Sanford defends insurance strategy

Letting free market work is best way to ease coastal crisis, governor says

Wed, Apr. 25, 2007

By JENNY BURNS - jeburns@thesunnews.com

Gov. Mark Sanford defended his free-market reforms for the insurance crisis at a news conference in Myrtle Beach on Tuesday, saying it’s the best way to go in the long run — and it’s attracting carriers to South Carolina.

A billion-dollar surplus lines company — a carrier whose rates are not regulated by the state — is coming to the S.C. coast to write condominium building insurance — a market that greatly needs more carriers on the Grand Strand, Department of Insurance director Scott Richardson said during the news conference at the Myrtle Beach Area Chamber of Commerce.

Richardson said the company will start writing policies in June, up to $25 million per policy, but said he can’t name the company yet.

Condo owners have seen the largest increases in their homeowners association insurance costs on the Strand — as much as seven times — so a new carrier might help condo associations find better prices.

Richardson also said he expects new tiered rates for the wind pool — with those on the oceanfront costing more and those further inland costing less — will be approved in coming weeks.

Sanford wants residents to look closely at the bills being considered in the Legislature because he says knee-jerk reactions, like those of Florida, will only force carriers out of the state.

Florida passed a law to reduce the rates offered by Citizen’s Property Insurance, Florida’s state-run insurer.

“It’s very important that people be watchful of and guard against proposals that will solve this tomorrow,” Sanford said.

Addressing reforms made in Florida, Richardson said, “You do not want the state of South Carolina in the insurance business,” saying the burden will eventually fall on homeowners in Florida when a large hurricane hits.

“We think we’ll see Florida and Louisiana coming to South Carolina to see how we do it,” he said.

New carriers coming into the market, such as Companion Property & Casualty Group, have said more capacity in the reinsurance market and Richardson’s request for help played a part in their decision.

AllState also announced plans to not cancel 2,300 of the policies it had planned to cancel last week, saying the wind pool expansion and improving market conditions caused the decision.

But at least one homeowner at the news conference Tuesday didn’t buy it.

Myrtle Beach resident Thomas Nelson said the wind pool’s rates are too high, and he wants them to be reduced.

The wind pool is South Carolina’s insurance market of last resort, which was designed to have higher rates than the standard market in order to encourage competition in the private market. Wind pool rates are about $1,100 to $1,400 more than the standard market for a $250,000 home, Richardson said. Homeowners are supposed to seek wind pool coverage only when they can’t find anything else.

Rep. Tracy Edge, R-Horry, said Sanford and Richardson’s legislation likely would move quickly through a House subcommittee. That bill includes extending cancellation periods and requiring that insurers give discounts to homeowners who have made their structures more storm resistant.

Sanford emphasized that insurance is a top priority, and it has hurt the real estate market. The S.C. Association of Realtors reported a 31 percent drop in home and condo sales for the Grand Strand in the first quarter and a 21 percent drop in Beaufort.

The association is surveying the state’s Realtors to find out how insurance has impacted their own property and that of their clients. The group plans to share the findings with state officials when it’s ready in June, said Nick Kremydas, chief executive officer of the association.

Some condo associations are finding ways to lower their insurance bills. Homeowners at Winchester at Wachesaw East, a 128-unit complex, were able to reduce their wind deductible from 5 percent to 3 percent, reduce monthly homeowners association dues by $35 a month and get a policy they could cancel after three months instead of nine months.

“It didn’t come easy. We spoke to dozens and dozens of insurance companies,” said Tony Grant, the HOA president.

Source : http://www.thestate.com/101/story/45884.html

Blauvelt insurance broker charged with stealing from customer

By STEVE LIEBERMAN
THE JOURNAL NEWS

April 25, 2007

BLAUVELT -An insurance broker was arrested yesterday on a felony charge accusing him of stealing from a customer by taking her money and not providing coverage on her car, state police said.

John L. Pagliaroli, 48, of Princeton Drive, Tappan, was accused of selling the woman a car insurance policy for $1,100 and giving her forged insurance cards.

Investigators arrested Pagliaroli at 9:15 a.m. yesterday at his business, Pagliaroli Insurance Agency, 527 Route 303, Blauvelt.

Pagliaroli was charged with one count of fourth-degree grand larceny, a felony, and two counts of third-degree criminal possession of a forged instrument, a misdemeanor, and one count of second-degree offering a false instrument, a misdemeanor.

The woman, 43, a former Orangetown resident, learned she lacked insurance after being stopped on a speeding charge in Ulster County in September, state police Investigator Patrick Beyea said yesterday. The trooper informed the woman that her license and registration had been suspended by the state for lacking insurance.

She was shocked since she told the state police Pagliaroli had sold her insurance since 2005.

"She would go to his office and pay him money for car insurance," Beyea said. "She believed she had insurance since Pagliaroli gave her insurance cards."

The woman later told police that she called Pagliaroli and he had assured her she had coverage, even though the state Department of Motor Vehicles told her no insurance papers had been filed, Beyea said. She eventually gave the information to the state police, which started investigating Pagliaroli in December.

The price of the insurance policy sold to the woman seemed rather low, given the going rate, Beyea said.

"That tipped me off," he said. "I would have been suspicious at that."

Pagliaroli was released yesterday on $500 bail pending a May 2 hearing on the charges in Orangetown Justice Court.

State police are concerned that others may have paid for insurance and are driving around without coverage, Beyea said.

Pagliaroli didn't return a message left on his office telephone number and on his cell phone.

Reach Steve Lieberman at slieberm@lohud.com or 845-578-2443.

Source : http://www.nyjournalnews.com/apps/pbcs.dll/article?AID=/20070425/NEWS03/704250407

Houston General Offers Personal Lines Insurance in Ind.

April 25, 2007

Indiana consumers have new options for insuring their homes, cars and other valuable assets. Mass.-based Houston General Insurance Exchange recently announced that it is now offering homeowners and auto insurance in Indiana.Houston General Insurance Exchange is a property-casualty insurance carrier that is owned by its policyholder members. In addition to its personal lines insurance products, Houston General provides membership benefits separate from its insurance coverage.

Houston General offers personal insurance protection through its suite of OneChoice products: OneChoice Homeowners and OneChoice Auto. Its package solution, OneChoice CustomPac, will be available in May.

Houston General markets its products through select local independent insurance agents.

Source : http://www.insurancejournal.com/news/midwest/2007/04/25/78942.htm

Insurance firm blames state for revenue slip

April 25, 2007

By THOMAS S. BROWN
Business Writer DAYTONA BEACH -- Brown & Brown Inc. has lost half of its Florida condominium insurance business since Jan. 1, largely because of aggressive price cutting by the state-run Citizens Property Insurance Corp., company executives said Tuesday.

J. Hyatt Brown, chairman of Brown & Brown, briefed investment analysts on why his company posted its weakest quarterly performance in more than a decade Monday.

"It's a wild and crazy place here in Florida," Brown said in a conference call with the brokerage researchers. ". . . It's the most unusual set of circumstances I've seen since I've been in the insurance business."

Although the company recorded an overall $9.7 million profit boost for the January-March period, and revenues grew by $28 million, all the extra money came from newly purchased agencies and a one-time investment gain. The company's core business -- the 100-plus offices that have been part of Brown & Brown for more than a year -- suffered a 1.8 percent decline in revenue.

Brown & Brown makes most of its money from business insurance, workers compensation and fringe benefit management. Homeowners insurance is just a small part of its volume.

The company's biggest setback during the quarter was a $4.4 million drop in revenue from Florida Insurance Underwriters, its condominium subsidiary.

Some of the revenue loss resulted from the company tightening its standards -- no longer renewing whole-building policies for older condo complexes that lack storm shutters or hurricane-resistant windows, Brown said.

But in cases where it's renewing coverage, the subsidiary is cutting condo premiums by about 20 percent to match price reductions being offered by Citizens.

In previous years, Citizens was forbidden to compete with private insurance companies, but the Legislature recently eased that restriction.

tom.brown@news-jrnl.com

Source : http://www.news-journalonline.com/NewsJournalOnline/Business/Headlines/bizBIZ02042507.htm

As corporate scandals decrease, so do insurance rates -- In 2006, rates to cover directors and officers who could be sued for negligence or misleading

Zachary R. Mider and Hugh Son Bloomberg News

NEW YORK: When Performance Technologies renewed its insurance policy protecting against shareholder lawsuits, the software company paid less than it did before Enron's collapse in 2001.

American International Group and another insurer cut Performance's annual premiums to $160,000, about half of their 2003 peak of $314,000, said Dorrance Lamb, chief financial officer of the company, based in Rochester, New York, which makes programs and switches for the telecommunications industry. Bidding was so aggressive that two smaller competitors offered the same policy for $95,000.

AIG, the largest U.S. insurer of corporate boards, and rivals have cut prices as the perception of risk from scandals like the one at Enron fades with new accountability standards. In 2006, rates to cover directors and officers who could be sued for negligence or misleading statements fell to the lowest level in five years, according to a survey of 2,875 insurance buyers to be released next week by Tillinghast, a consultancy in Stamford, Connecticut.

"I'm really worried about it coming back to bite them," said Robert Haines of CreditSights. "There's potential fallout from the options-backdating scandal and subprime lenders, and still pricing is going down."

Ten of the biggest investor suits since 2000, including those linked to frauds like Enron's, have cost insurers of directors and officers more than $2 billion, said Dan Bailey, a lawyer in Columbus, Ohio, who helps insurers in coverage disputes.

The number of shareholder class-action suits filed against U.S. companies in 2006 was the lowest in at least 11 years, according to Cornerstone Research.

Keith Martinsen, an insurance broker at Carpenter Moore, said: "The number of claims, the number of securities lawsuits, have been on a downward trend. The question starts becoming: At what point do the rates get too low?"

Such coverage is trickier to price than other forms of insurance because claims often surface years after policies are sold. The Center for Financial Research and Analysis found that insurers ended up losing money on coverage sold from 1998 to 2002, and it said reported profits from 2003 to 2005 were not yet certain because claims could still arise.

Insurers flock to high-priced markets only to overcrowd them and drive down rates. Premiums that surged 72 percent from 2001 to 2003 fell during the past three years, according to Tillinghast, a unit of Towers Perrin that publishes an annual index based on the survey. AIG, Chubb and dozens of other insurers who handle policies for directors and officers collected $7.5 billion to $8 billion in 2006, Fitch Ratings has estimated.

"We're our own worst enemies," said Paul Ingrey, chairman of the insurer Arch Capital Group. "Memories are short."

AIG executives say they have not forgotten. The company's average rate for policies for directors and officers was still higher last year than in 2002, a spokesman said. AIG said it had lost some smaller accounts, where competition is fiercest, because it refused to match rivals offering discounts of 30 percent to 35 percent.

"If we thought the rate was still adequate, we would compete harder for the account," said John Doyle, chief executive of AIG's National Union Fire Insurance. "We're remaining disciplined."

Source : http://www.iht.com/articles/2007/04/08/bloomberg/bxinsure.php

Insurance industry concerned about data management

There are growing concerns about the governance and management of data the insurance industry is required to maintain, particularly in light of enhanced financial reporting requirements.
The concerns were expressed by senior insurance executives attending the Actuarial Transformation Roundtable, organized by the insurance and actuarial advisory services (IAAS) practice of Ernst & Young LLP.
“A survey of participants revealed 88% of attendees agree [with the statement] that ‘data management issues currently impact the ability to provide reliable, valid financial data,’” Ernst & Young noted in a press release announcing the results of the roundtable.
“At the same time, more than half (56%) say they do not have a dedicated data governance team in place and 67% do not have a formal data management program.”
“Companies need to engineer a culture shift,” says Steve Goren, roundtable moderator and leader of the Ernst & Young IAAS Actuarial Transformation practice. “It is crucial to get everyone to acknowledge data governance and quality as key corporate priorities, and reflect this in their operating practices and processes.
“Recognizing that old problems will only multiply over time, insurers must clean up existing data and change their processes going forward. We have termed the data management evolution ‘actuarial transformation,’ and it includes the move to an automated, controlled, yet flexible technology-based environment.”
Nearly three-quarters (73%) of participants said the quality of their data needs at least some improvement. Half (50%) acknowledged their actuarial team spends between three and five “person days” per month correcting data quality issues.
The vast majority of participants (93%) agreed that the assumptions they use in their actuarial models constitute data that must be stored and managed. “In fact, many acknowledged they are building meta-data repositories to hold information about existing data, such as how they develop their assumptions, in order to satisfy auditors,” Ernst & Young noted in a release.

Source : http://www.canadianunderwriter.ca/issues/ISArticle.asp?id=67487&issue=04092007

Gulf Islamic insurance sector to grow 15% a year

Gulf News Report

Dubai: The Islamic insurance industry in the region is projected to grow at 15 per cent per annum during the next eight years, a senior industry executive said at the World Takaful Conference (WTC), which opened in Dubai yesterday.

"Insurance penetration in the Muslim world is estimated to be less than five per cent while Muslims account for more than 25 per cent of the total world population.

"Considering the huge demand from the region, Takaful premiums should grow at more than 15 per cent annually," said Abdullah Kubursi, regional vice-president, AIG addressing a session on "Seizing the Growth Imperative: How can Takaful Operators Capture Growth Potential?" at WTC.

"There is clear evidence of growing demand for insurance from the GCC region as the regional economies are booming and the regulatory frameworks are becoming global in nature. There is a huge potential for growth for Islamic products in this part of the world as Muslims are becoming more affluent and aware of the advantages of takaful," said Kubursi.

Currently the total global conventional insurance premium is worth $1.6 trillion accounting for 99.3 per cent of the total global insurance premium while takaful represents just 0.7 per cent ($11 billion).

The Middle East accounts for 38 per cent ($4.2 billion) of the total takaful premium, about 33.6 per cent ($3.7 billion) is generated from South East Asia.

Risk-based

The regulators and industry participants at the WTC said the fast-growing Islamic insurance market in the UAE and the region should come under risk- based regulation while the shariah based compliance issues should be left to Islamic scholars or the respective shariah boards of companies.

Commenting on Dubai International Financial Centre's efforts to promote takaful and Islamic banking Nasser Al Shaali, Chief Executive Officer of DIFC Authority said: "The DIFC is committed to promoting the growth and development of Islamic Insurance industry in accordance with Sharia principles. The takaful market is one of the fastest growing in the world and firms domiciled in the DIFC will complement the regional market."

DIFC's regulatory regime is flexible to accept various interpretations of takaful while its regulations are based on the risk perspective.

"Our approach to takaful as a regulator is to implement a risk-based regulatory and supervisory regime.

As market regulators, we are focused on providing stable, efficient, transparent flexible business environment while prescriptive rules or underlying principles or interpretations of Sharia are left to Sharia boards," said Lisa Kelaart-Courtney, Associate Director - Supervision, Dubai Financial Services Authority.

While projecting takaful as a highly competitive alternative to conventional insurance, leading industry players emphasised the role of innovation in offering products that meet the markets' requirements.

Below average

Global insurance statistics indicate that the insurance penetration and per capita premium density in the Muslim world is comparatively low while the share of GCC countries is below the global average.

According to AIG's estimates the GCC region has a potential for a gross premium of more than $20 billion, but currently it is below $4.5 billion.

Source : http://www.gulfnews.com/business/Insurance/10117167.html

CIGNA Group Insurance Names New Leader for Sales and Distribution

    PHILADELPHIA, April 9, 2007 /PRNewswire-FirstCall/ -- CIGNA Group
Insurance (CGI) announced today that Craig Guiffre will join the company as
senior vice president for Sales and Distribution, leading the CGI Sales
team. A seasoned leader with a proven track record of sales and account
management, Guiffre most recently served as vice president of Guardian Life
Insurance Company of America's group life and disability business. As part
of this role, he led the organization's group marketing and training
operations, as well as key technology projects.
   "In addition to his sustained track record of excellent results, Craig
brings to CIGNA extensive industry experience in sales and account
management," said Karen Rohan, president of CIGNA Group Insurance. "This
background and experience make him ideally suited to build on our Sales
team's momentum and reinforce CGI's role as a partner of choice for
customers and consultants."
   Guiffre also held various leadership positions with MetLife. In his 20+
years with MetLife, he was responsible for their group insurance products,
led their National Account sales force, and drove significant new revenue
growth while overseeing client relationships, pricing and sales planning.
   Guiffre holds a bachelor of science degree in marketing from Lehigh
University and received his master's in Business Administration from
Manhattan College. He will be based in CIGNA's Philadelphia office.
   About CIGNA Group Insurance:
   CIGNA Group Insurance is a registered service mark of Life Insurance
Company of North America, Connecticut General Life Insurance Company, and
CIGNA Life Insurance Company of New York. These CIGNA companies together
are one of the top five U.S. providers of disability management and
insurance with solutions that focus on helping employees return to a
productive work life as quickly and safely as possible. It also is one of
the top five providers of group term life and group universal life, and the
second leading provider of group accident insurance, including voluntary
accident and business travel accident insurance.

SOURCE CIGNA Group Insurance

Insurance Company Offers Discounts to Tracked Teens

Big brother can help you save money on your car insurance. Parents who are willing to install a GPS device to track their teenage drivers will get discounted insurance rates.

The AIG Teen GPS Program is a trial program in Arizona, Illinois, New Jersey, Pennsylvania, South Carolina and Washington, that tracks the speed limit and location of teenagers. If teens go too fast or too far, mommy and daddy will receive a text message or email letting them know.

Teenagers are more likely to die from a car accident than anything else, so insurers are trying anything to improve driving behaviors. For parents, installing a GPS provides some peace of mind, but the ill-will from teens will be substantial.

My son is years from being of driving age, but I would have to consider this even if I trust him. Since 1 in 8 teen drivers has an accident each year, it is hard not to at least consider every option. Would you do it if it reduced your premium substantially?

Source: Telematics Journal