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, September 30, please email Michael Barry at michaelb@iii.org.
NAMIC releases its latest Issue Analysis paper:
The Financial Crisis, Systemic Risk, and the Future of Insurance Regulation, authored by Dr. Scott E. Harrington, the Alan B. Miller Professor of Health Care Management and Insurance and Risk Management at the Wharton School of the University of Pennsylvania. The paper provides an overview of the causes of the financial crisis and the failure of American International Group, while simultaneously exploring the sources of systemic risk, whether insurance poses systemic risk, and whether a systemic risk regulator is needed for insurers.
Bob Hartwig gives presentation in Australia on economic issues and insurance:
His presentation, the Geo Political and Economic Issues Affecting Catastrophe Risk Funding was given at a conference sponsored by Aon Benfield Australia Limited on the theme of probable maximum loss, frequency vs. severity. The report notes that the global economic crisis that began in the U.S. subprime mortgage sector in mid-2007 spread with remarkable speed and ferocity to challenge the operations of every segment of the global financial services industry, including insurance.
Annuities Suitability Podcast completed:
A VNR and pod cast http://inr.mediaseed.tv/Annuities_36999/ on annuity suitability has been completed and a new release was issued and promoted on Facebook and Twitter.
Atlanta Journal-Constitution looks at flood losses in Georgia:
Michael Kanell’s article quotes Georgia Insurance Commissioner John Oxendine who estimated the damage at a quarter billion dollars and called the flooding the worst he has ever seen in metro Atlanta. David Colmans of the Georgia Insurance Information Service pointed out that the water is still high in some places, keeping people from being able to get to their properties. Economist Roger Tutterow of Mercer University noted that that the economic impact of the flooding will be limited and that a surge in repairs will stimulate the area’s economy.
GAO report dubs FEMA poor watchdog:
An article by Becky Mowbray of the Times-Picayune looks at a new report from the Government Accountability Office, entitled “Opportunities Exist to Improve the Oversight of the WYO Program,” which says that FEMA does not know how much it pays to private insurance companies that sell and administer policies through the National Flood Insurance Program and has no idea of the profits involved. Robert Hartwig, was quoted saying that the report says nothing disparaging about insurers. “The report is not accusing insurers of any impropriety,” Hartwig said. “It’s up to FEMA, working with insurers, to determine what an appropriate return is on these policies.” The full GAO report can be accessed at http://www.gao.gov/new.items/d09455.pdf
Former Alabama insurance commissioner says new bill bad for international reinsurers:
Walter Bell, chairman of Swiss Re American Holding Corporation and a former Alabama Insurance Commissioner had an op-ed in the Sun-Sentinel on Sept. 21 which addressed HR 3424, a bill before the U.S. House of Representatives that would impose a significant tax on internationally based reinsurers as part of a crackdown on supposed “tax havens.” Bell says the proposal would negatively impact all international reinsurers that help rebuild businesses and lives after catastrophes. And because international reinsurers get no U.S. tax benefit from losses on their U.S. business, he says, the bill would create an uneven playing field by taxing international reinsurers twice, once in the U.S. and again in their home country.
Business Week story on Med Mal now on newsstands:
Catherine Arnst’s article, The Truth About Malpractice Lawsuits notes that most studies show costs associated with malpractice lawsuits account for only one to two percent of the nation’s $2.5 trillion annual healthcare bill and that the effects of tort reform would be negligible. The article provides the example of Texas, which enacted extensive malpractice reforms in 2003, resulting in a 50 percent drop in the number of lawsuits in the state and a decrease in malpractice premiums of 30 percent. Nevertheless, Texas still ranks among the most expensive states in the U.S. in healthcare costs.
Time magazine spotlight on Med Mal Reform:
Kate Pickert, the author of the piece, notes that there is a consensus between Republicans and Democrats that current malpractice law is often unfair and inefficient but no consensus on how to fix the system. The article includes illustrations showing malpractice insurance costs for obstetricians in three cities (Los Angeles, Minneapolis and Miami), the amount of each dollar of malpractice premiums that goes toward awards, the average malpractice award in 2008 the percentage of malpractice awards arrived at in court and out of court, the percentage of patients injured by medical negligence who file claims and the approximate percentage of malpractice awards that goes to plaintiffs’ attorneys.
National Law Journal focuses on changes in the tobacco litigation environment in its September 21 edition.
The author, Amanda Bronstad in her piece, The Bloom is Off the Rose for Tobacco Claims (subscription required) cites the recent example of a Los Angeles jury that awarded $13.8 million in punitive damages in the retrial of a case where, seven years before, a different jury had awarded a record $28 billion. While hard statistics on recent personal injury lawsuits against tobacco companies are not easy to find, an increasing body of anecdotal evidence seems to show that jurors are less willing today to impose severe punitive damages awards than jurors were 10 years ago, according to the article.
Number of female drivers pass male drivers on U.S. roads:
That’s according to a USA Today Snapshot by Anne Carey and Sam Ward in the Sept. 21 edition. It shows the numbers of male and female drivers in the U.S. from 2002 to 2007. Over that period the percentage of male drivers dropped from 50.2 percent to 49.8 percent and female drivers rose from 49.8 percent to 50.2 percent.
Financial crisis leads to inflation of ratings:
WSJ.com’s Serena Ng and Aaron Lucchetti’s piece Congress Takes On Credit Ratings states that the financial crisis has led to criticism of credit rating firms for providing overly optimistic ratings of complex debt securities, which declined in value soon after receiving high ratings, causing investors to lose billions of dollars. Eric Kolchinsky, who recently left his position as an analyst at Moody’s Corp., said that after months of inquiries by regulators and some internal changes at the rating firms, inflated ratings are still being issued.
Chicago public radio marks one-year anniversary of economic collapse:
This one-hour special aired on the program “This American Life,” was a special collaboration with NPR News and looked at the housing crisis and what it had to do with the turmoil on Wall Street, why banks made half-million dollar loans to people without jobs and the similarities with the Great Depression of the 1930s.
Health care and the uninsured in America:
USA Today’s Dave Merrill did a special section on healthcare which consists of a map of the U.S. showing the percentage of people by state who were uninsured in 2008 and bar charts showing the uninsured rate by age, ethnicity, employment status and household income.
Life settlement business booming but rife with risks and scams:
According to this Oct. 5 article by William Barrett for Forbes magazine, people who are disappointed by the amount of cash value they have accumulated from their life insurance policies there are three choices: accept a meager cash-out value from the insurer, continue paying premiums to maintain the death benefit for heirs or sell the policy to a stranger. The article explains how life settlements work, focusing on the risks for policyholders. It also advises sellers to avoid the many agents trolling the Internet and to find an expert who can be trusted. The article discusses the reasons life settlement fees are so high, provides an example of why a skilled tax advisor may be needed and discusses controversial "stranger-originated life insurance," policies purchased with the intent of selling them soon afterward.
Distracted Drivers and insurance implications for employers:
Matt Richel of the New York Times (415-665-5430; mattr@nytimes.com) is focusing on sales reps and others who use their cars as mobile offices and is looking at the insurance implications for their employers.
How costly is violence in the workplace?:
That’s the focus of a story by National Underwriter’s Dan Hays who is looking at the insurance industry aggregate number of claims, dollar amount, percentage change and trends. Those interested in participating can send information to Loretta Worters at lorettaw@iii.org
Deer/Auto crashes of interest to media:
Josh Max, an auto journalist with AOL Autos, is doing an article entitled, “How to Avoid Deer on the Highway.” He is looking for tips and information. He can be reached at: 212-713-5555; jmaxroadtest@aol.com. In addition, Bloomberg reporter Jamie McGee is also working on this issue. She can be reached at 212-617-4652;
Story on cost of homeowners insurance to appear in December issue of Angie’s List:
Emily Udell’s story, which focuses on the cost of homeowners insurance, how rates are determined and the issue of coastal property insurance affordability/availability will appear in the December issue of their web site.
Alabama Gubernatorial Candidate Wants Home Insurance Rate Hikes Reviewed:
An article in the Mobile Press Register taken from an Associated Press story reported that Bill Johnson, a Republican candidate for governor, has asked the Alabama Department of Insurance to reconsider rate increases on homeowners insurance recently approved for three of the four companies that insure the most homes in the state.
Bloomberg adds additional insurance reporter:
Ms. Jamie McGee has moved over to the insurance beat from general finance at Bloomberg News. Jamie can be reached at 212-617-4652; jmcgee8@bloomberg.net.
Former Forbes reporter now at AOL:
Carrie Coolidge started her new position at AOL’s website "Luxist.com" two weeks ago. She can be reached at carrie.coolidge@corp.aol.com.
Memorial Service held for William Bailey:
The Memorial Service for Dr. William Bailey was held at Trinity Church in Waltham, MA on Saturday, September 26. Dr. Bailey, who was special counsel to I.I.I., died of cancer on Friday, Aug. 21. For those wishing to send condolences to his wife, please contact Loretta Worters at lorettaw@iii.org
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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