SYNOPSIS ALL INDUSTRY CONFERENCE CALL June 30, 2010

Alex made landfall as a Category 2 hurricane on Wednesday evening, June 30, in northeastern Mexico, about 100 miles south of Brownsville, Texas, according to the Associated Press.  A day earlier, on Tuesday, June 29, President Obama signed a Texas Emergency Disaster Declaration.  The I.I.I.’s initial media advisory on Alex was issued on Monday, June 28.

U.S. insurers are benefiting from year-to-date below average incidences of wildfires and tornadoes, while foreign insurers and reinsurers face sizable losses from the February 2010 Chile earthquake and the ongoing oil spill in the Gulf of Mexico, according to this Wednesday, June 30, Bloomberg Businessweek story. U.S. wildfire frequency as of June 28, 2010, was the lowest since 2003, according to the National Interagency Fire Center.  In addition, preliminary data from the National Oceanic and Atmospheric Administration (NOAA) showed that 904 tornadoes touched down during the first half of 2010, killing 29 people, compared with an annual average of 983 tornadoes and 69 fatalities for the same period from 2007 through 2009.  The I.I.I.’s Bob Hartwig is quoted in the story, which also cites data from the Property Casualty Insurers Association of America showing that U.S. catastrophes during the first quarter 2010 cost insurers $2.6 billion this year, 18 percent less than for the same period last year.

The U.S. Senate’s action came on Wednesday, June 30, according to this Thursday, July 1, New Orleans Times-Picayune story.  The I.I.I.’s Mike Barry and Loretta Worters did media interviews over the past week explaining why the NFIP’s status was in limbo for the month of June 2010, and what it meant for current policyholders, as well as the market for flood insurance.  Barry did a taped television interview with Mobile, Alabama’s Fox affiliate and an all-news radio station in Miami, Florida (WIOD-AM), while Worters spoke with Katy Stech of the Charleston (S.C.) Post and Courier (email: kstech@postandcourier.com).

This Saturday, June 26, Washington Post article reports on the accord, which was reached in the early morning hours of Friday, June 25.  Rep. Barney Frank (D-Massachusetts) described the agreement as the best that could be reached in order to win approval. A final and difficult compromise came when Senator Blanche Lincoln (D-Arkansas) agreed to limit the scope of a provision that would have required the largest banks to withdraw from their lucrative business of trading in derivatives, the Washington Post reports. The conference committee also reached an agreement on the Volcker rule that would prevent banks from using their own money in trading operations, an approach referred to as proprietary trading.

New York Times publishes lengthy story on natural disasters, preparedness and insurance coverage: 

With the start of a hurricane season that forecasters have said may be very active, the insurance industry is reminding homeowners of potential risks and how they can prepare, according to this Saturday, June 26, New York Times article. While evacuating a home safely is the priority in a storm, long before one hits homeowners should focus on protecting their property, reporter Paul Sullivan writes. The article quotes the I.I.I.’s Jeanne Salvatore and cites a May 2010 Insurance Information Institute poll that found only 50 percent of Americans nationwide keep an inventory of their possessions in the event they need to file an insurance claim. The same I.I.I. poll also determined that in the southern portions of the U.S., 26 percent of residents mistakenly believe standard homeowners policies cover flood damage.

Martin Sullivan, the former chief executive officer of American International Group (AIG), and Eric Dinallo, New York’s former superintendent of insurance, were among those who testified at the Commission’s two-day (June 30-July 1) hearing in Washington, D.C., on The Role of Derivatives in the Financial Crisis.  The Commission’s website offers details. Dinallo, a Democrat, is seeking his party’s nomination as state attorney general in a primary that will be held on Tuesday, September 14.

Chicago’s CBS affiliate looking into the link between aging tires and auto accidents:

Danae Harris (email: dharris3@cbs.com) has read through some federal studies on the matter and wants to know how many claims nationwide have been reported about car accidents that involved old tires, and how many of these accidents happen, on average, each year.Carol Thompson (email: cjthompson@cbs.com) is looking for a Chicago-area expert who can discuss how tires age and degrade over time. Ms. Thompson sent a missive to PR Newswire’s ProfNet service saying the station was also seeking accident victims in which tires aged six years and older were believed to have played a role in a crash. Safety Research & Strategies has analyzed this issue.

Bergen (NJ) County Record reporter hearing of double-digit percentage premium increases in homeowners market:

Rich Newman of the Bergen County Record (newman@northjersey.com) is prepping a piece on the homeowners insurance market in New Jersey, with the story pegged to homeowners who are seeing double-digit percentage premium rate increases this year.

A Thursday, June 24, tornado caused significant property damage in Connecticut’s most-populated city, according to this next-day Associated Press story.  The Connecticut Post was told by both the Connecticut Insurance Department and the I.I.I.’s Barry that a standard homeowners policy only covers tree removal expenses if the tree hits an insured structure.

Georgia’s insurance commissioner slammed in investigative report broadcast on Atlanta’s ABC affiliate:

Since the call, WSB-TV aired a piece on Thursday, July 1, which was highly critical of Commissioner John Oxendine’s conduct while an attorney in private practice, specifically the way he handled a case that was settled in 1994, the year in which Oxendine was first elected insurance commissioner.  Oxendine is a leading candidate in the state’s Republican gubernatorial primary on Tuesday, July 20. 

Atlanta Journal-Constitution (AJC) asks Consumer Federation of America’s Hunter to weigh in on Oxendine’s legacy as insurance commissioner:

The AJC story on Oxendine’s political career was posted online on Saturday, June 26, and can be found here.

South Florida Sun-Sentinel examines GAO findings on Florida Hurricane Catastrophe Fund, state-run Citizens Property Insurance Corporation:

The federal Government Accountability Office (GAO) issued a report in mid-June saying the two entities were vulnerable to a maximum possible loss of $2.57 trillion—more than the risk of all the other state residual market programs combined, according to a Thursday, June 24, blog entry in the South Florida Sun-Sentinel.  The GAO’s argument supports the position of www.smartersafer.org, a coalition opposed to national catastrophe fund legislation, such as the Homeowner’s Defense Act, notes Sun-Sentinel reporter Julie Patel. On Thursday, July 1, Patel updated the aforementioned blog item when Florida insurance regulators contested the GAO’s figures.

Ratings firm questions the financial strength of the newest entrants into Florida’s homeowners insurance market:

Jupiter, Florida-based Weiss Ratings issued on Monday, June 28, a news release/study which found that, in most hurricane-prone states, homeowners have few insurance coverage choices, with just eight property and casualty insurers in each state controlling up to 77.2 percent of the market share.  Meanwhile, Florida residents have more companies to select from when shopping for homeowners insurance, with eight companies controlling only 38.4% of the market share, according to Weiss. “But while the risk has now been spread among more players, the financial strength of the new [Florida] entrants is questionable, and consumers must monitor the health of the insurer they select, especially in light of the forecast for another active hurricane season,” stated Weiss Ratings vice president Melissa Gannon.  Many Florida start-up companies that received policies from Citizens in recent years are financially unstable, Weiss notes, citing by name Royal Palm Insurance Company and Edison Insurance Company (both founded in 2006) as well as Peoples Trust Insurance Company (founded in 2008).

TheNashville Tennessean published on Sunday, June 27, an Associated Press story that said a University of Illinois study showed the New Madrid seismic zone is capable of producing a 7.7 magnitude earthquake that could devastate parts of the central U.S., killing 3,500 people, injuring more than 80,000 others and leaving more than seven million people homeless. St. Louis and Memphis would be the hardest-hit cities, the Illinois researchers theorized. The study was commissioned by the Federal Emergency Management Agency (FEMA), the article added.

Cincinnati Enquirer reports more than 20 Ohio municipalities now bill auto insurers for police response costs when an accident is caused by an out-of-town motorist:

Dayton, OH-based Cost Recovery Corporation has been retained by many of these municipalities.  CRC bills the at-fault driver’s insurance company for the time the municipality’s police spend on an accident if the driver is not a resident of the community in which the accident occurred. If the insurance company does not pay the bill, usually between $250 and $500, it goes to the driver, according to this Monday, June 28, Enquirer article.  The piece is pegged to North College Hill, Ohio’s vote earlier this month to contract for this service with Cost Recovery Corporation. CRC gets 10 percent of the total revenues a municipality secures through either an auto insurer or the out-of-town driver.

New single-family homes and duplexes in Baltimore must be equipped with automatic sprinklers:

This Tuesday, June 29, Insurance Journal article has the details.

Automobile Club of Southern California applies for right to sell ‘pay as you drive’ policies:

The California Department of Insurance announced the news in this Tuesday, June 29, statement.