SYNOPSIS ALL INDUSTRY CONFERENCE CALL October 5, 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, October 12, please email Mike Barry at michaelb@iii.org.

 

The nation’s largest river remains above flood level near Kansas City but is no longer flooding upstream as the Army Corps of Engineers releases less water from six huge reservoirs, which had filled to capacity in May. The corps released water from the reservoirs at more than twice the record rate from mid-June through the beginning of September. Many homeowners who live outside the designated flood zone are without insurance to cover large repair bills. The article includes maps showing rainfall amounts in the Missouri River basin in May and from Hurricane Irene on the East Coast, according to this Monday, October 3, Wall Street Journal (subscription required) article.

The new “alternative litigation funding market” now includes at least three startup businesses. These funds plan to invest at least a few million in each lawsuit in exchange for a share of the awards, which can be as high as a billion dollars. These new ventures are being criticized for possibly increasing frivolous lawsuits and pressuring defendants to settle. Third-party litigation funding is not new, but these new profit seekers envision a greatly expanded market for speculating on large commercial claims, this Monday, October 3, Wall Street Journal (subscription required) article notes.

 

Although insurance companies may not be faced with oversight from the Consumer Financial Protection Bureau, banks that sell insurance and debt protection will see increased regulation. Banks offer credit insurance or debt protection, which covers or suspends debt in the event of death, unemployment or disability. Consumer advocates contend that these products, which are costly and provide limited benefits, are often unnecessary. The Dodd-Frank Act gave the bureau the authority to review whether banks adequately disclose the terms of the products to consumers. The bureau regulates institutions with total assets over $10 billion, which means that only the largest banks, Wells Fargo and Capital One Financial, in the case of the Washington, D.C. area, will be subject to increased scrutiny, according to this Monday, October 3, Washington Post story.

 

Benjamin Lawsky, the former federal prosecutor who was recently appointed head of the New York State Department of Financial Services, which officially begins overseeing the state’s banks and insurers on October 10, learned last June that his new position was more powerful than he had anticipated. During the last four years Lawksy worked with Governor Andrew Cuomo when he served as the New York Attorney General, and he now has much broader authority to pursue criminal fraud cases. Since June, Lawsky has been holding discussions with Federal Bureau of Investigation agents, as well as lawyers and others he worked with in the past. Lawsky said that he plans to greatly expand the agency’s criminal division, which now only has a few employees, but added that the authority of the new office would be used judiciously. Lawsky, who conducted enforcement actions against numerous banks, securities firms and top executives while working in the attorney general’s office, described himself as “strategically aggressive.” The new agency has a staff of 1,700 and will oversee 3,900 banks, insurers, mortgage brokers, loan servicers and the New York operations of foreign banks, companies with combined assets of approximately $5.7 trillion, according to this Tuesday, October 4, Wall Street Journal (subscription required) story.

 

Spokespeople for the Office of the Special Inspector General for the Troubled Asset Relief Program (TARP) and for Imperial Holdings Inc., a specialty firm that lends money to individuals for the purchase of multimillion dollar life insurance policies, say that TARP inspectors participated in the Federal Bureau of Investigation’s recent raid on Imperial’s headquarters in Boca Raton, Florida. The TARP inspector general’s concerns about Imperial are unclear since the company did not receive any funds from the program set up to provide billions of dollars of assistance to banks, brokers and other financial firms during the financial crisis. Imperial has connections with two companies, American International Group Inc. and Lincoln National Corp., which received assistance from TARP. According to Imperial’s regulatory filings, Imperial obtained lender protection insurance from AIG from 2008 to 2010, and approximately 20 percent of Imperial’s loans have been used recently to pay for policies written by Lincoln. Imperial’s filings also show that the annual interest charged by Imperial for the loans was 14 percent and that high origination fees were required. Insurers and at least one borrower have filed civil lawsuits in federal courts accusing Imperial of transactions involving illegal “stranger originated life insurance.”  This story was reported in this Wednesday, October 5, Wall Street Journal (subscription required) article.

The rule would require power plants in 27 states to lower their emissions. The EPA is soon expected to propose that a rule the agency made final in July be revised so that some states and companies would be able to emit more pollutants than previously allowed, although no information is currently available about which states and companies would be affected. Although the EPA has said that the rule would protect public health and prevent as many as 34,000 premature deaths, opponents argue that it will eliminate jobs, raise the cost of power and make the supply of electricity less reliable. Inside sources say that the changes to the rule are expected to allow emission increases that range from 1 percent to 4 percent higher than set in July, depending on the pollutant, according to this Wednesday, October 5,  Wall Street Journal (subscription required) story. 

The I.I.I.’s Jeanne Salvatore spoke with Black Enterprise magazine on the many ways to save money on auto insurance.

 

The I.I.I.’s Jeanne Salvatore spoke with Kiplinger’s Personal Finance magazine for a story about the “loss of use” fees that rental car companies impose—and how one can best insure against them.

 

The I.I.I.’s Loretta Worters did an interview with Fox Five News (WNYW-TV) on coverage issues after the flooding that took place after Hurricane Irene that aired October 3.

 

Gretchen Becker of Angie’s List(gretchenb@angieslist.com) is doing a story on record storm damages in the United States this year and how it is affecting consumers. Scott Van Voorhis (sbvanvoorhis@hotmail.com) with Insure.com had similar questions on homeowners insurance and all the disasters that are happening in the United States.

 

Karen McCowan (karen.mccowan@registerguard.com) with the Oregon Register Guard newspaper is doing a story on the insurance implications of a stolen car getting into a car accident.

 

Mark Vallet with carinsurance.com (insurancewriterdenver@yahoo.com) is doing a story on auto insurance for pizza delivery drivers. Are they at greater risk for accidents? The story looks at how insurance is being used when young people make deliveries with their personal cars.

 

Craig Guillot (craig@craigguillot.com) is writing a story for Insurancequotes.com on taking a home inventory. He is looking at steps a homeowner can take to make sure they have the right coverage.

 

Lori Johnston (lori@fastcopy.biz.com) is doing a piece for Bankrate.com on motorcycle thefts. She is looking at whether there is a rise in motorcycle thefts and what the insurance implications could be.

 

Insure.com’s Emmet Pierce (epierce@quinstreet.com) is doing stories on faking a death for a life insurance policy and Halloween safety and homeowners insurance.

 

Former Reuters reporter turned freelancer Ed Leefeldt wrote a piece for MSN.com called Insurers’ 10 Dirty Little Secrets which suggested that insurance companies use information and tactics that they would rather consumers not know about. These 10 secrets make them money but can cost the customer. Not only does the article portray the industry in a negative light, but some of the information is factually incorrect. The I.I.I. is contacting Leefeldt.

 

The hearing is “unusual” because it is not about a piece of legislation, rather it is simply to discuss pending regulations proposed by the Department of Banking and Insurance on PIP billing and arbitration. It is anticipated that the industry, and the Department, will come under significant attack by some medical providers and attorneys who have sought this forum with legislators. Deana Lykins of the ICNJ is looking for assistance in responding to a recent media/advertising piece attacking the auto insurance industry. This piece, sponsored by some of the medical providers, was prepared by a firm called Optimity and purports to make connections between PIP premium volume, insurance executive compensation and the notion that no further PIP reform is needed since insurers are supposedly making record profits. A link to that study has been running under a banner advertising headline on the popular PolitickerNJ website.

 

The Travelers Institute, the public policy division of The Travelers Companies, ishosting a symposium on Small Business Tips for Latino Entrepreneurs.The symposium builds on the principles of small business advocacy outlined in its recently released white paper. The event will be held at the Millennium Biltmore Hotel in Los Angeles.  For more information, contact Ashley Maagero at 860.277.2954; AMaagero@Travelers.com.

 

Congress, which is back in session this week, passed legislation that keeps the government running until November 18, 2011. The House vote (352-66) also extends the National Flood Insurance Program (NFIP) until that date. The Senate passed the budget funding legislation last week and President Barack Obama is expected to sign it. The program was slated to expire on Friday, September 30.

 

This Mobile Press-Register editorial criticizes Alabama Governor Robert Bentley for considering delaying the issue of homeowners insurance reform until next year’s regular legislative session instead of calling a special session on the matter in January. The editorial board opines that trying to untangle the knots in homeowners insurance for Alabamians will require legislators to set aside other matters in order to give it their complete attention. Bentley’s Affordable Homeowners Insurance Commission could have a package of legislation ready for lawmakers to consider by January since the commission has held several public forums across the state and will have time to hear from insurance industry professionals before finishing its work. The editorial emphasizes that the state needs relief from high premiums and policy cancellations and notes that coastal area homeowners have suffered for years with the issue.

INSURERS WIN AS (LA.) POST-HURRICANE KATRINA ISSUE IS RESOLVED.

This (New Orleans) Times-Picayune article by Becky Mowbray on Sunday, October 2,notes that two Hurricane Katrina insurance cases dealing with the issue of how flood and homeowners policies interact have been resolved, with the Louisiana Supreme Court finding that a policyholder can recover money under both flood and wind policies but only up to the total value of the loss. The settlement of what is known as the “flood offset issue” favors insurers in that it allows them to deduct money the homeowners get from their National Flood Insurance Program policy from what the insurer might have to pay under the homeowners policy. Federal courts had split on the issue. In Louisiana’s Western District, judges in Hurricane Rita cases ruled in favor of plaintiffs, allowing policyholders to collect the full value of both policies. But federal judges in the state’s Eastern District found in favor of insurers in Katrina cases, stating that insurers could deduct whatever the flood policy paid in potential settlements. The cases discussed are Robin and Hildrith Wegener v. Lafayette Insurance Company and Shirley Frught v. Lafayette Insurance Company. 

The Florida Sun-Sentinel’s Julie Patel had a piece in the paper on Wednesday, October 5, which looks at the new Broward FEMA maps. Fewer Broward County homeowners will live in areas that require flood insurance, according to maps based on new proposed risk data from the Federal Emergency Management Agency. But some homeowners in a few large areas of the county—including parts of Fort Lauderdale, Parkland, Coconut Creek, Deerfield Beach, Pembroke Pines and Hollywood—that that do not need flood insurance now would have to get it. That could cost them thousands more for insurance each year. The maps are not yet final. Broward County will allow property owners and others to examine the maps at meetings in November and the county is preparing an online searchable map with the new flood information. A 90-day appeal processwill start in December. The maps are expected to be final next year.

 

An Auto Insurance Fraud Summit, sponsored by NICB, the Personal Insurance Federation of Florida and the Latin American Association of Insurance Agencies will be held on Tuesday, October 11, from 6:30-8:30 p.m. at the University of Miami. Contact Kelsey Lehtomaa for details at (813) 775-6205; Kelsey.lehtomaa@hillandknowlton.com. Miami residents are invited to the town hall meeting to learn about how rampant auto insurance fraud is dramatically increasing the cost of their premiums and making coverage harder to get. 

I.I.I.’s Lynne McChristian has an editorial board visit planed with the South Florida Sun-Sentinel on Tuesday, October 11. 

Still reeling from last month’s devastating fire, residents in Bastrop County were once again forced to evacuate because of a 1,000-acre wildfire that firefighters were battling Tuesday night. Emergency officials were quick to point out that this fire was different from the devastating Bastrop Complex fire in September. The presence of firefighting aircraft that were not available last time meant quick progress was made against the blaze. It was 25 percent contained by 8:30 p.m. Tuesday, as reported Wednesday, October 5, in the Austin Statesman.

 

 

–The I.I.I.’s Monday, October 3, news release looked at the fact that 2011 is a record-setting year for federal disaster declarations. It has been popular on Twitter and is I.I.I.’s most retweeted item from the last two weeks.

 

–With renting becoming more common than buying a house or apartment, the I.I.I. developed a Renters Insurance Checklist along with a press release to help consumers choose the right coverage. This is also popping up on Twitter.

 

–A trending topic this week is how the changing season brings new road hazards including roads getting darker earlier, falling leaves, and the increase of deer on roads during the mating season which is from October through December. There are blog posts appearing with tips on how to protect yourself from these dangers. The I.I.I. is developing a press release on deer and vehicle accidents.

Nicole LaPorte is now a contributing business columnist for The New York Times. She writes the Prototype column, replacing Amy Wallace. Most recently, Laporte served as senior West Coast correspondent for The Daily Beast. She can be reached at proto@nytimes.com; 212-556-1474.

 

Susanne Sclafane, formerly managing editor of National Underwriter has now assumed her post as senior editor, Research & Editorial, with Advisen. In a press release written on September 26, Advisen says that Sclafane will report on commercial insurance news, and also lead Advisen’s new e-Journal series, beginning with the Advisen Management Liability Journal (MLJ), which will debut in November.  After liability Advisen may be looking at cyber risks. Loretta Worters will be meeting with her on Thursday, November 3.  She can be reached at 212-897-4773; ssclafane@advisen.com.

 

Bobbie Gossage has been named articles editor for Inc magazine. She previously served as the senior editor and an associate editor for the publication. Prior to her time with Inc., she was a staff writer at Worthmagazine and a staff reporter at Equity. Follow Gossage on Twitter at @bobbiegossage.

Ted Pincus who most recently served as a contributing business columnist for the Chicago Sun-Timeshas passed away. He had been a columnist with the paper since 2001. Pincus was also an independent finance consultant and an adjunct professor for DePaul University in Chicago. Pincus was previously the founder and owner of BSMG Worldwide. His work has appeared in The New York Times, The Wall Street Journaland Fortune 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

 

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