California Increases Capital & Surplus Requirements

California Governor Arnold Schwarzenegger signed into law on Sept. 27 a bill that will increase the capital and surplus requirements for nonadmitted insurers.

Assembly Bill 1708 goes into effect on January 1 and it increases minimum capital and surplus requirements for nonadmitted insurers and insurance exchanges from $15 million to $45 million, with the amount of cash surplus increased from $15 million to $25 million.

Nonadmitted insurers on the list of eligible surplus line insurers who do not meet the capital and surplus requirements as of January 1, must have at least $30 million of capital and surplus as of December 31, 2011, and at least $45 million as of December 31, 2013.

Be Cautious When Using Smart Devices

Mobile devices used by you personally or provided by your business or employer offer wonderful advantages to make you more productive, but they come with potential hazards. Security breaches either by accident or intentional "hacking" can put your personal information and/or your business information at risk.

Most corporate security types say the biggest issues involve personal mobile devices use to "hack" into corporate servers and data bases. Data encryption and passwords are highly recommended along with the ability to wipe out data from a Smartphone or tablet issued by the company. The latter can be extremely helpful in the event a personal Smartphone is stolen, and the corporate IT people want to wipe the phone of all secure access information remotely. Some corporations allow access to company data through personal mobile devices but only with devices that were provided by the corporation. Some corporations are requiring employees to register personal devices with corporate security/data processing so they can control how their corporate data is being accessed. All of these precautions are highly recommended by Fey Insurance.

It isn't just the business world that faces possible problems with personal smart phones, iPads, etc. accessing data. Accessing your personal and private financial information via Smartphone, iPads, etc can also be an issue. Many people have their banking applications on their devices as well as applications that have all their stored passwords. A lost device could result in access to your personal bank accounts and do a lot of financial damage. Password protecting your devices is key. The more passwords and protection you employ the better in protecting you and your family from potential financial ruin. Apple iPhones have tracking capabilities so if your phone is lost you can use your personal computer or another iPhone to track its location. They also allow you to wipe the phones clean of all data and make them useless to anyone who might find the lost phone and want to cause serious problems with your data.

If you have further questions, consult your Smartphone or table manufacturer, your phone service carrier or your corporate IT/security people for help.

NAPSLO Applauds Passage of Surplus Lines Bill

NAPSLO applauded Wednesday’s passage of the Non-Admitted and Reinsurance Reform Act of 2006 (H.R. 5637) by the U.S. House of Representatives and expressed optimism that a Senate sponsor of the bill will be found and that the Senate will consider the bill.

“This is an important milestone toward ultimately improving the operation and regulation of the surplus lines market,” said NAPSLO President William Newton. “And a step that NAPSLO has been working on for several years with members of Congress. We are pleased to see that many of the critical items that NAPSLO first raised in meetings with House members and staff were part of the final bill approved by the House.”

The legislation is in part aimed at making access to the surplus lines market more efficient for consumers and the brokers and agents who assist them.

“Insurance consumers are indebted to Reps. Ginny Brown-Waite (FL) and Dennis Moore (KS) who introduced the bill in June,” said NAPSLO Executive Director Richard Bouhan. “If enacted into law, this legislation will help ease the insurance crisis in states still suffering from the impact of natural disasters.”

H.R. 5637 would establish national standards for how states regulate the surplus lines market and reinsurance and would create a uniform system of surplus lines premium tax allocation and remittance, one-state compliance on multi-state surplus lines risks, and direct access to the surplus lines market for sophisticated commercial purchasers. These are concepts long endorsed by NAPSLO and promoted with members of Congress during meetings over the past two years.

H.R. 5637 was approved Wednesday evening by a vote of 417-0. The bill has not been introduced in the Senate and NAPSLO and its Washington, D.C. representative, Maria Berthoud of B&D Consulting, is working on securing a Senate sponsor.

“We are hopeful that a sponsor will be found and that the Senate will consider the bill this year,” said Ms. Berthoud. “We believe the bill includes a number of items that will improve the way the insurance industry operates and will also benefit consumers.”

New California Bill Adds Filing Requirements

The Governor of California has signed Senate Bill 131, which specifies that certain filing requirements now applies to certain surplus line brokers.

The bill, which was signed into law, requires that the information in a sworn statement be expanded to include certain premium information for single and multistate risks. Requires the filing to apply to a home state insured that directly procures insurance with a nonadmitted insurer. Requires that when multiple brokers are involved in placing a policy, only the one responsible for filing the report would be considered transacting business for tax purposes.

This bill would specify that the sworn statement filing requirements apply to surplus line brokers placing business for a home state insured. The bill require that the information in the sworn statement be expanded to include the total amount of gross premium, the total gross premium for single state risks where 100% of the premium is attributable to risks in California, and for multistate risks, the percentage of gross premium allocated to California and each other state. The bill also requires that the sworn statement filing also apply to a home state insured that directly procures insurance with a nonadmitted insurer. However, the bill authorizes the commissioner to waive or modify any of the foregoing requirements by public notice published on the department's Internet Web site.

The bill changes the definition of "business done" or "business transacted" to mean all insurance business conducted by a surplus line broker for a home state insured or directly procured by the home state insured. The bill also requires that when 2 or more licensed surplus line brokers are involved in placing a policy, only the one responsible for filing the confidential written report, as specified, would be considered transacting business for tax purposes, and only one licensed surplus broker would be required to include the policy in his or her sworn statement.

The surplus line broker required to include the policy in his or her sworn statement would be either the one responsible for negotiating, effecting the placement, remitting the premium to the nonadmitted insurer or its representatives, and filing the confidential written report, or the one surplus line broker delegated the responsibility for the filing of the confidential written report pursuant to a written agreement, as provided.

Pending FIO Insurance Regulatory Modernization Report Still Pending

Already well past the deadline for its insurance regulation modernization report, the FIO faces a looming deadline on its global reinsurance report.

The Federal Insurance Office ("FIO") was authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") in 2010, and the first Director of FIO, former Illinois Insurance Director Michael McRaith, took office in June of 2011.[1]

At the time, proponents of FIO insisted that insurance regulation was not among its responsibilities.

At the time, Deputy Treasury Secretary Neal Wolin said the creation of FIO would correct the "glaring omission" of any federal "institutional capacity to develop and coordinate insurance policy...". Regulation of the insurance industry was not part of FIO's responsibilities, according to Wolin and others who indicated that neither FIO nor the Dodd-Frank Act altered the fact that insurance is primarily regulated by the states.[2]

Under the Dodd-Frank Act, FIO was directed to study and prepare a report to Congress regarding the improvement and modernization of insurance regulation in the United States. This report was initially due in January of 2012.[3]

In February, 2012, FIO was hard at work and expected the report in "the coming weeks."

In February of 2012, a spokesperson for the U.S. Treasury indicated that FIO was "hard at work preparing [its] first report on how to improve and modernize the system of insurance regulation in the U.S." According to the Treasury spokesperson, FIO expected "to send the report to Congress in the coming weeks."[4]

As Insurance Regulatory Law discussed at the time, many in the insurance industry were watching FIO with interest and expecting the modernization report to potentially be a critical indicator of the future of federal involvement in domestic insurance regulation.[5]

In July of 2012, an opinion piece in Business Insurance noted that FIO's insurance modernization report was still overdue.

Those with long memories will recall that the report was supposed to be presented to Congress by the end of January. And those with an understanding of how Washington too often works know that such deadlines often aren't met. We said in March that we weren't “troubled” that the report was a little late.

Well, now it's more than a little late. The insurance industry and its customers—including risk managers—ought to know what FIO has in mind for improving the regulation of insurance.[6]

While the Business Insurance piece did not expect the FIO report to call for significant direct federal involvement in insurance regulation, it did indicate that the report, and FIO itself, could have a major impact on the future of insurance regulation:

Still, the FIO can greatly influence how insurance is regulated. It can prod states to reform and modernize regulatory practices. As the first-ever federal-level insurance authority, the FIO also should play a critical role in presenting U.S. views in international insurance regulatory forums.

The report will give a clear indication of how the FIO plans to approach its job. With elections looming, we hope the report is issued soon, and the sooner the better.[7]

Also as noted by Business Insurance in July, the FIO set its sights "on crafting another report—this one on reinsurance." That report is due to Congress no later than September 30, 2012.[8]

This refers to the report to Congress that the Dodd-Frack Act requires FIO to make regarding the global reinsurance market and the critical role it plays in the U.S. insurance industry.[9]

There are no signs of FIO's reinsurance report yet, but from a political angle, FIO may have an easier time making the reinsurance report deadline than the insurance modernization report deadline.

"Sources with knowledge" allege that the FIO modernization report has been delayed for political reasons.

In April, the Insurance Insider reported that the FIO modernization report could be delayed until after the U.S. presidential elections in November of 2012, citing "sources with knowledge of the situation" that said the "White House is unlikely to risk a confrontation with states and governors over state rights as well as a potential gridlock in Congress at a time when the US legislation process has ground to a halt...".[10]

Missing a federally-legislated deadline by 9 months (and counting) may not have a significant effect on the future of insurance regulation, but it could illustrate a weakness in the arguments of those proponents of increased federal insurance regulation who decry the inefficiencies of the state-based system.

1. The First Director of the Federal Insurance Office Takes the Reins, Insurance Regulatory Law, June 13, 2011.
2. FIO to Develop and Coordinate Insurance Policy at the Federal Level, Insurance Regulatory Law, December 12, 2011.
3. The Dodd-Frank Act, Title V, Subtitle A, Section 502.
4. FIO Still Working on Overdue Modernization of Insurance Regulation Report, Insurance Regulatory Law, February 7, 2012.
5. FIO Still Working..., id.
6. Opinion: Federal Insurance Office regulatory report looks to be MIA, Business Insurance, July 15, 2012.
7. Opinion: Federal Insurance..., id.
8. Opinion: Federal Insurance..., id.
9. The Dodd-Frank Act, Title V, Subtitle A, Section 502.
10. FIO report could be delayed post-US election date, Insurance Insider, April 23, 2012.

Somerford and Mueller Selected for International Internships

Rachel Somerford, a junior at the University of North Texas, and Claude Mueller, a junior at Florida State University, NAPSLO interns in 2008, have been selected by NAPSLO for additional internships in London and Bermuda in 2009.

Each summer NAPSLO selects students from around the country for its internship program. Out of 80 applicants in 2008, Somerford and Mueller were two of 15 interns selected for the internships. Of the 15 interns, seven were selected to attend the NAPSLO Annual Convention in San Diego where the interns had many opportunities to interact with individuals representing the Excess and Surplus Lines industry. After an interview process at the NAPSLO convention, the Internship Committee selected Somerford and Mueller as the 2008 top interns.
Rachel was selected as the J.H. Blades Scholar and will receive a 3-week internship in London and will intern with Miller. Claude was selected as the first recipient of the new Bermuda Scholarship sponsored by NAPSLO and will intern with Crump International in Hamilton.

With the additional internship opportunities, NAPSLO provides airfare and a stipend for the students to spend three weeks learning about the London or Bermuda insurance market with selected hosts. While this is the first Bermuda internship, NAPSLO has sponsored an internship in London since 1984.

NAPSLO established the Internship Program in 1981 to interest students in the Surplus Lines Industry, which handles unique, unusual, or hard to place risks. Since its inception more than 200 students have participated in the program and over half of the former interns are currently working in the insurance industry and many are employed by NAPSLO member firms.

NAPSLO Affirms Strength and Stability of Specialty Lines Insurance Industry

NAPSLO as part of its recently launched education and awareness campaign, today issued a statement affirming the strength, stability and accessibility of the wholesale specialty lines insurance industry, including surplus lines.

“Given recent developments in the financial services industry and related concerns about stability of the U.S. insurance industry, NAPSLO believes it’s important to reiterate the strength and solvency of the specialty lines insurance market, including wholesale brokers and surplus lines carriers,” said NAPSLO President John Wood. “The member companies and wholesale brokers that make up NAPSLO provide strong, stable markets for placement of specialty insurance.”

NAPSLO is comprised of approximately 500 wholesale brokers and 100 insurance companies, and the surplus lines industry wrote more than $36 billion in premium in 2007.

According to Wood, the industry’s stability was reaffirmed by the 2008 Special Report, “U.S. Surplus Lines – Market Review,” published by the A.M Best Company. The survey of the excess and surplus lines market reported that “surplus lines insurers outperformed the property/casualty industry in underwriting and operating performance in 2007.” Since 1994, the annual A. M. Best report has found that the solvency record of the specialty insurance industry is as good, if not better, than the overall industry.

“We encourage retail agents and brokers looking to place specialty insurance to work through wholesale brokers, who have access to a broad array of strong, stable specialty lines carriers and can find the best coverage often using innovative solutions for the difficult insurance problems retailers and their clients face,” Wood said.

A.M. Best Webcast on Friday

Registration is still open for the A .M. Best Co. and NAPSLO Webcast entitled, "State of the Excess and Surplus Market" on Friday, September 25, from 11 a.m. to Noon (Eastern).

Registration is free and can be done online at Best's Conference Center.

Company leaders and experts in the specialty insurance market will discuss the findings of the annual report from A.M. Best and the Derek Hughes/NAPSLO Educational Foundation on the issues shaping the excess and surplus market and how companies are faring within it.

Speakers scheduled include:

• Steve DeCarlo, CEO, AmWins
• Neil Abernathy, CEO & President, Swett & Crawford
• Matt Power, EVP, Lexington Insurance Co.
• Joseph Roethel, Assistant Vice President, A.M. Best Co.
  

Topics will include:

• An analysis of the performance of the leading excess and surplus insurance coverage writers.
• An exploration of changes in the distribution environment and the roles of agents and brokers.
  

Attendees can submit questions or comments for the discussion by e-mailing news@ambest.com. Questions and comments will be discussed before and during the live event. Coverage of the Webcast will be featured in an upcoming issue of Best's Review.

WSJ Article on Flood Insurance

Wall Street Journal had a very interesting article about flood insurance.   In the wake of all that is going on in the aftermath of Irene, we thought this article would be a good one to share.  As you may recall from our previous posts on flood insurance, it is run by FEMA.  What is going to even make this whole flood topic even more interesting is that the FEMA flood program expires on Sept 30th, 2011 unless the lawmakers decide to continue the program.  Stay tuned.

Click below to read the article:
As Homeowners Dive Into Pool Of Flood Insurance, Caveats Abound

Cavalcade of Risk, No. 140 - Doom and Gloom

Dr. Jaan Sidorov presents the 140th edition of the Cavalcade of Risk. This week, its a collection of risky, often scary posts, all tied together with a big dollop of (very dry) humor at the Disease Management Care Blog.

The Cavalcade of Risk is a biweekly rotating collection of articles and links (also known as a "blog carnival") from insurance and other-risk-related sources that provides some great information and insight about risk management.

Check out the latest edition of the Cavalcade of Risk here.

Committee Day Update– November 12-13, 2007

NAPSLO will notify committee volunteers shortly regarding their selection to serve on a committee. Notifications will also include information about Committee Day registration, scheduled for November 12-13 at the Hyatt Regency Hotel at the Dallas-Fort Worth Airport. Registation will be handled online.

NAPSLO has nine committees and approximately 100 volunteer committee members. Each year a number committee members leave committee service, making room for new volunteers to join.

Current NAPSLO committees are as follows: Budget, Finance, Audit & Investment; Communications & Technology; Convention; Education; International; Internship; Legislative; Membership & Ethics; and Mid-Year Educational Workshop.

In addition, NAPSLO is adding a new committee whose members will educate students from their local colleges and universities, or alma mater, about surplus lines insurance and our industry. Initial committee members will name the committee and also create a Mission Statement for the committee.

Idaho Reclaims Review of Health Premium Rate Increases from Feds

The Idaho Governor has issued a waiver to the Idaho Department of Insurance, allowing it to comply with the Affordable Care Act despite his previous executive order stopping the Act's implementation; subsequently, federal officials have approved the state's request to resume its own rate review process.

The Associated Press is reporting that Idaho has reversed the federal takeover of health insurance rate increase reviews in the state.

Federal officials stepped forward to assume rate review of health insurance premium rate increases earlier this year

Earlier this year, Idaho Governor C.L. "Butch" Otter issued an executive order prohibiting the implementation in the state of the Patient Protection and Affordable Care Act, also known as "Obamacare," as well as the laws and regulations associated with federal healthcare reform. As a result of that executive order, federal officials indicated that they would usurp rate review of health insurance premium increases of ten percent (10%) or more by private insurance companies in Idaho as authorized by the Affordable Care Act.

From the Associated Press article:

The Idaho Statesman reports (http://bit.ly/qc8rci) the state Department of Insurance was already was reviewing some health plan rates filed by insurance companies, as part of its regular procedures, but the executive order Otter issued in late April had made it impossible for the Idaho Department of Insurance to meet new standards under the federal health care law.

The Associated Press indicates that Governor Otter has now issued a waiver allowing the Idaho Department of Insurance to comply with the provisions of the Affordable Care Act, thereby preventing the federal takeover.

The Director of the Idaho Department of Insurance, Bill Deal, indicated that the Department established a premium reporting and review process according to the Affordable Care Act after Governor Otter issued the waiver.

Subsequently, the federal Center for Consumer Information and Insurance Oversight granted the state's request to operate its premium reporting and review process in lieu of federal oversight.

Read the full article:

Idaho reclaims insurance rate reviews from feds
Associated Press | Deseret News
September 11, 2011

Insurance Industry M&A on the Rise

A steady rise in mergers and acquisitions in the insurance industry in the first part of this year is part of a trend that should continue into the future, according to reports.

After at least two years of steady decline, the first half of 2011 has brought a significant increase in mergers and acquisitions in the global insurance industry, according to an analysis by Clyde & Co cited in a report by the Financial Times.

The report indicates that global insurance industry transactions are expected to continue at an increased rate moving forward, and suggests that the reinsurance sector and the Bermudan industry are likely to be particularly active in M&A.

The Financial Times quotes Andrew Holderness, a partner at Clyde & Co, as follows:

“It is evident that mergers and acquisitions are back on the agenda of underwriting businesses,” he said. “Regulators and customers are looking for strength and stability...we expect to see continued activity across all types of transactions.”

Read the full article:

Sharp rise in insurance M&A
Paul J. Davies | Financial Times
September 11, 2011

E&S Workflows and Standards On Agenda at ACORD Implementation Forum

The insurance industry’s E&S Joint Working Group (ESJWG) will present in-depth discussions of excess and surplus lines connectivity issues at the upcoming ACORD Implementation Forum on October 29, 2013 in Boston.

Aimed to assist carriers, retail agents, general agents and wholesalers in boosting their ability to connect, these two ESJWG panel discussions will include:

1) Carriers & Lloyd’s: This initial one-hour session beginning at 3:15 p.m. will focus on standards development, adoption and electronic interaction implementations between managing general agents and insurance carriers, including Lloyd's. ESJWG spearheaded an effort working with ACORD to deliver the first-ever excess and surplus lines (E&S) industry web services standard for general liability, and is now delivering an expanded standard that includes property rates and rating requests.

Recent developments from the ESJWG insurance carrier subgroup and Lloyd’s subgroup will be the focus of information presented by:

• Greg Ricker of Sombra Technologies, E&S carrier subgroup co-chair.

• Scott Good of Scottsdale Insurance Co., E&S carrier subgroup co-chair.

• Tammie Miller of Risk Placement Services Inc., Lloyd’s subgroup co-chair.

2) Retail Agents & General Agents: From 4:30 to 5:30 pm, this session will expand on the prior session and focus on process efficiency and electronic transaction opportunities between retail agents and the E&S managing general agent (MGA)/wholesaler community. Recent developments from the ESJWG retail agent/general agent subgroup will be the focus of information presented by Lisa Parry Becker of William B. Parry & Son Ltd.; and Tate Tooley of Bloss & Dillard Insurance Managers Inc. Both co-chair the ESJWG retail agent/general agent subgroup.

ESJWG co-chairs Mike Roy, of Risk Placement Services Inc., and Angelyn Treutel, of SouthGroup Insurance-Gulf Coast will participate in both panel discussions.

Registration link for those attending because of the E&S sessions is: https://secure.events-registration.com/aif2013/?source=ES13. 

“ACORD Implementation Forum is the venue where decision-makers meet to really push the industry forward on connectivity issues,” said Roy, who is CIO of Risk Placement Services Inc. “So for ESJWG to highlight excess and surplus lines connectivity issues in that environment shows we’ve made much progress. The ESJWG sessions at AIF will highlight accomplishments along with current activities and the input needed from agents, wholesalers and carriers. ESJWG invites any and all industry participants to attend the session at ACORD Implementation Forum, but also get involved on an ongoing basis and tap ESJWG.org for resources.”

“ESJWG has effectively developed standards and implementation strategies, while providing information and training for retail agents, general agents and carriers to better automate and streamline,” said Treutel, who is president of independent agency SouthGroup Insurance-Gulf Coast in Bay St. Louis, Mississippi. “We continue forward on two tracks—implementing what is already available and developing additional tools for the E&S business. All these efforts can hasten business processing while reducing pain points, keystrokes, and errors and omissions risks throughout the E&S community.”

ESJWG’s overall objectives of in the E&S marketplace are:

• Carrier standards: Focus on E&S electronic rating transactions between general agents and carriers, work toward standards adoption with ACORD, and drive implementation of standards with service providers, general agents and carriers.

• Retail agent/general agent (RA/GA) interface: Concentrate on data transmission streams to/from RA systems to/from GA systems with emphasis on automating the flow of data.

• Lloyds: Jointly develop global standards.

The E&S Joint Working Group (ESJWG) was formed in 2008 as an alliance of carriers, agents and vendors working with the American Association of Managing General Agents (AAMGA), ACORD, Agents Council for Technology (ACT) of the Independent Agents & Brokers of America, and the National Association of Professional Surplus Lines Offices (NAPSLO). 

ESJWG’s mission is to improve the efficiencies for retail agents, general agents, wholesale brokers and carriers by promoting use of ACORD standards, best-practice workflows and the electronic exchange of data among each of the business partners. The group comprises retail agent/general agent, carrier and Lloyd's subgroups. www.ESJWG.org

Leaving Your House Vacant? Consult Your Agent!

In today’s real estate market it can be somewhat common to purchase a new home with out having first sold your current home. Prices are low so if you want to upgrade your house, now seems to be the time even if you know you may have to wait a few months until you sell your current home. So many are purchasing a new home, moving into it and then leaving the old home vacant until it sells. This can pose an insurance problem that Fey Insurance feels many don’t realize.

In a typical homeowner policy there is wording that refers to a 60 day period. For sixty days your homeowner policy will have no change in coverage once it becomes vacant. However, and this is important, once the house has been vacant for 60 days some of the coverages are no longer provided. Example, vandalism or malicious mischief claims would no longer be covered. Same with glass breakage claims. The reason for this is that a homeowner policy is priced and designed for buildings that are being lived in and cared for by the owners. Once the owner no longer lives there and it is vacant then the building is more at risk for claims and therefore the insurance companies require it be on a special vacancy policy. What does vacancy mean? Vacancy means the following, “Substantially empty of personal property necessary to sustain normal occupancy.”

So if you are considering purchasing a new home and leaving the current home vacant until it sells, please be sure to call your insurance agent so they can make sure coverages don’t disappear from your policy

NAPSLO Members Elect New Officers, Directors

NAPSLO elected a slate of officers and directors for 2006-07 at the Annual Business Meeting, on Friday, September 15, at the Annual Convention in Chicago.

Elected officer positions were:
President - William H. Newton, Lemac & Associates, Los Angeles, Calif.
Vice President - Mary Ellen Rozzell, Continental/Marmorstein & Malone, Paramus, NJ.
Secretary - John F. Wood, III, CIC, CIW, Specialty Risk Associates, Inc., Shreveport, La.
Treasurer - Dale H. Pilkington, Colony Insurance Company, Richmond, Va.

Elected for new three-year terms on the Board were Gregory T. Crouse, Crouse & Associates Insurance Brokers, Inc., San Francisco; and Gilbert C. Hine, Jr., CPCU, McClelland & Hine, Inc., San Antonio, Texas. Letha Heaton, Evanston Insurance Company, Deerfield, Ill.; Matthew D. Nichols, All Risks, Ltd., Hunt Valley, Md.; and Mr. Pilkington, were elected for new three-year terms.

Directors are elected for three-year terms on the Board. Officers are elected for a one-year term.

Online Registration for Convention Ends on Friday

Online registration for the 2009 NAPSLO Annual Convention ends on Friday and members interested in attending the meeting, Oct. 7-10 in Orlando, will have to register on site after Sept. 18.

Nearly 2,700 people have registered for the meeting, which will take place at the Orlando World Center Marriott. Hotel rooms at the Marriott are sold out but rooms are still available at the Caribe Resort, located nearby. NAPSLO will operate a shuttle between the two hotels during the convention.

The convention's Opening Reception will take place on Wednesday, Oct. 7 and programs are scheduled for Friday and Saturday morning. Among the programs will be a speech Dr. Robert Hartwig of the Insurance Information Institute, a industry panel and a game show type of program featuring representatives of Baby Boomers and members of NAPSLO's Next Generation discussing workplace issues.

PDF Electronic Online Forms Now Available

NAPSLO now features interactive electronic PDF applications and forms that can be completed onscreen and e-mailed conveniently to NAPSLO, versus printing, handwriting and mailing via postal mail.

All applications in the Member and Labels & E-mail Address section of NAPSLO’s Web site now feature the interactive PDF Smart Forms.

Having the capability to electronically fill out a form is fast and simple. The document contains data fields where text can be directly entered and can also include radio boxes and checkboxes for multiple choice questions. Using these Smart Forms also ensures the information entered will be legible and allows the user the ability to keep backup copies electronically.

To view the applications containing forms, please visit the Member and E-mail & Labels section of NAPSLO's Web site.

Let NAPSLO know if there is a particular form or application you prefer to feature Smart Forms. E-mail Jennifer@napslo.org with suggestions.

Technology Program on Data Transfer Added to Convention

An update on current efforts to standardize data transfer between U.S. and London firms will be the subject of a special presentation added to the programming at the 2010 NAPSLO Annual Convention in Atlanta.

The program, London Technology Update – Standardizing Data Transfer Across the Pond, is set for Monday, October 11 from 1:00-2:00 p.m. (Convention registration opens that Monday at 9:00 a.m. and the Opening Reception is in the evening.)

The technology program will provide attendees a review of proposals by Lloyd’s of London to standardize data collection between U.S. and London firms; recent efforts by the Retail Agent E&S Working Group to involve London firms; and the Working Group's efforts to improve data transfer between firms in the U.S.

Adam Stafford of Lloyd’s will review current data standardization efforts in London and John Diebler & Angelyn Treutel, co-chairs of the Retail Agent E&S Initiative (a collaboration of NAPSLO, AAMGA, ACT and ACORD) will review the Joint Working Group's recent activities, including Lloyd’s joining the Joint Working Group, the establishment of a new Lloyd’s subgroup, accomplishments and goals.

Quantifying the Unquantifiable: Some Perspective on Terrorism Risk

A brief commentary from a terrorism model expert on classifying terror risks after September 11, 2001.

In Jack Seaquist’s article Perspectives: Trying to Quantify Terror Risks at BusinessInsurance.com, the terrorism model expert, and Assistant Vice President at the catastrophe modeling firm AIR Worldwide Corporation, gives a brief overview of what he considers the most significant issues in terrorism risk assessment, as well as a look at the impact of terrorism on the insurance industry in general. Seaquist describes the terrorism threat in the United States as "highly dynamic" considering the "evolving political situations" overseas.[1]

The impact of Sept. 11, 2001, on the insurance industry was immediate. Once covered in most standard all-risk commercial policies, reinsurers either refused to renew terrorism coverage or began charging exorbitant rates. Unable to purchase reinsurance or to otherwise raise sufficient capital, insurers adopted new policy forms with terrorism exclusions. For a time, terrorism coverage was virtually nonexistent.[2]

Until the devastation from Hurricane Katrina in 2005, the 9/11 attacks in 2001 were "the largest cumulative claims payout in global insurance history." The attacks brought about insured losses of $32.5 million across multiple lines of insurance "including property, business interruption, aviation, workers compensation, life and liability."[3]

But terrorism insurance per se did not exist. Insurers paid claims on a loss for which they had collected no specific premiums. Because of its nature, terrorism was a risk considered impossible to underwrite, and insurance dried up for areas—such as Manhattan and Washington—deemed likely targets for future attacks. As a result, risk managers, insurers and business groups pushed for some sort of federal terrorism insurance response.[4]

Seaquist explains that the U.S. government responded by passing the Terrorism Risk Insurance Act ("TRIA") in November of 2002. TRIA was meant to stabilize the insurance market and it established the Terrorism Risk Insurance Program ("TRIP"), which provides "government-furnished reinsurance for direct terrorism losses" for most commercial lines above the company’s deductible. The Terrorism Risk Insurance Program Reauthorization Act, passed in 2007, extended TRIP through 2014 to give insurers "the sense of stability needed for a viable market."[5]

The future of the federal backstop for terrorism coverage is set to expire in 2014 as the administration considers limiting its exposure as part of deficit-reduction efforts. While the current appetite for terrorism coverage is healthy, many insurers have begun to make longer-term plans for terrorism risk management in the absence of the TRIP.[6]

As Seaquist points out, the insurance business model functions best when losses are relatively small, uncorrelated and random, even if those losses are relatively frequent. However, catastrophic losses are generally the opposite: "large, infrequent and highly correlated." Additionally, while catastrophe modelers have been able to use historical data and other methods to overcome many of the obstacles to estimating future losses with respect to natural disasters, estimating losses from terrorist attacks is much more challenging.

Historical data on terrorist attacks is much more limited and may not be representative of the current threat. Even more importantly, while scientists and engineers can achieve mastery over the physical science underlying natural catastrophes and their impact on the built environment, terrorist activity resists scientific quantification. In addition, while natural catastrophe risk remains relatively stationary over time, terrorist threat is highly dynamic.[7]

1. Perspectives: Trying to Quantify Terror Risks, Jack Seaquist, BusinessInsurance.com, September 11, 2011.
2. Perspectives..., Id.
3. Federal Terrorism Coverage Backstop Remains Vital Tool, Mark A. Hofmann, BusinessInsurance.com, September 11, 2011.
4. ;Federal Terrorism..., Id.
5. Perspectives..., Id.
6. Perspectives..., Id.
7. Perspectives..., Id.

LifeHealthPro: AIG on the Verge of Federal Regulation

AIG, because of pending transactions and the Dodd-Frank Act, may soon become the first insurance holding company ever regulated by the federal government.

According to an article by Arthur D. Postal at LifeHealthPro.com, American International Group, better known as AIG, is "on the verge of becoming the first insurance holding company ever regulated by the federal government."

The Treasury Department is launching a public offering of $18 billion of AIG stock.

A few days ago, the United States Treasury Department announced that it is preparing to launch a public offering of $18 billion of AIG stock. At the same time, AIG announced that it plans to purchase up to $5 billion of that stock, according to the LifeHealthPro article.

Assuming the U.S. divests enough stock such that it no longer holds a majority interest in AIG, industry observers speculate that the Federal Reserve Board will step in and regulate AIG as a thrift holding company under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The decline of U.S. ownership below 50 percent would trigger federal regulation, according to a bevy of securities analysts and industry lawyers, some of whom formerly worked at the Federal Reserve Board.[1]

The LifeHealthPro article quotes Ray Schoen of Washington Analysis, a securities analytical firm, as suggesting that "the company is poised to face real regulatory supervision of its non-insurance financial business for the first time in its history."

AIG may face new restrictions on dividend payments, share buybacks, minimum leverage and risk-based capital.

Schoen also indicated that, because of the new federal regulation, AIG may face "a litany of new restrictions... including minimum leverage and risk-based capital requirements, as well as restrictions on dividend payments and share buybacks."

Robert Benmosche, President and CEO of AIG, suggested in early August that it was preparing for federal regulation as well as state regulation moving forward.

According to Benmosche and the analysts, AIG will be subject to federal regulation both because it owns a savings and loan holding company based in Wilton, Conn. now regulated by the Fed, and/or through its designation by the Financial Stability Oversight Council as systemically significant.[2]

Schoen also suggests that AIG may be required to separate its financial activities from its non-financial activities, with new restrictions between the two holding companies.

Read the full article:

AIG on the Verge of Federal RegulationArthur D. Postal | LifeHealthPro.com September 10, 2012

1. AIG on the Verge of Federal Regulation, Arthur D. Postal, LifeHealthPro.com, September 8, 2012.
1. AIG on the Verge..., id.

Advanced School Set for Oct. 27-30 in St. Louis Sold Out

The Advanced School, set for October 27-30 in St. Louis, has sold all available spaces. The Advanced School moves to St. Louis and will be held at the Eric P. Newman Education Center, the same site as previous E&S Schools.

The school will include sessions on claims, finance, recognizing scams, reinsurance & alternative risk, brokering, errors & omissions, trends in E-Business, and a review of current federal legislative proposals.

The school offers a comprehensive look at surplus lines, and provides the opportunity to meet with others in the industry. Completion of the NAPSLO E&S School is not a prerequisite.

The school opens with Perspectives From the Top, a presentation by Dale H. Pilkington, President of Colony Insurance Co.

Members on the Executive Panel will be Maureen Caviston, CPCU, Partners Specialty Group, LLC; M. Steven DeCarlo, AmWINS Group, Inc.; Stephen J. Vaccaro, Jr., Max Specialty Insurance Co.; and Terry Younghanz, Rockhill Insurance Co.

Instructors are Philip R. Ballinger, CPCU, ASLI, Surplus Lines Stamping Office of Texas; Richard M. Bouhan, NAPSLO; Richard Clarke, J. Smith Lanier & Co.; Andrew Forstenzer, Crump Group, Inc.; Randall D. Jones, Maxum Indemnity Co.; Marshall P. Kath, Colemont Brokerage Group, Inc.; Jean M. Nelson and Terry Bolin, Scottsdale Insurance Co.; and Marcus Payne, NAPSLO Education Coodinator.

Cost Savings Ideas

There is constant talk today about cutting costs. Here are two options that might help you save a few dollars on your insurance in this rough economy.


1)Raise your deductibles:
A typical homeowner policy has a deductible of $500 and a typical auto insurance policy has $100 for comprehensive and $250 for collision deductibles. One way to help save a few dollars on your annual insurance bill is to increase your homeowner deductible to $1000 and your comprehensive and collision deductibles on your auto to $500 each. Note that when you do this you bring a little bit of the financial risk back on yourself. A good rule of thumb to help figure out if the deductible change is worth the risk is to take the savings you will get for increasing your deductible and multiply it by three. If that number is larger than the difference between your old deductible and your new deductible in my opinion you are taking on an appropriate amount of risk for the savings.

2) Drop physical damage on your old vehicles.
If a car is 10 years or older it is probably worth researching whether you should have comprehensive and collision coverage on your car (many people know this as "full coverage"). Two ways to help you decide if dropping comprehensive and or collision from your car is worth it are:

1. The Insurance Information Institute says that if your car is worth less than 10 times the amount you pay annually for comprehensive and collision coverage it isn't worth keeping the coverage.

2. Another way to analyze if it is worth keeping the coverage is to take the premium you pay for collision and add it to your deductible amount. That is the total amount that it costs you to insure your car. (i.e. Your annual collision premium is $250 and your collision deductible is $500. If you total your car you will have paid $750 ($250 in premium and $500 in deductible) before you received any money from your insurance company) If in your mind it isn't worth spending that kind of money to save your vehicle if it was totaled than you might want to consider dropping that coverage.

How to Avoid Contractor Fraud

Starting a house project? Read these helpful tips before you hire a contractor.

                -Get a list of reputable contractors from your insurance company, the Better Business Bureau or a specialized consumer organization like Angie’s List.

                -Contact multiple contractors, and obtain more than one estimate.

                -Don’t allow a contractor to inspect your property if you’re not home.

                -When the contractor is inspecting your property, personally watch him conduct the inspection.

                -Obtain the terms and conditions of the project in writing, including details on specific supplies being used     and who will purchase and deliver them. Include an estimated completion date and a price-deduction schedule if work takes longer than promised.

                -Ask about warranties on work.

                -Make sure the contractor gets the necessary permits and puts them in his name.

                -Ask for references from recently completed work. Call them and look at the work if possible. Ask if there were issues and if the homeowner would use the contractor again.

                -Ask the contractor if he has liability insurance, and get the policy number and agency’s name. Call the agency, and ask them to provide you with a liability certificate of insurance. There should be no charge to you as a customer of a contractor.

                -Avoid signing the contract until the document is reviewed fully and/or discuss the terms of the contract with a legal representative or a knowledgeable source.

                -Pay the contractor by check or credit card rather than in cash.

                -Don’t pay for work in advance. If possible, don’t pay until the work is done. If you do agree to pay portions at different stages, make sure the bulk of the payment is made at the end of the project after inspections are passed.

                -Get these details in writing.  

 

        -Ask for proof of insurance and get certificates of insurance especially workers compensation.

Sources: Ohio Department of Insurance, PIAA of Ohio, and Ted Kinney, CIC, CPCU, ARM

NARAB II Passes House

The U.S. House passed legislation on Tuesday for the National Association of Registered Agents and Brokers, more commonly known as NARAB II. The Senate previously introduced the same bill but has not yet voted. If NARAB II becomes a law it will streamline the licensing process for agents and brokers nationwide, eliminating burdensome multistate requirements while preserving important state regulatory authority and consumer protections.

 NARAB II will establish a national clearinghouse as a one-stop licensing system for agents and brokers operating outside of their home state. Agents and brokers will apply for membership of the Association, agreeing to strict standards and ethical requirements. NARAB II will be governed by a board of state insurance commissioners and industry representatives with a goal of applying licensing, continuing education and nonresident insurance producer standards on a multi-state basis while preserving the laws of individual states.

 “Our Association and its members have put significant effort into advancing this legislation, taking advantage of every opportunity to highlight its impact and importance to the industry,” said NAPSLO Executive Director Brady Kelley. “We applaud the House for passing legislation that will greatly increase the efficiency and compliance in the licensing process for NAPSLO members licensed in multiple states.”

 We will continue to provide the NAPSLO membership with updates as the legislation progresses in the Senate.

NAPSLO Encouraged About NRRA Prospects following House Passage

NAPSLO officials are encouraged about Senate prospects for the NonAdmitted and Reinsurance Reform Act of 2009 following unanimous approval by the U.S. House of Representatives on Wednesday.

"We are very pleased to see the strong support the House members gave the bill and we hope the Senate will follow suit," said NAPSLO President John Wood. "This is an important piece of regulatory reform that will help both consumers and the industry."

The NRRA (HR 2571, S 1363) is aimed at streamlining and reducing barriers in state regulation of surplus lines insurance and reinsurance. It would create a uniform regulatory system, while preserving the role of the state regulator. The House overwhelmingly passed similar versions of the bill in the last two sessions of Congress. The Senate considered a similar bill in 2007 but it took no action prior to the end of the 110th Congress, requiring that the bill be reintroduced in the 111th Congress.

"This is the third time the House has passed this legislation. We are hoping the third time is the charm and the bill will be signed into law," said NAPSLO Executive Director Richard Bouhan. "These reforms and efficiencies are needed now."

Senators Evan Bayh (D-IN) and Mel Martinez (R-FL) introduced the Senate companion to the House-approved NRRA in early June. NAPSLO representatives have working closely with these leaders and other members of the Senate Banking, Housing and Urban Affairs Committee to encourage Senate action on the bill.

"We are encouraged by our discussions and look forward to the Senate passing the bill soon, whether as a stand-alone bill or in connection with other financial services & insurance reform proposals," said Maria Berthoud, Partner, B&D Consulting. "A number of proposals are being considered by the Senate and we believe the NRRA will be included as part of these reforms. Senator leaders know how important this bill is and recognize that it has broad industry support and the unanimous endorsement of the House."

Cavalcade of Risk, No. 139 - Lean and Mean

Emily Holbrook hosts this week's lean and mean roundup of risk-related posts in the 139th edition of the Cavalcade of Risk at her blog, the Risk Management Monitor.

The Cavalcade of Risk is a biweekly rotating collection of articles and links (also known as a "blog carnival") from insurance and other-risk-related sources that provides some great information and insight about risk management.

Directors and Officers of Non-Profit Organizations

Many people today have a servant’s heart and wish to volunteer on different non-profit boards to help better their community.  As board members they steer the path of the non profit organization by helping with fiscal policy and with major decision making.  We at Fey Insurance strong encourage people to take part in boards to help better their community; however, we caution them to make sure these boards have Directors and Officers Liability. 

Many people think that if they buy a personal umbrella policy they will be covered for anything that could happen to them while serving on a board.  Unfortunately this is not always true.  Many umbrella policies only cover you for Directorships or Trusteeships if they are non-profit and only for Bodily Injury, Property Damage and Personal Injury.  Most lawsuits that could arise out of your service on a non for profit board will not be for Bodily Injury, Property Damage or Personal Injury.  They will be because other members of the organization that are not on the board disagree and disapprove of a financial decision or just an overall steering decision that the board made.  Lawsuits such as these are considered wrongful acts and do not fall under the Bodily Injury, Property Damage or Personal Injury and would therefore in many cases not be covered by your homeowner or personal umbrella.

This possibly large gap in coverage is why we strongly encourage our customers that sit on boards (for-profit or not-for-profit) to make sure the boards have Directors and Officers Liability (D&O liability).  D&O Liability is special coverage designed to protect for wrongful acts or supposed wrongful acts of the board.  We recommend this coverage to all boards not only to protect our individual insured’s but to also protect the organization itself.  Even if a claim of wrongful acts is frivolous it can still cost the organization thousands or tens of thousands of dollars just to defend itself.

So next board meeting you attend be sure to ask if they have Directors and Officers Liability.  If they say no and tell you that you should be fine if you have a personal umbrella be sure to reference this article to help them understand the possible large limitation that a personal umbrella has in covering you as a board member.  

Rental Car Insurance: Buy or Not Buy

During the summer our agency receives a lot of phone calls from clients who are sitting at the airport getting ready to sign up for a rental car. The rental car employee has just asked them if they wish to purchase the “extra” insurance from the rental car company, and they are not certain if their personal auto insurance protects them on rental cars or not. So they pull out the cell phone and call Fey Insurance Services. Our answer is always this, “It is not a black or white answer.

Unfortunately it is a gray answer so we recommend you purchase at least the “Collision Damage Waiver”. Normally the client is somewhat confused on what the “gray” answer is but the beach is calling and they want to get on their way. So, I thought with this blog article I would hit on two reasons why it is a “gray” answer when it comes to purchasing insurance from the rental car company on a rental car.

The first reason is contract language. Two contracts would be involved if you did not purchase rental car insurance from the rental car company. The contracts would be the one between you and the rental car company (the one you sign in order to rent the car) and the contract between you and your personal auto insurance company. Each of these contracts can be different depending on which rental car company you are using, which state you are in and which personal auto insurance company you have. Because of this there are all kinds of possible gaps in insurance coverage. An example gap is “loss of use”. A number of rental car companies will charge you for the loss of use of the car while it is in the repair shop after you caused an accident that damaged the vehicle. This means that if it takes a week for the car to be repaired they will charge you a week of rental. Some insurance companies do pay this extra cost and some don’t. Gaps like this can be avoided by just spending the extra money on “Collision Damage Waiver”.

A second reason we feel it is a gray topic and you should just purchase the extra coverage is that often times you drop off a car after your trip and no one from the rental car company is present to help you check for damages to the car. We have had a couple of cases where our clients received a letter from the rental car company seeking money for a ding or scratch. They swear they never caused any damage to the car. Unfortunately, when they turned the car in there was no one to sign off that the car was returned undamaged. So, when another vacationer in an unfamiliar car at an unfamiliar airport (who is late for their flight) pulls in next to you to drop off their rental car, and they bump into the car you had just dropped off twenty minutes ago, you have no way of proving you where no longer responsible for the vehicle when the damage occurred.

So we recommend you play it safe next time you rent a car and purchase at least the “Collision Damage Waiver”.

House Expected to Approve NRRA on Wednesday

The House of Representatives is scheduled to vote on the NonAdmitted and Reinsurance Reform Act of 2009 on Wednesday and NAPSLO officials are hopeful the Senate will take positive action following the House's expected approval.

The House version of the NRRA (HR 2571) is one of 15 bills listed on the House of Representatives Suspension Calendar, which is generally used to quickly pass non-controversial bills. The vote is expected to be carried live on C-Span on cable and on its website at http://www.c-span.org/.

The NRRA (S 1363 in the Senate) is aimed at streamlining and reducing barriers in state regulation of surplus lines insurance and reinsurance. It would create a uniform regulatory system, while preserving the role of the state regulator. In May, Reps. Dennis Moore (D-KS) and Scott Garrett (R-NJ), members of the House Financial Services Committee, introduced the bill, which has more than 20 cosponsors.

The House overwhelmingly passed similar versions of the NRRA in the last two sessions of Congress. The Senate considered a similar bill in 2008 but it took no action prior to the end of the 110th Congress, requiring that the bill be reintroduced in the 111th Congress.

Senator Evan Bayh (D-IN) and Senator Mel Martinez (R-FL) introduced the Senate companion to the House bill in June. NAPSLO representatives have been working closely with Senate leaders and other members of the Senate Banking, Housing and Urban Affairs Committee to encourage Senate action on the bill.

A.M. Best to Review State of Industry During Sept. 20 Webinar

Availability, pricing and coverage trends will be discussed as Best's Review magazine hosts a webinar examining the current state of the excess and surplus markets on Sept. 20 from 2 p.m. to 3 p.m. EDT. Register at no charge by clicking the State of the Surplus Lines Market Link at http://www.ambest.com/conferences/webinars.html

Panelists from the specialty markets will discuss the impact of mergers and acquisitions and other developments affecting this fast-moving and important sector of the property/casualty insurance industry. The highlights of a new special report from A.M. Best Co. and the Derek Hughes/NAPSLO Educational Foundation on the state of the excess and surplus markets will also be reviewed.

The webinar will be presented in live video streaming and audio-only formats. The webinar panelists include:

• Matthew F. Power, Executive Vice President, Lexington Insurance Company
• Steven DeCarlo, Chief Executive Officer, Amwins
• J. Neal Abernathy, President & Chief Executive Officer, Swett & Crawford
• Joseph Roethel, Assistant Vice President, Property/Casualty, A.M. Best Co.
  

Topics will include:

• How companies in the excess and surplus sectors fared in the past year;
• How new federal legislation is poised to shape the sector;
• How the distribution environment is changing; and
• Emerging opportunities for agents, brokers and other insurance professionals.
  

Attendees can submit questions or comments for the discussion by e-mailing news@ambest.com. Questions and comments will be discussed before and during the live event. Coverage of the webinar will be featured in an upcoming issue of Best's Review.

For more information about the webinar, please call (908) 439-2200, ext. 5561, or e-mail lee.mcdonald@ambest.com.

State of Excess & Surplus Lines Market to be Focus of A.M. Best Webinar on September 28

Editors of A.M. Best's annual report on the state of excess and surplus lines market and industry leaders will appear in a one-hour webinar examining the implications of the current landscape. The webinar will also examine trends in coverage, mergers & acquisitions and other factors affecting this fast-moving and important sector of the property/casualty insurance industry.

The live webinar is scheduled for Wednesday, September 28, at 2:00 p.m. Eastern and you can register at A.M. Best's webinar page.

Panelists for this webinar include:

• David Bresnahan, President, Lexington Insurance Company
• Dave Obenauer, President, Crump Insurance Services, Inc.
• Dick Bouhan, Secretary, Derek Hughes/NAPSLO Educational Foundation
• James Drinkwater, President, AmWINS Brokerage
• Carole Ann King, Managing Senior Business Analyst, A.M. Best Company

The event is presented by Lexington Insurance Company. A.M. Best and the Derek Hughes/NAPSLO Educational Foundation annually produce a detailed report on the excess and surplus lines insurance sector. The report updates the relative positions of carriers in the market and examines regulatory developments, distribution, solvency, availability and coverage. That report will be the starting point for the webinar discussion.

Attendees can submit questions in advance during registration or email questions to news@ambest.com during the live event, which will be streamed in video and audio format. Coverage of the webinar will be featured in an upcoming issue of Best's Review.

For more information about the webinar, please call (908) 439-2200, ext. 5561, or e-mail lee.mcdonald@ambest.com.

New Jersey Changes Limits on Fees

Effective October 1, 2010, New Jersey law was amended to change the limitation on fees surplus lines producers may charge an originating broker from $50 to an amount set forth by the Commissioner of Banking and Insurance pursuant to regulation.

The New Jersey Department recently issued a bulletin is to remind surplus lines producers that the $50 fee limitation remains in effect until October 1, 2010. The Department of Banking and Insurance said it anticipates proposing rules to implement the statute as amended later this year. The Department will issue further guidance on the implementation of the statute prior to October 1, 2010 based on the content of the rulemaking to be proposed.

Surplus Lines Industry, Annual Market Report to be Focus of A.M. Best Webinar on September 24

A panel of industry leaders and editors of the A.M. Best Co.'s annual report on the excess and surplus lines sector will take part in a special one-hour webinar on September 24. The panel will review the market and highlights of the 2012 Special Report U.S. Surplus Lines – Market Review to be released soon.

The live 60-minute webinar will be offered at no charge and is scheduled for 2:00 p.m. Eastern on Monday, September 24. Registration is now open at the A.M. Best website.

Since 1994, the Derek Hughes/NAPSLO Educational Foundation has provided a grant to A.M. Best to produce the detailed report on the excess and surplus lines insurance sector. The 2012 report will update the state of the market and the relative positions of carriers in the market, examine the sector’s solvency performance, market trends, legislative and regulatory developments, and distribution issues.

“We are pleased to continue our support to A.M. Best in producing the annual special report,” said Joseph Timmons, President of the Derek Hughes/NAPSLO Educational Foundation. “The report has become the authoritative study of the industry, demonstrating the stability of the excess and surplus lines sector.”

Panelists for the webinar will include:
• David Bresnahan, President, Lexington Insurance Company
• Maureen Caviston, President, Partners Specialty Group and a former NAPSLO President
• Brady Kelley, Executive Director, NAPSLO
• Robert Sargent, President & CEO, Tennant Risk Services and current NAPSLO President

Webinar attendees can submit questions during registration or email questions to news@ambest.com during the live event, which will be streamed in video and audio format. Coverage of the webinar will be featured in an upcoming issue of Best's Review.

For more information about the webinar, please call A.M. Best at (908) 439-2200, ext. 5561, or e-mail lee.mcdonald@ambest.com.

CAT Claims: Insurance Coverage for Natural and Man-Made Disasters

The semiannual update to CAT Claims: Insurance Coverage for Natural and Man-Made Disasters was released in May, just in time for what may be an active latter half of the hurricane season. Written by Dennis J. Wall, author of the Insurance Claims and Issues blog, as well as John K. DiMugno and Steven Plitt, CAT Claims is an in-depth examination of the insurance ramifications of major disasters, discussing the widespread consequences and huge financial stakes of such catastrophes.

CAT Claims is a great asset for those handling, or preparing for, the myriad insurance law issues that arise in the aftermath of catastrophes such as 9/11, Hurricane Katrina or even the recent series of tornado disasters across the country in April and May of this year. Dennis Wall, John DiMugno and Steven Plitt are leading attorneys in the insurance practice from across the country that provide varied perspectives on handling insurance litigation.

Among a number of different topics and discussions, CAT Claims examines the current state of the "anti-concurrent cause clause" or "ACCC" exclusionary language as it has been shaped by federal courts after Hurricanes Katrina and Rita, as well as subsequent disasters. Detailing the relevant jurisprudence in Section 7:5 of CAT Claims, the authors conclude as follows:

...it appears that the most that can be said in favor of an "anti-concurrent cause clause" exclusion is that there is a conflict in the case law whether anti-concurrent cause clause exclusionary language will be given effect or invalidated in insurance coverage cases involving first-party homeowners and other kinds of property insurance policies.

Dennis Wall's blog is also a great source of information on insurance issues. One of his recent articles, Irene Brings Flood Exclusions Along With Winds may foreshadow the insurance wake of Tropical Storm Lee, even as its remnants continue to soak the Gulf South.

Nominating Committee Releases Report

The NAPSLO Nominating Committee recently issued its proposed slate of officers and directors for the Association for 2007-08. Nominated for officer positions were:

President - Mary Ellen Rozzell, Continental/Marmorstein & Malone, Paramus, NJ. Vice President - John F. Wood, III, CIC, CIW, Specialty Risk Associates, Inc., Shreveport, LA.
Secretary - Dale H. Pilkington, Colony Insurance Company, Richmond, VA.
Treasurer - Marshall P. Kath, Colemont Brokerage Group, Inc., Dallas, TX.

Nominated for a new three-year term on the Board was Kevin T. Westrope, Westrope, Kansas City, MO. Steven R. Gross, Metro Insurance Services, Inc.; Marshall P. Kath, Colemont Brokerage Group Inc.; Tom Mulligan, Western World Insurance Group; and Gary Tiepelman, CPCU, ASLI, Scottsdale Insurance Co., were renominated for three-year terms. Directors are nominated for three-year terms on the Board. Officers are nominated for a one-year term. NAPSLO member firms will vote on the proposed slate of officers and directors during the Annual Business Meeting, scheduled Friday, October 5, at the Annual Convention in New Orleans.

Illinois announces increase in stamping fee

On Wednesday, the Surplus Line Association of Illinois announced the stamping fee will increase from .1% to .2% for all policies effective January 1, 2015 and thereafter. If an endorsement is issued after January 1, 2015, the stamping fee should be calculated at the rate in effect at the inception of the policy. Therefore, for endorsements on policies issued prior to January 1, 2015, the stamping fee should be calculated at .1% but endorsements on policies issued on or after January 1, 2015, the fee should be calculated at .2%.

For additional information or questions, contact the Surplus Line Association of Illinois. 

Online Regulatory Compliance Course Updated

NAPSLO’s online Surplus Lines Regulatory Compliance Course, launched in 2011, has been updated and improved to provide a more meaningful learning experience.

Key improvements include: updated surplus lines and commercial lines comparative year-end data; information and examples on working with the Nonadmitted Reinsurance and Reform Act (NRRA); and updated state requirements on diligent searches, tax report filings, and stamping fees.

The compliance course is aimed at professionals with less than two years of surplus lines compliance experience, and others who deal less frequently with compliance issues. Regulatory staff, brokers and support teams, and others who place business in the nonadmitted market will also benefit.

The course focuses on regulatory compliance while the recently introduced online Surplus Lines Fundamentals Course provides a general overview of the industry. Both courses continue to be available at no charge for a limited time.

The compliance course contains four sections and eight lessons, and the lessons contain learning objectives. Topics include: an overview of the industry; broker licensing and record keeping; surplus lines insurer eligibility; compliance process and procedures on diligent searches, tax remittance, policy disclosure and delivery, and independent procurement/industrial insured exemptions; and the NRRA.

An interactive glossary, links to excellent outside resources, sample state requirements, key general information for filings and reports, and lesson specific self-mastery tools, are part of the course. Learners can also send specific course questions to education@napslo.org.

Insurance Tips Before and After A Disaster

“If only I knew.” Four words spoken after disasters by people who’ve learned they don’t have the insurance coverage they thought they had. In our agency, we never want you to be in that situation, so here are some tips to help.

Advice you need before a disaster

You might have purchased your insurance a long time ago. Do you remember the coverage choices you made and your deductibles, endorsements and exclusions? These details can make or break a family after a disaster, so take a few minutes to call us to see if your coverage fits your current needs. Be sure to report life changes and significant purchases or home improvements.

Do you know how much coverage you have if your home or possessions are damaged by rain, hail, lightning or tornadoes? If your roof was damaged in a storm, would it be repaired or replaced? How soon after a storm do you need to report a loss? Are you aware that most renters and homeowners policies don’t cover floods or earthquakes? Do you have loss-of-use coverage in case you have to vacate your home temporarily? If a tree falls on your car, do you have the right auto coverage?

If you don’t know the answers, it’s important to call us to learn what your policy specifies.  Another helpful tip is to create a home inventory every few years. It sounds like a headache, but anyone who has filed a claim will vouch for its value, and technology has made the process quick and easy. Videotape or photograph your possessions room by room. Get close-ups of valuable items, and keep receipts. Create an inventory by downloading an app or using a website like knowyourstuff.org, recommended by the Ohio Committee for Severe Weather Awareness (OCSWA). Store this inventory on the web or somewhere outside your home to keep it protected.

Insurance tips for after a disaster

Inspect your property and vehicles. Make a list of what is damaged and how. Take photos for documentation. And report your loss in a timely manner. Also take steps to protect possessions from further damage after the disaster.

If you need to move out of your residence temporarily, provide us with a phone number where we can call you. Find out the monetary limit your loss-of-use insurance covers before you choose a hotel. When you file a claim, back it up with written estimates and your home inventory information.  Prepare now, and your family will be grateful if there ever is a disaster.