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Catastrophe Losses in 2007 Impacted by High Losses from Flood and Storm Damage in Europe

December 29, 2008

According to initial estimates, tens of thousands of people were killed by natural and man-made catastrophes in 2007. The catastrophes led to overall financial losses of $61 billion across the globe. Property insurers had to contend with losses totaling $25 billion.

The preliminary estimates of catastrophe losses in 2007 mentioned in the Swiss Re sigma include three insured losses running into the billions in Europe, two in North America, and one in Asia. Although the insured losses, at $25 billion, were $9 billion higher than in the previous year, 2007 is below the long-term loss trend.

The largest losses occurred in the first half of the year and were concentrated in Europe. The second half of the year, as of Dec. 11, has been less eventful. Over the course of the year, more than 20,000 people died in catastrophes. Bangladesh, for example, was hit several times, with monsoon rains and landslides in July and August and then with Cyclone Sidr in mid-November, killing more than 4,000 people and destroying extensive parts of the country's southwestern region.

Property insurers pay out losses in excess of $22 billion for natural catastrophes...

In 2007, Europe was unusually hard-hit by natural catastrophes. In January, Germany, the UK, Belgium, and the Netherlands reported losses from winter storm Kyrill. During the summer, the UK was also hit twice by heavy rains and flooding.

In the United States, a winter storm struck the East Coast in April, bringing heavy rainfall and flooding. At the end of October, the Witch forest fires raged in California. As these woodland areas are densely populated, these fires, known as urban forest fires, caused extensive property damage. The fires in California are associated with the heat and extreme lack of rainfall. Japan was spared record losses, whereas Australia reported flood and storm damage in New South Wales (NSW) in June.

...and more than $2 billion for man-made catastrophes

Major man-made disasters caused insured losses in excess of $2 billion in 2007, with major industrial fires, explosions, and aviation and spacecraft losses at the top of the list. Insured property losses were approximately of the same magnitude as those in 2006.

Source: Swiss Re

© Copyright 2007, National Association of Mutual Insurance Companies (NAMIC).

State looks at mediation on Ike claims

December 29, 2008

Amid a growing number of conflicts between Texans and their insurance carriers over hurricane damage, state regulators are taking a look at mediation to help solve disputes.

With more than 730,000 claims filed since Hurricane Ike blew through Texas in September, regulators expect the number of complaints to climb. The program would help expedite resolutions for consumers unhappy with their claims offers.

"We think the volume of Hurricane Ike claims may lend itself to this type of process," said Audrey Seldon, head of consumer protection at the Texas Department of Insurance.

In comparison, consumers filed 95,000 claims after Hurricane Rita in 2005 and 50,000 claims so far after Hurricane Dolly hit the South Texas coast earlier this year.

The state is considering mediation programs, in which an independent party would help resolve claims without binding the homeowners or insurers to the decisions. The programs are usually paid for by insurers.

Mediation could be faster than the state's complaint process and also cheaper than an appraisal process, in which the policyholder and the insurer hire separate damage appraisers who review the company's offer and choose a third appraiser to act as an "umpire" and make a binding ruling on any disagreements.

Seldon's agency is studying mediation programs in Florida, California, Louisiana, Mississippi and North Carolina to determine what would work best here, she said.

In other states, the insurer usually pays for the mediation process.

The department has received more than 1,200 complaints since Ike and has been able to get consumers $6.5 million. Under its complaint process, the department usually presents any evidence of underpayment or other grievance to the insurer, which then repays. But the state can't force the insurance companies to take any actions unless they are violating Texas insurance codes, Seldon said.

"Sometimes you have disputes where the parties don't come to a quick agreement, at which point this mediation process would give us another avenue," she said.

Nearly 3 months later

It might benefit consumers like Claudia Bernal, who is still trying to get her insurer to reimburse damages to some appliances and pay to replace her roof, nearly three months after Ike blew three trees onto her Spring home and more than a month after filing a complaint with the state.

"They haven't really done anything on our behalf," Bernal said, adding that she simply received a copy of an explanation from her insurer that she's also disputing.

The department declined to comment on the complaint, saying it's still open.

Bernal says her insurer wants her to go through the appraisal process, but she worries about its fairness and its expense.

She's trying to save as much money as possible given that she's been turned down for federal assistance and didn't qualify for a Small Business Administration disaster assistance loan because the agency questioned her and her husband's ability to repay.

Plan by January

The state plans to have a proposal ready by January. If there's enough interest from the industry and consumers, the department could pass a rule adopting the program, have insurers sign agreements or wait for lawmakers to create a program in the upcoming legislative session.

If the program is truly optional and doesn't thwart consumers from pursuing other avenues, such as litigation, it could be beneficial to consumers, said Alex Winslow, head of Texas Watch, a consumer group in Austin.

"I'd want to look at the proposal and see how it's handled and be sure it isn't an attempt to make it more difficult to grant co-insurers access to the legal process," Winslow said.

Insurers like idea

Insurers also said the program has potential.

"We would welcome TDI's proposed mediation process if it provides a fair and expedient agreement in settling Hurricane Ike claims," said Mark Hanna, a spokesman for the Insurance Council of Texas, an industry trade group. "Any agreement settled outside a courtroom will simply mean a faster reimbursement for policyholders."

Copyright © 2008 The Houston Chronicle

La. wish list on storm recovery: Don't forget us

December 29, 2008

NEW ORLEANS - More than three years after Katrina and Rita, and with billions of federal dollars already committed for recovery, Louisiana still has major requests � and complaints � pending on a wish list for the next president as rebuilding from the storms continues.

Louisiana's post-Katrina wish list for the next Congress and incoming Obama administration, lengthened by 2008 hurricanes Gustav and Ike, boiled down in a transition brief to one essential message: Don't forget us.

While progress has been made since Katrina and Rita lashed Louisiana in 2005, "our state still suffers an extreme housing crisis with affordable rental property hard to come by and billions of housing and infrastructure repairs yet to be completed," the Louisiana Recovery Authority said in the brief dated Dec. 8 and which the LRA provided a copy of last week.

The state's wish list for the Katrina and Rita aftermath include an extension of federal disaster housing assistance, including rental subsidies, set to expire March 1.

It also includes a call to push back by two years, to December 2012, a deadline to finish housing projects benefiting from tax credits due to the sour national economy. And there's also a call for establishment of a "blight removal fund" to help speed cleanup of thousands of derelict properties that are seen as stalling reinvestment in some devastated communities.

Louisiana also may seek a congressional appropriation if it can't come to more favorable terms with the Federal Emergency Management Agency on the level of Katrina damage to New Orleans' former public hospital for the poor, Charity. The state believes it's due $492 million; FEMA's offered $150 million.

Signs of Katrina's destruction remain in hard-hit communities of New Orleans and neighboring St. Bernard Parish. Hopeful signs � new, elevated houses, reopened businesses � give way to eery desolation in vast stretches of the Lower 9th Ward.

Abandoned apartment complexes blight slow-to-return neighborhoods in eastern New Orleans. Some houses still bear brownish-yellow water lines and the tattoos left by searchers in Katrina's frantic aftermath.

But progress is being made: In New Orleans alone, officials claim hundreds of millions of dollars in infrastructure projects are planned, under way or now completed. Hundreds of millions of additional dollars are lined up for neighborhood rebuilding and economic revitalization.

"The evidence of the recovery is going to get stronger and stronger as time goes on," said Mayor Ray Nagin.

But he also worries about "the people side of issues" � affordable health care and improved mental health services in a community where he says many still grapple with post-Katrina trauma.

In his own letter Nov. 26 on the city's outstanding needs, directed to House Speaker Nancy Pelosi, Nagin listed terminal improvements at the city's commercial airport; upgrades at the train and bus depot used as part of hurricane evacuation plans; and water and sewer system work among the "ready-to-go" infrastructure projects, independent of Katrina, that he believes merit consideration for inclusion in a stimulus package.

"In the next Congress, your continued support of our ready-to-go infrastructure, as well as other priority issues" � including rebuilding the city's health care and criminal justice systems, devastated by Katrina, and reforming the federal act that governs disaster recovery � "is critical," Nagin wrote.

President Bush's hurricane recovery chief, retired Maj. Gen. Doug O'Dell, said in a recent interview that he thinks the federal government has provided ample resources to Louisiana and Mississippi for recovery � and that a key task now is putting that money to work.

Of the $4 billion for permanent infrastructure work that FEMA set aside for Louisiana, $1.2 billion has been paid to the local level by the state, which has an accounting system of its own for the dollars.

One reason is the huge volume of work due to Katrina. Another, according to the state, is continuing frustration in getting FEMA to agree to what costs it will cover so cities have a clearer idea of what they can put out to bid.

FEMA spokesman Bob Josephson said there's often too much focus on a final dollar figure instead of on the overall scope of what needs to be done. He said the goal remains to cover "all actual and eligible costs."

O'Dell, who began in the post earlier this year and whose office is to be phased out early next year, began sit-downs with local, state and federal officials several months ago. His goal: to break through logjams and speed major projects.

While he calls FEMA's $150 million offer for Charity firm and all that's allowable under the federal law governing disaster recovery, he believes there's a potential public-private solution to the Charity fight.

The state's hurricane recovery chief, Paul Rainwater, wants to take his case for the $492 million to the Obama administration or Congress.

Major concerns following Gustav and Ike, which affected south Louisiana in September, include restoring wetlands that are a first line of defense against storms; investment in "a consistent" flood protection standard in coastal areas, outside the New Orleans' area; and providing aid to hard-hit farmers and fishermen.

Copyright 2008 The Associated Press. All rights reserved.

With Fed's Help, AIG Unloads $16 Billion in Credit Default Swaps

December 29, 2008

American International Group retired $16 billion in credit default swaps, the contracts that almost caused the company's collapse, after buying the underlying securities with help from the Federal Reserve.

The fund created by the Fed and AIG to protect the insurer's customers from losses has now purchased collateralized debt obligations with a face value of about $62.1 billion, the firm said in a statement.

The purchases bring AIG closer to winding down the financial products unit that triggered the worst of AIG's losses. The business guaranteed more than $70 billion in securities created by pools of different kinds of debt, including subprime mortgages, that plunged in value. The federal government committed $150 billion to bail out AIG and prevent losses at investment banks that bought protection on fixed-income securities from the insurer.

The fund, called Maiden Lane III, paid about $6.7 billion to the investors for the securities in the latest purchases. The counterparties were also able to keep more than $9 billion that AIG had posted in collateral, reimbursing them at face value for the assets. AIG "continues to analyze" ways to retire another $12.3 billion in contracts it sold, the company said.

AIG had to post collateral to investment banks including Goldman Sachs Group that purchased protection through swaps, pushing the insurer to the brink of bankruptcy in September. The government extended an $85 billion loan that month, and the bailout expanded to about $150 billion in November after the Fed created funds to limit losses tied to swaps and the firm's securities-lending program.

The Federal Reserve Bank of New York will provide as much as $30 billion to the fund retiring the swaps, with AIG contributing $5 billion.

Write-downs on AIG's swaps and mortgage-backed securities led to four straight quarterly losses totaling about $43 billion. Shares of AIG climbed 1 cent to close at $1.56 yesterday. The stock has plunged 97 percent this year.

Older Drivers' Fatal Crashes Trend Down; Many Say They Self-limit Driving

December 24, 2008

Despite growing numbers of older drivers on the road, fewer died in crashes and fewer were involved in fatal collisions between 1997 and 2006 than in years past, a new Insurance Institute for Highway Safety study reports. Crash deaths among drivers 70 and older fell 21 percent during the period, reversing an upward trend even as the population of people 70 and older rose 10 percent. Compared with drivers ages 35 to 54, older drivers experienced much bigger declines in fatal crash involvements. Reasons for the fatality declines aren't clear, but another new Institute study indicates that older adults increasingly self-limit driving as they age and develop physical and cognitive impairments.

Compared with drivers ages 20 to 69, fewer people 70 and older are licensed to drive and they drive fewer miles per licensed driver. However, older people now hang onto their licenses longer, drive more miles, and make up a bigger proportion of the population than in past years as baby boomers age. There were more than 20 million licensed drivers 70 and older in 2006, compared with just under 18 million in 1997. The total annual miles these older drivers traveled climbed 29 percent from 1995 to 2001, compared with a 6 percent rise among 35- to 54-year olds. Per mile traveled, crash rates, and fatal crash rates increase starting at age 70 and rise markedly after 80.

These trends have raised concerns about older drivers in fatal crashes. Their fragility makes them vulnerable to getting hurt in a crash and then to dying from their injuries. Physical, cognitive, and visual declines associated with aging may lead to increased crash risk.

Fatal crash involvements decline: Earlier research predicted that older drivers would make up a substantially larger proportion of drivers in fatal crashes, so "the findings are a welcome surprise," says Anne McCartt, Institute senior vice president for research, and an author of the new studies. "No matter how we looked at the fatal-crash data for this age group " whether by miles driven, licensed drivers, or population " the fatal-crash involvement rates for drivers 70 and older declined, and did so at a faster pace than the rates for drivers 35 to 54 years old."

Declines per licensed driver increased with age, so that drivers 80 and older had the most dramatic decreases. If the fatal crash involvement rates for older drivers had mirrored the trend for younger ones from 1997 to 2006, nearly 7,000 additional older drivers would have been in fatal crashes (1,376 drivers 70- to 74-years old; 1,680 drivers 75 to 79; and 3,935 drivers 80 and older). Fatal crash rates fell among older drivers for most types of crashes, and the decline was dramatic for crashes at intersections.

"The large drop in intersection crashes is especially important because Institute and other studies have shown that older drivers are overrepresented in multiple-vehicle crashes at intersections," McCartt says. "The data don't allow us to point to any one reason why older drivers' fatal crash experience has improved. Some drivers may have benefited from newer and safer vehicles, and older people generally are more fit than in years past, with better access to health care."

Older drivers are mostly a danger to themselves; 75 percent of people who die in crashes involving older drivers are these drivers themselves or their older passengers.

Older drivers limit car trips: One way some older drivers lower their crash risk is to limit driving. A separate ongoing Institute study is examining how older adults restrict their driving in response to declines in their health, mobility, vision, and memory. Researchers recruited drivers 65 and older in three states as they renewed their licenses between November 2006 and December 2007. In the first of several planned interviews, more than nine in 10 of these drivers said that driving themselves is their primary way to travel. Fewer than 1 percent said they'd been advised by family, friends, or a doctor to give up driving.

Most drivers reported at least some impairment, and the extent of impairment increased with age. For example, 26 percent of drivers 65 to 69 reported having at least some type of mobility issue, compared with 43 percent of drivers 80 and older. The oldest drivers were more likely to say they restricted their own driving. Drivers 80 and older were more than twice as likely as 65- to 69-year olds to self-limit driving by doing such things as avoiding night driving, making fewer trips, traveling shorter distances, and avoiding interstates and driving in ice or snow.

The percentage of drivers who said they limit their driving increased with each added degree of impairment. Drivers cited memory and medical impairments more often than vision or mobility ones. For example, among drivers 80 and older, 74 percent reported medical conditions such as diabetes or arthritis; 69 percent cited some memory impairment, such as more often forgetting names and appointments or misplacing items, compared with five years ago.

Source: Insurance Institute for Highway Safety

© Copyright 2007, National Association of Mutual Insurance Companies (NAMIC).

California Receives Highest Marks For Traffic Safety Laws In National Survey

May 28, 2009

California was the only state in the nation to receive consistently top marks across the board on a recent ranking of traffic safety laws conducted by the Insurance Institute for Highway Safety (IIHS). The study examined the strength of traffic safety laws in six key areas, including: DUI/DWI, young driver licensing, safety belt use, child restraint use, motorcycle helmet use and red light cameras.

"I am extremely pleased by the results of the IIHS study," said Office of Traffic Safety Director, Christopher J. Murphy. "We ended 2008 on a very high note, with seat belt and child safety seat use at an all-time high, plus alcohol impaired and total traffic fatalities were down significantly. The synergy between California's traffic safety laws, enforcement, engineering, emergency medical services, and public awareness are really paying off."

The State's 2008 adult seat belt use rate was 95.7 percent, with teens buckling up at a rate of 89.6 percent and child safety seat use at 94.4 percent. Total traffic fatalities are projected to be down over 13 percent from 2007, translating into well over 500 lives saved in just one year. Although 2008 figures for alcohol impaired fatalities are not yet available, the 2007 fatality total was down 9.5 percent from the previous year.

California was the only state to receive 'good' ratings in all six categories, the highest rating possible. Only Delaware, the District of Columbia, Oregon and Washington received five out of six 'good' scores.

After a nearly two year process, California instituted a Strategic Highway Safety Plan in September of 2006 to significantly reduce deaths and injuries. Hundreds of state and local agencies, advocacy groups and private industries helped develop the plan, which has been integrated into the on-going efforts of agencies and organizations throughout the state.

"California is on the forefront of every major movement in the nation," said Murphy. "We are proud to be the leader in traffic safety, since it means that we are saving lives and protecting futures."

Copyright © 2009 PR Newswire Association LLC. All rights reserved.

A Surgical Approach to Regulatory Reform

May 28, 2009

Given the enormity of the financial crisis, a predisposition toward bold legislative action among lawmakers seems natural. Yet, a measured, surgical response that takes into account the peculiarities of insurance while recognizing its central place in the financial services industry may be the correct one.

Patricia Guinn, managing director, risk & financial services, at New York-based Towers Perrin, favors such an approach. Indeed, Guinn recently testified to this effect at hearings held by the House Committee on Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises titled "How Should the Federal Government Oversee Insurance?"

Citing the industry's strong risk management culture and the historical success of state regulators, Guinn stressed that any new federal regulatory effort needs to be carefully structured and designed to supplement and improve the existing regulatory framework, not replace it.

After the hearing, Guinn elucidated this viewpoint in an excluded interview with Insurance Networking News. "There are reasons that Federal attention is warranted, but it should be balanced by the realization that there is no need to start from scratch," she said. "Any new role for the federal government in insurance regulation should build on the industry's positive risk management characteristics and the good elements of the current regulatory structure."

To quell systemic risk, Guinn said she favors a holistic regulatory framework that includes insurers along side commercial banks, investment banks and hedge funds, citing the United Kingdom, Australia and Canada as models for comprehensive financial services regulation. However, she stressed that federal oversight of the insurance industry needs to recognize its unique characteristics. "A one-size-fits-all approach derived from the banking industry would likely not work well," she said.

Moreover, any new legislation should seek to eliminate regulatory arbitrage, while acknowledging the complexity of the insurance landscape, especially at the holding company level. To accomplish this, she suggests adopting a principle-based approach that values transparency as much as rules.

Lastly, Guinn said that Federal regulators should strive for the lightest footprint possible and only intervene in the direst of circumstances. "State insurance regulation has served the industry, by and large, quite well. The best of it should be preserved."

For more information on related topics, visit the following channels:

• Compliance
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2009 Insurance Networking News and SourceMedia, Inc. All rights reserved.

Wholesalers Optimistic Future Will See Improvement

May 28, 2009

A hard insurance market may not be on the horizon any time soon, according to wholesale line executives, but no signs of pessimism were evident among attendees of this year's meeting of the American Association of Managing General Agents.

In his remarks during the opening session of the AAMGA annual meeting in Boca Raton, Fla., Bernd G. Heinze, executive director of the association, commented that times have changed dramatically in one short year.

He noted that this time last year, the Dow Jones Industrial Average was over 1200 points, and American International Group was the most powerful insurance company in the world.

In an interview with National Underwriter during the meeting, Alan Jay Kaufman, president and chief executive officer with the wholesale brokerage firm Burns & Wilcox, said the economic crisis has had a huge impact on the insurance markets�impacting policyholders, which in turn impacts their insurance purchasing.

Humana Ensuring Young Adults Have No Gap In Health Coverage Before Provision Of Health Reform Law Takes Effect

April 21, 2010

Humana Inc. (NYSE: HUM) announced today that it will extend health insurance coverage for young adults currently covered by their parents' Humana health plans during what otherwise could have been a gap in their coverage.

Young adults whose Humana coverage would have ended at some point this spring or summer now qualify for coverage on their parents' or guardians' plans until they turn 26. Although the dependent-care provision of the new health reform law takes effect on September 23, 2010, Humana will provide uninterrupted coverage for these young adults this year.

"We believe this decision will provide not just extended health insurance coverage but also some peace of mind for our Humana members and their adult children who are Humana members," said Bill Tait, vice president of sales and market operations for Humana. "Now, young adults who are finishing college or just beginning to look for a job in such a competitive environment won't have to worry that they'll lose their health coverage."

With the new dependent-care requirement not taking effect until September 23, 2010, some college graduates and other young adults faced a gap in their coverage. Humana will ensure that these young adults who are currently Humana members will have uninterrupted coverage this year.

The decision by Humana directly impacts the adult children of members who are enrolled in Humana's fully insured lines of business. (Children of members enrolled in a HumanaOne individual health plan have already been able to remain on their parents' or guardians' coverage until age 26.) Humana is also encouraging large employers who self-fund their coverage with Humana to extend coverage to the adult children of their employees who would otherwise lose their coverage this year.

Source: Humana Inc.

© 2010 MediLexicon International Ltd

Schools work to reduce liabilities over bullying

April 21, 2010

he widely publicized suicide of a Massachusetts teen and an $800,000 award to a Michigan teen, both of whom allegedly were bullied by classmates, are expected to generate more litigation against school districts, observers say.
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In the Massachusetts case, 15-year-old Phoebe Prince, a recent immigrant from Ireland, hanged herself in January after being bullied by classmates at South Hadley High School. The bullying allegedly began after she briefly dated a high school senior.

Prosecutors have filed charges including statutory rape, violation of civil rights with bodily injury, harassment and stalking against six alleged perpetrators.

In the Michigan case, a federal jury in Detroit last month awarded $800,000 to a student despite the fact that the school district had made some efforts to stop the bullying.

In David Patterson and Dena Patterson vs. Hudson Area Schools and Kathy Malnar, the parents of Dane Patterson accused the school district of violating Title IX of the Education Amendments of 1976, which bans sex discrimination in schools, by allowing their son to be harassed by other students. The son, now 19, endured years of escalating bullying by his classmates that culminated in a sexual assault, according to court documents.

Observers say school bullying has always been an issue, but the advent of online social networking has exacerbated the problem.

Steps school district risk managers should take to address the problem include implementing a policy and training students, staff and parents, experts say (see related story).

Eric Seaborg, risk management consultant for Chevy Chase, Md.-based United Educators Insurance Inc., a reciprocal risk retention group, said, "There are a lot of school systems out there that are very, very advanced in regard to having committees and prevention group programs to address bullying, to identify bullying behaviors, to deal with bullying behaviors."

In the Michigan case, the 6th U.S. Circuit Court of Appeals in Cincinnati in January 2009 overturned a lower court ruling that had dismissed the Pattersons' case. The appeals court held that despite implementing several proactive programs to combat harassment and bullying, a "genuine issue of material fact" remained as to whether the Hudson, Mich., school district's actions were "deliberately indifferent," one of the required elements to establish a violation of Title IX.

The 2-1 ruling said after the cycle of harassment against the teen intensified in ninth grade, "Hudson's only response was to employ the same type of verbal reprimands that it had used unsuccessfully in response to the sixth- and seventh-grade harassment," steps that "were clearly unreasonable in light of the known circumstances."

The appeals court ordered the case returned to district court, where a federal jury in March awarded $800,000 to the family. An attorney for the school district could not be reached for comment as to whether an appeal is planned.

Elsewhere, the parents and sister of 14-year-old Christopher David Jones of Crofton, Md., who was surrounded and beaten to death by gang members as he rode his bike home, filed suit last week against the Anne Arundel County Board of Education and others. A school administrator who had promised to take several measures to protect Christopher against gang member threats failed to take any action, said the family's attorney, Richard L. Jaklitsch, of the Upper Marlboro, Md.-based Jaklitsch Law Group. A school district spokesman had no comment.

Bullying is "one of the major, top issues in schools," said Cheryle Mangels, executive director of the Denver-based Colorado School Districts Self-Insurance Pool.

"I think school districts are extremely concerned about it and are paying a great deal of attention to it," said Nancy Sylvester, managing director, public entity and scholastic division, for Arthur J. Gallagher Risk Management Services Inc. in Baton Rouge, La. "The effort (to address the issue) is much more concentrated now than ever before."

"It's a very, very big concern," agreed Lee Gaby, executive director of the Athens, Ga.-based Public School Risk Institute Inc. The Massachusetts incident and the Michigan case, along with other bullying incidents, "all combined may have served to reawaken an interest in finding what's been referred to as a systemic solution" to the problem of bullying, he said.

Internet access has exacerbated the problem. Communications can be sent anytime "with the push of a button," said Philip D. Burns, president of Tulsa, Okla.-based Sytech Research Inc., a psychological research firm. "The consequences now are far more dire due to the instant public humiliation that this type of electronic bullying can bring to the equation," he said. "It's far more devastating on the kids."

In a 2005-2006 study of 7,000 sixth- through 10th-grade students by the Rockville, Md.-based National Institute of Child Health and Human Development, 36.9% reported they have been victims of verbal bullying, 32.1% rumor spreading, 25.8% social exclusion, 13.2% physical bullying and 10.1% cyber bullying.

Among victims of "traditional" bullying, 17.8% also reported online victimization; but 95.1% of cyber victims said they also were victims of traditional bullying.

While there were no reports of litigation by Ms. Prince's parents, more litigation stemming from bullying is expected. "We're not seeing a lot of it, but I think that will increase," Ms. Mangels said.

Jean Demchak, Hartford, Conn.-based global education practice leader at Marsh Inc., said the tendency to sue in such cases has increased as parents have become aware of their rights. "Litigation will increase in this area based on the historical perspective we have of similar incidents," she said.

State law in many cases provides school districts with immunity and such litigation is more likely to be brought under federal law, as in the Michigan case, observers say.

"There's absolutely very likely to be a proliferation of these cases brought," said Katie Anderson, senior counsel with law firm Strasburger & Price L.L.P. in Dallas.

The Michigan damage award "was really shocking," said Christine Lueders, Chicago-based senior vp in the Willis Pooling Practice, a unit of Willis North America. "It really says to the schools that even though they have a policy" and take some actions against individuals when bullying occurs, the school district still may be held liable for failing to create a safe environment for the student.

School districts are charged with the responsibility "of taking action and making sure it's effective," said Ms. Anderson. "They can't just do something and say, "Look, we did something.' They have to check and make sure it worked."

When a landmark case such as the one in Michigan is successful, plaintiffs attorneys will try to set the same precedent elsewhere, said David Ruiz, employee benefits and risk manager for the Martin County School district in Stuart, Fla.

Copyright © 2010 Crain Communications, Inc.

P&C Industry's Capital Position Improves

April 21, 2010

The property/casualty industry withstood the global financial crisis reasonably well, according to Fitch Ratings. In its recent report, "Property/Casualty Insurers' Financial Leverage and Debt-Servicing Capacity," the firm analyzed key holding company financial factors of U.S. property/casualty insurance organizations, examining changes in financial leverage and debt-servicing capacity for the last several years and in 2009.

After analyzing 10-K filing data from all publicly traded property/casualty insurers in Fitch's debt rating universe, the firm found that most companies experienced solid operating earnings and a significant recovery in investment portfolios in 2009, which led to a material increase in reported GAAP shareholders' equity and, thus a decline in financial leverage for Fitch Ratings' property/casualty insurer universe, in aggregate.

The report also features evaluations of insurers' liquidity from insurance subsidiary dividend capacity. While most of the companies highlighted in the report had increased maximum dividend capacity for 2010, and most of these had double-digit increases, there were a few exceptions to the improvement: XL Capital Ltd. with a 44% decline in capacity; Odyssey Re Holdings Corp. with a 36% decline in capacity; Berkshire Hathaway Inc. with a 22% decline in capacity; and Zenith National Insurance Corp. with a 12% decline in capacity.

The majority of the insurers highlighted in the report experienced favorable underwriting performance fueled by fewer catastrophe-related losses and recognition of reserve redundancies, which contributed to higher GAAP interest and preferred dividend coverage ratios and a number of companies continue to hold cash at higher than traditional levels at the holding company level.

The industry still faces continued earnings and capital pressure due to the economic recession and a persistent competitive insurance pricing environment, Fitch says. Earnings will also be strained by less attractive investment yields and poorer core underwriting results, due to less benefit from favorable loss reserve development. Fitch's rating outlook for the sector remains negative for these reasons.

While the industry's capital position remains strong, companies face extreme challenges to profitably deploy capital generated from current earnings. As such, Fitch anticipates significant increases in share repurchase activity from its property/casualty (re)insurer universe in 2010, which are likely to moderately increase financial leverage.

©2010 Insurance Networking News and SourceMedia, Inc. All rights reserved.

Deal Seeks to Ease Fraud Reporting

April 21, 2010

n an attempt to eliminate duplicate fraud filings, ISO (Insurance Services Office), the National Insurance Crime Bureau (NICB) and the National Association of Insurance Commissioners (NAIC) have announced an agreement to streamline the online reporting process.

"This agreement has been a high priority for the NAIC Antifraud Task Force over the last year," Sandy Praeger, Chair of the NAIC Antifraud Task Force and Kansas Insurance Commissioner said in a statement. "This agreement saves insurance companies and fraud investigators time and improves investigative resources for state fraud bureaus. We are already receiving twice as many fraud referrals from property/casualty insurers now that NICB/ISO members are providing reports to the NAIC Online Fraud Reporting System (OFRS) system."

Companies can now file a single report directly to multiple state insurance departments and the NICB/ISO. Starting today, 47 states will accept reports either through the NAIC OFRS or via a direct system connection from NICB/ISO.

"This expansion of NICB's Fraud Bureau Reporting Program, in cooperation with the NAIC and state fraud bureaus, brings us closer to offering a single system where the insurance industry can report suspected fraud and get the data in the hands of people that can make a difference," added NICB President and CEO Joe Wehrle.

©2010 Insurance Networking News and SourceMedia, Inc. All rights reserved.

COBRA Subsidies Continued, Medicare Cuts Delayed

April 20, 2010

President Barack Obama signed legislation Thursday night extending extra unemployment benefits through May, including subsidies to help the laid-off buy health insurance under so-called COBRA rules, The New York Times reports. "The measure, which would continue added unemployment benefits and other expired federal programs through May, will restore aid to thousands of Americans who had exhausted their benefits or whose eligibility was expiring. " The new law comes after a two-week gap in benefits for some people as Senate Republicans held up progress on the measure (Hulse, 4/15).

USA Today: The bill passed 59-38. "Three Republicans voted with Democrats on the bill: George Voinovich of Ohio and Olympia Snowe and Susan Collins of Maine. Three Democrats did not vote: Evan Bayh of Indiana, Bill Nelson of Florida and Mark Warner of Virginia" (Fritze, 4/15).

The Associated Press: "The bill also restores full Medicare payments to doctors who were threatened by a 21 percent cut and refloats the flood insurance program." Obama asked lawmakers to extend the package for the rest of the year. The temporary extension will cost $18 billion, an expense that will be added to the deficit. Republicans objected to the added deficit spending, but the "situation became more urgent Thursday afternoon when Medicare announced that it would start paying doctors' claims at a 21 percent lower rate" (Taylor, 4/16).

MedPage Today: "The 21 [percent] cut officially took effect April 1, but Medicare has held off paying claims since then in anticipation of Congressional action, so that doctors have yet to feel the sting. ... Congress has already voted several times this year to push the 21% cut in reimbursement down the road. The most recent reprieve -- during which doctors received no increase in payments but no cuts -- expired on April 1" (Walker, 4/15).

Politico: "The bill bypassed pay-as-you-go rules because it was designated as a temporary 'emergency' spending plan." But, those requirements - that legislation be paid for in advance in order not to balloon the deficit -- may make it hard for Democrats to pursue other items on their agenda, such as the year-long fix to the unemployment programs (Shiner, 4/16).

Humana Ensuring Young Adults Have No Gap In Health Coverage Before Provision Of Health Reform Law Takes Effect

April 21, 2010

Humana Inc. (NYSE: HUM) announced today that it will extend health insurance coverage for young adults currently covered by their parents' Humana health plans during what otherwise could have been a gap in their coverage.

Young adults whose Humana coverage would have ended at some point this spring or summer now qualify for coverage on their parents' or guardians' plans until they turn 26. Although the dependent-care provision of the new health reform law takes effect on September 23, 2010, Humana will provide uninterrupted coverage for these young adults this year.

"We believe this decision will provide not just extended health insurance coverage but also some peace of mind for our Humana members and their adult children who are Humana members," said Bill Tait, vice president of sales and market operations for Humana. "Now, young adults who are finishing college or just beginning to look for a job in such a competitive environment won't have to worry that they'll lose their health coverage."

With the new dependent-care requirement not taking effect until September 23, 2010, some college graduates and other young adults faced a gap in their coverage. Humana will ensure that these young adults who are currently Humana members will have uninterrupted coverage this year.

The decision by Humana directly impacts the adult children of members who are enrolled in Humana's fully insured lines of business. (Children of members enrolled in a HumanaOne individual health plan have already been able to remain on their parents' or guardians' coverage until age 26.) Humana is also encouraging large employers who self-fund their coverage with Humana to extend coverage to the adult children of their employees who would otherwise lose their coverage this year.

Source: Humana Inc.

© 2010 MediLexicon International Ltd

Schools work to reduce liabilities over bullying

April 21, 2010

he widely publicized suicide of a Massachusetts teen and an $800,000 award to a Michigan teen, both of whom allegedly were bullied by classmates, are expected to generate more litigation against school districts, observers say.
Advertisement

In the Massachusetts case, 15-year-old Phoebe Prince, a recent immigrant from Ireland, hanged herself in January after being bullied by classmates at South Hadley High School. The bullying allegedly began after she briefly dated a high school senior.

Prosecutors have filed charges including statutory rape, violation of civil rights with bodily injury, harassment and stalking against six alleged perpetrators.

In the Michigan case, a federal jury in Detroit last month awarded $800,000 to a student despite the fact that the school district had made some efforts to stop the bullying.

In David Patterson and Dena Patterson vs. Hudson Area Schools and Kathy Malnar, the parents of Dane Patterson accused the school district of violating Title IX of the Education Amendments of 1976, which bans sex discrimination in schools, by allowing their son to be harassed by other students. The son, now 19, endured years of escalating bullying by his classmates that culminated in a sexual assault, according to court documents.

Observers say school bullying has always been an issue, but the advent of online social networking has exacerbated the problem.

Steps school district risk managers should take to address the problem include implementing a policy and training students, staff and parents, experts say (see related story).

Eric Seaborg, risk management consultant for Chevy Chase, Md.-based United Educators Insurance Inc., a reciprocal risk retention group, said, "There are a lot of school systems out there that are very, very advanced in regard to having committees and prevention group programs to address bullying, to identify bullying behaviors, to deal with bullying behaviors."

In the Michigan case, the 6th U.S. Circuit Court of Appeals in Cincinnati in January 2009 overturned a lower court ruling that had dismissed the Pattersons' case. The appeals court held that despite implementing several proactive programs to combat harassment and bullying, a "genuine issue of material fact" remained as to whether the Hudson, Mich., school district's actions were "deliberately indifferent," one of the required elements to establish a violation of Title IX.

The 2-1 ruling said after the cycle of harassment against the teen intensified in ninth grade, "Hudson's only response was to employ the same type of verbal reprimands that it had used unsuccessfully in response to the sixth- and seventh-grade harassment," steps that "were clearly unreasonable in light of the known circumstances."

The appeals court ordered the case returned to district court, where a federal jury in March awarded $800,000 to the family. An attorney for the school district could not be reached for comment as to whether an appeal is planned.

Elsewhere, the parents and sister of 14-year-old Christopher David Jones of Crofton, Md., who was surrounded and beaten to death by gang members as he rode his bike home, filed suit last week against the Anne Arundel County Board of Education and others. A school administrator who had promised to take several measures to protect Christopher against gang member threats failed to take any action, said the family's attorney, Richard L. Jaklitsch, of the Upper Marlboro, Md.-based Jaklitsch Law Group. A school district spokesman had no comment.

Bullying is "one of the major, top issues in schools," said Cheryle Mangels, executive director of the Denver-based Colorado School Districts Self-Insurance Pool.

"I think school districts are extremely concerned about it and are paying a great deal of attention to it," said Nancy Sylvester, managing director, public entity and scholastic division, for Arthur J. Gallagher Risk Management Services Inc. in Baton Rouge, La. "The effort (to address the issue) is much more concentrated now than ever before."

"It's a very, very big concern," agreed Lee Gaby, executive director of the Athens, Ga.-based Public School Risk Institute Inc. The Massachusetts incident and the Michigan case, along with other bullying incidents, "all combined may have served to reawaken an interest in finding what's been referred to as a systemic solution" to the problem of bullying, he said.

Internet access has exacerbated the problem. Communications can be sent anytime "with the push of a button," said Philip D. Burns, president of Tulsa, Okla.-based Sytech Research Inc., a psychological research firm. "The consequences now are far more dire due to the instant public humiliation that this type of electronic bullying can bring to the equation," he said. "It's far more devastating on the kids."

In a 2005-2006 study of 7,000 sixth- through 10th-grade students by the Rockville, Md.-based National Institute of Child Health and Human Development, 36.9% reported they have been victims of verbal bullying, 32.1% rumor spreading, 25.8% social exclusion, 13.2% physical bullying and 10.1% cyber bullying.

Among victims of "traditional" bullying, 17.8% also reported online victimization; but 95.1% of cyber victims said they also were victims of traditional bullying.

While there were no reports of litigation by Ms. Prince's parents, more litigation stemming from bullying is expected. "We're not seeing a lot of it, but I think that will increase," Ms. Mangels said.

Jean Demchak, Hartford, Conn.-based global education practice leader at Marsh Inc., said the tendency to sue in such cases has increased as parents have become aware of their rights. "Litigation will increase in this area based on the historical perspective we have of similar incidents," she said.

State law in many cases provides school districts with immunity and such litigation is more likely to be brought under federal law, as in the Michigan case, observers say.

"There's absolutely very likely to be a proliferation of these cases brought," said Katie Anderson, senior counsel with law firm Strasburger & Price L.L.P. in Dallas.

The Michigan damage award "was really shocking," said Christine Lueders, Chicago-based senior vp in the Willis Pooling Practice, a unit of Willis North America. "It really says to the schools that even though they have a policy" and take some actions against individuals when bullying occurs, the school district still may be held liable for failing to create a safe environment for the student.

School districts are charged with the responsibility "of taking action and making sure it's effective," said Ms. Anderson. "They can't just do something and say, "Look, we did something.' They have to check and make sure it worked."

When a landmark case such as the one in Michigan is successful, plaintiffs attorneys will try to set the same precedent elsewhere, said David Ruiz, employee benefits and risk manager for the Martin County School district in Stuart, Fla.

Copyright © 2010 Crain Communications, Inc.

P&C Industry's Capital Position Improves

April 21, 2010

The property/casualty industry withstood the global financial crisis reasonably well, according to Fitch Ratings. In its recent report, "Property/Casualty Insurers' Financial Leverage and Debt-Servicing Capacity," the firm analyzed key holding company financial factors of U.S. property/casualty insurance organizations, examining changes in financial leverage and debt-servicing capacity for the last several years and in 2009.

After analyzing 10-K filing data from all publicly traded property/casualty insurers in Fitch's debt rating universe, the firm found that most companies experienced solid operating earnings and a significant recovery in investment portfolios in 2009, which led to a material increase in reported GAAP shareholders' equity and, thus a decline in financial leverage for Fitch Ratings' property/casualty insurer universe, in aggregate.

The report also features evaluations of insurers' liquidity from insurance subsidiary dividend capacity. While most of the companies highlighted in the report had increased maximum dividend capacity for 2010, and most of these had double-digit increases, there were a few exceptions to the improvement: XL Capital Ltd. with a 44% decline in capacity; Odyssey Re Holdings Corp. with a 36% decline in capacity; Berkshire Hathaway Inc. with a 22% decline in capacity; and Zenith National Insurance Corp. with a 12% decline in capacity.

The majority of the insurers highlighted in the report experienced favorable underwriting performance fueled by fewer catastrophe-related losses and recognition of reserve redundancies, which contributed to higher GAAP interest and preferred dividend coverage ratios and a number of companies continue to hold cash at higher than traditional levels at the holding company level.

The industry still faces continued earnings and capital pressure due to the economic recession and a persistent competitive insurance pricing environment, Fitch says. Earnings will also be strained by less attractive investment yields and poorer core underwriting results, due to less benefit from favorable loss reserve development. Fitch's rating outlook for the sector remains negative for these reasons.

While the industry's capital position remains strong, companies face extreme challenges to profitably deploy capital generated from current earnings. As such, Fitch anticipates significant increases in share repurchase activity from its property/casualty (re)insurer universe in 2010, which are likely to moderately increase financial leverage.

©2010 Insurance Networking News and SourceMedia, Inc. All rights reserved.

Deal Seeks to Ease Fraud Reporting

April 21, 2010

n an attempt to eliminate duplicate fraud filings, ISO (Insurance Services Office), the National Insurance Crime Bureau (NICB) and the National Association of Insurance Commissioners (NAIC) have announced an agreement to streamline the online reporting process.

"This agreement has been a high priority for the NAIC Antifraud Task Force over the last year," Sandy Praeger, Chair of the NAIC Antifraud Task Force and Kansas Insurance Commissioner said in a statement. "This agreement saves insurance companies and fraud investigators time and improves investigative resources for state fraud bureaus. We are already receiving twice as many fraud referrals from property/casualty insurers now that NICB/ISO members are providing reports to the NAIC Online Fraud Reporting System (OFRS) system."

Companies can now file a single report directly to multiple state insurance departments and the NICB/ISO. Starting today, 47 states will accept reports either through the NAIC OFRS or via a direct system connection from NICB/ISO.

"This expansion of NICB's Fraud Bureau Reporting Program, in cooperation with the NAIC and state fraud bureaus, brings us closer to offering a single system where the insurance industry can report suspected fraud and get the data in the hands of people that can make a difference," added NICB President and CEO Joe Wehrle.

©2010 Insurance Networking News and SourceMedia, Inc. All rights reserved.

COBRA Subsidies Continued, Medicare Cuts Delayed

April 20, 2010

President Barack Obama signed legislation Thursday night extending extra unemployment benefits through May, including subsidies to help the laid-off buy health insurance under so-called COBRA rules, The New York Times reports. "The measure, which would continue added unemployment benefits and other expired federal programs through May, will restore aid to thousands of Americans who had exhausted their benefits or whose eligibility was expiring. " The new law comes after a two-week gap in benefits for some people as Senate Republicans held up progress on the measure (Hulse, 4/15).

USA Today: The bill passed 59-38. "Three Republicans voted with Democrats on the bill: George Voinovich of Ohio and Olympia Snowe and Susan Collins of Maine. Three Democrats did not vote: Evan Bayh of Indiana, Bill Nelson of Florida and Mark Warner of Virginia" (Fritze, 4/15).

The Associated Press: "The bill also restores full Medicare payments to doctors who were threatened by a 21 percent cut and refloats the flood insurance program." Obama asked lawmakers to extend the package for the rest of the year. The temporary extension will cost $18 billion, an expense that will be added to the deficit. Republicans objected to the added deficit spending, but the "situation became more urgent Thursday afternoon when Medicare announced that it would start paying doctors' claims at a 21 percent lower rate" (Taylor, 4/16).

MedPage Today: "The 21 [percent] cut officially took effect April 1, but Medicare has held off paying claims since then in anticipation of Congressional action, so that doctors have yet to feel the sting. ... Congress has already voted several times this year to push the 21% cut in reimbursement down the road. The most recent reprieve -- during which doctors received no increase in payments but no cuts -- expired on April 1" (Walker, 4/15).

Politico: "The bill bypassed pay-as-you-go rules because it was designated as a temporary 'emergency' spending plan." But, those requirements - that legislation be paid for in advance in order not to balloon the deficit -- may make it hard for Democrats to pursue other items on their agenda, such as the year-long fix to the unemployment programs (Shiner, 4/16).

Humana Ensuring Young Adults Have No Gap In Health Coverage Before Provision Of Health Reform Law Takes Effect

April 21, 2010

Humana Inc. (NYSE: HUM) announced today that it will extend health insurance coverage for young adults currently covered by their parents' Humana health plans during what otherwise could have been a gap in their coverage.

Young adults whose Humana coverage would have ended at some point this spring or summer now qualify for coverage on their parents' or guardians' plans until they turn 26. Although the dependent-care provision of the new health reform law takes effect on September 23, 2010, Humana will provide uninterrupted coverage for these young adults this year.

"We believe this decision will provide not just extended health insurance coverage but also some peace of mind for our Humana members and their adult children who are Humana members," said Bill Tait, vice president of sales and market operations for Humana. "Now, young adults who are finishing college or just beginning to look for a job in such a competitive environment won't have to worry that they'll lose their health coverage."

With the new dependent-care requirement not taking effect until September 23, 2010, some college graduates and other young adults faced a gap in their coverage. Humana will ensure that these young adults who are currently Humana members will have uninterrupted coverage this year.

The decision by Humana directly impacts the adult children of members who are enrolled in Humana's fully insured lines of business. (Children of members enrolled in a HumanaOne individual health plan have already been able to remain on their parents' or guardians' coverage until age 26.) Humana is also encouraging large employers who self-fund their coverage with Humana to extend coverage to the adult children of their employees who would otherwise lose their coverage this year.

Source: Humana Inc.

© 2010 MediLexicon International Ltd

Schools work to reduce liabilities over bullying

April 21, 2010

he widely publicized suicide of a Massachusetts teen and an $800,000 award to a Michigan teen, both of whom allegedly were bullied by classmates, are expected to generate more litigation against school districts, observers say.
Advertisement

In the Massachusetts case, 15-year-old Phoebe Prince, a recent immigrant from Ireland, hanged herself in January after being bullied by classmates at South Hadley High School. The bullying allegedly began after she briefly dated a high school senior.

Prosecutors have filed charges including statutory rape, violation of civil rights with bodily injury, harassment and stalking against six alleged perpetrators.

In the Michigan case, a federal jury in Detroit last month awarded $800,000 to a student despite the fact that the school district had made some efforts to stop the bullying.

In David Patterson and Dena Patterson vs. Hudson Area Schools and Kathy Malnar, the parents of Dane Patterson accused the school district of violating Title IX of the Education Amendments of 1976, which bans sex discrimination in schools, by allowing their son to be harassed by other students. The son, now 19, endured years of escalating bullying by his classmates that culminated in a sexual assault, according to court documents.

Observers say school bullying has always been an issue, but the advent of online social networking has exacerbated the problem.

Steps school district risk managers should take to address the problem include implementing a policy and training students, staff and parents, experts say (see related story).

Eric Seaborg, risk management consultant for Chevy Chase, Md.-based United Educators Insurance Inc., a reciprocal risk retention group, said, "There are a lot of school systems out there that are very, very advanced in regard to having committees and prevention group programs to address bullying, to identify bullying behaviors, to deal with bullying behaviors."

In the Michigan case, the 6th U.S. Circuit Court of Appeals in Cincinnati in January 2009 overturned a lower court ruling that had dismissed the Pattersons' case. The appeals court held that despite implementing several proactive programs to combat harassment and bullying, a "genuine issue of material fact" remained as to whether the Hudson, Mich., school district's actions were "deliberately indifferent," one of the required elements to establish a violation of Title IX.

The 2-1 ruling said after the cycle of harassment against the teen intensified in ninth grade, "Hudson's only response was to employ the same type of verbal reprimands that it had used unsuccessfully in response to the sixth- and seventh-grade harassment," steps that "were clearly unreasonable in light of the known circumstances."

The appeals court ordered the case returned to district court, where a federal jury in March awarded $800,000 to the family. An attorney for the school district could not be reached for comment as to whether an appeal is planned.

Elsewhere, the parents and sister of 14-year-old Christopher David Jones of Crofton, Md., who was surrounded and beaten to death by gang members as he rode his bike home, filed suit last week against the Anne Arundel County Board of Education and others. A school administrator who had promised to take several measures to protect Christopher against gang member threats failed to take any action, said the family's attorney, Richard L. Jaklitsch, of the Upper Marlboro, Md.-based Jaklitsch Law Group. A school district spokesman had no comment.

Bullying is "one of the major, top issues in schools," said Cheryle Mangels, executive director of the Denver-based Colorado School Districts Self-Insurance Pool.

"I think school districts are extremely concerned about it and are paying a great deal of attention to it," said Nancy Sylvester, managing director, public entity and scholastic division, for Arthur J. Gallagher Risk Management Services Inc. in Baton Rouge, La. "The effort (to address the issue) is much more concentrated now than ever before."

"It's a very, very big concern," agreed Lee Gaby, executive director of the Athens, Ga.-based Public School Risk Institute Inc. The Massachusetts incident and the Michigan case, along with other bullying incidents, "all combined may have served to reawaken an interest in finding what's been referred to as a systemic solution" to the problem of bullying, he said.

Internet access has exacerbated the problem. Communications can be sent anytime "with the push of a button," said Philip D. Burns, president of Tulsa, Okla.-based Sytech Research Inc., a psychological research firm. "The consequences now are far more dire due to the instant public humiliation that this type of electronic bullying can bring to the equation," he said. "It's far more devastating on the kids."

In a 2005-2006 study of 7,000 sixth- through 10th-grade students by the Rockville, Md.-based National Institute of Child Health and Human Development, 36.9% reported they have been victims of verbal bullying, 32.1% rumor spreading, 25.8% social exclusion, 13.2% physical bullying and 10.1% cyber bullying.

Among victims of "traditional" bullying, 17.8% also reported online victimization; but 95.1% of cyber victims said they also were victims of traditional bullying.

While there were no reports of litigation by Ms. Prince's parents, more litigation stemming from bullying is expected. "We're not seeing a lot of it, but I think that will increase," Ms. Mangels said.

Jean Demchak, Hartford, Conn.-based global education practice leader at Marsh Inc., said the tendency to sue in such cases has increased as parents have become aware of their rights. "Litigation will increase in this area based on the historical perspective we have of similar incidents," she said.

State law in many cases provides school districts with immunity and such litigation is more likely to be brought under federal law, as in the Michigan case, observers say.

"There's absolutely very likely to be a proliferation of these cases brought," said Katie Anderson, senior counsel with law firm Strasburger & Price L.L.P. in Dallas.

The Michigan damage award "was really shocking," said Christine Lueders, Chicago-based senior vp in the Willis Pooling Practice, a unit of Willis North America. "It really says to the schools that even though they have a policy" and take some actions against individuals when bullying occurs, the school district still may be held liable for failing to create a safe environment for the student.

School districts are charged with the responsibility "of taking action and making sure it's effective," said Ms. Anderson. "They can't just do something and say, "Look, we did something.' They have to check and make sure it worked."

When a landmark case such as the one in Michigan is successful, plaintiffs attorneys will try to set the same precedent elsewhere, said David Ruiz, employee benefits and risk manager for the Martin County School district in Stuart, Fla.

Copyright © 2010 Crain Communications, Inc.

P&C Industry's Capital Position Improves

April 21, 2010

The property/casualty industry withstood the global financial crisis reasonably well, according to Fitch Ratings. In its recent report, "Property/Casualty Insurers' Financial Leverage and Debt-Servicing Capacity," the firm analyzed key holding company financial factors of U.S. property/casualty insurance organizations, examining changes in financial leverage and debt-servicing capacity for the last several years and in 2009.

After analyzing 10-K filing data from all publicly traded property/casualty insurers in Fitch's debt rating universe, the firm found that most companies experienced solid operating earnings and a significant recovery in investment portfolios in 2009, which led to a material increase in reported GAAP shareholders' equity and, thus a decline in financial leverage for Fitch Ratings' property/casualty insurer universe, in aggregate.

The report also features evaluations of insurers' liquidity from insurance subsidiary dividend capacity. While most of the companies highlighted in the report had increased maximum dividend capacity for 2010, and most of these had double-digit increases, there were a few exceptions to the improvement: XL Capital Ltd. with a 44% decline in capacity; Odyssey Re Holdings Corp. with a 36% decline in capacity; Berkshire Hathaway Inc. with a 22% decline in capacity; and Zenith National Insurance Corp. with a 12% decline in capacity.

The majority of the insurers highlighted in the report experienced favorable underwriting performance fueled by fewer catastrophe-related losses and recognition of reserve redundancies, which contributed to higher GAAP interest and preferred dividend coverage ratios and a number of companies continue to hold cash at higher than traditional levels at the holding company level.

The industry still faces continued earnings and capital pressure due to the economic recession and a persistent competitive insurance pricing environment, Fitch says. Earnings will also be strained by less attractive investment yields and poorer core underwriting results, due to less benefit from favorable loss reserve development. Fitch's rating outlook for the sector remains negative for these reasons.

While the industry's capital position remains strong, companies face extreme challenges to profitably deploy capital generated from current earnings. As such, Fitch anticipates significant increases in share repurchase activity from its property/casualty (re)insurer universe in 2010, which are likely to moderately increase financial leverage.

©2010 Insurance Networking News and SourceMedia, Inc. All rights reserved.

Deal Seeks to Ease Fraud Reporting

April 21, 2010

n an attempt to eliminate duplicate fraud filings, ISO (Insurance Services Office), the National Insurance Crime Bureau (NICB) and the National Association of Insurance Commissioners (NAIC) have announced an agreement to streamline the online reporting process.

"This agreement has been a high priority for the NAIC Antifraud Task Force over the last year," Sandy Praeger, Chair of the NAIC Antifraud Task Force and Kansas Insurance Commissioner said in a statement. "This agreement saves insurance companies and fraud investigators time and improves investigative resources for state fraud bureaus. We are already receiving twice as many fraud referrals from property/casualty insurers now that NICB/ISO members are providing reports to the NAIC Online Fraud Reporting System (OFRS) system."

Companies can now file a single report directly to multiple state insurance departments and the NICB/ISO. Starting today, 47 states will accept reports either through the NAIC OFRS or via a direct system connection from NICB/ISO.

"This expansion of NICB's Fraud Bureau Reporting Program, in cooperation with the NAIC and state fraud bureaus, brings us closer to offering a single system where the insurance industry can report suspected fraud and get the data in the hands of people that can make a difference," added NICB President and CEO Joe Wehrle.

©2010 Insurance Networking News and SourceMedia, Inc. All rights reserved.

COBRA Subsidies Continued, Medicare Cuts Delayed

April 20, 2010

President Barack Obama signed legislation Thursday night extending extra unemployment benefits through May, including subsidies to help the laid-off buy health insurance under so-called COBRA rules, The New York Times reports. "The measure, which would continue added unemployment benefits and other expired federal programs through May, will restore aid to thousands of Americans who had exhausted their benefits or whose eligibility was expiring. " The new law comes after a two-week gap in benefits for some people as Senate Republicans held up progress on the measure (Hulse, 4/15).

USA Today: The bill passed 59-38. "Three Republicans voted with Democrats on the bill: George Voinovich of Ohio and Olympia Snowe and Susan Collins of Maine. Three Democrats did not vote: Evan Bayh of Indiana, Bill Nelson of Florida and Mark Warner of Virginia" (Fritze, 4/15).

The Associated Press: "The bill also restores full Medicare payments to doctors who were threatened by a 21 percent cut and refloats the flood insurance program." Obama asked lawmakers to extend the package for the rest of the year. The temporary extension will cost $18 billion, an expense that will be added to the deficit. Republicans objected to the added deficit spending, but the "situation became more urgent Thursday afternoon when Medicare announced that it would start paying doctors' claims at a 21 percent lower rate" (Taylor, 4/16).

MedPage Today: "The 21 [percent] cut officially took effect April 1, but Medicare has held off paying claims since then in anticipation of Congressional action, so that doctors have yet to feel the sting. ... Congress has already voted several times this year to push the 21% cut in reimbursement down the road. The most recent reprieve -- during which doctors received no increase in payments but no cuts -- expired on April 1" (Walker, 4/15).

Politico: "The bill bypassed pay-as-you-go rules because it was designated as a temporary 'emergency' spending plan." But, those requirements - that legislation be paid for in advance in order not to balloon the deficit -- may make it hard for Democrats to pursue other items on their agenda, such as the year-long fix to the unemployment programs (Shiner, 4/16).

Effort to ban texting by drivers gains traction

May 5, 2010

So much recent attention has been focused on distracted driving that even Oprah Winfrey has gotten in on the act.

Despite state and federal laws banning the use of hand-held communication devices while driving, risk and fleet managers are challenged to enforce policies that ban the use of wireless devices while driving.

Data showing the hazards of distracted driving does exist. The National Highway Traffic Safety Administration says nearly 6,000 people died and more than 500,000 were injured in 2008 crashes involving a distracted driver.

Further, the Insurance Institute for Highway Safety says drivers who use hand-held devices are four times as likely to get into a crash.

So far, seven states and the District of Columbia have banned hand-held devices while driving. In addition, 19 states and the District of Columbia have banned texting while driving. In January, U.S. Transportation Secretary Ray LaHood imposed a federal ban on texting on commercial truck drivers.

The message has caught mainstream appeal, with Oprah Winfrey partnering with the Governors Highway Safety Assn. in an awareness campaign called "No Phone Zone," which asks drivers to discontinue cell phone use while driving. She also hosted an April 30 show with interviews of government officials and families of victims of distracted driving crashes.

But in a business climate with people always on the go and emphasis on productivity, risk and fleet managers are relying on their drivers and employees to be responsible and not talk, text, check e-mail or surf the Internet while driving.

"You have to institute a policy that doesn't allow hand-held devices while driving," said Nancy Bendickson, St. Paul, Minn.-based senior consultant with Chicago-based Aon Corp.'s global risk consultant group, who specializes in private fleets and nontrucking fleets. "Typically, fleet managers and risk managers are not going to find out a driver is using them until there is a crash. It's something that is difficult to monitor and companies are struggling with ways to do so."

Her colleague, David Mitchell, director of risk control and safety management with Aon's trucking division in Little Rock, Ark., said voluntary driver cooperation is needed to make the policies work.

Many companies, including United Parcel Service of America Inc. and Verizon Communications Inc., already have a broad, zero-tolerance policy on using cell phones and other hand-held wireless devices while driving. Fleet managers from both companies said that if drivers need to make a call, they should pull off the road, stop safely and then place it.

"We operate by the code of no distractions in the cab," said Emilio Lopez, UPS fleet safety risk manager, who oversees about 102,000 drivers who drive 3.3 billion miles per year. "We comply with all federal and state rules when it comes to this."

According to Verizon's policy, the New York company "prohibits the reviewing or sending e-mails, texts, videos, pictures, note-taking, checking calendars with wireless devices...to conduct Verizon business while driving regardless of whether it is a company-owned or personal device." Verizon's policy notes that if a driver makes a call while driving, it must be on a hands-free device.

James Noble, senior risk engineering consultant for Schaumburg, Ill.-based insurer Zurich North America, co-authored a white paper, "Cell Phone Liability for Employers," which states that having a cell phone policy in place helps reduce exposures and improves safety, but it is not a catchall.

"Unless the enforcement is strong enough, it is not likely to discourage drivers from using a cell phone while driving," the white paper states. "The prudent practice for a company is to consider developing a cell phone use policy and implementing it uniformly in order to manage this risk proactively in their fleet operations."

Dave Melton, director of transportation and technical consulting with the Boston-based Liberty Mutual Research Institute for Safety, said in light of the information available about the dangers of distracted driving, the problem boils down to a "management and culture issue."

"In service organizations especially," Mr. Melton said, "they are required to perform at a certain level and maintain a certain level of productivity." That could result in some drivers thinking that productivity during driving time is more important than observing company policy.

Copyright © 2010 Crain Communications, Inc.

Social Networking Imperiling Risk Management

May 5, 2010

As Americans become more enmeshed in social media sites, it opens up new avenues of risk and challenges for risk managers.

One such risk is engendered by the anonymity people enjoy online. A survey of 1,040 Americans sponsored by the Chubb Group of Insurance Cos. revealed that only half (51%) of the people surveyed always use their real name on social networking sites.

"Twitter, Facebook and Foursquare have created new social media risks and an environment where many people don't know who they are talking to online," says Kenneth Goldstein, worldwide media liability manager at Warren, N.J.-based Chubb.

Another risk is location-based, as something as innocuous as a Facebook update can reveal the location of a hidden data center. "They don't realize who can see their location, creating many exposures for individuals and companies," Goldstein adds

Encouragingly, 66% of respondents said they would not use mobile technology that shows people on social networking sites where they are located. "Although this lets your friends know where to find you, it also alerts criminals of your whereabouts, including when to burglarize your empty home," he says.

Another interesting result was that 64% of respondents said their company had no policy for talking about the company on social networking sites. Of the 36% who said their company had a policy, 18% said they were encouraged to talk about the company, and 18% said they were prohibited from talking about the company.

©2010 Insurance Networking News and SourceMedia, Inc. All rights reserved.

Insurers, reinsurers start assessing rig explosion losses

May 5, 2010

Several insurers and reinsurers are exposed to claims from the loss of the Deepwater Horizon oil drilling rig.

ACE Ltd., AXIS Capital Holdings Ltd. and Lancashire Holdings Ltd. are believed to have "very significant exposures on a direct basis," one energy market source said.

A spokesman for Zurich-based ACE would not comment on whether the insurer writes coverage for Transocean or others associated with the risk. A spokesman for Bermuda's Lancashire confirmed it is on the risk but would not provide specifics.

AXIS President and CEO John Charman confirmed in a conference call with analysts on April 27 that it writes a $150 million layer of liability coverage in excess of $50 million for Transocean.

Mr. Charman said during the call that his company's exposure is heavily reinsured and Bermuda-based AXIS' net retention is around $8 million.

Hiscox Ltd. in London and Catlin Group Ltd. in Bermuda confirmed they are on the risk, but did not provide details of their exposure. "A lot of the loss will probably end up in the reinsurance market," said Simon Williams, head of marine and energy at Hiscox.

Bermuda reinsurer Partner Re Ltd. said it expects $60 million to $70 million in losses, primarily within its Paris Re Holdings Ltd. unit and global specialty operations.

Montpelier Re Holdings Ltd. could see losses of as much as $20 million, the Bermuda-based reinsurer confirmed in an analysts call on April 28.

New York-based reinsurer Transatlantic Holdings Inc. said it expects insured losses to total around $1.5 billion, with its share less than 1%, or $15 million, of the industry loss.

Bermuda-based Validus Holdings Ltd. estimated its losses would range from $38 million to $45 million, net of reinstatement premiums, reinsurance and other recoveries.

Germany's Hannover Reinsurance Co. said it expects a claim of about e40 million ($53.5 million), and Munich Reinsurance Co., also of Germany, said it expects an undetermined loss related to the explosion.

Copyright © 2010 Crain Communications, Inc.

Insurers leery of elements in financial services reform

May 5, 2010

WASHINGTON�Property/casualty insurers remain concerned that financial services regulatory reform could force some insurers to bail out other financial institutions even though insurers already pay for their counterparts' insolvencies through state guaranty funds.

The U.S. Senate last week took up financial services reform legislation after Democratic leaders agreed to strip a provision that would have established a $50 billion resolution fund to cover failing institutions. The fund, which Republicans argued would lead to endless bailouts, would have been paid for though pre-event assessments on financial institutions.

After days of wrangling, Sen. Richard Shelby, R-Ala., played a leading role in getting Banking, Housing and Urban Affairs Committee Chairman Chris Dodd, D-Conn., to drop a proposed $50 billion resolution fund from financial services regulatory reform legislation. That allowed the bill to proceed to the Senate floor, where it is expected to be the subject of numerous amendments.

But large insurers�those with consolidated assets of more than $50 billion�still could be assessed to cover the costs of other types of financial institutions that collapsed, industry observers say. Insurers hold that doing so would be unfair, because they already cover the cost of insurer insolvencies through state guaranty funds.

"Dropping the $50 billion fund on the front end is significant because post-event is better than pre-event, but from an insurance perspective, paying once is better than paying twice," said Ben McKay, senior vp in the Property Casualty Insurers Assn. of America's Washington office.

"We think that's inequitable," he said. "Unfortunately, the politics are such that it's hard to explain the guaranty funds in a way that makes politicians comfortable in changing the law so that insurers only pay once."

"The Senate is going to spend at least the next two weeks looking at this legislation," said Leigh Ann Pusey, president and CEO of the American Insurance Assn. in Washington. "We haven't seen the details, but our understanding is the $50 billion pre-fund will dropped. That's good news.

"We remain very concerned that insurers with consolidated assets of more than $50 billion would still be included in a post-event assessment," Ms. Pusey said. "We've opposed that because the bill provides that insurers will be resolved through the existing state-based regulatory system," she said, adding that "we don't think we should be taxed to pay for" the failure of other types of financial institutions.

"In lieu of an assessment across the whole financial industry, we would support the concept of recouping those dollars from entities that had benefited from the resolution," she said.

Jimi Grande, senior vp in the National Assn. of Mutual Insurance Cos.' Washington office, said of the proposed $50 billion find: "It wasn't 100% clear whether the fund would impact property/casualty insurers, so we're glad it's gone."

Regarding possible post-event assessments, "paying into the fund should be limited to those that would require the fund. The property/casualty industry has a long-established record of a working, proven guaranty fund system combined with strict state regulation that has prevented insolvency. When it comes to solvency, we know it works," Mr. Grande said.

Copyright © 2010 Crain Communications, Inc.

Shadow of Hurricane Katrina Hangs Over Obama After Spill

May 3, 2010

WASHINGTON � There's a world of difference between the impact of an oil spill and a deadly hurricane. And the White House hopes it stays that way.

As President Obama, who will visit the Gulf region on Sunday morning, has stepped up his administration's response to the oil leak in the Gulf of Mexico, ordering a moratorium on new offshore drilling leases and dispatching cabinet secretaries and cargo planes to the region, the White House is also trying to avert the kind of political damage inflicted on former President George W. Bush by his administration's slow response to Hurricane Katrina.

In contrast with his treatment of the Massey Energy Company, which operates the West Virginia mine where 29 miners recently died in an explosion, Mr. Obama has not directed any tough rhetoric in public against BP, the British oil giant that was leasing the oil rig that exploded 11 days ago. Nor has he struck any tones of outrage on behalf of Gulf Coast residents and businesses affected by the spill.

But administration officials said privately that there was increased frustration with BP's response, and the White House spokesman, Robert Gibbs, pointedly refused to say whether the White House had confidence in the company's handling of the spill.

Mr. Obama, for his part, vowed, for the second time in two days, that his administration would respond aggressively to the oil spill. He maintained that he continued to "believe that domestic oil production is an important part of our overall strategy for energy security," addressing concerns about whether the administration would stick with its plan to increase drilling in the gulf.

But administration officials left open the possibility that they might reconsider the decision to expand offshore drilling if conditions in the gulf worsened. Mr. Gibbs said there would be "an extensive environmental review before deciding" on issuing new drilling leases.

Before it was announced that he would visit the Gulf Coast, Mr. Obama's weekend plans had already raised the eyebrows of some administration critics. He is scheduled to attend the high-wattage, celebrity-studded White House Correspondents Dinner on Saturday night, which CNN has been promising, in hourly promos, that it will broadcast live starting at 7 p.m. with dispatches from the red carpet.

For Mr. Obama, the potential political fallout "is going to be aggravated by the fact that the president traditionally gives a humorous speech," said Martha Kumar, a political science professor at Towson University. "There you are in Washington with celebrities and the media while wildlife and fishermen are doused in oil? That's not going to do much for the White House or for the press, for that matter."

Mr. Obama flew to Michigan on Saturday morning to speak at the commencement of the University of Michigan, and will then return to Washington for the dinner. Aides add that Mr. Obama could use his remarks at the dinner to highlight the plight of gulf residents, fishermen and wildlife.

"I think that given the serious nature of the problems that we face as a country, you could say that about any event on any day," Mr. Gibbs said in an interview, responding to suggestions that the president's attendance at the correspondents dinner might look unseemly while an environmental calamity was under way.

Natural disasters provide great opportunities, or great peril, for presidents. President Bush's slow response to Hurricane Katrina in 2005, magnified by his now-infamous "You're doing a heck of a job, Brownie" praise of his FEMA director, Michael Brown, cemented an impression that his administration failed to act with enough urgency to address the suffering of tens of thousands of people.

The widening environmental calamity in the gulf is the first time Mr. Obama has confronted a domestic disaster. Complicating the White House response is the fact that the spill occurred just a month after the president announced he was expanding offshore drilling.

Officials note that a key difference between the spill and Hurricane Katrina is the pace of the onslaught of the disaster. While the hurricane hit the Gulf Coast in a fury, the oil has � literally � crept to the shores of the gulf. While the eventual harm from the leak could outstrip that of the Exxon Valdez accident in Alaska, that will not be known for weeks, if not months.

While characterizing the Obama administration's response to the spill as intense, Bill Eichbaum of the World Wildlife Fund said the disaster showed that the expansion plans were a bad idea.

"This spill in the gulf is like having a heart attack in New York City," he said. "Everything is there that you need to fix it. If you have a spill in the Arctic, it's like having a heart attack on the North Pole. There's nothing there to help you fix it."

Copyright 2010 The New York Times Company