A U.S. House subcommittee chairman may be in a standoff with state insurance regulators over the State Modernization and Regulatory Transparency Act. After reviewing an April 22 National Association of Insurance Commissioners' report on the proposed legislation, Rep. Richard Baker, R-La., wrote a May 16 letter to Pennsylvania Insurance Commissioner Diane Koken calling the report "35 pages of objections" and added that he is still waiting for NAIC to propose "a meaningful, enforceable, and effective proposal" for reform.
SPITZER A SAVIOR?
Three out of four executives and analysts surveyed at Standard & Poor's Corp.'s annual insurance conference in New York in June believed that the insurance industry will be better off because of increased disclosure resulting from New York Attorney General Eliot Spitzer's investigations. As for the biggest concerns of the approximately 100 surveyed, the top two were price competition (with 39 percent of responses) and increasing regulatory risks (with 37 percent of responses).
Arthur J. Gallagher & Co. announced in May that it had reached a settlement with the Illinois attorney general and the director of insurance of Illinois regarding investigations into its compensation practices. The Itasca, Ill.-based brokerage agreed to form a $27 million fund for some of its retail clients. The world's fourth-largest broker will also stop collecting contingent commissions on retail business and carry out other business-practice reforms. For their part, state authorities did not file a lawsuit against the firm.
RRGS ON THE RISE
Risk retention groups produced nearly $2.2 billion in premiums last year, according to an analysis by Pasadena, Calif.-based Risk Retention Reporter. The figure represents a 26.4 percent increase over last year and the third consecutive year of double-digit increases. One explanation may be that RRGs increased in number by 45 to 186 groups. Existing RRGs can also be expected to attract new members and expand their lines of coverage. Still, RRG formation has slowed in 2005 because of improving conditions in the traditional market.
The United States is at risk for economic disruption if another major terrorist attack occurs, according to the new RAND Corporation study, "Trends in Terrorism." The researchers from RAND's Center for Terrorist Risk Management Policy suggest that the U.S. terrorism insurance system fails to provide businesses with adequate financial protection. They recommend that Congress consider proposals to lower the cost of terrorism insurance to encourage more businesses to buy it.
Insurers may face a one in three chance of large hurricane catastrophe-losses in the United States during this hurricane season, a modeling vendor says. Thefirm based its analysis on past seasons' catastrophe-losses and the most recent 2005 forecasts from the National Hurricane Center, which predicted seven to nine hurricanes in the Atlantic basin. Since 1950, 12 other seasons played out similar to the one forecasted for 2005.
The debate over the tort litigation crisis is driven by hyperbole, faulty evidence and "secret" data, according to "The Frivolous Case for Tort Law Change," a recent study by the Economic Policy Institute. The authors, economist Lawrence Chimerine and attorney Ross Eisenbrey, found no evidence to link the tort litigation crisis with economic difficulty. Nor did they uncover any evidence to connect benefits to proposed tort system reforms.
--Compiled by staff from news and wire reports.
August 1, 2005
Copyright 2005© LRP Publications