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The Insurance Daily
will not be published on Friday, July 3.
Have a safe and happy Fourth of July Weekend.
1. WORLD INSURANCE SET FOR RECOVERY IN 2010: SWISS RE. No byline. Agence France
Presse. 06/30/2009. Page N/A. On
June 30 Swiss Re, one of the world’s largest reinsurers, released a study
predicting that the economic activity of the world insurance market would
continue at a reduced level in 2009 and recover with a general improvement
in the economy next year. Growth
in world life insurance premiums, which represents the industry’s leading
source of earnings, will remain at a low level and may even decline this
year as turmoil in the stock markets and high unemployment interfere with
sales of some savings funds.
Daniel Staib, one of the authors of the study on insurance markets
in 2008, said that as the economy recovers, the industry is expected to
see higher life premiums and better investment results as asset prices
gain strength. Staib said that
profitability, shareholder capital and the ability to raise capital are
all expected to improve. Staib
said that in the medium and long term, the outlook for life insurance is
good but demand for other types of insurance is likely to remain
unchanged and closely correlated with economic conditions. (Editor’s
note: the World Insurance study is posted on the Web at (http://www.swissre.com/pws/research%20publications/sigma%20ins.%20research/sigma_no_3_2009.html)
2. AS HAGGLING FOR AIG UNIT CONTINUES, PRICE FALLS. Jenny Strasburg and Liam
Pleven. The Wall Street Journal. 07/02/2009. Page C3. American International Group Inc. (AIG)
has been unable to reach an agreement with any potential buyers of its
asset management business. As
another exclusive negotiation period passed at the beginning of July, it
appears that the price of the business has declined. AIG, under pressure to sell off assets
to pay back tens of billions of dollars received in a government bailout,
has been negotiating exclusively with a group led by Franklin Templeton
Investments Inc. The group is reported to be seeking to buy AIG
Investments, a division that manages approximately $85 billion in assets
for clients that include pension funds and other insurance
companies. The initial exclusive
negotiating period ended in mid-June but was extended by two weeks. The extension has expired with inside
sources reporting that no agreement has been reached on price and
terms. On July 1 AIG shares
declined by 22 percent after a reverse stock split of 20 for 1.
3. HIGHWAY CONDITIONS CONTRIBUTE TO OVER HALF OF FATAL
AUTO CRASHES. Ashley
Halsey III. The Washington Post. 07/02/2009. Page B3. On July 1 the Transportation
Construction Coalition, representing trade groups and unions in the road
construction industry, released a study concluding that defects in
highway design and conditions are a factor in more than half the fatal
crashes in the U.S. Ted Miller, one
of the authors of the study, said that these defects are costlier than
speeding, drunken driving or failure to use seatbelts. The study indicates that 22,000
fatalities costing $217.5 billion each year involved road conditions. According to Miller crashes involving
alcohol, speeding and failure to wear seat belts cost $130 billion, $97
billion and $60 billion, respectively.
Nearly 42,000 people are killed in traffic accidents in the U.S.
each year. The study recommends
several improvement to bring roads more closely in compliance with current
standards: adding and widening shoulders, widening or replacing narrow
bridges, realigning crooked roads, requiring breakaway signposts and
light poles, using more brightly colored pavement markings, installing
signs that easier to read and adding rumble strips ad guardrails.
4.
FORMER JUDGE TO LEAD SYSTEM COMPENSATING HURT WORKERS. Steven Greenhouse. The New York
Times. 07/02/2009. Page A19. On
July 1 a spokesman for New York Governor David Paterson said that the
governor has appointed Robert Beloten, who has long served as a workers
comp judge, as chairman of the New York State Workers’ Compensation
Board. Beloten was a workers comp
judge from 1988 to 1996 and from 2000 until last May when he was named
one of the board’s 12 commissioners.
Beloten, who was a law student with Paterson at Hofstra
University, succeeds Zachary Weiss, who stepped down to become a judge in
the Social Security system. As
chairman of the state board, Beloten will oversee a system with an annual
budget of $5.5 billion and 1,500 employees and manages 140,000 cases
year. Beloten said that his
primary goal as chairman would be to shorten the amount of time it took
for claimants to receive benefits. Full Text
5. ING GREOP TO TRIM WORK FORCE BY 10 PERCENT. No byline. The Wall Street
Journal. 07/02/2009. Page C2. On
July 1 ING Greop NV, the Dutch financial services company, announced a
plan to reduce the workforce in its insurance operations in the
Netherlands by 800 jobs, or 10 percent, over the next three years. ING also plans to merge its three Dutch
insurance brands in order to lower costs.
The company expects the reorganization to begin reducing its
annual costs by 2010 and lead to a savings of 100 million euros ($140.3
million) before tax by 2013. RVS
and ING insurance brands will be merged with Nationale Nederlanden
brand. In May ING reported a net
loss of 793 million euros. The
latest job cuts are in addition to the 7,000 ING announced previously.
6. PENSION FUNDS TO LEAD SUIT
AGAINST BANK.
Reuters. New York
Times. 07/02/2009. On June 30, a U.S. District Court Judge
in Manhattan granted a group of five public pension funds the right to
head investor class action lawsuits against the Bank of America
Corporation over its acquisition of Merrill Lynch. The pension plans, including state
funds in Ohio and Texas, are charging that the bank misled them about the
state of Merrill Lynch’s financial health as it was heading to a loss of
$15.84 billion in the fourth quarter of 2008. Full
Text
7. INSURANCE: MANY OF THE NEW COMPANIES
IN FLORIDA ARE UNREGULATED. Shannon Colavecchio and Jeff
Harrington. The Miami Herald. 07/01/2009. Page N/A. Shannon Colavecchio and Jeff
Harrington. The Miami Herald. 2009/07/01. Page N/A. Florida Governor Charlie Crist recently
touted the growth of his state's private insurance market when he vetoed
a bill passed by state legislators to try to get big-name insurers such
as State Farm to keep writing business in the state. Governor Crist
didn't point out that the influx of new insurance capital into the state
came mostly from surplus lines insurers that are unregulated and not
available to typical homeowners. Gary Pullen, executive director of the
Florida Surplus Lines Services Office, described these companies as the
private sector's market of last resort, which usually write polices for
unique, high-risk clients, or cover risks that are unacceptable to the standard
private insurer. Lawmakers who
supported the vetoed legislation say Insurance Commissioner Kevin McCarty
misled the governor by failing to explain to Crist the predominance of
surplus lines insurers in the new capital that has come into Florida since
2006. Governor Crist could not be
reached for comment on this issue. A spokesman for the state's Office of
Insurance Regulation said the fact that roughly 30 homeowner insurers
entered the market over the past few years is proof things are improving.
He said surplus lines carriers
play a key role by insuring "high-dollar, high-value properties like
condominiums Full Text.
8. BEACH PLAN BILL GETS NOD IN HOUSE. David Ranii.
The (N.C.) News and Observer. 07/01/2009. Page N/A. On June 30 the Insurance Committee of
the North Carolina House approved a bill that will require homeowners
across the state to provide financial assistance to the Beach Plan, which
insures nearly 176,000 coastal properties valued at $73.6 billion, if a
catastrophic storm results in more claims that the plan can cover. The bill now goes to the House Finance
Committee. Debate over the
legislation centers on the point at which the state’s homeowners would be
assessed a surcharge of as much as 10 percent on their annual insurance
premiums. Other controversial
provisions would reduce the coverage limits of the plan’s homeowners
policies from $1.5 million to $750,000 and increase the premiums. The current bill would allow insurers
to impose a 10 percent surcharge on homeowners after the companies have
covered a $1 billion Beach Plan deficit.
The plan’s surplus and the reinsurance it has purchased means that
a storm would have to result in approximately $2.4 billion in damages
before a statewide premium surcharge would be required. Full Text
9. INSURANCE MAY COST TOO MUCH IN S.C. Kristy Rupon.
The (S.C.) State. 07/01/2009. Page 1.
On June 30 the South Carolina Legislative Audit Council released a
report suggesting that the state’s consumers could be paying more for
insurance than necessary. The
report concludes that the South Carolina Department of Insurance fails to
adequately document justifications for rate increases. Tom Bardin, director of the audit
council, said that such paperwork as projected loss and revenue sheets
was missing for many of the files audited. Barding said the missing paperwork
prevents a proper review of reasons for rate increases. Scott Richardson, state insurance
director, called portions of the report erroneous or misleading and said
that state law did not require many of the documents in question. Richardson
denied that the approval process was compromised. In 2007 Senate President Pro Tem Glenn
McConnell requested that the audit answer concerns about increasing rates
for workers comp and coastal property insurance. Bardin noted that workers comp rates in
the state went from among the nation’s lowest to one of the highest in
2008. The council concluded that
the department generally regulates the industry appropriately. Full Text
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