SYNOPSIS ALL INDUSTRY CONFERENCE CALL October 27, 2010

The magazine posted Hartwig’s comment in response to University of Minnesota law Professor Daniel Schwarcz’s article in the October 26 online edition.  Hartwig authored the op-ed, Greater Choice Key To Homeowners Market, which was published in NU’s Oct. 11 edition in response to Professor Schwarcz’s presentation to the NAIC in Seattle in August 2010.  Professor Schwarcz then authored the rebuttal Debate Continues over Homeowners Policy Transparency. 

Former Reuters reporter Ed Leefeldt(litenair@aol.com), is doing a story for Insure.com based on Professor Schwarcz’s study.  The I.I.I.’s Hartwig spoke with Leefeldt and discussed many of the same things Hartwig cited in his National Underwriter op-ed and letter to the editor. 

The storms, which brought strong winds, heavy winds and tornados to many parts of the country, including the Midwest all had insurance implications. The I.I.I. offered up insurance experts and resources including videos and podcasts in the advisory. 

This web site, developed by the University of Rhode Island’s Graduate School of Oceanography with financial support from the National Science Foundation, was launched October 26 at a hurricane symposium in New Orleans. Jeanne Salvatore gave a presentation at the symposium on the insurance implications of hurricanes.  

Combs, a little known hedge fund manager, was chosen by Buffett as his most likely successor as chief investment officer of Berkshire Hathaway Inc. when Buffett retires. This was widely reported in the news yesterday, including The Wall Street Journal by Susan Pulliam and Serena Ng, the New York Times, Forbes.com and Bloomberg, among others.  The WSJ story reports that the company has appointed Combs as overseer of part of Berkshire’s investment portfolio, holdings totaling approximately $100 billion. The selection of Combs comes as a surprise, particularly since the fund he recently managed had assets of only approximately $400 million and invested primarily in financial services companies. Buffett said that Combs would not be managing Berkshire’s entire portfolio before he steps down and that he intended to continue to serve in his dual function as CEO and CIO.

The New York Times’ Mary Williams Walsh reported that Neil Barofsky, the inspector general for the Troubled Asset Relief Program (TARP), has issued a report concluding that the U.S. Treasury Department concealed a likely $40 billion in losses on the government’s bailout of American International Group (AIG) when Treasury changed its standard approach to valuing assets. In an interview on October 25, Barofsky described the abandoning of the usual method of valuation as a significant failure in transparency at the Treasury. A U.S. Treasury Department spokesperson denied Barofsky’s conclusion that the change in method of valuation was intended to mislead. The Treasury official said that the smaller loss was based on projections, and the earlier estimate was based on an audit that included only realized gains and losses.

This was widely reported in both national and trade publications.  Wall Street Journal’s Joan Solsman wrote that Robert Benmosche wrote a letter to his employees, explaining that he had begun aggressive chemotherapy and that it would be a couple of months before his long-term prognosis would be known. Benmosche, who is 66 and keeping a normal schedule, emphasized that he is feeling fine and remains fully committed to his job, AIG and its stakeholders. Robert Miller, chairman of AIG, said the board is confident that Benmosche and the board would continue to work smoothly on the company’s plan to repay taxpayers.

New York Times covers Indonesian disasters:

According to this October 27 article by Aubrey Belford, a powerful earthquake off the coast of Sumatra Island and the tsunami that followed killed at least 113 people, left hundreds missing and destroyed the homes of thousands. That same day thousands of villagers on the island of Java, 800 miles to the east, fled numerous eruptions of Mount Merapi, Indonesia’s most active volcano. The eruptions killed 25 people and injured at least 15. Experts say that the two disasters were probably not related since the earthquake was not large enough to have jolted the volcano.

 GlaxoSmithKline has agreed to pay $750 million to settle criminal and civil complaints about the sale of contaminated baby ointment, an ineffective antidepressant and other drugs, according to this New York Times article. The company agreed to pay $150 million to settle criminal charges and $600 million in civil penalties. The settlement is the latest in an increasing number of large payments drug companies have made to resolve lawsuits based on allegations from whistle blowers. The drugs involved in the settlement include Paxil, an antidepressant; Bactroban, an ointment; Avandia, a diabetes drug; Coreg, a heart drug; and Tagamet, an acid reflux drug. No patients are known to have been made ill because of problems with the drugs. Several of the recent lawsuits against drug companies have contended that patients have been misled. The lawsuits also argue that state and federal governments have been defrauded because many of the drugs in question were paid for through the Medicare and Medicaid programs.

 This was reported by Laurie Burkitt of The Wall Street Journal on October 27. The stricter product safety regulations are aimed at preventing the export of defective and dangerous products and resolving trade disputes between the U.S. and China. On October 25, Zhi Shuping, head of China’s Administration of Quality Supervision, Inspection and Quarantine, met with U.S. and European consumer safety officials and said that the nation’s manufacturers will be held accountable for the safety of their products. China intends to cooperate with U.S. and European agencies on an initiative to provide Chinese manufacturers with safety and testing standards. One of the primary goals of the initiative will be to remove high levels of caustic metals such as lead and cadmium from Chinese products. Recently during a trip to China, U.S. Consumer Product Safety Commission Chairman Inez Tenenbaum cited the import of tainted Chinese drywall in calls for increased regulation.

Newsday’s Tom Incantaluponoted in his October 27 storythat the ranking is based on consumer complaints. In the evaluation of 167 insurers, Nationwide Mutual Insurance Co., ranks first without a single upheld complaint. Long Island Insurance Co. ranked 165 on the overall list, and ranked lowest among companies that collect $1 million or more in annual premiums. The department said that 265 complaints against Long Island Insurance Co. had been upheld. On October 19 a New York state court justice, in response to a request from the state’s insurance department, ordered the liquidation of the company.

 American Banker’s Donna Mitchell reported on October 27 on a new study by Allianz Life Insurance Company of America which  found that almost 84 percent of younger survey respondents said that they were more concerned about the safety of their money now than a few years ago. Katie Libbe, vice president of consumer marketing and solutions at Allianz, said that this cautious attitude is motivating them to think more about using annuities in their investment portfolios. Specifically the study found that 19 percent of younger baby boomers (in their mid to late 40s) reported having hired a financial professional and 41 percent said they were receptive to hiring one. Twenty-two percent said that the thought of having to provide for themselves and their families in retirement was overwhelming.

This was reported in UPI and CNN.Money.com as well as national papers including the Boston Globe.  Problems with high pressure fuel pumps in various 2007 through 2010 models prompted the recall.  The company said power steering and power brakes would cease functioning if the engine shuts down due to fuel pump issues.

Smart Money prepping piece on insurance rates for hybrid cars:

Smart Money’s Anna Prior (212-416-2207) is doing a story about the costs of going green, specifically about insurance rates for hybrid cars. The story is based on a study by Mitchell International, a leading provider of information and workflow solutions to the Property & Casualty Claims and Automotive Collision Repair industries. They noted that premium rates for hybrid vehicles may go up as much as 20 percent in the next 6-12 months.  Prior is looking for trends and data. 

Peter Greenbaum (312-337-4288; peteportage@mac.com) is looking to write a story about the link between drivers who are convicted of DUI/DWI offenses, and insurance rates.  He wants to know the insurance coverage options for drivers meeting these criteria, and the most common misconceptions about acquiring insurance for drivers with a DUI or a DWI on their record.

Freelance writer Emmet Pierce (communications@emmetpierce.com) is doing a piece for Insure.com based on the reality show Sister Wives.  The seven-episode series follows advertising exec Kody Brown – who lives in Utah with his 13 children – as he courts a potential fourth wife, who has three kids herself.  Emmet has been asked to do a piece exploring the insurance implications for Mormons including life, auto and home.  

Jeff Steele (scribsteel@ameritech.net) is writing about the new Federal Insurance Office for Insure.com and the expected role of the office and whether the FIO will make a difference for consumers.

A two-part Sarasota Herald-Tribune series contended that, since the state’s last spate of hurricanes in 2004 and 2005, a dramatic shift has taken place in the property insurance marketplace. Two-thirds of homeowners insurance premiums now leave Florida as unregulated payments to largely offshore reinsurers, according to this story that appeared in the October 23 paper.

Paige St. John had a story in the October 25 issue of the Sarasota Herald-Tribune.  This second in a series of major investigative articles about the effects of reinsurance and reinsurance companies on Florida’s troubled property insurance market. The article contends that after bad hurricane seasons in 2004 and 2005, Floridians took another hit — from Bermuda reinsurers resulting in double and triple their rates.  The article noted that the average home insurance premium increased 80 percent, with residents near the coast seeing increases of 300 percent. Over 300,000 Florida families lost their private coverage and were forced to find a new company or join the state-run insurer of last resort, Citizens.

South Florida Sun-Sentinel’s Patel may write about rebuilding coverage:

Julie Patel is doing research on the topic, and will likely file a story on the issue sometime soon.

This op-ed in the October 26 Gainesville Sunby FIC President Cecil Pearce looks at the private reinsurance market. Pearce notes that no region benefits more from private market reinsurance than the Sunshine State. Reinsurance enables even locally focused companies to protect themselves from catastrophic losses by obtaining coverage from a network of foreign and domestic reinsurers who diversify and spread complex risks, like Florida’s hurricane threat, across the globe, Pearce writes. If risk is effectively spread, no single company is saddled with a financial burden beyond its ability to pay, FIC’s president states.

This Sun Herald October 25 article reports that U.S. Rep. Gene Taylor (D-MS) said he voted for U.S. Senator John McCain for president in 2008.  Rep. Taylor’s statement received widespread coverage including CBS News, Politico, the Daily Caller and the Hill.

U.S. attorney general’s office refuses to dismiss whistle-blower lawsuit involving Hurricane Katrina claims practices:

The Biloxi Sun-Herald’s Anita Lee wrote in this October 25 article that the U.S. Attorney General’s Office has refused to dismiss permanently Forensic Analysis and Engineering Corporation from a Mississippi whistle-blower lawsuit involving Hurricane Katrina claims adjusting practices.

Marisa Taylor has joined SmartMoney as a reporter. She was previously a reporter for The Wall Street Journal, a blogger for Digits and a reporter for Red Herring.

60 Minutes Overtime is a new web show that debuts the week of October 25. Overtime will feature original web videos with new angles on 60 Minutes reports, conversations with correspondents, and revealing moments from its 40-year archive.  The web program’s co-executive producers are Bill Owens and Jeff Fager.  The online editor is Ann Silvio.