders.

FEMA sent agency representatives to Milwaukee, Wisconsin on Wednesday, July 28, to assess the damage from the Thursday evening, July 22, flooding in Milwaukee County, which was caused by torrential rains, according to this Wednesday, July 28, Milwaukee Journal-Sentinel story.  The extreme weather caused a power outage at the Milwaukee State Office Building, prompting Wisconsin Governor James Doyle to close the site and ask state employees to stay home on Friday, July 23.  Private-sector insurers are receiving hundreds of damage claims, too, the Journal Sentinel reports.

Gordon Ito is the new Hawaii insurance commissioner:

Governor Linda Lingle announced Ito’s appointment in this Monday, July 26, news release.  KITV, Honolulu’s ABC affiliate, picked up on the news that same day.  Commissioner Ito had been the department’s chief deputy insurance commissioner since 2000 and succeeds Commissioner J.P. Schmidt, who had served as the state’s top insurance regulator since 2003.  Schmidt resigned a few weeks ago to join a Honolulu law firm.

The New Mexico Independent had the details on Superintendent Franchini’s appointment in a Tuesday, July 27, article.

Commissioner Sandy Praeger (R-Lawrence), who is seeking a third, four-year term as Kansas insurance commissioner, has spent more than $140,000 to fend off a Republican primary rival, David Powell, an El Dorado, Kansas, insurance agent, in the months leading up to the Tuesday, August 3 statewide election, according to this Monday, July 26, Associated Press story.

Haley will be attending Columbia University on a Knight-Bagehot fellowship, studying economics and business journalism. Haley had been handling insurance content on CNNMoney.com, as well as personal finance topics for CNN.  Her first jobs at CNN were as Geri Willis’s assistant and then her producer.  Willis is now at Fox Business Network, hosting The Willis Report weekdays at 5 p.m., ET.  For CNN story pitches and ideas going forward, Haley said to contact either Jennifer Icklan at Jennifer.icklan@turner.com or Jennie Bragg at Jennifer.Bragg@turner.com.