Simmonds Business Insurance Index - Market Changing

For the first time in a long time, I am predicting a hardening in the insurance market.  That is reflected in the changes I am making in the Simmonds Business Insurance Index:

The Simmonds Business Insurance Index™ August, 2011

Renewal Premiums Flat To Slight Increase

Renewal Coverages Negotiate

Buyer's Outlook Long-Term: Prices Increasing

I think the insurance marketplace is starting to change.  Over the next 12 months we are going to see higher premiums and restrictions on coverage.



Over the past month I have seen underwriters decline accounts they would have drooled over six months ago.  My August and July renewals were/are more intense in the negotiations than in recent memory.



I'm getting more aggressive questions from insurers, and I'm starting to see a general attitude of, "We are not really interested in being competitive if it means we can't have the price we want."



At the same time, there are flashes of the soft market.  One recent renewal had one insurer 40% below last year.



As the marketplace toughens, it will be more important than ever to have a renewal plan and to negotiate coverage and premiums with insurers.



Agents and insurers have been looking for a hard market for some time - years now.  Their incomes will be going up.  Workloads too.  To the insurance buyers out there I say, "Make them earn it."

History lesson

Here's a really interesting article on the history of insurance.

Deductibility of CPP Disability Benefits

The plaintiff in Demers v. B.R. Davidson Mining & Development Ltd. [2011] ONSC 2046 received CPP benefits following a car accident in 1999. A dispute arose as to the deductibility of these benefits.

Prior to November 1, 1996 it was clear that CPP benefits were not deductible. The law in this respect became less clear with the enactment of Bill 59. This Bill dealt with car accidents occurring after November 1, 1996 and before October 1, 2003. As a result of its enactment, s.267.8(1) of the Act provided for the deduction of benefits for “loss of earning capacity”. What wasn’t clear was whether this included CPP benefits.

To complicate matters further, there were two conflicting court decisions. The court in Meloche v. McKenzie ,[2005] O.J. No. 3761 (S.C.J.) looked to the 2003 amendments which specify that CPP benefits are deductible and concluded that this amendment must be a clarification of the original legislation. The court in Sonnenberger v. Creamer, [2009] O.J. No. 754 (S.C.J.) made the opposite finding as it took the position that the amendment did not provide for retrospective application.

There is also a Court of Appeal decision, Kosanovic v. Wawanesa Mutual Insurance Co., [2004] O.R. (3d) 161 (C.A.) which held that CPP benefits were not deductible for this time period. This case was not considered by the court in Meloche and arguments were made by the defendants in Demers that this case should not be considered.

Shaw J. found Kosanovic relevant and binding but also focused on two principals of statutory interpretation to settle the issue: 1) the ordinary meaning of a legislative provision should prevail absent a good reason to reject it; and 2) there must be something in the wording of the provision or in the circumstances in which it is enacted to indicate that the provision is meant to be retroactive. He concluded that the legislation in effect in 1999, when the accident occurred, does not expressly provide for the deduction of CPP benefits and the amended legislation does not indicate retroactivity.

As a result of this case there appears to be two distinct periods of time: 1) accidents which occurred between October 23, 1989 and September 30, 2003 (CPP benefits not deductible); and 2) accidents which occurred after October 1, 2003 (CPP benefits deductible).

NonProfits-Where and Why Buy D&O

Letter from someone who found me on the internet...

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July 25, 2011

Dear Scott,

I just read your article here:

http://www2.guidestar.org/rxa/news/articles/2004/nonprofit-directors-and-officers-insurance-the-good-the-bad-and-the-ugly.aspx?articleId=839 and wonder if you might answer a few questions for me.

I am a director of a newly formed citizens' group, a non-profit corporation in the state of xx. We are not a 501c(3), although we may become one in the future. We expect to approve our Bylaws at the board meeting tomorrow, and we do have an indemnification clause...

We have been told that, although it is unlikely, there is a small risk that we will be sued, and that to be able to afford to defend ourselves in this unlikely event, we should get directors' and officers' insurance. You wrote in your article:

"Volunteer service is no defense for improper acts. Many states, however, provide immunity from prosecution if the actions arise out of voluntary service in a nonprofit. Remember that these laws are at the state level, and that they vary from state to state. State law cannot provide immunity from federal statues such as ERISA, the Americans with Disabilities Act, or Civil Rights laws."

We are in xx.  How do I find out if we really need this coverage or not? Can you point me to a description of the coverage that would be most applicable in our situation? Further, do you know of insurers who perhaps specialize in our type of needs?

Thanks for your prompt response,

SB

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My reply...

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SB,

Your indemnification clause is only as good as the assets that stand behind it.  Without insurance, you are asking your directors to risk their personal assets.

Any good local commercial insurance agent can help you.  Talk with your board members and supporters - find one who runs a successful business, and ask them to refer you to their insurance agent.

A local attorney can help you with the laws in your state.  Personally, I cannot imagine serving on a board of directors without D&O insurance.  The premiums are usually $1,000 or so for a small group.  Why should so many board members risk so much for so little?

Best of luck.

Regards,

Scott

US District Court holds that due process claims regarding tax lien "arose from" prior litigation regarding the lien

In my last post I wrote about Saugus v. Zurich Am. Ins. Co., __ F.2d __, 2011 WL 2311873 (D. Mass.),in which the town of Saugus sought insurance coverage for claims that it had wrongfully demolished a house after a fire and collected costs associated with the demolition.

In addition to the Zurich policy discussed in the last post, the town had also been issued a claims-based policy by Maryland Casualty. That policy contained an exclusion for claims "arising from all pending or prior litigation as of the policy effective date and all future claims arising from such litigation." Maryland asserted that the exclusion applied because the underlying plaintiffs had sought relief from the Board of Assessors, the Appellate Tax Board and the Massachusetts Appeals Court on matters relating to the costs of demolition.

The town argued that due process claims alleged by the underlying plaintiffs under §1983 were different from and unrelated to the prior litigation involving tax abatement. The underlying plaintiffs alleged that the town demolished the remains of the property without proper notice, imposed an illegal lien on the property, added non-existent debt to the real estate tax bill, forced them to pay an illegal special assessment, and refused to return the special assessment.

The United States District Court held that the § 1983 claims 'arose from" the prior litigation, so that the exclusion applied.

10 things your homeowners insurance DOESN'T cover

Surprise: Here are 10 things a typical homeowners policy doesn't cover:

• Damage due to animals or rodents.
• Mold, mildew or dry rot.
• Earthquakes -- including earth movement, landslides, etc.
• Slow leaks.
• Flooding: You have to buy a separate flood insurance policy to be covered for floods, tidal surges and tsunamis.
• Intentional damage.
• Foundation settling and cracking.
• Volcanoes: Damage from tremors caused by the eruption generally isn't covered, but removal of ash deposits -- or damage from them -- often are covered.
• A home business: If you operate a home-based business, you might be uninsured and not even realize it. Your homeowners policy may provide a limited amount of coverage for business-related personal property in the home, but don't wait until you have a loss to find out if you're covered. Talk to your agent.
• A second residence on the property: Most homeowner policies don't cover a second residence.

Here, on the other hand, is a list of what is covered under a typical homeowners policy.

Need help with insurance problems?

If you live in Washington state, we can help with insurance questions and problems. (We're the state agency that regulates insurers, agents and brokers. We get tens of thousands of calls a year from consumers.)

What kind of help? Here are a few examples of recent cases we've handled:

-We helped a dentist get paid when one insurer didn't process a claim because it didn't have the medical codes from the primary insurer. We looked up the codes (on the primary insurer's website; not so hard), provided them, and passed along a friendly reminder about the legal requirements for timely claims processing. The insurer processed the claim the next day.

-We helped another consumer get a life insurer to pay out the proceeds -- more than $250,000 -- on his mother's annuity policy.

-We helped a consumer after an insurer found him 100 percent at fault for an accident. We reviewed their investigation and discovered that they'd failed to get statements from key players (the other driver, for one, and a police officer witness who happened to be sitting beside the road when the accident occurred).  We asked the company to contact the two. Result: they reversed their decision, finding the other driver 100 percent at fault for the accident.

-We helped a homeowner expedite and settle a disputed home repair claim for more than $145,000.

Need help? Call us at 1-800-562-6900 or see http://www.insurance.wa.gov/.

(And if you live in another state, here's a handy map with contact info for your own state's insurance regulator.)

US District Court holds that continuing violation of rights occurred at the time of the original violation

In 2006, a house owned by the underlying plaintiffs was damaged by a fire. They later filed a complaint against the town of Saugus alleging that the town unlawfully demolished the house and in 2007 illegally collected costs associated with the demolition. The town sought coverage for the claim from Zurich Casualty, who denied any duty to defend.

The Zurich policy was an occurrence policy in effect from July 1, 2009 to July 1, 2010. The town argued that there was a claim of an independent due process violation (failure to abate the costs paid by the underlying plaintiffs to the town).

In Saugus v. Zurich Am. Ins. Co., __ F.2d __, 2011 WL 2311873 (D. Mass.), the United States District Court for the District of Massachusetts held that the occurrence was the actions of the town shortly after the fire, and continuing claims arising out of that occurrence did not affect the date of the occurrence. (I would have to give some thought to how that fits into a triggers of coverage analysis.) It also held that the claims were a known loss when the policy period began.

Summary judgment in jury cases

Is summary judgment available in jury cases?

Cooke v. Toivonen (2011), 105 O.R. (3d) 232 (S.C.J.)

This case involved a multi-vehicle automobile collision. The Cooke vehicle was hit from behind by Price, and in turn Cooke hit Toivonen. Toivonen hit the vehicle in front of him.

The plaintiffs consented to an order releasing Toivonen from the action; however, the remaining defendants objected, arguing that to do so would amount to bifurcating the trial. Rule 6.01 permits bifurcation only if all parties consent. In Kovacs v. Kovacs, the Court of Appeal held that jury cases are an exception to the court’s inherent power to split a trial.

The Court held that it has the authority to order summary judgment in jury cases. Summary judgment is not at odds with a litigant’s right to a jury trial. There was no air of reality to a claim that the Toivonen vehicle could be liable and the action and crossclaims against Toivonen were dismissed.

Health insurance exchanges: Who's doing what?

The Kaiser Family Foundation has put together handy maps illustrating what each state is doing in terms of setting up health insurance exchanges. The maps are sortable by actions, status, etc.

Exchanges are new marketplaces where consumers will be able to comparison shop for health insurance.

Health insurance rate requests now public

Individual and small employer health insurance rate requests are now public. See the complete filings received since July 1, as well as a summary for each request.

Several health insurers filed rate requests prior to July 1, but have voluntarily made their filings public. They include: Asuris Northwest Health, Kaiser Foundation Health Plan, and Regence BlueShield.

Insurance Commissioner Mike Kreidler proposed the legislation (HB 1220) making health rates public on behalf of the consumers who contact his office, demanding to know what's driving their higher premiums. State law prevented him from sharing the information that insurers use to justify rate requests - even after the rate was approved.

The new law makes most individual and small employer health insurance rate filings public shortly after they're received. This includes how much of the requested rate will be spent on medical claims, administrative costs and profit. Also, the public will see if their rate change includes any benefit changes.

Kreidler's office is building an interactive web tool where the public can search rate requests, post comments, and sign-up to get an e-mail when their health plan requests a change and a decision is made. The new tool is scheduled to go live early this fall.

Owner of auto glass companies sentenced in $1.6 million fraud case

A Burien auto glass company owner has been sentenced to jail for a billing scheme that's believed to have cost insurers more than $ 1.5 million.

Michael Alan Perkins, 44, pleaded guilty to three counts of first-degree theft in King County Court July 1. He was sentenced to 9 months in jail, with 30 days of the sentence converted to 240 hours of community service.

Investigators for state Insurance Commissioner Mike Kreidler are recommending a total of more than $1.6 million in restitution to the companies. The court will decide the amount at an upcoming hearing.

Perkins is the owner of Autoglass Express Inc. and Premier Auto Glass, LLC., both run out of Perkins' Burien home. The glass shops overbilled insurers, including State Farm, Allstate and MetLife insurance companies.

An investigation by Kreidler's office's anti-fraud Special Investigations Unit, which spent months combing through more than 10,000 records, found more than $1.5 million in deceptive billing by Perkins' companies between September 2005 and December 2009. Read the full release.

WARNING: Teens Driving

TEENAGE DRIVING OFTEN DEADLY

Ask any teen made to pay his or her own car insurance and they will tell you: it’s expensive!!

Since insurance is all about risk, these high premiums indicate the problem. Drivers aged 16- to 19-years-old are far more at risk for accidents than any other age group. In fact, for each mile driven, teen drivers ages 16 to 19 are almost four times more likely than other drivers to crash than many other age groups.

Is it an urban myth that male teen drivers are in more accidents? No. The insurance rates are set in part by statistics from real crash data. The car accident death rate for teen male drivers and passengers is more than one and a half times female teen driver (19.4 killed per 100,000 male drivers compared with 11.1 killed per 100,000 female drivers). This does not mean that boys are worse drivers. Teen girls cause a lot of accidents. But the boys test themselves at much higher speeds on average.

This year we will lose over 5,000 teens ages 16 to 20 in car crashes. Almost 400,000 drivers age 16 to 20 will be seriously injured in these accidents in the same time! This is about the entire population of metro Knoxville, Tennessee, hurt every year.

Alcohol is a serious problem. In one reported survey, almost 30% of teens reported that just within the previous 30 days, they had ridden in a car with a driver drinking alcohol. Many rural teens grow up drinking and driving through the country on weekend nights. More than half of teen deaths from car crashes occurred between 3 p.m. and midnight and 54% occurred on weekends: Friday, Saturday, or Sunday. It is only a matter of time until there is a crash. Unfortunately, the inevitable crash is almost always at high speed. In fact, 23% of drivers age 15 to 20 who died in car crashes had a Blood Alcohol Reading of 0.08 or higher.

The “Immortality Complex.” Teens are also more dangerous because they do not intrinsically understand that they can actually be hurt or die. This minimizes seat belt use. It was found that with teen drivers killed in auto crashes after drinking and driving, a full 74% did not wear a seat belt.

Jeff Foxworthy is credited with a relevant quote. He says the last words of many a redneck are, “Hey guys, watch this!” The stereotype of the daredevil male teen driver, with a beer between his legs, the stereo blaring and a back seat full of friends rocketing through the curvy rural roads at night at 85 mph are supported by common experience and crash statistics.

Recent changes in Tennessee law limiting passengers for beginning drivers are hoped to reduce the tragedies. In the meantime, new technology that reads and reports speeding to parents remotely might hold some promise.

But for us parents, there will be a lot of sleepless nights.

Mr. Peel is a local attorney who practices in the areas of Accident, Injuries, Malpractice and Nursing Home Neglect. Mr. Peel often addresses churches and clubs and can be contacted through www.PeelLawFirm.com, wherein other articles can also be found.

Insurance Fraud

The front page of the Toronto Star today headlines "Shady clinics bilk $1.3 billion in bogus car insurance claims scam".

The related article states:

Ontario’s car insurance industry is under attack by bogus medical clinics that use fake accident treatment charges to milk the system...

Travel around Toronto and you will see more and more of these rehabilitation clinics popping up. Anybody can open one and they are not regulated. One New York man with an auto insurance fraud conviction is listed as administrator of a Mississauga clinic.

...Here’s how it typically works.

Tow truck drivers or paralegals direct accident victims — drivers and passengers — to rehab clinics. They might get a finder’s fee of $1,000 cash or, in the case of paralegals, a percentage of the payout. It is not uncommon for a clinic to bill an insurer $40,000 over the life of a claim.

The accident victims the Star found often spoke little or no English. At the clinic they were handed forms to sign that gave the clinic the right to submit claims to their insurance firm and receive payments.

Here is a link to the Toronto Star's website.

Deductibility of Statutory Accident Benefits

Sutherland v. Singh, [2011] O.J. No. 2901 (C.A.)

The plaintiff was eligible for income replacement benefits (IRBs) and caregiver benefits (CGBs). He elected to receive CGBs. Under s. 267.8(1) of the Insurance Act, damages are reduced by payments for statutory accident benefits that the plaintiff received or that were “available”. The issue on appeal was whether IRBs were “available” to the plaintiff (thus allowing the tort defendant to deduct them) even though he elected to receive CGBs. The Court of Appeal held that the answer is “no”.

Justice Gillese held that once the plaintiff elected to receive CGBs, IRBs were no longer available to him. The purpose of s. 267.8 is to prevent double recovery. The effect of allowing the defendants to deduct CGBs that the plaintiff received as well as IRBs that he never received would be to create a windfall for the defendant.

The Casey Anthony Verdict

Casey Anthony Trial

While my law practice is limited to injury, civil, and malpractice cases, so many folks have asked me about the Casey Anthony criminal case that I feel I should address it.

The jurors wanted the story! They always want the story. Since we were all little children, we have been told fairy tales, nursery rhymes and bedtime stories. We have all watched far too many television dramas, videos and movies. If you have read Shakespeare, enjoyed a novel or have been to the theater, it is basically the same sequence. They all have a beginning, characters and a plot. Virtually all of them have an action sequence with good guys and bad guys in some conflict. They certainly all have an ending.

The little Anthony girl’s remains were only skeletal by the time they were finally found. As a result, scientists were unable to tell the jury how and exactly when she died. The jury wants to know how and when she died. Those are important elements of the story. While it may not technically be needed to convict, the jurors usually at least want a workable theory on those points.

If you are like me, it is beyond infuriating that the mother’s own failure to report the missing child and her own lying is what gave enough time for the remains to fully decay! (It makes me angry all over again just to type it). In a sense, even though she was convicted of lying, it appears she still has benefited from it.

It brings to mind the O.J. Simpson trial for many. There is still no question in my mind that he killed Nicole Brown Simpson and Ronald Goldman. Unfortunately, the story of an alleged racist cop planting evidence (including the infamous glove) was what prevailed.

But when I think about the Simpson trial, I recall a different set of events. After his ex-wife was found murdered, he led police on a slow chase in the white Bronco, carrying a gun, money and a disguise. That is unreasonable unless he was guilty. Innocent ex-husbands rarely act like that when an ex-wife was killed.

The story that will likely be remembered in the Casey Anthony case is about a monster of narcissistic mother who got away with murder.

What do you think?

Mr. Peel is a local attorney who practices in the areas of Accident, Injuries, Malpractice and Nursing Home Neglect. Mr. Peel often addresses churches and clubs and can be contacted through www.PeelLawFirm.com, wherein other articles can also be found.

10 things to do after a car crash

The National Association of Insurance Commissioners recently put out a checklist to help you gather the neccessary information after a car crash. Here are the their 10 things to do after a car crash: (And here's a printable form for your glove compartment)

1. Remain calm.

2. Assess the scene. Do not get out of your car if it is not safe to do so.

3. Check for injuries.

4. Call the police. Tell them where you are, what happened and if there are injuries.

5. DO NOT admit fault.

6. Exchange information with the other drivers. Get: NAME, ADDRESS, PHONE, INSURER’S NAME, INSURER’S PHONE and POLICY NUMBER for all of the drivers involved.

7. Get names and phone numbers of witnesses.

8. Take photos/video of the scene including the damage to all cars. Cell phone photos will work to document initial damage.

9. Write down/record your record of the events.

10. If the police respond, find out where to get a copy of the police report for your claim. If the police do not come to the scene, ask police dispatch where you can file an incident report.

Appeals Court holds that 93A claim can proceed after insurer rectifies failure to pay PIP damages

Marie Chery was injured in a car accident while she was a passenger in a car insured by Metropolitan. She submitted her PIP claim to Met, which failed to pay the medical bills within the time prescribed by Mass. Gen. Laws ch. 90 § 34M. Chery then sued for breach of the statute and Mass. Gen. Laws ch. 93A.

Six months later Met paid the medical bills. It then moved for summary judgment on the ground that an insured cannot prevail on a PIP claim if the disputed amount is paid prior to judgment entering; and that the 93A claim should be dismissed because Chery suffered no damages.

Chery did not dispute the first assertion. (See my post on that issue here.) She argued that Met had not paid a bill she submitted after she filed the complaint. That argument was ineffective because she had never amended the complaint to include reference to that bill.

In Chery v. Metropolitan Prop. & Cas. Ins. Co., 79 Mass. App. Ct. 697 (2011), the Massachusetts Appeals Court held that her 93A claim could survive summary judgment. It held that Metropolitan has caused her injury by failing to settle her claim after its liability was reasonably clear and forcing her to bring suit to receive benefits to which she was entitled.

The court also found support in the record for the claim that Chery had suffered emotional distress from having to prosecute the lawsuit and concern for the effect the unpaid bills would have on her credit.

Risks of car-sharing

Hank Stern at InsureBlog has posted on the risks to car-owners who sign up with car-sharing companies, which coordinate the very short-term rental of private individuals' cars to local people who need to, say, make a grocery run. (These companies should not be confused with Zipcar, which rents out its own cars.)

I strongly agree with Hank's basic point, which is that you should be cautious about insurance issues before signing up with a car-sharing company, because there may be no coverage under your policy if the car is involved in an accident while rented out.

Hank points out that one car-sharing company states that it provides liability coverage to renters, and therefore presumably not to the owners. If he's right then the car-sharing company has demonstrated a shocking lack of judgment, and no one should sign up with it. It is not worth the risk.