Claims Magazine - Personal Lines Terrorism Exclusions Fail to Win NAIC Endorsements In late January, members of the National Association of Insurance Commissioners came to an agreement regarding how to handle filings for terrorism exclusions on personal lines and automobile policies, with 45 of them deciding not to endorse terrorism exclusions. “It is the sense of the NAIC membership that terrorism exclusions are generally not necessary in personal lines property and casualty products to maintain a competitive market, and they may violate state law,” said Terri Vaughan, NAIC President and Iowa Insurance Commissioner. “However, we recognize that state laws vary in their authority and discretion. Further, there may be unique company circumstances that need to be considered in individual cases. We expect these cases to be limited.”

National Underwriter - A research study of the workers‘ compensation system in eight large states has found Texas is leading the list for medical costs. The major driver behind high Texas medical payments is the growth in chiropractic visits, according to the not-for-profit Workers‘ Compensation Research Institute in Cambridge, Mass. WCRI looked at California, Connecticut, Florida, Georgia, Massachusetts, Pennsylvania, Texas and Wisconsin--a group of states they said represents 40 percent of the benefits paid in the nation. The study for the 1996-1999 period found that the average medical payment per claim was $2,413 in Texas, or more than double the per-claim average of Massachusetts, which was lowest at $1,125. The WCRI said that Texas has higher medical payments per claim because the number of visits for treatment is higher than other states.

Claims Magazine - A growing awareness exists that companies in our industry are not attracting and retaining enough talented people. Although insurance companies, independent adjusting firms, third-party administrators, brokers, and even customers all seem to be aware of this issue, the industry as a whole seems to be unable to deal with it effectively. The problem does not appear to be, as some might suspect, a lack of executive awareness. The survey of claim executives published in the October 2001 issue of Claims revealed that attracting and retraining good workers was their highest rated issue for claim operations, coming in above issues such as the company’s financial strength, automation, customer relationship management, and the litigious environment.

National Underwriter - Efforts to cut workers' compensation system costs through managed care and other initiatives have slowed nationwide, and two states have dropped managed care mandates, a research organization reported. The findings were released by the non-profit Workers' Compensation Research Institute in Cambridge, Mass. in its seventh edition of "Managed Care and Medical Cost Containment in Workers' Compensation: A National Inventory, 2001-2002." According to the report's lead author, Ramona Tanabe, states are focusing on evaluating the effects of past medical cost containment moves "before moving forward with a new round of activities." She said there is also more interest in studying the impact that medical cost containment initiatives have on "the quality of care received by injured workers.

National Underwriter - Following over a decade of declines, the price for commercial lines insurance began to increase in 2000. Price increases accelerated with 2001 renewals. Following the horrendous losses to commercial lines insurers as a result of the events of Sept. 11, businesses are expecting even higher rates of increase in 2002. As opposed to prior hard markets, businesses in 2002 have a lot more options to manage exposures than through the pure transfer of risk by insurance. In considering these options, businesses need to assess when the current upturn in pricing will peak, and when pricing will return to rates that clients consider acceptable. As shown in Chart 1, prices for commercial lines insurance began to increase in 2000, following 12 years of decline.

Claims Magazine - Saying that because both towers in the World Trade Center complex could have been destroyed by a single plane, insurers are arguing that the event should count as one insured loss. A lawyer for Travelers Indemnity told a federal court in mid-January that one hijacked airliner could have felled both towers because they shared a six-story basement, according to the Associated Press. The collision of the first plane “may well have rendered the second building unusable even in the absence of a second airplane,” said attorney Harvey Kurzweil at the hearing. Seeking to limit its payout to the leaseholder of the complex, Larry Silverstein, Swiss Reinsurance filed suit in late October, asking a judge to declare that the attack constituted a single occurrence. The company has commissioned engineering studies to back up its contention that the first hijacked plane’s impact with the first tower would have destroyed the second tower.

National Underwriter - With a median jury award of $268,926 , age discrimination plaintiffs won the most money among all types of plaintiffs in employment discrimination cases between 1994 and 2000, according to a study by Jury Verdict Research. Announcing the study yesterday, the Horsham, Pa.-based firm said that the median award for all types of employment discrimination cases in that time-period—sex, race, disability, and age—was $150,000. Disability claims came in a distant second behind age claims, with a median award of $175,001, while sex and race case median awards were $100,000 and $120,951, over the 1994-2000 time period. Analyzing award amounts by year, the study found that the median award for all types of discrimination cases in 2001 was $218,000—44 percent higher than the median of $151,000 reported for 2000.

Insurance Information Institute - Many policyholders have seen the price they pay for auto and homeowners insurance increase over the past year. In 2001, the average cost of insuring cars and homes both rose by six percent nationally. Similar increases are projected for 2002. The increases may have taken some policyholders by surprise given that they came after several years of flat to decreasing prices. While these increases translate into a relatively modest $40 for the average homeowner and $45 per vehicle, many policyholders are understandably concerned about higher insurance costs and have been left wondering why their premium rose and what they can do to keep costs down in the future.

Claims Magazine - Despite higher than usual hurricane activity, the 2001 Atlantic hurricane season officially ended in late November with no hurricanes making landfall in the U.S., for the second year in a row. “The respite in hurricane landfalls can be attributed partially to luck, and a persistent trough near the U.S. East Coast that helped steer away the storms,” said Max Mayfield, director of the National Hurricane Center. Several of this year’s storms stayed well to the south, moving westward through the Caribbean, following the easterly steering winds, while other potential hurricanes were weakened by unfavorable upper-level winds, he explained. Three new records were set in 2001, however. It was the first season with nine hurricanes forming after Sept. 8, including the very tardy arrival of Hurricane Olga on Nov. 26.

Claims Magazine - In a move applauded by insurance trade groups, California’s governor has vetoed a workers’ compensation reform bill for the third year in a row. The bill failed to adequately balance increased benefits with cost-saving reforms, according to the National Association of Independent Insurers. “We don’t dispute that injured workers need higher benefit levels,” said Sam Sorich, vice president and western regional manager for the NAII. “However, California must balance any benefit adjustments with substantive reforms that address the major problems that are escalating workers’ compensation costs.” “California’s workers’ compensation system is broken and it must be fixed,” said Mark Webb, vice president for state affairs for the American Insurance Association. “