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Fall Season Reminder: Heating Causes 14% of Home Fires

Written By kolimtiga on Kamis, 20 September 2012 | 08.14

Heating is the second leading cause and accounts for 14 percent of all residential building fires responded to by fire departments across the nation.

From 2008 to 2010, an estimated average of 50,100 heating fires in residential buildings occurred in the United States each year and resulted in an annual average of approximately 150 deaths, 575 injuries, and $326 million in property loss, according to government figures.

Fall begins this Saturday, and with it comes cooler temperatures and the resulting seasonal increase in the number of home heating fires. The term "heating fires" applies to those fires that are caused by central heating units, fixed or portable local heating units, fireplaces, heating stoves, chimneys, and water heaters.

Previously, especially during the late 1970s and early 1980s, heating was, by far, the leading cause of residential building fires. Stimulated, in part, by an energy shortage, this surge in heating fires was the result of the sudden increased use of alternative heating, particularly wood heating stoves and space heaters.

Since then, the overall numbers of heating fires have substantially decreased. In 1983, there were 200,000 heating fires, but by 2010, that number had fallen to an estimated 46,800.

Cooking is the leading cause of residential fires.

A new report from the U.S. Fire Administration (USFA), "Heating Fires in Residential Buildings (2008-2010)" is based on data from the National Fire Incident Reporting System (NFIRS) and provides more detail on the different types of heating fires and when they are most likely to occur. According to the USFA report:

  • Residential building heating fires peak in the early evening hours between 5 and 9 p.m. with the highest peak between 6 and 8 p.m. This four-hour period accounts for 30 percent of all residential building heating fires.
  • Residential building heating fires peaked in January (21 percent) and declined to the lowest point during the summer months from June to August.
  • Confined fires, those fires confined to chimneys, flues, or fuel burners, accounted for 87 percent of residential building heating fires.
  • Thirty percent of the non-confined residential building heating fires occurred because the heat source was too close to combustibles.

As heating season gets underway in many parts of the country, the USFA offers the following safety tips:

  • Maintain heating equipment and chimneys by having them cleaned and inspected annually by a qualified professional.
  • Use heating equipment that has the label of a recognized testing laboratory.
  • All heaters need space. Keep anything that can burn at least three feet away from heating equipment.
  • Plug space heaters directly into outlets and never into an extension cord or power strip.
  • Install and maintain carbon monoxide (CO) alarms inside a home to provide early warning of CO.

admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/national/2012/09/20/263789.htm
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Mississippi Court Hears Challenge to Death Certificate As Evidence in Accident

Prosecutors have asked the Mississippi Supreme Court to reinstate the conviction of Jeffrey Dale Beecham, who won a new trial because the state failed to offer testimony to authenticate a death certificate in a fatal DUI case.

Special Assistant Attorney General Billy Gore told the court that a death certificate was used at Beecham's trial to provide the cause of death and other facts and did not require testimony from an expert to validate.

The state Court of Appeals last year ordered a new trial for Beecham on grounds that his attorney was not allowed to question the doctor who prepared Freda Lovelace's death certificate. Beecham claimed — and the Appeals Court agreed — that it was a violation of his Sixth Amendment right to confront his accusers.

Beecham was convicted in 2008 in DeSoto County of being intoxicated when he was involved in a fatal wreck. Prosecutors said Beecham's blood-alcohol content was more than three times the legal limit of 0.08 percent.

Beecham was sentenced to 25 years. Beecham died in 2011 while in prison.

At trial, Circuit Judge Robert Chamberlin had allowed a certified copy of Lovelace's death certificate to be introduced by prosecutors without a sponsoring witness.

The Court of Appeals ruled the death certificate was tantamount to testimony in that it offered a conclusion that Lovelace died from "complications of blunt-force injuries to head and chest sustained in an automobile accident."

The Appeals Court said the only information that Lovelace died in 2007 as a result of the automobile accident was the death certificate.

"Death certificates are different from laboratory or ballistic reports. If you can't trust a death certificate, what can you trust? It is a record of vital statistics. It is self-authenticating," Gore said.

John Watson, a Southaven attorney representing Beecham, said the death certificate noted that she had been involved in a traffic accident.

"The death certificate was the only thing put in by the prosecution as to the cause of death. The confrontation clause says that we've a right to cross-examine. There are many, many trials that result from traffic accidents. There are circumstances where information in a death certificate is testimonial and in this case it is," Watson said.

He said the death certificate allowed the prosecution to admit facts of the case into evidence without testimony to support it.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/southeast/2012/09/20/263786.htm
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Willis Opens New Office in Malta

Willis Group Holdings plc has opened a new office on the island of Malta, which it said is "to serve its growing captive and commercial insurance clients in the region," an area that "has experienced substantial growth in the past year. The office is located at Development House on St. Anne Street in Floriana, just outside the Maltese capital of Valletta.

Willis' Malta operation now has seven full time Willis associates based in Floriana, who will bring the services of the wider Group to bear on a growing portfolio of local clients. The official office opening took place on September 19th and the Chairman of the Malta Financial Services Authority, Professor Joe Bannister, attended as a guest speaker.

"The presence of a global insurance broker such as Willis is proof that Malta is a jurisdiction of repute with solid regulation," Bannister stated. "The presence of Willis assumes great importance because it shows that Malta—now a Member State of the EU—is able to attract large multinationals to the island. The indications are that we are going to continue achieving this despite the economic and financial turbulence."

Nigel Goodlad, Managing Director of Willis Management (Malta) Limited, commented: "We are now even better positioned to take our insurance company management business forward in an attractive EU location and modern office environment. Malta has a number of unique characteristics that make it an interesting location for our clients. The combination of the ability to write risk across the European Economic Area (EEA), an accessible regulator and a pleasant place to do business makes for an attractive business proposition."

Malcolm Cutts Watson, Chairman of the Willis Global Practice – International, added: "Malta is an expanding financial services centre with close links to many European financial hubs enabling European organizations to easily set up their captives here. They are impressed by the business centric experience provided by Malta. This applies not only to captives but also third party underwriters writing commercial books of risk."

Source: Willis Group Holdings

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admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/international/2012/09/20/263793.htm
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Gunshot Claim Not Barred by Workers’ Comp Settlement: Georgia Supreme Court

A worker who unintentionally shot a co-worker can be sued in civil court since his actions were outside the scope of his normal duties and despite the fact the employer treated the shooting like a workers' compensation claim, the Georgia Supreme Court recently ruled.

At issue before the high court was the application of a landmark workers' compensation case [Ridley v. Monroe, 256 Ga. App 686 (2002)] that found if a worker receives benefits for an on-the-job injury the worker cannot then sue a fellow co-worker even if the worker was responsible for the accident and acting outside his or her normal duties.

The state's high court upheld the Ridley principle but carved an exception due to the particular facts of the Smith case that it said allow a civil suit.

The case that rose to the Supreme Court [Smith et.al v. Ellis, S12A1174] had its genesis in a Georgia District Court of Appeals case where the judges split 6-6 on the issue of whether Ridley should be upheld. The matter then went before the state's high court.

At stake are the circumstances in which an injured worker can sue a co-employee responsible for his injury in civil court.

The Smith case started due to a February 2009 incident between Joseph Smith and John Ellis, both of whom were employed by Georgia housing construction firm, The Knight Group.

The two men worked at different housing subdivisions. Ellis asked Smith if he could meet him at Smith's job site so he could borrow a tool and test fire an AR-15 rifle he had just recently bought.

Ellis began firing his new rifle at a nearby undeveloped lot while Smith worked near his truck. The rifle jammed three times. Ellis unjammed the rifle twice, but the third time he accidentally shot Smith with the bullet, penetrating his right leg into his left leg leaving him seriously wounded.

The Knight Group subsequently fired both men. But when Smith filed a workers' compensation claim saying the incident happened on the job, the company agreed to pay him $6,000 with the stipulation that it was not a compensable claim.

Under Georgia state law, employers and injured workers can agree to a "no liability" settlements, whereby an injured worker can receive a lump-sum payment while holding the employer harmless for any future legal action requesting medical or wage-loss benefits.

The settlement triggers the "exclusive remedy" portion of the workers' compensation law and blocks the injured worker from seeking further action against a co-worker or employer.

But Smith later sued Ellis for negligence and Smith's wife sued for loss of consortium based on the argument that Ellis was not acting in the capacity of "employee of the same employer" and therefore could be sued.

At the trial court level, the court found for Ellis based on the Ridley case, maintaining that since Ellis received a workers' compensation settlement he had no standing to sue Smith.

Upon appeal, however, the Georgia District Court of Appeals split 6-6 on the issue of whether Ridley should be overturned given the facts of the case.

District appeals court Judge Anne Barnes, writing for in favor of overturning Ridley, said that Smith's injury did not constitute a compensable act because "no rational mind can see a causal connection in this case between the conditions of Smith's employment and his injury."

As a result, Barnes said that by blocking Smith's right to sue, Ridley was "illogical" and should be overturned.

Writing in favor of Ridley, appeals court Judge Gary Andrews said that since Smith accepted the workers' compensation settlement he essentially agreed with the state law barring any further action. Andrews wrote that overturning Ridley would gut the exclusive remedy provision of the workers' compensation law and would "flout the [law's] command that it be interpreted liberally to bring both employers and employees within its scope."

In its decision on the Smith case, the state Supreme Court upheld Ripley, stating the case correctly interpreted the intent of the state's workers' compensation law. However it also opened the door to further suits in the Smith case.

Supreme Court Judge David Nahmias said Ridley rightly prevented injured workers from reaching a workers' compensation settlement with an employer only to "turn around and sue the employer now alleging that the injury was not compensable, hoping that the court will disregard the prior resolution of the case."

However, the high court did not stop there and outlined a possible exception to the Ridley ruling.

Nahmias noted that a substantial argument could be made that at the time of the shooting Ellis was not acting as an "employee of the same employer." Among other things, he noted Ellis was not at his job site, was not engaged in his normal work duties, and was acting in a manner that his "employer did not condone, much less direct."

Nahmias said such an exception should be possible because if Ridley prevented an injured worker from suing a co-employer or employer as was the case in the Ellis case, it could open the door to other workers' compensation claims the law never anticipated.

"As long as the plaintiff happened to be employed by the same employer and working at the time of the injury, it would make no difference whether the co-employee defendant was at work, off-duty, or even on vacation when the injury occurred," wrote Nahmias.

admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/southeast/2012/09/20/263797.htm
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Marsh Names Cameron, Ott in West

Marsh named Alice Cameron as west zone leader of Marsh Private Client Services and Susan Ott as San Francisco PCS office leader.

Cameron is responsible for overseeing all aspects of Marsh PCS operations in its Los Angeles, San Francisco, and Seattle offices.

Ott, who is responsible for the San Francisco PCS office, reports to Cameron.

Mash PCS clients include many members of the Forbes 400 list of the wealthiest Americans.

Cameron has 22 years of insurance industry experience as a broker, high net worth client advisor, and underwriter. She rejoins Marsh PCS from Fireman's Fund Insurance, where she was a vice president responsible for marketing and corporate communications. She began her career at Safeco Insurance in 1990 as an personal lines underwriter.

Ott has 25 years of experience as an insurance broker and high-net worth client advisor. Before rejoining Marsh in 2011, she led the personal insurance divisions dedicated to affluent individuals and family offices at both MacCorkle Insurance and Frank Crystal & Company. She previously managed the West Coast offices for PLI. She began her career in 1987 as a client advisor in Marsh's San Francisco office.

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admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/west/2012/09/20/263799.htm
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Pawlenty to Head Financial Services Roundtable

Former Republican presidential hopeful Tim Pawlenty will become the head of the Financial Services Roundtable, a U.S. financial services lobbying group that represents JP Morgan Chase & Co. and Wells Fargo & Co., among other financial companies, the group said on Thursday.

Pawlenty, who dropped out of the White House race early and quickly backed Mitt Romney for the nomination, takes over as president and chief executive office of the industry group on Nov. 1, it said in a statement.

As the industry's top lobbyist, he will play a major role in the industry's efforts to make new Dodd-Frank rules, which Congress passed in 2010 in response to the 2007-2009 financial crisis, more favorable for Wall Street as regulators implement the law.

The measure – a response to the crisis fueled by risky financial swaps trading at some firms that required multibillion-dollar tax payer bailouts – has yet to be fully enacted.

"Few industries have more impact on the entire economy – and on the lives of average Americans – than financial services. I realize there is still work to be done to continue to earn customers' confidence," Pawlenty said in the statement.

"Our members will best accomplish that goal by responsibly investing every day in our communities and job creators," he added.

A former Minnesota governor, Pawlenty was considered a possible vice presidential pick for Romney, but U.S. Representative Paul Ryan of Wisconsin eventually was chosen.

The Financial Services Roundtable represents 100 integrated financial services companies and accounts for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs, according to the group.

[Insurance industry members include Allstate, Brown & Brown Insurance, Chubb, Hanover Insurance, The Hartford, Liberty Mutual, Nationwide, State Farm and Swiss Re America.]

admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/national/2012/09/20/263778.htm
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Ratings Recap: Emirates, Sorford, BF&M, Unity Re

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of 'A-' (Excellent) and issuer credit rating of "a-" of Emirates Insurance Company P.S.C. (EIC), which is based in the United Arab Emirates. The outlook for both ratings is stable. The ratings of EIC reflect its "strong level of risk-adjusted capitalization, very good track record of technical profitability and established position in the United Arab Emirates market," Best explained. As an offsetting factor Best cited the company's" weak investment strategy, with a significant concentration in equities." Best added that in its opinion, "EIC's risk-adjusted capitalization is strong, benefitting from capital and surplus of AED 784 million ($214 million) in 2011, relative to a low level of underwriting risks. Additionally, EIC's capital position is supported by sound reinsurance protection. However, capital requirements are largely driven by EIC's investment activities, with a high concentration in equities, which is a concern." Concerning the equity investment concerns, Best said it "believes that while EIC's level of risk-adjusted capitalization is sufficiently strong to absorb the concentration and fluctuation in its investment activity, it will give rise to volatility in its capital position and earnings and thereby require prudent capital management." Best also acknowledged "the efforts made by the company in recent years to de-risk its investment portfolio, although exposure to equities and private investment funds remain high, above 60 percent of invested assets. Prospective levels of risk-adjusted capitalization are likely to be driven by improvements in its investment profile and dividend policy. EIC has demonstrated a very good track record of technical profitability in recent years, with technical profits rising to AED 56 million ($15 million) in 2011 from AED 54 million ($15 million) in 2010. This has been achieved through strict underwriting practices and careful selection to attract quality business in a competitive market environment. EIC produced a loss ratio below 60 percent in 2011, with a robust performance across most business segments. A very good combined ratio of approximately 77 percent has been maintained, with profits benefitting from significant inward reinsurance commissions." In Best's opinion, "EIC has become a prominent player in the United Arab Emirates' general insurance market with written premiums of approximately AED 643 million ($175 million) in 2011, establishing itself as the fourth-largest insurer by total revenue. However, there is some pressure on EIC's market position from increased competition and pressure on pricing. As such, EIC is expected to concentrate on underwriting profitability over premium volume. EIC has a diversified portfolio in line with local market characteristics, with a low retention level of 36 percent weighted towards motor." Best also indicated that it "views EIC's risk management framework as moderate, with good controls in place, particularly for underwriting and operational risks. However, there are concerns regarding EIC's deficiencies in its investment risk management, which it is aiming to address over the next three years. There is no prospect of upward movement on EIC's ratings in the short term. Downward pressure might arise if the company's capital adequacy is materially impacted by investment losses or aggressive dividend policy."

A.M. Best Co. has assigned a financial strength rating of 'B' (Fair) and issuer credit rating of "bb+" to Bermuda-based Sorford Surety Insurance Company, Ltd and has assigned the rating s a stable outlook. The company is a wholly owned subsidiary of the Miami-based IBT Group, LLC, which is a subsidiary of Spain's Eurofinsa S.A. They are both members of a multinational group of companies that specialize in the development, design, construction, equipment and finance of public infrastructure projects around the world. Best said the ratings "reflect Sorford's sound business plan, supportive risk-based capitalization and the explicit financial guarantee from IBT. Also inuring to the ratings is incorporation of a favorable business plan, upon which the profitability and liquidity metrics of the ratings are based, as well as the benefits from the management and underwriting expertise provided by Willis Management (Bermuda), Ltd. As partial offsetting factors Best cited the "start-up nature of Sorford, its limited market scope/business profile, product mix and dependence on third parties for processing, servicing and administration. Furthermore, the company's relatively large (gross) underwriting exposures, as it offers high gross insurance limits and execution risk associated with the implementation of Sorford's business plan. Additional rating factors taken into consideration are Sorford's fundamental business strategies of providing stable risk products including bid, performance and down payment surety bonds to be key lines of business, coupled with quality service for IBT. While the business that will be written has a history of strong underwriting results, to protect the company from undue risk exposure and underwriting volatility in its startup phase, Sorford will place various excess-of-loss with external reinsurers." Best said it believes that Sorford's capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), is supportive of its premium growth and overall risk profile over the next five years." However Best also indicate that is concerned "with Sorford meeting the assumptions included in its business plan, economic volatility as well as the possibility that Sorford could be exposed to a confluence of events that will test its capital strength." Best added that it would "closely monitor the quarterly performance of Sorford against its stated operating plan. Any material adverse deviations with regard to management, earnings, capitalization or risk profile could potentially undermine the stability of the assigned ratings. Conversely, key rating triggers that could result in positive rating actions would be Sorford generating consistent net income, limiting its losses and meeting and/or exceeding its business plan and credit metrics that improve steadily supporting the ratings over the long term.

A.M. Best Co. has affirmed the financial strength ratings of 'A' (Excellent) and issuer credit ratings (ICR) of "a" of BF&M Life Insurance Company Limited and BF&M General Insurance Company Limited. Best also affirmed the ICR of "bbb" of BF&M Limited. The outlook for all ratings is stable. All companies are domiciled in Hamilton, Bermuda. The ratings of BF&M Life reflect its "consistent favorable operating results, premium growth and strong level of capital. Operating income for 2011 was the highest reported in the last five years, aided in part by a one-time credit for an adjustment to the retiree benefits liability. The positive net income has contributed to the company's strong capital level through retained earnings while still maintaining a dividend to its parent company, BF&M." As offsetting rating factors Best noted "margin pressure due to competition and economic conditions, the effect of the low interest rate environment on BF&M Life's pension business and investment income and income statement volatility due to asset valuation. BF&M Life operates mainly in the local Bermuda market, which concentrates its business geographically and limits domestic growth opportunities." Best said its "ratings for BF&M General reflect its consistent overall profitability, excellent capitalization and top line premium growth. In addition, BF&M General continues to maintain a leading market position in the domestic Bermuda market. As partial offsetting factors, Best cited the "geographic concentration of BF&M General's business in Bermuda, the level of intra-group receivables, and like its domestic peers, reliance on reinsurance to protect its earnings and capitalization. BF&M Life and BF&M General are well positioned for their current ratings. Negative rating actions could occur if  BF&M Life or BF&M General experience a significant deterioration of operating trends, there is a drastic decrease in either company's level of capital or if the consistent low interest rate environment has a material adverse effect on operating results."

A.M. Best Europe – Rating Services Limited has revised the outlook to positive from stable and affirmed the financial strength rating of 'B+' (Good) and issuer credit rating of "bbb-" of Russia's Unity Reinsurance Company, Ltd. Best explained that the positive outlook "reflects Unity Re's ability to maintain a strong technical performance and a strong level of risk-adjusted capitalization while growing its business in Russia and outside its domestic market. The positive outlook also reflects the recent de-risking and de-leveraging of Unity Re's balance sheet, driven by the significant reduction in its use of repurchase agreements to date. The ratings also incorporate Best's view of Unity Re's exposure to country risk through its operations in Russia. Best described Unity Re's risk-adjusted capitalization as "strong and supportive of its ratings. A major banking institution is expected to take a 20 percent stake in Unity Re in September 2012, which will include an injection of new capital into the company. Additional capital needs generated by Unity Re's ambitious growth plans will be largely met by this capital injection and will be further supported by internal capital generation. Unity Re has been actively involved in repurchase transactions since 2010, which have been used to invest in fixed-income instruments rated within the vulnerable category. However, this trend has reversed since the beginning of 2012 and at half year 2012, Unity Re had significantly reduced its use of repurchase agreements, improving the risk profile of the company." Best also indicated that the reinsurer "continues to produce strong underwriting results, despite its rapid expansion in recent years. Technical profitability has remained at a strong level with a combined ratio of 76 percent in 2011 (2010: 75 percent). Although prospective operating results are expected to remain strong," Best said it "remains cautious about the potential impact of the company's planned growth on underwriting profit margins going forward. Nevertheless, Unity Re has demonstrated a consistent quality in its underwriting in recent years with a five-year average combined ratio of 79.1 percent. Unity Re is a leading reinsurer operating in Russia and the Commonwealth of Independent States. Despite Unity Re's relatively small size by international standards, gross written premiums grew by 25 percent in 2011 to RUB 1.275 billion [$40.45 million], estimated to represent around 6 percent of the local reinsurance market (2010: 5 percent). Unity Re's portfolio of cedants includes most of the largest local insurance companies, and unlike most competitors, its portfolio of risks excludes captive business and financial schemes. Positive rating actions could occur if Unity Re continues to profitably grow its business whilst maintaining risk-adjusted capitalization at a sufficient level to support its ratings, and maintains a prudent investment strategy. Negative rating actions could occur if there is an increase in the use of repurchase agreements to levels similar as at year-end 2011, or risk-adjusted capitalization falls below a level considered supportive of the current ratings. Additionally, a deterioration in operating performance or country risk factors could negatively affect Unity Re's ratings.

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Bank Group Warns of Heightened Risk of Cyber Attacks

A financial services industry group warned U.S. banks, brokerages and insurers on Wednesday to be on heightened alert for cyber attacks after Bank of America and JPMorgan Chase experienced unexplained outages on their public websites.

The Financial Services Information Sharing and Analysis Center, which is widely known as FS-ISAC, raised the cyber threat level to "high" from "elevated" in an advisory to members, citing "recent credible intelligence regarding the potential" for cyber attacks as its reason for the move.

The problems with the websites at the two banks came after an unidentified person posted a statement on the Internet threatening to attack Bank of America and the New York Stock Exchange as a "first step" in a campaign against U.S. companies. The posting said the attacks would continue until the film that had stirred up anti-U.S. protests across the Middle East was "erased" from the Internet.

It was not possible to identify the person who posted the statement. Nor was it clear if the threat had anything to do with the issues at either of the two banks.

Dan Holden, director of security research at Arbor Networks, said that several U.S. banks were under assault by a distributed denial of service (DDoS) campaign. He declined to identify them by name.

An outside security contractor who was familiar with the attacks said that they were "massive" in scope.

Denial-of-service attacks seek to disrupt websites and other computer systems at the targeted organization by overwhelming their networks with computer traffic.

FRAUD ALERT
The move by FS-ISAC came just two days the FBI published a "fraud alert" advising financial services firms that cyber criminals may be disrupting service to their websites in a bid to keep banks from noticing a recent surge in fraudulent large-sized wire transfers.

"Often these DDoS attacks are part of a more sophisticated blended threat – One that utilizes DDoS as a diversion for more complex, difficult to detect, techniques with the intention to extract customer data or financial information," said Holden of Arbor Networks.

An FBI spokeswoman declined to say if the tactics cited in the fraud alert were related to the problems experienced by the two banks.

On Wednesday the consumer banking website of JPMorgan Chase & Co was intermittently unavailable to some customers. The problems followed issues with the website of Bank of America Corp on Tuesday amid threats on the Internet that a group was planning to launch cyber attacks on a U.S. bank.

JPMorgan Chase spokesman Patrick Linehan said: "We're experiencing intermittent issues with Chase.com. We apologize for any inconvenience and are working to restore full connectivity."

A Bank of America spokesman reported no continuing problems on Wednesday. "Our online banking services have been, and are, up and running," Mark Pipitone said. "The vast majority of our customers have not experienced any issues."

'ENSURE CONSTANT DILIGENCE'
The short advisory from the industry group urged banks and other industry members to "ensure constant diligence in monitoring and quick response to any malicious events."

The Reston, Virginia-based group is owned by dozens of firms, including the two banks, as well as Citigroup Inc, Goldman Sachs Group Inc and Morgan Stanley. Insurers including American International Group, Allstate Corp and State Farm Insurance also belong to the group, as do credit card companies MasterCard Inc and Visa Inc.

The advisory also cited a warning from Microsoft Corp that hackers have attacked some of its customers by means of a security bug in its widely used Internet Explorer browser.

Microsoft has yet to release software to fix that security flaw. The German government advised the public to stop using Internet Explorer until an update is released. The U.S. Department of Homeland Security has advised users to follow steps recommended by Microsoft to reduce the risk of attacks but noted that those measures may not fully secure the browser.

POLICY DEBATE
The warning from FS-ISAC comes as the Obama Administration is considering issuing an executive order that could instruct government agencies to take action to help better protect the nation's critical infrastructure from cyber attacks.

Legislation that would strengthen the government's ability to help secure private networks has so far been stalled in Congress by groups concerned about privacy issues as well as business groups that oppose increased regulation of their activities.

Senator Jay Rockefeller, who heads the Senate Commerce Committee, on Wednesday sent letters to the 500 biggest U.S. companies, challenging them to improve their computer security. He blamed the defeat of the legislation on concerns raised by "a handful of business lobbying groups and trade associations."

He asked the companies to identify their own best practices and to spell out their concerns about government-conducted risk assessments that were part of the cyber security bill. He warned that the companies could face "reactive and overly prescriptive legislation" if nothing were done until some cyber disaster.

During a speech to the annual Air Force Association conference, Deputy Defense Secretary Ashton Carter complained that businesses are not doing enough to protect their own networks, saying he was disappointed that the legislation has not passed Congress.

Officials with FS-ISAC could not be reached to comment on the decision to raise its cyber threat level. A spokesman for the Department of Homeland Security declined to comment on the advisory from the industry group.

admin 20 Sep, 2012


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Gates, Buffett Still Top of Forbes List of Richest Americans

The net worth of the richest Americans grew by 13 percent in the past year to $1.7 trillion, Forbes magazine said on Wednesday, and a familiar cast populated the top of the annual list, including Bill Gates, Warren Buffett, Larry Ellison and the Koch brothers.

The average net worth of the 400 wealthiest Americans rose to a record $4.2 billion, up more than 10 percent from a year ago, while the lowest net worth came in at $1.1 billion versus $1.05 billion last year, the magazine said. Seven in ten of the list's members made their fortunes from scratch.

It was a bad year, however, for social media moguls, whose net worth fell by a combined $11 billion. On the heels of Facebook Inc.'s rocky IPO in May, the No. 1 social network's chief executive, Mark Zuckerberg, was the year's biggest dollar loser: his net worth fell by nearly half to $9.4 billion from $17.5 billion. He also slid to the No. 36 slot from No. 14 a year ago, Forbes said.

Facebook shares have fallen 40 percent from their IPO price of $38 a share in May.

Dismal performances by other social media stocks dropped some executives from the list altogether, including Groupon Inc. Chairman Eric Lefkofsky, No. 293 on last year's list, and Zynga Inc. Chairman and CEO Mark Pincus, No. 212 on the 2011 list.

"The gap between the very rich and merely rich increased and helped drive up the average net worth of The Forbes 400 members to an all-time record $4.2 billion," said Forbes Senior Wealth Editor Luisa Kroll.

Collectively, this group's net worth is the equivalent of one-eighth of the entire U.S. economy, which stood at $13.56 trillion in real terms according to the latest government data. But the 13 percent growth in the wealth of the richest Americans far outpaced that of the economy overall, helping widen the chasm between rich and poor.

Forbes attributed the growth in net worth in part to the performance of the stock market and a recovering real estate market.

But while their wealth grew faster than the economy as a whole, which expanded at an anemic 1.7 percent annual rate in the second quarter of 2012, the super rich generally failed to keep pace with the stock market. The benchmark Standard & Poor's 500 index rose nearly 20 percent over the 12 months ended Aug. 24, the last date of market performance measured for this year's list.

FAMILIAR NAMES AT THE TOP

Gates, the chairman of Microsoft Corp., topped the list for the 19th year in a row, with $66 billion, up $7 billion from a year earlier.

Buffett, chairman and chief executive of insurance conglomerate Berkshire Hathaway Inc, stood second with $46 billion, followed by Ellison, head of software maker Oracle Corp., with $41 billion. Brothers Charles and David Koch, who run the energy and chemicals conglomerate Koch Industries Inc and who are active in conservative politics, were tied for fourth with $31 billion, Forbes said.

The ranks of the top five were unchanged from a year earlier.

Two notable names dropped from the top 10, however. Casino magnate Sheldon Adelson, also active in conservative political causes, fell to the 12 spot from No. 8 last year, and financier and liberal philanthropist George Soros dropped five spots to No. 12.

Michael Bloomberg, the billionaire founder of Bloomberg LP who is now in his third term as New York City mayor, rose to the No. 10 slot.

Newcomers to the elite club of 400 include Laurene Powell Jobs, the widow of Apple Inc. co-founder Steve Jobs who is now the wealthiest woman in Silicon Valley, and Jack Dorsey, the co-founder of Twitter.

Just 45 women made the cut, up from 42 last year, Forbes said.

California has the largest share of Forbes 400 members, with 87, followed by New York, Texas, Florida and Illinois. Among cities, New York City topped the list, with 53. San Francisco, Dallas, Los Angeles and Houston rounded out the top-five cities.

One quarter of the Forbes 400 come from the finance and investment sector while another quarter come from either the technology, media or energy industries.

The complete list can be found at: www.forbes.com/forbes400.

admin 20 Sep, 2012


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John Hancock, Law Firm Face Tax Shelter Racketeering Lawsuit

John Hancock Life Insurance Co. and its law firm, Edwards Wildman Palmer, must face a class action accusing them of violating racketeering laws by marketing a tax shelter, a federal appeals court ruled on Wednesday.

The 6th U.S. Circuit Court of Appeals in Cincinnati in reversing a lower court's ruling, found that the insurer's customers had sufficient grounds to pursue a claim under the Racketeer Influenced and Corrupt Organization Act (RICO).

Federal prosecutors first used RICO to go after mobsters and organized crime, but later used its powers to pursue white collar crime on Wall Street. Victims of an alleged fraud can use RICO to file civil suits and recover triple the amount of damages they suffered.

Judge Jane Stranch, writing for a three-judge panel, said the appellate court recognized that John Hancock, Edwards Wildman and various individuals named as defendants may ultimately be found to have not participated in a RICO enterprise.

"But that is a matter to be fleshed out in discovery and to be resolved through motion practice or by the jury," she wrote

Ralph Canada, a lawyer for the plaintiffs, welcomed the decision.

"We're obviously delighted to go back to do discovery and go forward with our case," he said.

Representatives for John Hancock, the U.S. unit of Canada's Manulife Financial Corp., did not respond to requests for comment.

John Tuerck, a spokesman for Edwards Wildman, said the law firm looks "forward to the opportunity to show…that there is no basis for the plaintiffs' claims against the firm."

The lawsuit, filed in 2009 in the U.S. District Court in Grand Rapids, Mich., stemmed from a purported tax-deductible welfare benefit plan called Benistar 419 Plan.

The plaintiffs, family owners of Newaygo County, Mich.-based Stoney Creek Fisheries and Equipment Inc., alleged that starting in 2001, agents with John Hancock approached them about buying financial products, including the Benistar plan, which was intended to provide death benefits funded by life insurance policies.

Stoney Creek's owners signed up for Benistar in 2001 following meetings with John Hancock, which also furnished a letter from the law firm Edwards Angell Palmer & Dodge attesting to the plan's legality. The law firm is now called Edwards Wildman following a merger last year.

When Stoney Creek's owners chose to end their participation in the Benistar plans in 2006, John Hancock allegedly told them there would not be any tax consequence, the complaint said.

But in 2008, the Internal Revenue Service declared the Benistar plan an "abusive tax shelter" and assessed back taxes and penalties on the plaintiffs, the complaint said.

The lawsuit seeks an unknown amount of compensatory and punitive damages. The 6th Circuit's ruling sends the case back to U.S. District Judge Janet Neff, who had dismissed the lawsuit in October 2010.

The case is Ouwinga, et al., v. Benistar 419 Plan Services, Inc., 6th U.S. Circuit Court of Appeals, 10-2531.

admin 20 Sep, 2012


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Pentagon Warns Private Computer Networks on Vulnerability to Cyber Attacks

Privately-owned U.S. computer networks remain vulnerable to cyber attacks, and many U.S. companies are not doing enough to protect them, Deputy U.S. Defense Secretary Ashton Carter said on Wednesday.

"I hope this isn't one of those situations where we won't do what we need to do until we get slammed," Carter told the annual Air Force Association conference.

Attacks on American computer infrastructure by other countries and criminal gangs have soared in recent years, according to U.S. government officials. Efforts to pass legislation to strengthen U.S. cyber security have met obstacles such as privacy issues.

Carter said the Pentagon was doing all it could to protect its own networks and develop offensive cyber weapons, but shoring up the nation's overall cyber infrastructure — much of which is privately held — was far more challenging.

"When it comes to the nation's networks there are many other forces and considerations that make it very complicated, and therefore very slow, and I'm concerned that it's moving too slowly," he told Reuters after his remarks at the conference.

"We're still vulnerable and the pace is not adequate," Carter told the conference, noting that many private companies either did not invest or invested too little in cyber security.

Congress' failure to pass cyber security legislation this summer was very disappointing, Carter told Reuters after the speech, noting that the proposed measure would have helped increase U.S. cybersecurity "tremendously."

As a result, the Obama administration was trying to move ahead on its own, within existing legislative constraints, he said.

"We're trying to do without legislation some of the things -obviously we can't do everything — that we need to do," he said.

White House homeland security adviser John Brennan last month said the White House was exploring whether to issue an executive order to protect the nation's critical computer infrastructure, but gave no details on the timing or possible content of such an order.

Carter told hundreds of industry executives and military officials at the conference that protecting the country's privately-controlled computer networks raised myriad antitrust and privacy questions that needed to be addressed more quickly.

Some of those questions center on the amount and type of data that can be shared among private companies and with the government, and to what extent the government can get involved in protecting private networks.

The Pentagon is facing mounting budget pressures, especially if Congress fails to avert an additional $500 billion in across-the-board defense cuts due to start taking effect in January.

Carter said the budget reductions would have a devastating effect on a number of Pentagon programs, but continued investment in offensive and defense cyber operations would continue, along with unmanned systems, space capabilities and electronic warfare.

Debora Plunkett, of the secretive National Security Agency, whose responsibilities include protecting U.S. government computer networks, predicted earlier this month that Congress would pass long-stalled cybersecurity legislation within the next year.

She said other nations were increasingly employing cyber attacks without "any sense of restraint," citing "reckless" behaviors that neither the United States nor the Soviet Union would have dared at the height of Cold War tensions.

In July, General Keith Alexander, head of the NSA, said during an interview at the Aspen Security Forum in Colorado, that the number of computer attacks from hackers, criminal gangs and foreign nations on American infrastructure had increased 17-fold from 2009 to 2011.

admin 20 Sep, 2012


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U.S., Trade Allies Push for International Services Talks

A proposed international agreement to reduce barriers to trade in service sectors ranging from banking to telecommunications [including insurance] would give the global economy a much-needed boost, top trade officials said on Wednesday.

"This is a huge opportunity to spur economic prosperity and job growth," U.S. Trade Representative Ron Kirk said in a speech at a conference of global companies eager for new markets to sell their services.

With the nearly 11-year-old Doha round of world trade talks all but officially dead, the United States and 19 other members of the World Trade Organization have been exploring the idea of negotiating an international services agreement.

"It is our collective plea to the world to take the open shot," Kirk said, using a basketball analogy to argue for countries to launch talks aimed at quickly reaching a high-quality pact. "We need to put points on the board."

Major emerging economies such as China, Brazil and India have been cool to the idea. But global services companies want the 20 members, which include the 27-nation European Union and other developed and developing countries, to press ahead.

"I think the important thing is just to get something moving," New Zealand Trade Minister Tim Groser said, expressing optimism that "other important countries" could be brought into the negotiations once they start.

Mexico's Ambassador to the WTO Fernando De Mateo said negotiators should aim for a pact within 12 months, once talks start. Other negotiators also expressed the desire for a speedy negotiation.

Michael Punke, U.S. ambassador to the WTO, said the 20 countries would meet again in Geneva in early October to consider the next steps.

"I think we should skip the ritual dance and dive right in," said Punke, who also expressed hope that more WTO members would join in.

Canadian Trade Minister Ed Fast said negotiators should shoot for an ambitious agreement that sets a high-standard of market openness without "constantly keeping our eyes on the emerging economies" and worrying if they can match the commitments.

South Korean Trade Minister Taeho Bark and several other speakers said the agreement should be crafted in way that its commitments can eventually be "multilateralized" among all WTO members.

A number of negotiators said the pact could be forged by consolidating the most ambitious services chapters of existing free trade agreements, and complementing that with new market-opening commitments.

Kirk said the United States favored a "negative list" to the talks, meaning the pact would cover all services sectors unless they are specifically excluded. Others favor a "positive" list, which liberalizes only those sectors specifically mentioned.

Punke and senior EU trade official Joao Machado said a compromise on that issue was likely, with countries using a "hybrid" approach.

"The imperative for us is to get this train rolling down the tracks," while keeping open the possibility for Brazil, India, China and other countries to join, Kirk said.

"This is a train with nothing but first-class service. So if you get on late, you're not going to have to get on in the back with the cows and the pigs … This is a Eurostar," Kirk said.

admin 20 Sep, 2012


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Industry Faces Cyber Risks in Shift from Tangible to Intangible Property

If Mike McGavick is right, the business world will soon be carrying the equivalent of a massive data base in a cell phone. Technology has moved so rapidly that not only the insurance industry, but also business in general, is now facing a sea change in the way all types of data, including personal and corporate information, is collected and stored. How well re/insurers deal with this new reality could well determine the industry's future course.

Attorneys are on the front lines in seeking to define and master the challenges posed by the cyber revolution. Jeffery Kingsley, an attorney with the law firm of Goldberg & Segalla, is one who specializes in the arcane world of cyber risks. He explained what's involved in an interview with the IJ at the recently concluded Reinsurance Rendezvous in Monte Carlo.

"One of the challenges that I think the insurance industry has in dealing with their perceptions of their modeling is taking a physical, tangible loss and transitioning how they can quantify that market and set premiums for that to an intangible loss," he said.

The problem occurs ever more frequently "when you're dealing with cyber risks, internet exposures, when you're dealing with electronically stored information or ESI," he continued. From his discussions with a number of insurance professionals he's learned how to go about educating "the insurance industry from underwriters upward on an effective way that they can handle and appreciate those losses-" how  can they market products designed to address those concerns "without taking substantial losses?"

The transition from tangible to intangible losses creates uncertainty, especially for the insurance industry, Kingsley explained that when faced with such a situation it experiences a condition he described as "paralysis by analysis." It causes people to "analyze things too much, so that they can't come up with a recognizable and cohesive model" to enable them to determine premiums.

It isn't that re/insurers don't use models. They basically "ask preliminary questions in terms of what the cyber risk is, what their internet exposure is and what data they have in terms of electronically stored information, protocols and procedures." These are basic formulaic questions. The difficulty starts with the responses as to how you make the tangible/intangible transition.

As an example Kingsley posited the following situation: "Someone hacks into someone's computer system and takes all of their data, and then asks that company for ransom to get their data back." The loss to the insured company is "essentially the time it takes to hire a third party to ascertain, or try to quantify, the amount of data that was lost, as well as, after the information is put back, the amount of information and cost of having some type of credit monitoring to assure some type of security for those people whose data was breached."

From an insurer's point of view the above is analogous to a kidnap and ransom policy. It's just happens to be intangible. "That is maybe the first step in gaining an understanding of the situation, so that there isn't so much apprehension in the market as to the transition, as we all go into the digital age, where paper and tangible information is now stored on BlackBerrys, on servers, on backup servers all across the world," Kingsley said.

Increasingly the "insurable interest aspect of a particular policy is less of an issue if you can make that analogy to something that people are familiar with. Then they can effectively transition their models to the intangible product."

Kingsley explained that "while theft and breach is always the primary issue, you're also dealing with privacy and confidentiality, especially in the U.S. market. As Facebook and all these people gain data and information – personal information and other information – with respect to various sources, the issue then becomes how does an insured then protect the confidentiality" of the various parties involved, and has that been communicated to them. There are risks of both an "intentional leak" and/or an "accidental disclosure of potentially confidential privacy information."

Most insureds who handle that kind of data now "modify and enhance their protocols on their privacy protected products." The risk of a breach is perhaps greater for accidental disclosures, which are then wrongfully used to cause harm to someone, than the intentional misappropriation of private information. This gives rise "to allegations posing breach of confidentiality issues," as well as those arising from an intentional theft.

How does an insurer, in issuing an insurance policy "ascertain those potential liability exposures for both the first party and the third party," then becomes the question facing the industry. As with K&R, an intrinsic part of the policy is an undertaking to make sure the insured puts in place adequate security to prevent data breaches and theft from occurring.

"Especially in cyber, they [policies) are to gain up front protection, because it is a fluid situation; it's changing daily," Kingsley said. "How electronically stored information occurred last year is probably not the way that electronically stored information is occurring now." It will again change by a year from now. Therefore, getting that up front security is "the real challenge to the insurance industry, because the fluidity with which the intangible market is changing causes problems as to how to ascertain and quantify the amount to adequately address the premium situation."

How fast does the situation change? "Two or three years ago the way in which we stored electronic information was on back-up servers, now we're using cloud information, where it's 'off-site,' and that makes it easier to obtain information on a wireless network, as opposed to being tied in more on the land-line, broadband scenario," Kingsley said.

The fast pace of change contributes to the uncertainty surrounding cyber coverage. "You're changing into privacy information in other areas," and this raises the question for the insurers as to how they price policies, even for a short time, "in those fluid markets, which in a twelve month period of time could have a sea of changes."

He's not exaggerating. It took many years for businesses to changeover from mainframes to personal computers. It's taken less than 10 years to go to laptops, to BlackBerrys, to i-Pads and smart phones. Trying to keep pace with a market that keeps running away from you is a difficult, perhaps impossible, task.

As an example Kingsley said: "A year from now [maybe even sooner] we're no longer going to exchange business cards; we're going to use our phones to provide information about ourselves." Doing so will immediately disclose all of that information; it will bring it back into the servers, and to third parties.

"How you quantify that between now and twelve months from now is going to be a challenge for the [insurance] industry." It's no longer a "physical loss," it's a loss of information. As a result security becomes even more important. As soon as a policy is issued, the first thing the policyholder is looking for is security. But the insurers have trouble placing such policies, largely due to the uncertainty. "Things change, protocols change," Kingsley explained. How information is protected and transmitted, how firewalls are employed, all of it "will change within 12 months."

When there is a security breach, Kingsley said the primary risk covered is for business interruption. Then they assess the need for protection to third parties, who have provided the information. As an example he cited the recent theft suffered by LinkedIn, where data, information and passwords were stolen. The company undertook to provide "monitoring to the customers to give them some kind of security. That cost, and potential cost, could be anywhere between $80 and $100 per customer; as you're talking about thousands, even millions, of customers, you're talking about that kind of a loss."

Again the question of security becomes paramount, as, when going from tangible to intangible information, an insurer has to be assured that the insured company "has the necessary protocols and procedures on the privacy side to insure that that information is secure." Both the company and the insurance company are under a duty to "provide security to that individual, not only for the initial breach, but also to maintain and repair that relationship; so that the company can continue to provide and disclose information of a personal nature."

Difficult as it may be to assess the risks of insuring intangible property, it also presents a whole new set of opportunities for re/insurers. They are perforce going to have to come to terms with it. Kingsley said: " I think the one thing is to embrace change, because change is going to occur; understand that electronically stored information , communications, how companies deal with things, is going to embrace and rely even more heavily on third parties electronically stored information. So the insurance industry needs to embrace that change, not be fearful of it."

As each year passes "we get more and more data as to the losses, as to the risks, so that we can come up – even if we're not comfortable using my [tangible property] analogy- with ways of insuring how they [insurers] handle it." Eventually the additional information will enable the industry to learn more about cyber risk, and to construct models for those risks. However, part of that process requires an awareness that over a period of as little as 12 months – i.e. between placement and renewal – the situation, the risks and the protocols will change.

That has to be a factor, which is taken into account. "You have to build in uncertainty," Kingsley stressed. "You have to try to keep ahead of the game, and it's imperative for the insurance companies to provide that level of security up front, because that's what people are looking for.

"Cyber risks, cyber liabilities – the intentional or unintentional breach of personal information – is becoming extremely important, especially in the U.S market," as regulators are becoming increasingly concerned about "confidentiality controls, and, if the business world doesn't take action, you can be assured that the U.S. government and regulators will."

admin 20 Sep, 2012


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Goddard Joins Yates

Written By kolimtiga on Rabu, 19 September 2012 | 16.26

Deashawn Goddard has joined Tustin, Calif.-based managing general agent Yates and Associates as a broker.

Goddard spent the past eight years at working out of the Orange County office and managing the western region of the US. of an insurance company specializing in various small business insurance products.

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Don Jergler 20 Sep, 2012


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Calif. Workers’ Comp Reform Dominates Conference

Senate Bill 863, or the more popular usage "SB 863," was the phrase at the beginning, end or middle of many-a-conversation during the California Workers' Compensation & Risk Conference on Wednesday.

The four-day conference drew several hundred people who deal with the workers' comp topic, and SB 863 may have been the topic foremost on everyone's minds after Gov. Jerry Brown signed a reform bill on Tuesday, a new law that promises to give nearly $750 million in increased benefits for injured workers and reduce system wide costs.

While it received bipartisan support thanks to a big push by Brown, the bill was and still is controversial. Vehemently against the law is the California Applicants' Attorneys Association, which is seeking more benefits for injured workers. Rallying around the bill following a personal plea from Brown was legislators from both sides of the aisle, labor and the business community. Several insurance associations also offered support for the bill.

Speakers at the conference in Dana Point, Calif. often diverged from planned topics to talk about the possible impacts of the bill, or they weaved the new reforms into their discussions.

"This isn't a year of landmark cases this is a year of landmark legislation," said Barry M. Lesch, with Laughlin, Falbo, Levy & Moresi LLP, one of the panelists on a forum titled "Case Law Update, Top 10 cases of 2012."

Lesch said the California Supreme Court may even take a closer look at how it delivers workers' comp decisions following the passage of SB 863, "because of the cases that can become moot because of this current law."

A major provision in SB 863 deals with the state's massive logjam of medical liens, which have "absolutely choked the system, particularly in Southern California," said fellow panelist James Pettibone, managing partner of Laughlin, Falbo, Levy & Moresi.

Pettibone, who noted that workers' comp reform in California seems to come and go on a seven- to 10-year cycle – with the last reforms being ushered in under the Gov. Arnold Schwarzenegger administration in 2003 and 2004 – said the new law has created a slew of new questions for all parties involved with workers' comp.

"There's a whole lot of new questions," he said.

The subject of SB 863 also reared up during a panel for "CEOs and Stakeholders."

Panelists discussed opioid use and efforts to curb the growth in the usage, and misuse, of painkillers among injured workers.

"Medical has become the big driver in workers' compensation," said Mark Wilhelm, CEO of Safety National, who attributed a large amount of that growth to prescription opioids. He added that if the new law, or new regulations that are paired with the law, are able to get a handle on that, "that's a game changer."

One problem, said Mark Webb, vice president of governmental relations for Pacific Compensation Insurance Co., is tracking the use of opioids by injured workers outside the system.

"What you can't track is an injured workers going to a pain managing specialist … and getting a pain medication script, or getting multiple scripts," Webb said.

He and other panelists expressed hope that the oversight of opioid use moves above and beyond the current focus on doctors and physicians who are dispensing pain medications and utilization review.

"We need to focus on the licensing entities," he said.

Todd DeStefano, president of risk management for York Risk Services Group Inc., referred to studies that indicate the possibility of a large number of injured workers who are receiving but not taking their prescribed drugs.

"So the question becomes," DeStefano asked, "'What are they doing with them?'"

Michael Sullivan, principal of Michael Sullivan & Associates, which provides defense in workers' comp claims, said his clients have been clamoring for more information about SB 863.

He's been conducting a series of webinars to instruct people on the new law. His last webinar had over 1,700 attendees and was rebroadcast to a wider audience via YouTube, he said.

"I'm doing five more in the next two months," he added.

Don Jergler 20 Sep, 2012


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Louisiana Senator Vitter Named a NAMIC Federal Legislator of the Year

The National Association of Mutual Insurance Companies (NAMIC) has named Sen. David Vitter, R-La., one of its Federal Legislators of the Year for 2012. Sen. Jon Tester, D-Mont., also won the award.

"Senators Tester and Vitter played a leading role in helping ensure that millions of Americans will have access to flood insurance through the National Flood Insurance Program, without putting the taxpayers at additional risk," said Charles M. Chamness, NAMIC president and CEO. "In these contentious times, they have shown that bipartisanship is still possible on big issues."

Passage of flood insurance reform marks one of the very few bipartisan accomplishments in this sharply divided Congress and signifies a major victory for NAMIC and the industry. Vitter and Tester worked across party lines to build support for flood reform, all the while ensuring that a harmful lapse in NFIP authorization did not occur. Together, the two co-authored a letter calling for a long overdue vote on NFIP reform legislation, which was supported by 41 senators.

Each year, NAMIC selects a federal lawmaker who has been a leader on the issues of great importance to the insurance industry as Legislator of the Year.

This year, Tester and Vitter have both earned the distinction in their work together to reform and reauthorize the NFIP. "Together, they showed that this issue is not about one party, or one part of the country," Chamness said.

Source: NAMIC

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admin 20 Sep, 2012


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Missouri Licenses 25th Captive Insurer

The Missouri Department of Insurance announced it has licensed its 25th captive insurance company. The state began allowing captive formation in 2007 and had just three licensees before Gov. Jay Nixon signed House Bill 577 in 2009.

The 2009 law simplified the process of moving offshore captive operations to Missouri and made it more attractive for companies based outside Missouri to set up captive operations here. The law also makes it easier for companies to bring their captive operations to Missouri by removing certain financial and investment restrictions and expanding organizational options for captives.

Missouri captives in 2011 saw $1.9 billion in premium volume. The captive insurance industry contributes to Missouri's economy by bringing high-paying support jobs, including lawyers, CPAs, actuaries, consultants and a captive industry association.

By the end of the year, John M. Huff, director of the Missouri Department of Insurance, expects the number of captives to top 30 and premium volume to exceed $3 billion.

Companies are using their Missouri captives to finance deductibles for workers' compensation and other property and casualty lines, life reinsurance, professional and general liability, commercial auto and more.

Similar to self-insurance, a captive insurance company is formed to insure some of the risks of its owner and subsidiaries.

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admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/midwest/2012/09/19/263539.htm
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Willis Launches Pizza Delivery Program

Willis Programs, a unit of Willis Group Holdings, has introduced a customized insurance program for pizza delivery restaurants.

PizzaGuard is an insurance program designed specifically to meet the needs of the pizza delivery industry. The PizzaGuard program is written on an admitted basis, including difficult-to-place non-owned auto liability which covers the use of employees' vehicles in the delivery of pizzas.  Non-owned auto coverage is available only in conjunction with the business owners policy, (BOP) which provides property and general liability as well as enhanced coverages for food spoilage, off premises power failure and employment practices liability among other specialized coverages.

Willis Programs serves independent commercial insurance brokers with over 30 insurance programs for a variety of industries PizzaGuard is underwritten by an A.M. Best rated 'A'  carrier and is currently available countrywide with the exceptions of Alaska, Hawaii, Mass. and Vt.

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admin 20 Sep, 2012


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US Fidelis Co-Owner Gets 40 Months in Prison

A former co-owner of auto service contract seller US Fidelis has been sentenced to more than three years in federal prison.

Cory Atkinson of Lake St. Louis, Mo., was sentenced Sept. 18 in St. Louis. He pleaded guilty in June to federal fraud and tax evasion charges. He also faces sentencing Sept. 28 on state charges of insurance fraud, consumer fraud and stealing.

In addition to the 40-month sentence, U.S. District Judge Catherine Perry ordered Atkinson to pay $4.5 million in back taxes.

His brother, Darain Atkinson pleaded guilty to similar charges. He faces federal sentencing on Sept. 25 and state sentencing on Oct. 1.

Authorities say the now-defunct US Fidelis misled consumers about what was covered by warranties, lied about affiliation with automakers and dealers, and used other deceptive practices.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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admin 20 Sep, 2012


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IIABNY Launches Hydrofracking Task Force

Independent Insurance Agents & Brokers of N.Y. Inc. recently launched a hydrofracking task force to examine insurance coverage issues and to assist New York region's agents and brokers.

IIABNY's hydrofracking task force will hold its first meeting on October 3, Kathleen Weinheimer, IIABNY's senior vice president of industry relations and education, told Insurance Journal.

The committee will investigate and provide recommendations to the board of directors in at least two areas, Weinheimer said. The committee will offer recommendations on insurance coverage issues for both PL & CL to help agents and brokers provide proper coverage and advice to their customers, she said. The committee will also provide public policy recommendations to address insurance issues raised by the practice of hydrofracking.

"The task force may also provide any other guidance or information they deem appropriate to help the association and its members deal with hydrofracking in New York State," she said. Weinheimer added, however, that the task force will not discuss the pros and cons of hydrofracking and is intended to focus on the insurance implications only.

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IPISC Launches Abatement Insurance Program for Intellectual Property Risks

Louisville, Ky. headquartered Intellectual Property Insurance Services Corporation (IPISC), which focuses on intellectual property (IP) insurance risks, has launched the InventPro Abatement Insurance program.

The InventPro program is designed to help enforce the policyholder's IP rights against infringers who are often larger and better equipped financially to withstand costly IP litigation. The InventPro program offers an affordable insurance policy specifically for accommodating inventors and small companies who have one to three patent applications, issued patents, trademark applications and/or registered trademarks.

"IPISC created the InventPro program to help level the playing field for inventors and small companies. The policy gives them access to the funds needed to help enforce the IP rights that their livelihood relies upon heavily. This policy can assist with protecting market share and deterring even exuberant or frivolous infringement charges," said Robert Fletcher, CEO and founder of IPISC.

The inability to fund an IP lawsuit aggressively could lead to the loss of precious knowhow and a competitive advantage. "Inventors' and small companies' greatest assets, their intellectual property, are really just pieces of paper hanging on a wall without the financial means and the support of an experienced litigation management team to help enforce those rights on the merits of the case, not who has the deeper pockets," says Fletcher.

Without specific IP insurance in place, inventors and smaller companies many times have little or no means to cover the cost of litigating a costly IP lawsuit on the merits of the case. Ensuring the appropriate IP insurance is in place for this potentially devastating exposure is essential to protecting overall financial strength.

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admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/national/2012/09/19/263511.htm
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Aon Construction Services Exec Moves to Sterling & Sterling in N.Y.

Woodbury, N.Y.-based brokerage Sterling & Sterling Inc. appointed Doreen DiCicco as senior vice president within its newly created Sterling Construction Services of New York.

In her new role, DiCicco will report directly to Sterling Construction Services of New York President Joseph Santospirito and work to broaden Sterling's existing construction practice working hand-in-hand with their newly formed SterlingHyde joint venture for surety.

DiCicco has over 30 years of experience in the insurance industry, most recently with Aon Construction Services Group/Aon Risk Services in Jericho, New York (formerly Allied North America) as senior vice president/practice leader. She is an experienced account executive with the last 20 years concentrated in the construction arena.

Founded in 1932, Sterling & Sterling employs over 180 insurance professionals, with offices in New York, New Jersey, Connecticut, Florida, Utah and California. The firm, with premiums exceeding $450 million, is one of the largest insurance brokers in the New York metropolitan area and ranks among the top 40 privately held brokerages in the United States.

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admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/east/2012/09/19/263505.htm
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Hanover Insurance Group Advises Dog Owners to Take Protective Measures

With dog bite claims accounting for over one-third of all homeowners insurance liability claim dollars in 2011, The Hanover Insurance Group is reminding dog owners to take preventative measures to protect themselves from the potentially serious financial consequences of aggressive canine behavior.

The cost of dog bite claims rose a whopping 53.4 percent from 2003 to 2011 according to the Insurance Information Institute. Rising medical expenses as well as the growing size of legal settlements are among the factors driving the significant increase in the cost of claims. With this costly increase, it's more important than ever for homeowners to take the necessary steps to limit their financial exposure, The Hanover advises.

In many cases, dog owners are covered to an extent from canine-inflicted injuries with a homeowner's insurance policy. However, before adopting, rescuing or buying a dog, The Hanover recommends checking with the insurance agent to see if the breed the insured is planning to add to the household can be covered.

Some breeds pose a higher risk of injuring someone and insurers may exclude them from coverage. The company also recommends dog owners talk with their independent insurance agents to ensure they have adequate coverage.

"We believe that policyholders will benefit from having an independent agent review their insurance coverages to ensure they have adequate protection against the alarming increase in lawsuits over bites by family dogs," said Mark Desrochers, president of The Hanover's personal lines business.

Desrochers recommended dog owners should consider obtaining an umbrella policy to add additional liability coverage. Dog bites and attacks can cause serious damage and can result in very expensive jury awards and court settlements.

Umbrella policies not only provide an extra level of protection, but they are also relatively affordable. For example, increasing coverage with a $1 million-dollar personal umbrella policy can cost between $100 and $300 per year.

There are other steps a dog owner or prospective dog owner can take to prevent problems as well. To reduce the chances of a dog biting someone, the Insurance Information Institute recommends considering the following steps:

• Consult with a professional (e.g., veterinarian, animal behaviorist, or responsible breeder) to learn about suitable breeds of dogs for the insured's household and neighborhood.

• Spend time with a dog before buying or adopting it. Use caution when bringing a dog into a home with an infant or toddler. A dog with a history of aggression is inappropriate in a household with children.

• Be sensitive to cues that a child is fearful of or apprehensive about a dog. If a child is or seems fearful or apprehensive, delay acquiring a dog. Never leave infants or young children alone with any dog.

• Have the dog spayed or neutered. Studies show that dogs are three times more likely to bite if they are NOT neutered.

• Socialize the dog so it knows how to act with other people and animals.

• Teach children to refrain from disturbing a dog that is eating or sleeping.

• Play non-aggressive games with the dog, such as "go fetch." Playing aggressive games like "tug-of-war" can encourage inappropriate behavior.

• Avoid exposing the dog to new situations in which the homeowner may be unsure of its response.

• Never approach a strange dog and always avoid eye contact with a dog that appears threatening.

• Immediately seek professional advice from veterinarians, animal behaviorists, or responsible breeders if the dog develops aggressive or undesirable behaviors.

Owning a dog is a very rewarding experience for millions of families. Taking some precautions to prevent aggressive actions, as well as consulting with an independent agent to ensure right coverages, will help to add more peace of mind on the homeowner's financial side.

admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/east/2012/09/19/263512.htm
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Isaac Costs Entergy at Least $400M

Entergy Corp. says its estimated damages from Hurricane Isaac range from $400 million to $500 million, and the storm is expected to reduce the utility's third-quarter revenue.

In a news release, Entergy said it will pursue all reasonable avenues to recover storm costs, including using its storm reserves, borrowing, additional charges for customers, and insurance.

Entergy said it is unable to predict the degree of success it may have in these initiatives, the amount of restoration costs it may recover or when it may recover them.

Spokesman Michael Burns said it is too early to discuss the impact on individual or average customers.

The estimated losses by Entergy company are Entergy Gulf States Louisiana, which serves the Baton Rouge area, $70 million to $90 million; Entergy Louisiana, $240 million to $300 million; Entergy New Orleans, $50 million to $60 million; Entergy Mississippi, $30 million to $40 million; and Entergy Arkansas, $10 million.

Entergy Gulf States has $87 million in funded storm reserves, Entergy Louisiana, $187 million, Entergy New Orleans, $16 million, Entergy Mississippi, $32 million.

Isaac left more than 787,000 Entergy customers without power. Based on preliminary estimates, counted as damaged or destroyed are 4,500 poles and 2,000 transformers. Isaac also knocked 95 transmission lines out of service along with 144 substations.

The only storms with larger outages were Hurricane Katrina with 1.1 million affected customers, Hurricane Gustav with 964,000 affected customers and Hurricane Rita with 800,000 affected customers.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

admin 20 Sep, 2012


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Source: http://www.insurancejournal.com/news/southcentral/2012/09/19/263548.htm
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Virginia Woman Sentenced for Health Care Fraud

A Richmond woman has been sentenced to 11 years and three months in prison for health care fraud and other offenses.

A federal judge last Thursday also ordered Veronica Sharon Cunningham to pay more than $6.6 million in restitution to Medicare, Medicaid and private insurance companies, as well as more than $473,000 to the Internal Revenue Service.

A jury in March convicted Cunningham on 26 counts of health care fraud, eight counts of falsifying patient health care records and one count of filing a false tax return.

The 49-year-old Cunningham owned and operated Community Neurological Services, which administered intravenous immune globulin to patients suffering from immune deficiency disorders. She regularly billed insurance companies and the Medicare and Medicaid programs for intravenous immune globulin not actually administered.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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admin 20 Sep, 2012


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How Agents and Carriers Can Find Gold in Personal Lines

Independent agents and their companies have over the years been beaten in the personal lines market by direct response carriers and captive agents.

But being down so long means there is plenty of room for independent agents to go up in personal lines market share — and the high net worth (HNW) segment of the personal lines market might just be the best place for them to make inroads into personal lines, say experts.

These experts see opportunity for independent agents where other agents may lack the products they need to do as good a job with this clientele as independent agents could do.

Many independent agents have not yet tapped the sales potential in personal lines in general or in serving the personal lines needs of the wealthy in particular.

Captive carriers dominate the overall personal lines market, writing 53.1 percent, or $125.5 billion in premium in 2010, according to the latest Property-Casualty Insurance Market report published in 2012 by the Independent Insurance Agents & Brokers of America and A.M. Best Co. Direct response carriers write 13.1 percent ($30.9 billion) of the personal lines market, while independent agency carriers — both national and regional carriers — represent 33.8 percent ($79 billion) of the market.

Estimating market share in the HNW segment of the personal lines market is not as easy, the experts say.

Bob Courtemanche, division president, ACE Private Risk Services, says that less than one-fourth of the HNW personal lines market is insured with independent agency carriers that have products and services tailored for the affluent. He bases his estimate on a Conning Research & Consulting study in 2008 that pegged the HNW personal insurance premium opportunity at about $30 billion. Isolating the personal lines premium written by the carriers that specialize in the HNW market and then dividing it by the $30 billion, produces a rough idea of market share.

Jerry Hourihan, executive vice president, chief marketing officer, U.S. Personal Lines at Chartis, says his company defines the HNW market as clients whose main residence is worth at least $1 million or individuals who purchase as least $10,000 in total insurance premium. Under that definition, Hourihan estimates as much as 50 percent of the new business he sees coming to Chartis' Private Client Group is in whole or in part insured by non-high net worth specialist companies, or captive or direct insurers.

Ruthie Kerns, a personal insurance producer for Lockton Cos. who used to be an agent for Allstate, believes non-agency carriers such as State Farm, Allstate and Geico have captured the bulk of the HNW personal lines market share — as much as 80 percent in her estimation.

But that's exactly why she likes the market now. With a huge majority of the HNW personal lines market being served by direct and captive writers, Kerns says the opportunities for independent agents and carriers specializing in this class are huge. "It's a great market and what I have found is it is a very untapped market," Kerns says.

Too Much, Too Little

But how should agents go about attracting this HNW business?

One way independent agents can gain new business is by educating wealthy customers who have traditionally been insured by captives or direct response carriers on how the specialty insurance market can do a much better job of meeting their needs than the standard offerings of direct writers.

Captive and direct response carriers do not have the specialty products and expertise high net worth personal lines customers need, she says. "The Allstates, State Farms, American Families … those are great companies," Kerns says. "But their risk models are more to insure $500,000 homes — and a lot of them."

Chartis' Hourihan agrees. Carriers that do not specialize in the high net worth market do not have the products, risk management services and loss prevention services that are critical to the wealthy, he says. "They fall way short. The traditional insurance policy is typically inferior," he says.

Affluent policyholders who are with non-specialty carriers are possibly underinsured for their personal property and liability exposures and they may be overpaying for this inadequate coverage, these experts contend.

Kerns says she often sees direct and captive carriers charging too much for too little coverage in the HNW market. A month ago, Kerns wrote an account for an insured who owned a multimillion dollar property in Colorado. The homeowners' policy had been placed with a large captive carrier for many years at $4 million.

"When we came in, we did an onsite appraisal and found out the property was not worth $4 million, but was worth $8 million. They were underinsured," she said.

Through a high net worth carrier, Kerns was able to raise the limits on the home from $4 million to $8 million, replace actual cash value on the automobiles with agreed upon replacement cost and increase the personal excess policy limits from $2 million to $8 million.

"All in total, we kept their premium the same," Kerns says. "Were they overpaying for being underinsured? Absolutely."

Christie Alderman, vice president and new products and services manager at Chubb Personal Insurance, says it's not uncommon for her to see high net worth customers who are underinsured. That customer may have been underinsured for years, she says.

"That's true both from a property standpoint and also from a liability standpoint," she says. "Very frequently, our appraisers go out and take a look at a house that was submitted to us at a real estate value for the coverage A, and we spend a lot of time explaining why we think it needs to be a different value, a replacement cost value."

Alderman sees contents within an affluent home, such as fine arts and jewelry, often underinsured:

"Our appraisers often go into our customer's home and sometimes will say, 'Is there anything of terrific value that you might want to think about insuring in case there's ever a loss that might financially impact you or emotionally impact you, so you'd want to replace that in the future?' We're always surprised at the frequency at which customers say, 'Oh yes! I do have that Renoir upstairs.' I think customers live with these really fine pieces of art sometimes on their walls on a day to day basis, and just don't think about them from an insurance perspective."

Courtemanche asks HNW individuals if they had a significant loss tomorrow, or if their home burned to the ground, would there be enough coverage to replace what they had accumulated over the years, at today's replacement values? "That's an important point," says Courtemanche. "Are they properly scheduling items of particular value that they've collected over the years?"

The concerns of the affluent often go beyond jewelry and art. "To wine (and) all those things that someone might be accumulating, but not thinking about how the value increases over time," Courtemanche says. "People generally don't have a good idea about what it would cost to replace all that they've accumulated over the years … the general contents tend to be underinsured."

In Hourihan's view HNW homes often times are not insured to the correct value because direct and captive writers lack the engineering expertise to price replacement cost on a custom made home.

Liability Gap

The property is not all that may be underinsured.

ACE's Courtemanche says that when his company picks up a new client from a captive or direct response carrier, there is a gap in the liability coverage.

"From an umbrella standpoint, we see time and again when we write new business how much more umbrella liability the clients are taking when they have an agent that's properly counseling them, and asking the right questions," Courtemanche says. "Invariably, they wind up buying more umbrella insurance, which is a good thing to protect their net worth."

High-profile wealthy clients in particular are endangered by rising jury awards and they need liability limits that are current.

"Gone are the days where the $1 million liability policy is adequate for most customers," Chubb's Alderman says. "When we're looking at high net worth customers, there are a lot of contributing factors to evaluate. Are they online a frequent amount? Are they high profile? Do they have employees in the home? All of those questions should lead you to think about higher limits." Chubb offers limits up to $50 million quite regularly, she says.

Hourihan says not carrying enough liability insurance is the biggest problem he sees in HNW accounts.

"From at-fault car accidents, slip and falls, to entertaining at their home and someone gets injured … not carrying enough liability is probably the most prevalent underinsurance issue that we see," Hourihan says.

Lockton's Kerns has also noticed that her wealthy clients are being targeted more in lawsuits. "When I came to Lockton two and a half years ago, we were probably seeing a maximum of $11 million in a liability claim. This past year, we've been seeing $30 million to $45 million," she said.

Real Opportunity

The HNW market presents a real opportunity for independent agencies because HNW consumers tend to also be high-level executives and corporate business owners, says Robert Allan Paul, vice president of Entrepreneurial Advantage based in Minneapolis, Minn., an organization that works with the Consumer Agent Portal (CAP), a digital marketing and digital media provider for independent agencies and carriers in the personal lines insurance market.

The commercial lines market is already majority owned by the independent agency channel, Paul says. "I would hypothesize that if independent agents and carriers could figure out how to convert those commercial lines clients into HNW personal lines clients, there is a huge opportunity there," he told Insurance Journal.

But that doesn't seem to happen very much, Paul says. "For some reason your commercial client business owners don't seem to make that transition over to the personal lines side of the house with the independent broker or agent. It's not as common as you think it would be."

However that strategy seems to be working well for Lockton's Kerns.

"I have been using my commercial producers and we've been working together to get some of the key executives that we have here in Lockton," Kerns says. "I have had wonderful success," she says.

Lockton's commercial producers want to make sure that their clients are properly insured on not just the commercial but on their personal side as well, she says.

Bruce Humphrey, CEO of PCG Agencies Inc. in St. Paul, Minn., says working in the HNW market can be difficult and takes expertise from agents and carriers.

"It's exceptionally important to work with carriers that know how to adjust claims of that size and that have the ability to write risk throughout the country. Many of our clients own homes in many states and these carriers understand what the typical affluent person owns, the kinds of possessions they have, the unique construction of these homes," he says. "These clients are best served by those types of carriers."

Chubb's Alderman says agents targeting the wealthy need to understand how the lives of the rich can be very different than those of a typical personal insurance account. The risk profile can be much more complex.

High net worth specialty carriers can address that complexity with "bells and whistles" that just are not available in the direct and captive market, Kerns says.

admin 19 Sep, 2012


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Source: http://www.insurancejournal.com/news/national/2012/09/19/263484.htm
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