CA Insurance Commissioner Garamendi Suspects Excess P-C Profits

By Steve Tuckey
National Underwriter

California Insurance Commissioner John Garamendi said he may order significant rate reductions for state personal lines insurers after a study showing their costs have diminished while their premiums remained stable or increased over the past two years.

The commissioner released a report last week that he said could support his assertions of excess p-c industry profits.

“If my understanding of these results is confirmed by my full review and hearing, I am confident that I will be ordering a significant number of insurers to reduce their rates,” he said.

The commissioner set a July 20 hearing date.

Mr. Garamendi’s announcement comes in the midst of his Democratic primary campaign for lieutenant governor, which pits him against State Sen. Jackie Speier, D-Hillsborough, the chair of the Senate Insurance Committee, who has also been a prominent critic of the industry.
The primary election is one week from today.

The commissioner recently accused six top auto insurers in the state of trying to blackmail him by planning to hurt his campaign with a $2.4 million advertising program opposing his plan to limit the weight they give to geographic location in setting driver’s rates.

State Attorney General Bill Lockyer has forwarded his findings concerning Mr. Garamendi’s blackmail complaint, but the commissioner’s office has refused to release them.

Mr. Garamendi asserts that by lessening the effect of a driver’s domicile on rates, it will put a new emphasis on safe driving, while insurance industry critics maintain it will result in non-urban drivers subsidizing city motorists.

“The shady methods [insurers] employed in a failed attempt to intimidate me into delaying the reforms demonstrate the lengths to which they will go to protect this extraordinarily profitable market they currently enjoy,” Mr. Garamendi said.

He said that starting in 2004, loss ratios dropped significantly in the homeowners market, with some reduced to just under 25 percent.

“The data we have collected shows that while companies eagerly filed applications to increase rates during periods of higher losses, there was no corresponding race to reduce rates as loss ratios tumbled,” he said.

Robert Hartwig, chief economist for the Insurance Information Institute, said that it is not uncommon for homeowners’ loss ratio to increase or fall by 40 percent or 50 percent within just a few years.

“If Mr. Garamendi’s standards were applied to all businesses operating in California, he would be responsible for an economic disaster of unparalleled proportions,” he said.

As for the purported excess profits of the p-c industry, Mr. Hartwig noted similar charges were leveled against the Florida market in the spring of 2004 prior to a hurricane season with devastating losses.

From National Underwriter (www.nuco.com)

IBM Looks At A Virtual Insurance World In 2020

The global insurance industry in 15 years will see virtual service providers, increased standardization, products quickly tailored to individual consumers, and shifting consumer loyalties, according to an IBM study.

Old insurance models will be replaced by “pay-as-you-live” insurance--which deals with life “as it happens,” and active risk management--reducing claims management and costs by placing emphasis on preventive actions, IBM predicted.

The study also forecast that new business processes will be createdthat lower costs and broaden product appeal.

IBM said it reached its conclusions after a year-long global study conducted by the IBM Institute for Business Value (IBV)--"Insurance 2020: Innovating Beyond Old Models.”

Findings in the report, IBM said, are the result of discussions withmore than three dozen global insurance industry executives, as well as otherinfluential stakeholders from around the world.
The research also examines disruptive forces that will influence theindustry over the coming years, including technology, complex regulation, and competition from an increasing number of sources.

Survey respondents and data analysis revealed four mega-trends, IBM said, that underscore the need for innovation:

• The rising tide of technology will enable an increasing number of niche service providers from inside and outside of the traditional value chain.Within 15-years, a number of partial and even totally virtualcompanies will surface to meet the needs of consumers and businesses.

• Modern information networks and the ongoing transfer of financial responsibility to end-customers will drive attitudes regarding increased services and convenience. Applicants and policyholders from a range of demographic groups will shift loyalties to carriers that consistently meet their expectations.

• A global population that consumes and thrives on communication and personalization will drive carriers to develop products that are flexible and adaptable. Technology will empower insurers to bring their products closer to real-time interaction via sensor networks and enlightened privacy regulations.

• Globalization of all industries and the need for efficiency will drive the coordination of consumer and businessprotection across geographies, increasing automation and underscoring the demand for industry standardization.

Survey participants predicted that over the next decade there will be a significantincrease in the flexibility of insurance products, and that increaseduse of pervasive computing technology will make this a reality.

Calculating the cost of a specific risk, according to respondents, will make use of inexpensive sensors tied into the next-generation Internet. Data provided by these sensors will support real-time calculation of risk, and keep a running tally of premium costs based on the actual risk presented--serving both life and property policies.

Similar technology will also support a broad range of policy duration products such as "just-in-time insurance," where each step of a journey would represent a different risk, such as car-to-train-station, train-to-city, station-to-office, etc.

A “pay-as-you-live” scenario would trade some location and time-of-day privacy data for lower insurance bills overall.

In the spirit of active risk management, the same network of sensors could also provide convenient information—such as avoiding an overloaded expressway--relayed on the appropriate device (such as the car audio system, a phone, and then in e-mail or as a phone call in the office.)

The full research results and white paper are available at: ibm.com/bcs/insurance2020.

Source: IBM, Inc. (www.ibm.com)

From National Underwriter (www.nuco.com)

CA Insurance Commissioner Recommends 16.4% Cut to Workers' Compensation Pure Premium Rate

Statement from Insurance Commissioner John Garamendi:

“Today, I am announcing my decision to recommend an additional 16.4% decrease in the workers’ compensation pure premium rate for policies incepting on or after July 1, 2006. This recommendation results in a cumulative decrease of -55.1% in the cost of claims within the system since the July 1, 2003 period.

“In the past three years, California has experienced a dramatic transformation of its workers’ compensation system. High premium rates, which choked businesses and threatened to drive them from this state, have decreased, although some insurers have been slow to pass on the full savings to all businesses. Costs within the system continue to decrease as well, as has the frequency with which workers’ compensation claims are filed. This is all very good news for business. But, there is another, troubling side to this story for injured workers.

“In recent months I have heard a growing chorus of complaints from seriously injured workers who have suffered as the amount of compensation and treatment they receive has been slashed. In the area of serious permanent disability, benefits have been cut by an average of 50% compared to the period prior to the reforms. Additionally, I have received many complaints from injured workers and medical providers regarding unnecessary delays in providing medical benefits.

"These problems have led me to the conclusion that the most seriously injured workers with objective findings of disability may not be receiving fair compensation, and that utilization review is now being overused to delay and deny medical care. While I strongly believe that medical treatment guidelines and utilization review are necessary and effective tools, they must be used responsibly and not as an obstacle to reasonable and prompt medical treatment.

“These are issues that I fully expect the Governor and the Legislature to address. In addition, there are also court challenges underway to some provisions of the reform. I have taken into account the possibility that these actions, if successful, may have a slight impact on costs.

"Accordingly, rather than the 18.5% decrease proposed by my actuaries, I am recommending the additional 16.4% decrease in the pure premium rate.”

From California Department of Insurance (www.insurance.ca.gov)

California Considering New Mileage Verification Rules

Insurance brokers and agents could be required to verify odometer readings for new and renewal automobile insurance policies under amendments the California Department of Insurance (CDI) has proposed to its personal automobile rating factor regulations.

CDI has proposed amending Section 2632.5, of the California Code of Regulations, to specify how insurers may-and may not-verify estimated annual mileage. Under Prop. 103, annual mileage is second in importance only to driving safety record in the weight insurers may assign in establishing personal auto insurance rates.

Under the CDI proposal, new applicants would be required to estimate their annual mileage and provide insurers "reasonable information necessary to support the estimate." "Reasonable information" would be defined to mean, "the location of the applicant's workplace if the vehicle is used for commute purposes, the number of days per week the vehicle is used for commuting, an estimate of the number of miles driven for pleasure or other purposes, the approximate total number of miles driven the previous year, and the reason for any differences in the estimate for the upcoming year and the miles driven the previous year."

Insurers would be permitted to require applicants to provide their current odometer reading, or to obtain the last odometer reading from the California Department of Motor Vehicles smog certification program.

The proposed regulation further states, however, that "If an insurer markets using an independent or captive agency system, and an applicant meets with an agent in connection with the insurance application, the insurer may require the agent to verify the odometer reading of the vehicle to be insured under the policy, and the applicant shall allow the agent to do so."

If an applicant fails to provide or permit an agent to verify the odometer reading, if the insurer has no other means reasonably to estimate annual mileage, and if the insurer has clearly indicated the consequences of not providing that information, the insurer may issue the policy using a "default annual mileage figure, which has been filed with and approved by the Commissioner."

Insurers would be prohibited from changing the mileage estimate provided without notifying the applicant of that change and providing at least 15 days from mailing that notice, to challenge the insurer's determination under the proposed regulations. Insurers could request, but not require, an applicant to provide prior documentation, such as prior vehicle maintenance records or prior smog certificates. Insurers could not require an applicant to provide information from a prior insurer to confirm mileage estimated or driven.

A conference call workshop was held May 25, in which insurers argued for greater flexibility in deciding whether and how frequently to request documentation for mileage estimates. There will be a public hearing, June 13, at CDI offices in San Francisco at 45 Fremont Street.

From Insurance Journal (www.insurancejournal.com)

Long Term Care Insurance Sales on Gradual Upswing; in Step With Aging Baby Boomer Population

As the Baby Boomer generation continues its grinding march toward senior citizenship, sales of insurance products associated with aging, such as long term care (LTC) insurance, are also keeping pace, according to a recent analysis of data from the Claritas Insurance CLOUT(TM) database. The database houses current-year estimates and five-year projections of product usage and demand for insurance products and services.

The analysis estimated that within the next five years the number of U.S. households that own LTC insurance will increase from 16.5 percent to nearly 18 percent, and in the Washington, D.C. Designated Market Area (DMA), which is projected to be the most active market during this time, the number goes even higher -- to 21 percent. A DMA is the geographic area surrounding a city in which the broadcasting stations based in that city account for a greater share of the listening or viewing households than do broadcasting stations based in other nearby cities.

Currently, the Washington, D.C. DMA also leads the nation for LTC sales with a household penetration rate of 8.1 percent and an index score of 129, meaning that households in this market are 29 percent more likely than the average to buy LTC insurance.

Claritas Vice President Jane Crossan said one reason the Washington, D.C. DMA, which also comprises portions of Virginia, Maryland and West Virginia, is at the top of the list is because 40 percent of its households are in the highest growth segment for LTC insurance products -- the upper end of the Mass Affluent segment (households with between $500,000 and $1 million in Income Producing Assets).

"Also, the findings from a number of surveys have shown that the so-called aging Baby Boomers are increasingly concerned about outliving retirement savings as the mortality rate continues to increase, but, by the same token, they also want to be able to take care of health care needs," said Crossan.

The next two DMAs behind Washington D.C. are both in Florida, which Crossan said is not surprising given its large senior citizen population. They are Ft. Myers-Naples on the Gulf Coast and West Palm Beach on the East Coast with penetration rates of 7.9 percent and 7.7 percent and indexes of 126 and 124 respectively.

Rounding out the top 10 active markets as ranked by penetration percentage and index rates are:

4. Baltimore, MD, 7.7 percent, 123 index. 5.-9. Charlottesville, VA, Atlanta, GA, Austin, TX, Richmond-Petersburg, VA and Dallas-Fort Worth, TX, all with a ranking of 7.4 percent, 119 index. 10. San Francisco, CA, 7.3 percent, 118 index.

Source: Market Wire, Inc. (www.marketwire.com)

From Insurance News Net (www.insurancenewsnet.com)

White Paper Voices Concern About Property Insurance Market's Status

The insurance industry is bracing for another active hurricane season if predictions turn into reality. Most insurance companies, including the state-run insurer of last resort, have filed for rate increases as the entire industry must make adjustments to ensure that if predictions come true and Florida is struck with another major hurricane, there will be sufficient funds to pay the claims that will follow.

"From a consumer standpoint, the good news from the recent two storm seasons is that the industry bent, but it survived and it paid out a record amount of claim, more than $35 billion," said Sam Miller, executive vice president of the Florida Insurance Council.

"The bad news," he continued, "is that the industry paid out $35 billion while collecting only about $10 billion in hurricane insurance premiums. The industry cannot survive on lopsided numbers like that."

"While the industry is bracing for the worst, we are all hoping for a break from any major storm activity for at least the next year or two so that we can recover from the past catastrophic seasons," Miller said. "A break would help slow the peaking costs of reinsurance and the cost of building materials*two cost driving components that have surged as a result of eight hurricanes in two years," Miller said.

He added that while newspaper headlines have screamed about insurers reducing their exposure, what is not being written about is the fact that companies, even those which have reduced the number of policies they are writing, are still maintaining a far higher number of policies than those they choosing not to renew.

"Here on the eve of the 2006 hurricane season, while FIC recognizes that higher rates are difficult on some policyholders, we must take into consideration and be grateful that the industry has survived the past two seasons and is still taking on the risk of insuring the homes of millions of Floridians," Miller said.

The Florida Insurance Council has produced a White Paper on the status of the Property Insurance Industry. It can be downloaded at the FIC website www.flains.org in a special section called, Hurricane Central.

"We invite everyone to review the site for continued updates about the industry and issues involving the industry and hurricanes."

Source: Florida Insurance Council (www.flains.org)

From Insurance Journal (www.insurancejournal.com)

Commerce Bancorp Tries to Buy Insurance Agency

Commerce Ban-corp is attempting to buy a South Florida insurance agency to sell policies to businesses and consumers who are customers of its bank.

The Cherry Hill, N.J.-based holding company also is preparing to expand Commerce Bank's international banking services in South Florida.

Commerce is taking those steps as it continues talks with Coral Gables-based Commercebank over use of the Commerce name in South Florida banking.

Negotiations are still in progress, said Heather Newcomb, a spokeswoman for the New Jersey bank.

Commerce Bank entered South Florida last December, when it completed its acquisition of Palm Beach County Bank.

Two months earlier, Commercebank filed a civil suit in U.S. District Court in Miami, asking that the New Jersey bank not be permitted to use the Commerce name in Florida.

On Feb. 21, Judge Joan Lenard dismissed the suit without prejudice after Commercebank did not meet a deadline for filing additional information.

Officials familiar with the banks then told The Business Journal that a settlement could be pending - possibly with the Coral Gables bank changing its name after receiving a payment from the New Jersey bank.

Neither bank has confirmed those reports or provided details of discussions.

But on May 23, Newcomb confirmed that Commerce Bank's insurance affiliate has contacted South Florida insurance agencies with offers to buy them.

Commerce Bancorp (NYSE: CBH) operates subsidiary Commerce Insurance Services, which is also based in Cherry Hill.

The president of one South Florida insurance agency said Commerce officials have contacted him several times since April, with requests to buy the agency.

The insurance official, who asked not to be identified because his agency "is not looking to be sold," said he knows of several other South Florida agencies that have been contacted by Commerce.

In a statement relayed by Newcomb, Commerce Insurance Services Chairman George Norcross said the company would like to buy an insurance agency in South Florida and add its operations and customer base into Commerce Insurance.

Commerce already sells policies including property and casualty to South Floridians, said John Tolomer, Commerce Bank's South Florida president.

"We refer them to our insurance people in New Jersey. As we expand geographically, we like to provide all our products and services locally," he said, explaining Commerce Bancorp's interest in buying a South Florida insurance agency.

Commerce Insurance has offices in New Jersey, Pennsylvania and Delaware.

That agency sells policies written by several insurance companies. Products include auto, commercial and residential property, life, employee benefits and professional liability policies.

"I am not surprised that they are looking [for an insurance agency] in Florida and they could be very aggressive there," said Wilson Smith, an analyst at Boenning & Scattergood in West Conshohocken, Pa.

Commerce operates its banking and insurance subsidiaries "somewhat autonomously" and they refer customers to each other, Smith said.

Commerce Bancorp has $41 billion in assets, with bank branches in seven states and the District of Columbia.

The bank has eight South Florida branches - seven in Palm Beach County and one in Broward County.

Commerce has gained attention primarily by having its branches open on Sundays, from 11 a.m. to 4 p.m., and a rivalry with Fort Lauderdale-based BankAtlantic which also has branches open on Sundays.

Commerce also has been adding business clients, after bringing its commercial lending services to branches it acquired from Palm Beach County Bank, Tolomer said.

The bank expects some of its strongest growth will be in its international division, he said.
In January, Commerce hired Joseph Longobardi as regional VP and Hernan Mayol as VP for that division in South Florida.

They have been working from the bank's office in West Palm Beach and meeting with clients around South Florida.

This summer, the two bankers will set up an international office at a new site in Broward County, which the bank is not yet identifying.

The division offers letters of credit, other trade finance, wire transfers and foreign currency exchange.

"Many businesses that are using Commerce [for domestic banking] are discovering that we also offer these services," said Longobardi, who previously was a senior VP in the Miami office of ABN AMRO Bank, based in the Netherlands.

Mayol has worked in the South Florida offices of several banks, including Wachovia.

Commerce is focusing on international services for U.S.-based businesses, Longobardi said. Commerce does not plan to have an international private banking division in South Florida, he said.

"They have been a very strong player in international trade services in their home markets," analyst Smith said. "What they are doing in Florida is a natural expansion."

From South Florida Business Journal (www.bizjournals.com)

Rogue (British) Insurance Broker Admits £10m Scam Selling Bogus Policies

A rogue insurance broker yesterday admitted selling £10 million worth of bogus policies, bringing financial ruin to one customer and misery to tens of thousands more.

John Walker, 57, ran a company named Tribune Risk & Insurance Services, based in Eskbank, Midlothian, which lured 43,000 people to take out home insurance policies. But Edinburgh Sheriff Court heard that Walker had failed to ensure they were underwritten, meaning no money could be paid out for claims.

One policyholder whose house was partially destroyed by fire was left £46,000 in debt to a builder who had already carried out renovation work. The building firm was forced to lay off staff as it tried to recover the money.

Yesterday, Walker, known as Jack, pleaded guilty to obtaining £10,945,000 by fraud by selling unauthorised policies. Edinburgh Sheriff Court heard he had lied to the Financial Services Authority when a complaint was made by a former customer. He misled his company's 100 staff about the fraudulent dealings by pretending that firms such as Lloyds of London were underwriting the policies.

After two years of rogue dealing, an investigation finally revealed he was issuing home insurance documents without proper cover. Tribune Risk & Insurance Services Ltd was liquidated on 10 December, 2003. Customers in the middle of claims were left out of pocket and 43,000 policyholders discovered their documents were not covered by insurers.

"The biggest impact of the crime could be said to be in relation to individuals who believed they were fully insured, only to discover they had no insurance in place," fiscal depute Loraine Hirst told the court yesterday.

"There was a fairly small number of people who were making claims at the time of the liquidation, but the effect on these individuals was substantial."

When the company was shut down, staff were immediately laid off just two weeks before Christmas. Some also had their own insurance policies through the broker, which became defunct.

Can Do, a finance company which gave Tribune a commission for loans generated from its clients, lost about £2 million in unpaid instalments. Ms Hirst explained that Tribune customers who could not afford lump-sum payments were directed to Can Do to pay the annual amount in monthly instalments.

Meanwhile, the Walker family had taken £550,000 from the company between 2001 and 2003 to buy a Lexus car, make pension contributions, pay £25,000 towards a flat and as wages. The court heard that money had also been ploughed back into the business and Walker's home had been remortgaged.

Ms Hirst told Sheriff Kenneth MacIver that Walker had set up the company in February 1999 with his wife, Evelyn, 57, and son, Paul, 31. The broker did not deal directly with customers, but sold policies through financial and mortgage advisers and other agencies who received high rates of commission. Initially, he had traded properly with household policies underwritten by Highway Homes. But in December 2001, this main insurer pulled out of the arrangement.

Walker, of Marchwell House, Penicuik, Midlothian, still had underwriters for commercial policies but failed to get new insurers for individual householders. Despite this, he continued with this side of the business.

"Tribune was receiving payments from agencies and issuing policy documents, but not placing them with authorised insurers," Ms Hirst said.

Staff were required to put stickers referring to Lloyds of London over the Highway Homes name on documents. The broker covered claims with the money brought in by premium payments, but Ms Hirst said: "Had any large claims been made or a large number received, Tribune would have had insufficient funds to meet them.

Walker, who has a previous conviction for fraud, sank into financial problems and gave staff weekly budgets for claim pay-outs. When a retired lawyer was unimpressed by her paperwork, she cancelled her policy and contacted the FSA.

Sentencing on Walker was deferred yesterday pending reports. His wife and son were also accused of the same charge, but their not-guilty pleas were accepted by the Crown.

From Scottsman News (UK)

United Automobile Group Sponsors Indianapolis 500 Race Car

United Automobile Insurance Group (UAIG), a privately held property and casualty insurance company focusing on the non-standard auto insurance market, announced the company will be sponsoring a Vision Racing Indy car driven by Ed carpenter in this weekend’s Indianapolis 500 race.

“This is a very exciting endeavor for UAIG,” said Michael Parrillo, UAIG’s executive vice president. “By sponsoring an Indy car we hope to increase name recognition and develop closer ties to our independent agents.”

Vision Racing was formed in February 2005 by Tony George and his wife, Laura. They had purchased the assets of Kelley Racing from Tom Kelley, and since then, Vision Racing has set its sights on consistent top 10 finishes and is working toward its first win. The team’s driver lineup is made up of a promising IndyCar Series group including Ed Carpenter, who will be driving the UAIG car this weekend. Carpenter qualified 12th (fourth row) in the field of 33 cars. He and his Vision Racing teammates look forward to bringing the team its first victory in the competitive Indy Racing Series.

This year marks the 90th running of the Indianapolis 500, which was held at the Indianapolis Motor Speedway at 1 p.m. on Sunday, May 28th and broadcast live on ABC Sports, IMS Radio Network, XM Satellite Radio channel 145 and on the Internet at www.IndyCar.com.

From United Automobile Insurance Group (www.uaig.net)

Garamendi Won’t Bare Probe Outcome

By Steve Tuckey
National Underwriter

California Insurance Commissioner John Garamendi refused yesterday to disclose the outcome of a review by the state attorney general of his charge that auto insurers objecting to a regulatory action by him were attempting political blackmail.

“We are still in discussions with the attorney general and cannot comment on these talks now,” said Mr. Garamendi’s spokesman, Norman Williams.

But Tom Dresslar, spokesman for Attorney General Bill Lockyer, said the commissioner’s office was free to disclose the findings of the review and expressed surprise when told about the purported ongoing discussions.

Mr. Garamendi complained that the plans of five state auto insurers—Allstate, State Farm, Safeco, Farmers and 21st Century—to fund a $2.4 million television advertising campaign against his proposal to revise auto rating criteria constituted a threat of blackmail intended to derail his race for the Democratic nomination for lieutenant governor in the June primary.

The ads started airing this week aimed at persuading non-urban Californians that the commissioner’s auto rate regulation reforms would unfairly hit them in the pocketbook. The measure would lessen the impact of geographic location on a driver’s rate, which property-casualty industry advocates fear will result in urban motorists being subsidized by rural drivers.

In addition to the state attorney general, Mr. Garamendi requested the Federal Bureau of Investigation and the U.S. Attorney’s office look into the charges.

"The insurance industry will use any means necessary—from TV ads to extortion—to stop pricing reforms for good drivers, and this campaign should be seen for what it is: a big lie meant to mislead Californians about the impact of Garamendi's reforms," said consumer advocate Douglas Heller, executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights.

The new departmental rules will still allow insurers to consider geography in setting premiums, but will require factors related to a motorist's driving record to be most important, Mr. Heller said.

From National Underwriter (www.nuco.com)

Look For More P-C Mergers

By Steve Tuckey
National Underwriter

Merger and acquisition activity in the property-casualty insurance sector will pick up in the second half of this year and 2007, according to a new study.

The pace of such transactions will pick up “as organic premium growth opportunities are minimal given the competitive pricing environment,” wrote Bank of America securities analyst Brian Meredith.

He added that as loss reserves appear to be adequate, many companies are generating excess capital and valuations seem reasonable.

The loss reserve issues surrounding the St. Paul-Travelers merger underscore how they can contribute to buyer hesitancy to assume such latent risk. Many transactions have been renewal rights deals without the assumption of loss reserve liabilities, Mr. Meredith explained.

“The introduction of Sarbanes-Oxley has also muted M&A activity by putting increased liability on chief executive and financial officers for the accuracy of their financial information,” Mr. Meredith wrote.

And finally, he added, new accounting standards eliminating pooling of interest also helped curb M&A activity.

“We are not predicting a wave of insurance M&A, but rather suggesting that companies are more likely to consider transactions going forward, especially as we move into 2007,” Mr. Meredith wrote.

The personal lines group presents the greatest opportunity for M&A action among all the subsectors. “With top-line growth slowing due to competitive pricing pressures, slowing growth in policies in force and less shopping on the part of customers, we believe national and large regional carriers may look for growth through expanded distribution,” said Mr. Meredith’s report.

The highly fragmented insurance brokerage field will also continue to undergo consolidation, he predicted. “That said, the dollar volume of consolidations will likely moderate as the supply of brokers in the smaller to midsize range—$20-to-$50 million in annual revenues—is fairly limited,” Mr. Meredith wrote.

From National Underwriter (www.nuco.com)

Property Rate Hikes Limited To Southeast States: RIMS Survey

A nationwide rise in property rates, which some experts had anticipated going into this year, hasn't panned out, but instead is limited to Southeastern states by 2005 hurricanes, according to an industry survey.

"What we see has very definitely been driven entirely by the Southeast," said David Bradford, editor-in-chief at Advisen, Ltd., discussing the Risk and Insurance Management Society Benchmark Survey.

The Risk and Insurance Management Society Benchmark Survey for the first quarter is a survey of current policy renewal prices reported by corporate risk managers.

Organizations with risks in the Southeast are seeing property rates rise, while those located exclusively in the Northeast, Midwest or the West are remaining stable, Mr. Bradford said. This is "good news for the buyers."

"There were a lot of investors who put money in the [insurance] market after Katrina, expecting to see rates skyrocket, and it just hasn't happened to the degree anybody expected."
Mr. Bradford said he sees the market as "softening" rather than "soft."

He noted that although there is no "consistent definition" of soft, "I would say a soft market is when rates are below breakeven on an underwriting basis. We're not at that point yet."
In keeping with the soft market conditions evidenced in the last six quarters, the survey found that premiums for directors and officers liability policies dropped 3.5 percent in the first quarter of 2006, and workers' compensation rates declined just over 3 percent.

Karen Beier, a member of the RIMS board of directors, membership and chapter services portfolio, said in a statement, "The insurance market understandably appears a little unsettled by the massive hurricane losses of 2005."

But risk managers may experience even further softening in the casualty market, she said. "Barring more major catastrophes, premiums should fall further this year."

During the first quarter, general liability rates experienced an upward swing of 5.1 percent, according to the survey results jointly announced by RIMS and Advisen here at the Risk and Insurance Management Society annual conference. Previous data showed steadily falling general liability premiums since the fourth quarter of 2003.

Advisen analysts believe that general liability premiums may have been temporarily pulled higher by the spike in property premium levels, but will return to the pervasive softening trend by next quarter.

The RIMS Benchmark Survey is produced by New York-based Advisen, Ltd., which collects and analyzes the data and provides the technology infrastructure for the survey's print and online services.

The results of the survey are available online, published continuously throughout the year, and in a book, published once each year. Details are available at www.rims.org/benchmark for details.

Risk management professionals can contribute their data by e-mailing current and prior year policy schedules to Benchmark@RIMS.org, or data can also be sent by fax to Advisen.

Advisen said buyer participation in the survey has never been higher, especially with the recent announcement by Advisen that a broker authorization letter is available on www.rims.org/brokerform.

Source: Risk and Insurance Management Society (www.rims.org)

From Insurance News Net (www.insurancenewsnet.com)

Enough (Life Insurance) Riders To Make Heads Spin

By Keith Dall

The good old days of just offering a few life insurance riders that have been around for 50 years are over. Today, companies are offering a plethora of riders that cover everything from unemployment to critical illness.

Common riders such as waiver of premium, guaranteed insurability options, accidental death and dismemberment, and term riders have been around the industry for a long time.

The waiver of premium rider always has been the most popular rider and still is today.

However, new riders are coming to market and others that were only offered in the niche markets are quickly gaining in popularity in the mainstream marketplace.

The accelerated death benefit rider started innocently enough more than 15 years ago covering terminal illness. It now has branched out to chronic illness (inability to perform two of six activities of daily living) and critical illness. It is difficult to find a life insurance product today that does not offer an accelerated benefit rider.

From accelerated benefit riders, the benefit evolved into long term care riders. Additional riders were added to these riders such as the extension of benefit rider, benefit restoration rider and residual death benefit rider. While these last riders are currently sold more often in the worksite marketing arena, they are beginning to be more popular in the mainstream marketplace.

The return of premium (ROP) rider has been around for a long time in the mortgage term market, going almost unnoticed by many in the insurance industry. Then, about 10 years ago, a couple of the leading term writers started offering ROP, and it has swept across the industry since then.

Some life companies are selling the ROP rider on 75% of their term products. Almost all that have the rider available are selling ROP riders on at least 20% of their term products.

Recently, a company expanded its ROP rider to include an enhanced cash value rider. The ROP feature is also showing up in other product lines as guaranteed cash back or you-get-your-money-back features. This trend is sure to continue evolving and expanding.

There are plenty of other life insurance riders, too: critical illness, secondary guarantees, disability income, unemployment, income benefit, and all of the variable and indexed life insurance riders that offer some protection from stock market volatility.

All these riders are enough to make heads spin. This includes heads of insureds, producers, underwriters, compliance officers, policy owner service representatives, and pricing and valuation actuaries. It's not just their number that is confusing; it's also that the riders keep changing.

One way the worksite marketing industry is trying to combat this confusion is to offer packages of benefits. The concept is to move away from the kid-in-the-candy-store choices and into carefully wrapped gift packages. This concept of carefully packaging benefits may start to move into the mainstream marketplace.

The variety of benefits also creates many challenges in the home office environment. The compliance officer that previously concentrated solely on the life insurance benefit now has to think through the policy form language of long term care and disability income benefits.

Likewise, the underwriter has to consider the impact that specific diseases have on debilitating the insured.

The pricing actuary has to make sure the assumptions properly cover the benefits and the policyholder behavior given the specific rider. For example, the lapse rates on a term policy with a ROP rider are drastically different from the lapse rates on a term policy without the rider.

Also, although the pricing actuary may be very comfortable measuring the mortality risk, he or she may not understand the risks involved in covering long term care or disability income riders.

For some riders, like the unemployment rider, there is not enough available experience on insured lives for the actuary to become comfortable with the utilization of the rider. Because this rider has not commonly been offered, there is also not much information on acceptable policy form language or underwriting issues. All of this makes it difficult to understand the proper relationship of rider charges and benefits.

All these riders are probably here to stay. They likely will continue to expand into other benefits, and variations will show up in other product lines. So, insurance professionals everywhere will need to lock on to the changes as they come out, just to keep their heads from spinning.

Source: National Underwriter (www.nuco.com)

From Insurance News Net (www.insurancenewsnet.com)

Agents Like Expensing Options In President's Tax-Cut Package

A two-year extension of enhanced expensing options for small businesses signed into law this week by President Bush will help independent insurance agencies to afford investments in depreciable assets, according to the Independent Insurance Agents & Brokers of America.

The law extends the ability of small firms to claim expensed deductions of as much as $100,000 in depreciable assets, as currently allowed under Section 179 of the Internal Revenue Code.

Firms whose annual investments exceed $400,000 are subject to a dollar-for-dollar phase-out of their ability to take the deduction. Without the extension, the tax code would have reverted after 2007 to a $25,000 limit on expensing and a $200,000 phase-out threshold.

The provision was one of a host of tax-cut extensions included as part of H.R. 4297, the Tax Increase Prevention and Reconciliation Act, signed by the president May 17. The bill also extends capital-gains and dividend tax cuts through 2010 and institutes a temporary "patch" to the alternative minimum tax system by extending exemption levels of $62,550 for joint filers and $42,500 for single filers through the end of 2006.

"Raising the alternative minimum tax exemption, allowing greater expense write-offs and decreasing taxes on capital gains will all help our members and their employees by shielding them from unanticipated or onerous federal taxation," Charles E. Symington, the Big I's senior vice president for government affairs and federal relations, said in a statement.

The bill also removes modified adjusted gross income limitations on taxpayers who wish to roll over traditional Individual Retirement Accounts into Roth IRAs. Under the new rules, account holders who covert to a Roth IRA in 2010 may opt to pay their conversion "toll" in equal installments in 2011 and 2012.

Source: A.M. Best Company (www.ambest.com)

From Inurance News Net (www.insurancenewsnet.com)

Going Bare: Millions of Renters Lack Insurance Coverage, Survey Shows

Almost 25 million U.S. families renting their homes are going bare on insurance coverage, leaving themselves vulnerable to serious property and liability losses. Many renters without coverage own valuable, high-tech equipment and face higher risk related to pets, a new national survey conducted by Trusted Choice® finds.

The new survey uncovers a persistent lack of awareness or understanding about property and liability risks faced by renters, says Trusted Choice® spokesperson Madelyn Flannagan. Two-thirds (67 percent) of U.S. families that rent lack coverage.

Some 35 million homes were rented in 2005, or about 31 percent of all American households, according to the National Multi Housing Council (www.nmhc.org). Renters insurance replaces furnishings and property in an apartment, condominium or other rental home should those items be stolen, destroyed or damaged. The policy also includes liability coverage, a safety net against a lawsuit or claim that potentially could result in a large financial hit on renters.

Among those respondents who said they don’t have renters’ insurance, 26 percent feel that the coverage is too expensive and another 17 percent said they didn’t know they needed it. Moreover, another 8 percent have never heard of renters’ insurance.

"Insurance protection isn’t a ‘nice-to-have’ for renters," Flannagan said. "It’s an essential backup for property losses - such as water and fire damage - as well as today’s liability risks faced by Americans: slips and falls, accidents at parties, pet attacks, and lawsuits by landlords, for example."

Coverage for renters is widely available and affordable in most parts of the country, with the average annual premium about $20 per month for about $20,000 of property coverage and $500,000 of liability coverage, Flannagan said.

Renters sometimes mistakenly believe they’re covered under their landlord’s insurance policy following a loss or claim, Flannagan noted. "You’re really on your own. Landlords are interested only in insuring the buildings and the infrastructure for those buildings, such as elevators and heating/cooling systems. They’re not covering the contents or liability of individual tenants."
Moreover, the actions by another tenant - such as negligence causing fires and water damage, for instance - have obvious implications for the property and safety of other tenants in a building, Flannagan said.

From Insurance News Net (www.insurancenewsnet.com)

Phoenix Drivers Rated Safest Among Big City Counterparts

Phoenix is the safest large city in which to drive, according to the Allstate Insurance "America's Best Drivers Report."

For the second consecutive year, drivers in Phoenix are the safest big city commuters, among cities with a population of 1 million or more.

Drivers in Phoenix can expect to bump into another vehicle on the roadway every 9.7 years -- slightly more frequent than the national average.

Among all U.S. cities, Sioux Falls, S.D., drivers were rated as the safest, replacing drivers from Cedar Rapids, Iowa.

Sioux Falls drivers will experience an auto collision every 14.3 years, compared to the national likelihood of a crash every 10 years.

Allstate researchers analyzed company claims data to determine the likelihood of drivers in America's 200 largest cities experiencing a vehicle collision compared to the national average.

Philadelphia drivers were rated as the worst drivers, with each motorist likely to be in an accident every 6.6 years.

According to the National Highway Traffic Safety Administration Traffic Facts, more crashes occur on Saturdays than any other day of the week. Sunday ranked second and Friday came in third. Additionally, most collisions happen between 3 and 6 p.m.

Source: Allstate Insurance (www.allstate.com)

From Business Journal of Phoenix (www.bizjournals.com)

Anthem Sends Out Checks Erroneously

A Paducah, Ky. insurance company is trying to recover money it sent by mistake to 10,400 people in western Kentucky.

The checks were sent May 15 to teachers and other state workers covered by Anthem Blue Cross Blue Shield last year, said Anthem spokeswoman Christi Lanier-Robinson of Louisville. She said the checks were worth up to $2,000, but she was unsure of the total amount.

"It was due to a processing error in Anthem's prescription management program," Lanier-Robinson said.

Anthem was sending letters this week asking people to return the checks or pay the money back if the checks have been cashed.

Lanier-Robinson said the material will have instructions and a phone number to call if people have questions.

"We are moving forward with recovery efforts, and we believe once people find out these checks were sent mistakenly, they will do the right thing," Lanier-Robinson said.

She did not say how Anthem would enforce repayment if people resist.

Checks were sent by Anthem firm One-Nation Insurance Co., but she said she didn't know exactly where the checks came from or what caused the error.

"A lot of people were suspicious right off the bat because some of (the checks) were large amounts," said Mary Beth Ward with Owensboro Public Schools.

Some people didn't spend the money right away. Scott Hawkins, personnel director with Daviess County Public Schools, said he and his wife held on to their checks.

"The amount in mine was more than I paid out in prescriptions for the whole year," Hawkins said. "There didn't appear to be any rhyme or reason for the amount."

Hawkins said his office was initially told by Anthem last week that the checks were sent because co-pays had not been properly reduced, therefore resulting in overcharges. His office was later told they were sent in error, he said.

Tomi Mathew of Maceo, a substitute teacher in Daviess County, said she spent the $490 check she received before learning that it was a mistake.

"I said that's their problem, not mine," Mathew said.

Source: Associated Press (www.ap.org)

From Insurance Journal (www.insurancejournal.com)

CA Insurance Commissioner John Garamendi Discloses Apparent Excess Profits By Homeowner and Auto Insurers

Insurance Commissioner John Garamendi released a new report on the burgeoning profitability of Homeowners and Private Passenger Automobile Insurance companies. The study discloses that for the past two years insurance companies have enjoyed a scenario in which the amount they pay for claims has dwindled, while the money they keep has soared. The Commissioner has scheduled a hearing for July 20, at which he will examine this issue. The following is his statement:

“For the past two years homeowners and automobile insurance companies in this state have profited immensely at the expense of consumers. A new study from my office shows that the more money these companies keep from your premiums, the less they pay out in claims. In my view, Californians are due for a break. If my understanding of these results is confirmed by my full review and hearing, I am confident that I will be ordering a significant number of insurers to reduce their rates.

“Homeowner insurance and personal auto insurance are essential tools for consumers, enabling them to drive legally, to own homes and to responsibly protect their assets. I have committed to see that homeowners’ insurance and private passenger auto insurance are available and affordable in this state. When insurers seek a seemingly endless string of premium increases, yet fail to offer premium relief, even during periods of good fortune, the system clearly needs review. I aim to provide such review immediately.

“As we embark upon this task, bear in mind that the insurance industry bitterly opposes my latest effort to rein in pricing and bring affordable, fair insurance to all. My new pricing reforms would require insurers to base auto insurance rates primarily upon how safely you drive, and not just where you live. The rules would reward good drivers and end the industry’s practice of punishing safe drivers with high premiums simply because they live in the ‘wrong’ zip code. The industry recently unleashed a $2.4 million advertising campaign attacking me and these reforms. The shady methods they employed in a failed attempt to intimidate me into delaying the reforms demonstrate the lengths to which they will go to protect this extraordinarily profitable market they currently enjoy.

“The report I release today focuses on an important measure of success or failure for insurers, called loss ratio. The loss ratio is a fair measure of the value of an insurance product from a consumer perspective. In the simplest terms, a loss ratio represents what an insurer spends to pay the claims of its customers, expressed as a percentage of its premiums. For instance, if a company collects $100 dollars in premiums and spends $40 of these premiums on customer claims, the company has a 40% loss ratio. This is important to understand, because the bottom line is that lower loss ratios translate to higher profits.

“As I indicated earlier, I am very concerned by what I am observing as a trend over the last two years. Beginning in 2004, loss ratios dropped markedly in the homeowners’ insurance market in California. Only four companies reported loss ratios exceeding 50% in 2004, and only five companies were in this category by the end of 2005. In 2004, when we began to see such significant drops in loss ratios, I directed my staff to continue to monitor the trend for one more year to determine whether these results were merely an aberration. We have recently completed our review of 2005 data and confirmed the trend continues. In fact some low loss ratios have declined even further.

“The lowest loss ratio reported in 2004 for the top 20 companies was a mere 24.23%. Another company’s loss ratio declined from 49.86% to 27.82% between 2004 and 2005. These companies are paying only 25 to 30 cents on claims for each dollar of premium they collect. The other 70 to 75 cents pays for administrative expenses and goes to the bottom line as profit.

“The data we have collected shows that while companies eagerly filed applications to increase rates during periods of higher losses, there was no corresponding race to reduce rates as loss ratios tumbled.

“I am interested in seeing a healthy and prosperous insurance industry in California. But at the same time, the law requires that insurance company profits not be excessive. California voters have entrusted me with the responsibility of assuring that the premiums California homeowners pay are used to pay claims and provide a reasonable profit.

“In my view, some of the low loss ratios we are witnessing are an indication that profits and rates are excessive, and that consumers should be paying lower premiums. Today, I am announcing that I will hold rate reduction hearings in July to determine whether some of the rates consumers are paying are excessive and whether I should order insurers to lower their rates.

“Private passenger auto insurance presents a similar picture, even though the loss ratios we are seeing are not as low as those we have observed in the homeowners’ market. We reviewed the loss ratios for the twenty largest carriers in California that represent approximately 80% of the market. In the last several years there has been an overall decline in loss ratios for this line of insurance. Between 2002 and 2003 loss ratios declined for 18 of the top 20 carriers. Loss ratios declined further for all but two or three of the top 20 carriers between 2003 and 2004. Between 2004 and 2005 half of the top twenty carriers saw declining loss ratios in their automobile liability coverage. By 2005 the large majority of companies had loss ratios in the 50% to 60% range.

“While the case for excess profits is not as clear in the private passenger automobile insurance market, we must continue to be vigilant to ensure that these companies do not overcharge customers as their financial position continues to improve. We will review rates for the private passenger automobile market as we implement changes to our auto rating factors reforms. As I mentioned earlier, these changes to current practice are designed to ensure that premiums for auto insurance are based more upon how safely a person drives, than where the person lives. I believe that these companies are financially strong enough, and the rates they have been charging are high enough, that no consumer should have to bear an undue burden as we transition to the new rating methodologies.”

From California Department of Insurance (www.insurance.ca.gov)

Immigration Bill Awaits Senate Approval

By David Espo
Associated Press

Senate supporters of landmark immigration legislation looked ahead Wednesday to passage of a measure along lines set by President Bush, but they also signaled a willingness to seek common ground with conservatives whose House version would be far tougher on millions of men and women in the country illegally.

With Senate approval assured on Thursday, Arlen Specter, R-Pa., the chairman of the Judiciary Committee, said, "Does anybody have a better approach? Not yet. But we're still open for business."

If there are some unneeded and unwanted complexities in this legislation, they could probably be smoothed out," said Sen. John McCain (news, bio, voting record), R-Ariz. He said it was good news that new suggestions were coming from the House.

The Senate bill's passage, long assumed, was assured with a decision to limit debate. That 73-25 vote set the stage for final approval Thursday in what will be a bipartisan ratification of legislation that calls for increased border security, a new guest worker program and a shot at citizenship for millions of illegal immigrants.

"I will be voting for it," said Majority Leader Bill Frist, R-Tenn., after Wednesday proceedings ended.

By contrast, legislation passed last year by the Republican-controlled House is generally limited to border security. It would expose all of the estimated 11 million to 12 million illegal immigrants in the country to felony charges, and it contains no guest worker program.

Contentious compromise talks seemed sure as supporters of the Senate bill beat back the last in a long series of potentially lethal challenges to their handiwork.

An attempt by Sen. Jeff Sessions (news, bio, voting record), R-Ala., to scuttle the bill on grounds it violated spending limits was turned aside. The vote was 67-31.

For a second consecutive week, the White House dispatched top presidential aide Karl Rove to meet with rank-and-file House Republicans. Officials said his mission was to reassure critics by emphasizing Bush's commitment to stanching the flow of illegal immigrants across the Mexican border. Asked as he departed the Capitol whether he had made progress, he replied, "Could be."
Whatever impact Rove had, supporters of the Senate bill said at a news conference they did not underestimate the difficulties ahead as they seek an election-year compromise.

Numerous conservative House Republicans have denounced the Senate measure as conferring amnesty on lawbreakers. Some have demanded that House leaders refuse to enter compromise discussions with the Senate, and they have warned that giving too much ground could cause conservatives to stay home this November and spell defeat for the party in midterm elections.
Rep. James Sensenbrenner, R-Wis., chairman of the House Judiciary Committee and the man who would lead House negotiators, has a reputation for hard bargaining.

Nor is it clear how widespread support is among Democrats for a compromise. Some party strategists argue that Republicans would bear the brunt of public dissatisfaction if Congress failed to act on immigration. In this view, GOP lawmakers would be saddled with defending the votes they cast last winter to millions of Hispanic voters eager for an overhaul of existing law.

On the other hand, Senate Democrats are likely to provide more votes for passage of the measure than Republicans. And one lawmaker from the House, Rep. Howard Berman (news, bio, voting record), D-Calif., spent time in the Senate recently during debate on a provision for a new program of jobs for migrant farm workers, signaling his interest in having legislation emerge from Congress.

McCain and others said they saw signs of flexibility among House Republicans. They also claimed public support was on their side and said the party would benefit in the fall if the president and the GOP-controlled Congress could agree on legislation.

"The politics of solving this problem is better than the politics of doing nothing," said Sen. Lindsey Graham (news, bio, voting record), R-S.C.

McCain, of Arizona, a likely presidential contender in 2008 as well as a key architect of the Senate bill, re-enforced the view. "The American people accept a comprehensive solution," he said. "The president supports one."

"We've had conferences with Chairman Sensenbrenner in the past," said Specter, noting that earlier this year Congress passed a compromise anti-terrorist Patriot Act after particularly contentious negotiations.

In the House, prominent Republicans have sent mixed signals in recent days.

"Regardless of what the president says, what he is proposing is amnesty," Sensenbrenner, R-Wis., said last week. He repeated the contention on Sunday, at the same time saying, "I don't think anything is a deal-breaker." Appearing on CBS, he said, "We can't have legal proceedings to deport 11 to 12 million people, that is evident."

A prominent House conservative, Mike Pence of Indiana, added a new dimension to the debate this week, proposing what he called a "real rational middle ground."

He outlined an approach that calls for securing the border, creating a guest worker program to "efficiently provide American employers with willing guest workers who come to America legally" and ordering tough sanctions on employers who hire illegal workers. In remarks at the Heritage Foundation, he added, "The only way to deal with these 12 million people is to insist that they leave the country and come back legally if they have a job awaiting them."

Source: Associated Press (www.ap.org)

From Yahoo! News (www.yahoo.com)

Millions of Renters Lack Insurance, Says Agents' Survey

Almost 25 million U.S. families renting their homes are going bare on insurance coverage, leaving themselves vulnerable to serious property and liability losses. Many renters without coverage own valuable, high-tech equipment and face higher risk related to pets, a new national survey conducted by Trusted Choice finds.

The new survey uncovers a persistent lack of awareness or understanding about property and liability risks faced by renters, says Trusted Choice spokesperson Madelyn Flannagan. Two-thirds (67 percent) of U.S. families that rent lack coverage.

Some 35 million homes were rented in 2005, or about 31 percent of all American households, according to the National Multi Housing Council (www.nmhc.org). Renters insurance replaces furnishings and property in an apartment, condominium or other rental home should those items be stolen, destroyed or damaged. The policy also includes liability coverage, a safety net against a lawsuit or claim that potentially could result in a large financial hit on renters.

Among those respondents who said they don't have renters' insurance, 26 percent feel that the coverage is too expensive and another 17 percent said they didn't know they needed it.

Moreover, another 8 percent have never heard of renters' insurance.

"Insurance protection isn't a 'nice-to-have' for renters," Flannagan said. "It's an essential backup for property losses ? such as water and fire damage ? as well as today's liability risks faced by Americans: slips and falls, accidents at parties, pet attacks, and lawsuits by landlords, for example."

Coverage for renters is widely available and affordable in most parts of the country, with the average annual premium about $20 per month for about $20,000 of property coverage and $500,000 of liability coverage, Flannagan said.

Renters sometimes mistakenly believe they're covered under their landlord's insurance policy following a loss or claim, Flannagan noted. "You're really on your own. Landlords are interested only in insuring the buildings and the infrastructure for those buildings, such as elevators and heating/cooling systems. They're not covering the contents or liability of individual tenants."

Moreover, the actions by another tenant, such as negligence causing fires and water damage, for instance, have obvious implications for the property and safety of other tenants in a building, Flannagan said.

Among the Trusted Choice survey results:

Property Concerns: An overwhelming majority (89 percent) of all renters own one or more valuable electronic devices, such as digital recorder devices, desktop and laptop computers, digital and video cameras and home theater systems. More than half (53 percent) of renters own exercise and/or sports equipment such as a bicycle, exercise equipment or skis. Both groups of owners of electronic devices and exercise equipment are slightly more likely to own renter's insurance than non-owners.

Pet Owners: Half of all renters own pets, and these tenants face increased liability exposure, especially with dogs or exotic pets. But surprisingly, renters with pets are less likely to be insured, Flannagan said. The likelihood of owning renters insurance is much lower (26 percent) among pet owners overall than it is among those who don't own any pets (32 percent).

Business: For entrepreneurs operating a business out of a rented home, renters' insurance isn't the only protection they need. They probably should have a separate business policy, Flannagan said. But the likelihood of owning renters insurance is not much higher (31 percent) among those who own and operate a firm out of their condo, apartment or other rental property than among those who do not (29 percent), the survey found. (Only 5 percent of renters surveyed said they own an at-home business.)

College Implications: College students heading to school this fall could be putting their families at risk, the survey suggests. While homeowners' coverage typically extends to students living in campus dormitories, coverage applications for off-campus housing are vague and should be discussed with an agent before moving day, Flannagan said. "Often, a separate renters' insurance policy is the best bet for the risks students and their families assume with an off-campus rental."

Source: Trusted Choice

From Claims Guides (www.claimsguides.com)

Allstate Ordered To Give Refunds in Texas

By Janet Elliott
Houston Chronicle

Allstate, which last month reduced homeowners insurance rates 4.8 percent, was ordered Monday to refund $60 million to its customers.

Insurance Commissioner Mike Geeslin signed the order, which also requires an additional 0.2 percent reduction in current rates. The action was the latest step in a three-year battle over rates charged by the No. 2 Texas insurer.

Geeslin said the refunds reflect the amount overcharged since December 2004, including interest at an annual rate of 13.25 percent. Insurance department spokesman Jim Hurley said the refunds would cost the company $60 million.

Joe McCormick, Allstate's spokesman for Texas, said the company is reviewing the order and considering its options. He said that the 4.8 percent decrease was close to the 5 percent ordered by Geeslin.

"We need to maintain that balance between having a very competitive rate and also needing that rate to accurately reflect the risk and be adequate to pay future claims," he said.
McCormick noted that the company has decreased its homeowners rates about 15 percent since 2003.

In 2003, state regulators ordered most companies to reduce their rates. Allstate agreed to a 10 percent cut and said it would consider another 8.75 percent reduction a year later.

The insurer refunded $60 million in 2004 and offered to cut rates 1.3 percent. The Texas Department of Insurance rejected the filing and recommended that Allstate be penalized. The company appealed before a state administrative law judge. In March, two judges said Allstate's rates are excessive.

The company could appeal the order to a state district court in Travis County.

Source: Houston Chronicle (www.chron.com)

From Insurance News Net (www.insurancenewsnet.com)

A.M. Best Upgrades Ratings of Bristol West Insurance Group

A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Very Good) and the issuer credit ratings (ICR) to "a-" from "bbb+" of Coast National Insurance Company (California), Bristol West Insurance Company (Pennsylvania), Bristol West Casualty Insurance Company (Ohio) and Security National Insurance Company (Florida), all members of the Bristol West Insurance Group (Bristol West) (Davie, FL).

Concurrently, A.M. Best has upgraded the ICR to "bbb-" from "bb+" of Bristol West Holdings, Inc., the publicly-traded holding company (NYSE: BRW - News). The outlook for all ratings is stable.

The rating upgrades reflect Bristol West's enhanced capitalization and favorable overall operating performance in recent years. Improvement in the group's surplus position has been driven by operating earnings. The group's operating profitability is attributed to management's disciplined underwriting approach, product line expertise and utilization of sophisticated technologies within the pricing, risk selection and claims handling processes.

The rating upgrades also consider the significant investments made in technology to improve risk segmentation, refine pricing, enhance loss reserve monitoring and provide better service to producers and customers. As a result of these initiatives and generally favorable market conditions, operating profits have been reported in each of the past three years.

Bristol West provides non-standard private passenger automobile insurance in 21 states, with California comprising approximately 50% of its direct premiums written. Business, which is marketed through independent producers, is produced by affiliated general agencies.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Source: A.M. Best Company (www.ambest.com)

-----

A statement from Bristol West executives James R. Fisher, Chairman and CEO and Jeffrey J. Dailey, President and COO:

"We are very pleased to announce that A.M. Best has announced an upgrade to the financial strength ratings of Bristol West Holdings, Inc. insurance subsidiaries to "A-", or Excellent.

(Below is a copy of the press release A.M. Best issued earlier.)

Our focus has been to provide you with a stable market with excellent products and service that is delivered to you via cutting edge technological tools. We remain committed to the independent agent and broker market and we truly appreciate your business.

The announcement by A.M. Best represents our third ratings upgrade in the past 2 ½ years, and we are gratified that they recognize the strong financial position of our Company.

We thank you for your continued support of Bristol West."

Adobe Delivers Intelligent ACORD Forms for Insurance Industry

Adobe Systems Incorporated and the Association for Cooperative Operations Research and Development (ACORD) today announced the delivery of more than 150 ACORD insurance forms in Adobe® Portable Document Format (PDF).

Through new ACORD PDF fillable Forms, insurance companies, agencies and vendors can automate and simplify customer communication, capture data more accurately and securely, and reduce re-keying costs and errors associated with manual data entry. Delivery of additional ACORD fillable Forms will be provided on a phased approach between April and September 2006.

ACORD members can now easily add intelligence to ACORD fillable Forms in PDF through Adobe offerings such as Adobe LiveCycle® Designer and Adobe LiveCycle Forms software. Members can interact with ACORD fillable Forms in PDF while online or offline, thereby extending the reach of their insurance applications inside and outside the firewall via free Adobe Reader® software.

By adding advanced data collection and validation to ACORD fillable Forms, insurance companies can automate forms processes to achieve greater efficiency with higher data quality, while integrating remote workflows into the automated process.

"Insurance agents demand that carriers supply them with solutions that are familiar and easy to use," said John Kellington, chief technology officer and senior vice president of Ohio Casualty Group, Fairfield, Ohio and chair of the ACORD Standards Committee. "By combining the ubiquity of PDF with ACORD eForms and business logic to create an entire submission package from a single XML request, Adobe is enabling carriers to leverage the ACORD standard and their investment in XML-based applications to do better business."

"Insurers are adopting the ACORD fillable Forms to increase flexibility, improve efficiency and reduce costs by automating the exchange of information, extending their backend systems and decreasing their reliance on manual data entry," said Eugene Lee, vice president of vertical and solutions marketing at Adobe. "The integrity of Adobe PDF and the ubiquity of Adobe Reader combined with the ACORD XML data standard enable insurers to improve the level of engagement between their agents, brokers and customers and accelerate the exchange of business critical information."

"ACORD supplies over half of the insurance forms used in the industry to enable insurance companies to meet all regulatory requirements," said Aziz Hussein, chief technology officer for ACORD. "The new PDF ACORD fillable forms, combined with the ACORD XML standard, will enable our members to improve quality and service through automation of expensive manual processing, while complying with government mandates."

The new ACORD fillable Forms in Adobe PDF interoperate with the ACORD XML data standard, and are available on the ACORD Advantage program web site, www.acordadvantage.org.

Source: Adobe Systems, Inc. (www.adobe.com)

From Yahoo! News (www.yahoo.com)

A.M. Best Affirms Ratings of Infinity Property & Casualty Group

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a" of Infinity Property & Casualty Group (Infinity P/C) (Birmingham, AL) and its operating insurance subsidiaries.

In addition, A.M. Best has affirmed the debt rating and the ICR of "bbb" of Infinity Property & Casualty Corporation's (IPCC) (NASDAQ: IPCC - News; Birmingham, AL) $200 million 5.50% senior unsecured notes due 2014. All ratings have a stable outlook.

The affirmation of the FSR reflects Infinity P/C's excellent capitalization, strong non-standard automobile market presence and favorable overall operating performance. Infinity P/C ranks among the leading non-standard automobile writers in the United States. Business is heavily focused in California and Florida, which generates approximately two-thirds of direct business written.

Source: A.M. Best Company (www.ambest.com)

From Yahoo! News (www.yahoo.com)

Progressive Announces Management Changes

The Progressive Corporation announced the appointment of John A. Barbagallo as the President of the Company's Drive® Group of Insurance Companies. Mr. Barbagallo, 46, who joined the Company more than 20 years ago as a claims representative, currently serves as the Drive Atlantic Region General Manager.

CEO and President Glenn Renwick said: "I am thrilled to announce the selection of John as Drive Group President. I have great confidence in his ability to lead the Drive organization in meeting its goal of achieving consistently higher levels of profitable growth. John has a wealth of experience in our agency business as well as in claims, marketing and operations, which makes him the perfect choice to lead this important part of our business."

The Company also announced two other changes as part of a reorganization of the Company's Executive Team:

Brian A. Silva, 53, currently General Manager of the Company's Commercial Auto Group, reporting to the Drive Group President, has been promoted to Commercial Group President and will now report directly to Mr. Renwick.

Mr. Renwick said: "Under Brian's leadership, the Commercial Auto business has grown from $250 million in written premium in 1998 to more than $1.8 billion in 2005. He has made terrific contributions to the Commercial Auto Group and I look forward to the contributions he will make to all aspects of our business."

Alan R. Bauer, President of the Company's Direct Group of Insurance Companies since 2002, will step down from his responsibilities and leave the Company effective immediately. Mr. Bauer joined Progressive in 1979. Mr. Renwick announced the commencement of an internal search for the next Direct Group President.

Mr. Renwick also reaffirmed his intent to name a new CFO by the end of the third quarter to succeed Tom Forrester who will retire in early 2007, noting that the selection process for that position has already begun among a pool of highly qualified internal candidates.

Source: Progressive Insurance (www.progressive.com)

From Yahoo! News (www.yahoo.com)

US Hurricane Outlook Seen Raising Insurance Costs

By Ed Leefeldt
Reuters

U.S. insurers on Monday said a gloomy report on the 2006 hurricane season from the National Oceanic and Atmospheric Administration will make home and business insurance more expensive.

NOAA, which makes regular forecasts of storm activity, on Monday said the hurricane season, which starts June 1, would see up to 10 hurricanes, of which four to six could be "major."

"The property casualty insurers are expecting many years of this," said Robert Hartwig, chief economist of the Insurance Information Institute. "By 2010, we are likely to see a year when catastrophe losses hit $100 billion."

The NOAA forecast follows on the heels of one by Colorado State University's Dr. William Gray, who forecast five major storms.

Forecasters agree that because of warmer water and air temperatures in the Atlantic Ocean, the U.S. is facing heightened storm activity. Last year's hurricanes, the worst season ever, caused more than $58 billion of insured losses, while the 2004 season saw property casualty carriers hit for $28 billion in damages.

Based on predictions by forecasters, Risk Management Services, a Newark, California-based group that models future disasters for the insurance industry, is anticipating one major storm, with winds of 111 to 130 miles per hour, will hit the United States every year over the next five years, according to Robert Muirwood, chief research officer.

"We have increased our expectations by about 50 percent for catastrophes of all kinds, from $15 billion to $22.5 billion a year," said Stephan Christiansen, director of research at Conning Research & Consulting Inc.

Christiansen said insurers escaped some of the impact of last year's hurricanes because reinsurers, which write policies to cover them in the event of disaster, absorbed about a third of the $58 billion in insured losses.

"But if you have another year of major storms, reinsurance may dry up," he warned.

Insurers are well aware of their vulnerabilities, particularly along coastal states.

American International Group Inc., which had more than $2 billion in losses from hurricanes last year, is cutting back in Florida and Texas, and raising rates in hurricane-prone areas by 30 percent or more.

Fearing a storm along the Atlantic Coast, Allstate Corp. is refusing to write some homeowners policies as far north as the New York City area. It lost more than $3 billion in areas such as Louisiana, where New Orleans was flooded by Hurricane Katrina.

Source: Reuters (www.reuters.com)

From Yahoo! News (www.yahoo.com)

Senate Rejects Immigration Bill Amendment

By Suzanne Gamboa
Associated Press

The Senate rejected a California Democrat's plan to allow the estimated 12 million illegal immigrants in the country to remain, work and eventually become Americans, preserving a fragile bipartisan coalition needed to pass the bill.

Several lawmakers who voted against the proposal offered by Sen. Dianne Feinstein on Tuesday said they did so reluctantly, but out of necessity to ensure survival of the broader immigration bill. The legislation is expected to win Senate passage Wednesday or Thursday.

"This legislation is on the edge of the ledge as it is," said Sen. Arlen Specter of Pennsylvania, one of the Republicans supporting a delicate compromise that has kept the bill alive - letting two-thirds of illegal immigrants stay but making the other third leave.

Feinstein's amendment, defeated 61 to 37, would have supplanted the compromise that allows illegal immigrants here five years or more to stay and work six years and seek legal residency after paying back taxes and fines and showing they were learning English.

Those in the country two to five years under the compromise would have to go to a point of entry, exit and file an application to return as a guest worker. Those here less than two years must leave the country, but could apply from their native country to return as a guest worker and wait in line to get a visa.

"I have come to believe that the three-tiered system is unworkable, that it would create a bureaucratic nightmare and it would lead to substantial fraud," Feinstein said Tuesday.

Sen. Tom Harkin, D-Iowa, said the compromise bill could mean losing Latinos in his state who have helped revive some of its small towns by buying homes and starting small businesses.

Feinstein offered the plan just before Senate Majority Leader Bill Frist set the stage for a preliminary vote Wednesday that could quickly bring the bill to a final vote. The bill appears headed for passage.

A bigger fight on the bill is still to come - when the House and Senate meet to negotiate a compromise bill. The House passed an enforcement-only bill that makes illegal immigrants felons, cracks down on hiring of illegal immigrants and steps up border security. It offers no path to citizenship or a guest worker program, which critics say is amnesty.

"If we are lucky, the House of Representatives will say it's got to be better," Sen. Jeff Sessions, R-Ala., said of the Senate bill after predicting Monday it would pass.

Feinstein's proposal faced an uphill climb. Republican Sen. John Cornyn of Texas said it suffered the same "infirmities" as the bipartisan bill approved by the Senate Judiciary Committee, which offered citizenship for all illegal immigrants.

Feinstein's proposal required all illegal immigrants to register with the Department of Homeland Security, get fingerprinted and go through criminal and national security background checks.

They would get an "orange card" encrypted with identifying information and signifying they are legal workers after passing the background checks, demonstrating an understanding of English, U.S. history and government and paying back taxes and a $2,000 fine to apply.

They would go to the back of the line and could apply for legal permanent residency when a number they are given is reached.

Also Monday, the Senate showed support for President Bush's plan to deploy National Guard troops to the border by endorsing an amendment authorizing governors to order their state's Guard units to perform duties in border states.

Source: Associated Press (www.ap.org)

From Los Angeles Daily News (www.dailynews.com)

AVMED Health Plans Makes Weiss Ratings "Recommended" List

AvMed Health Plans announced today that its financial safety rating has been upgraded to B+ or “good” by the respected Weiss Ratings Inc., elevating AvMed to Weiss’ select list of the top-rated health plans in the United State s.

With the upgrade, AvMed is placed on the Weiss Recommended List of companies, a group of 142 health insurers nationwide that Weiss identifies as “representing the top 28.3 percent of the industry” in terms of financial safety.

“We are extremely gratified that Weiss Ratings recognized AvMed as one of the most financially secure health plans in the United States, which is great news for the thousands of members and employers we are privileged to serve across Florida,” said Doug Cueny, AvMed’s President and Chief Operating Officer.

“Our company is strong and growing stronger, which gives our members and their employers the security of knowing that we will be there to meet their future health coverage needs,” Cueny added.

In issuing its ratings upgrade, Weiss said in part: “The B+ rating means that, in our opinion, this company offers good financial security and has the resources to deal with a variety of adverse economic conditions. It comfortably exceeds the minimum levels for all of our rating criteria and is likely to remain healthy for the near future.”

As a not-for-profit health plan, AvMed is able to reinvest earnings to continually enhance the services and value it provides to members and employers, Cueny said. As a result, AvMed saw its membership rise a healthy 8 percent in 2005, with continued growth occurring in 2006. Meanwhile, member satisfaction scores exceed national and state averages.

AvMed has seen a significant upgrade in its Weiss ratings over the past three years as it has reinvested earnings to create new coverage options for both small and large businesses, improve member satisfaction and help members to live healthier lives through education and prevention programs.

From AvMed (www.avmed.org)

Insurance Technology Leaders Norvax Release White Paper

Norvax announced today the release of their latest whitepaper, Selling Insurance Online: Identifying the 9 Top Trends Affecting Agents & Carriers in 2006. The paper concisely reveals the latest trends in online insurance sales that independent insurance agents, captive agents and carriers can easily take advantage of to increase sales, productivity and profit this year.

All players in the insurance industry are realizing the immense potential the Internet gives them to streamline the connection between consumer, agent and carrier for faster sales, minimized paperwork and increased brand awareness. The "9 Top Trends" report helps pinpoint the latest ways these advances can be incorporated into daily operations, says Clint Jones, CEO, Norvax.

Highlights of the whitepaper include:

- The year's most dominant lead generation strategy
- How email will change agent and carrier marketing for better and for worse
- The secret to the successful one-man shop

Early adopters of insurance sales technology are already seeing profits increase as their sales and admin processes are simplified and sped up. These initial advances have created a base from which we're going to see leaders and followers this year.

The 9 trends identified in this report should be a valuable part of every insurance agent and carrier's new sales strategy for 2006, says Jeremiah Desmarais, the paper's author.

Desmarais is the Vice President of Marketing at Norvax. He is author of several whitepapers, and has been a contributor to the Agent Sales Journal, Health Insurance Underwriter as well as a keynote speaker at insurance carrier events and workshops. He is also editor of the Norvax Newsletter that delivers helpful sales articles, tips and marketing strategies to 15,000+ Insurance Agents monthly. He is a member of the Society of Industry Leaders.

Brokers, agents and carrier representatives can download a free copy of the exclusive whitepaper, Selling Insurance Online: Identifying the 9 Top Trends Affecting Agents & Carriers in 2006 at http://www.norvax.com/9trends

From Norvax, Inc. (www.norvax.com)

Broker Pays More Than $750,000 to Settle State Allegations

By Stephen Singer
Associated Press

An insurance broker has paid the state $754,804 to settle allegations it accepted undisclosed compensation from insurance carriers in exchange for placing insurance for the state, Attorney General Richard Blumenthal said Thursday.

The Hartford Financial Services Group, which recently settled with Connecticut and New York over separate allegations, and St. Paul Travelers, were involved, Blumenthal said. He did not provide details, saying only that the two companies were "sources of concealed commissions."

Other insurers also may be involved, but Blumenthal would not identify the companies.

The state used the insurance brokerage firm R.C. Knox of Hartford to place insurance for the State Insurance Risk Management Board and the Connecticut Development Authority from 1997 to 2004.

The state paid a fee to R.C. Knox, which assured state officials it was not receiving commissions from insurance carriers to place insurance for the risk management board, Blumenthal said. It said its fee was the "sole source of revenue on this account," the attorney general said.

Yet R.C. Knox accepted $415,058 in "improper concealed compensation" from insurers for placing the state insurance, Blumenthal said. The settlement accounts for the amount of the compensation R.C. Knox accepted, plus $339,746 in interest.

"The state relied on R.C. Knox for the best insurance deal for taxpayers, not the best secret commission deal for R.C. Knox," Blumenthal said.Brent DiGiorgio, a spokesman for People's Bank, which owns R.C. Knox, denied wrongdoing. R.C. Knox obtained competitive bids on policies in "complete accordance with the state's guidelines for bidding," he said.

The brokerage firm settled "to avoid the uncertainty and expense of contesting possible claims the attorney general may have had in connection with this issue," DiGiorgio said.

R.C. Knox also agreed to no longer accept so-called "contingent commissions" in exchange for any insurance placements for the state, Blumenthal said.

Blumenthal said the information leading to the accusations arose during his investigation of brokerage firms that allegedly steered business to insurers. The R.C. Knox settlement was his sixth, he said.

Marlene Ibsen, a spokeswoman for St. Paul Travelers in Hartford, would not comment on Blumenthal's allegations. The company is cooperating with "all investigations," she said.

Joshua King, a spokesman for The Hartford, would not comment.The Hartford last week agreed to pay $20 million to settle an investigation into claims of fraudulent sales practices in retirement products.

From Associated Press (www.ap.org)

Financial Industry Looks To Avoid ID Restrictions; Congress Eyes Limiting Use Of SSNs As Identifiers

By Jaikumar Vijayan

The possibility that U.S. lawmakers might restrict the widespread use of Social Security numbers as customer identifiers because of data-privacy issues is prompting big concerns within the financial services industry.

Randy Lively Jr., CEO of the American Financial Services Association in Washington, said last week that such a move could deprive banks, insurance firms, credit bureaus and other businesses of a reliable identity verification method while doing little to bolster consumer privacy.

"The Social Security number is the only unique identifier in our country that enables a [company] to be sure that the consumer they are doing business with is the correct John Smith," Lively said. Any attempt to limit the use of the numbers in commercial transactions could disrupt the nation's economy, he argued.

Concerns about the misuse of Social Security numbers and their link to identity theft are valid, Lively acknowledged. But he said that lawmakers need to understand the consequences of barring their use for commercial purposes. "What would be put in place if that number were to go away? And wouldn't that identifier be susceptible to the same kind of fraud?" he asked.
Lively was one of several financial industry representatives who testified at a hearing held in Washington earlier this month by a subcommittee of the House Committee on Energy and Commerce .

Taking a contrary view at the hearing was Marc Rotenberg, executive director of the Electronic Privacy Information Center , a Washington-based advocacy group.

Rotenberg said last week that EPIC supports current efforts by federal legislators to restrict the use of Social Security numbers. One is being led by Rep. Edward Markey (D-Mass.), who is sponsoring a bill that would require the Federal Trade Commission to establish rules limiting the purchase and sale of the numbers except in certain situations. Another bill, sponsored by Rep. Clay Shaw (R-Fla.), seeks to prohibit most sales and public displays of Social Security numbers and limit other uses of them.

"The concern is that use of [Social Security numbers] is contributing to the problem of ID theft," Rotenberg said. Although the numbers aren't the only source of identity information being tapped by companies, he added, "we see [their use] associated with a growing privacy risk."

Cost Worries

But a written statement submitted at the hearing by the Securities Industry Asso ciation's Financial Services Coordinating Council (FSCC) warned that overly broad legislation will raise the cost of credit and force "fundamental and costly changes to internal business operating systems."

In its statement, the FSCC urged that any legislation intended to limit the use of Social Security numbers "be carefully targeted to specifically identified abuses, such as measures to stop identity theft." The council claimed that existing laws such as the Gramm-Leach-Bliley Act and other proposed bills already require companies to protect sensitive information.

In testimony from the FTC, Commissioner Jon Leibowitz said companies and government agencies can take other actions to reduce identity theft, such as implementing better processes for protecting data and developing better fraud-detection technologies.

The FTC itself will continue to move against companies that fail to demonstrate due diligence in protecting sensitive data, Leibowitz said in a statement posted on the commission's Web site.
For example, he noted that the FTC levied a $10 million civil penalty against data aggregator ChoicePoint Inc. in January and required it to pay $5 million in restitution to victims of a data theft. w May 20, 2006.

From Insurance News Net (www.insurancenewsnet.com)

Auto Insurance Direct Writer 21st Century Heads East to Fla, Ga. and Pa.

21st Century Insurance Group, which sells auto insurance directly to consumers, is now selling in Florida, Georgia and Pennsylvania, the latest wave of the California-based company's national expansion in the personal auto insurance market.

21st has also launched its first-ever national television advertising campaign with ad buys on 27 national cable networks including USA, TNT and FOX News Channel.

"With our entry into Florida, Georgia and Pennsylvania, we've reached the tipping point that allows us to enjoy the economies of scale that come with national advertising," said President and Chief Executive Officer Bruce W. Marlow. "Our East Coast expansion is the next step in our disciplined growth strategy.

The three East Coast states represent 15 percent of the total U.S. personal auto premium, giving 21st a footprint in nearly half of the U.S. market.

21st says its growth coincides with an accelerating shift in the way consumers shop for auto insurance. According to the insurance rating and information agency A.M. Best, companies that rely on insurance agents lost more than 2.7 percent of personal lines market share between 1999 and 2004. Conversely, direct-to-consumer companies like 21st, GEICO and Progressive increased their market share 4.8 percent during the same period.

In addition, a 2005 survey by Internet benchmarking firm Keynote Systems showed that 87 percent of consumers shop for auto insurance online before purchasing and 55 percent are willing to purchase policies online.

"Today's consumers realize that auto insurance is just like any other consumer financial product - they don't need to pay an agent a big commission year in and year out to figure it out," said Marlow. "By doing it yourself on the phone or on the Web, you save money and gain control."

21st Century Insurance was one of the first companies to sell auto insurance directly to the public. Primarily a California company until a few years ago, 21st began doing business in Illinois, Indiana and Ohio in 2004. In January 2005, 21st expanded into Texas and also opened a state-of-the-art customer service center in the Dallas area. 21st is the seventh-largest personal automobile insurer in California and the 21st-largest nationally, according to A.M. Best.

21st now insures more than 1.5 million automobiles in 12 states and employs more than 2,800 people.

The carrier offers 24-hour towing and road assistance as a standard policy feature.

Founded in 1958, 21st Century Insurance Group is a direct-to-consumer provider of personal auto insurance. With $1.4 billion of revenue in 2005, the company insures over 1.5 million vehicles in Arizona, California, Florida, Georgia, Illinois, Indiana, Nevada, Ohio, Oregon, Pennsylvania, Texas and Washington.

Source: 21st Century Insurance (www.21stcentury.com)

From Insurance Journal (www.insurancejournal.com)

Chase to Begin New Spanish Advertising Campaign

Chase's Consumer Bank is launching its first-ever Spanish-language television advertising campaign Thursday night on Univision and Telemundo networks in Phoenix and several other markets.

The TV ads are part of a broader new Spanish-language campaign called "Confia en ti. Confia en Chase," or "Confidence in yourself. Confidence in Chase"), which includes print, radio, bus shelters and other outdoor ads for the fast-growing customer segment.

"We want to make sure we are speaking to Hispanic consumers in a voice and a language that they understand," said Ryan McInerney, head of marketing for Chase's Consumer Bank. "Our new ads are designed to show that customers can trust Chase to provide the financial services needed in various life situations."

The commercials will run through the end of the year in Phoenix, Tucson, New York, Chicago, Dallas, Houston, San Antonio, El Paso and Harlingen, Texas.

Chase is the consumer and commercial banking arm of JPMorgan Chase & Co. (NYSE: JPM) and has more than 2,600 bank branches across the country.

Source: Chase Manhattan Bank (www.chase.com)

From Business Journal of Phoenix (www.bizjournals.com)

Progressive's Drive Insurance Unveils New Branding Tools for Agents

Ohio-based Drive Insurance from Progressive recently unveiled several new co-branding tools ? including print ad, news release, customer thank you/referral e-mail and commercial auto direct mail post card templates, as well as high-quality vinyl banners to help independent agents promote and grow their businesses.

The new tools are all available exclusively through the Brand Expressway on Drive's agency-dedicated Web site, ForAgentsOnly.com (FAO). According to the company's press release, the Drive Brand represents a group of insurance companies that makes up the country's largest writer of private passenger auto insurance through independent agents and is a leading commercial auto, motorcycle, boat and RV insurance brand.

The Drive Brand Expressway is an Internet portal that combines easy-to-use technology and the Drive brand to give agents fast, easy access to the branding tools and resources they need. Its newest features can be customized with individual agency information and are designed to increase consumer awareness in the agents' local markets. These latest offerings include:

* Drive print ad templates. Agents can select from a variety of electronic Drive print ads for placement in magazines and other publications. The templates are provided free of charge and agents are only responsible for the cost and coordination of the ad with their publication of choice.

* News release templates. Agents can select from several template releases covering a variety of insurance-themed topics and use the system to choose newspapers within a 30-mile radius of their agency to which they want send their personalized release, free of charge.

* Thank you/referral e-mail templates. Agents can access and download several template e-mails for new customers, thanking them for their business and asking them to refer friends and family.

* Commercial Auto direct mail postcards. Agents can select postcard templates and use the system to have them mailed automatically to a targeted list of business vehicle owners in their area. Drive handles the mailing for a minimal cost.

* Banners. Agents can order high-quality, Drive vinyl banners for display at agency-sponsored events, community events, and trade and business shows.

"We're always looking for new, cost-effective ways to help Drive agents attract and retain customers," said David Skove, Drive brand director. "Independent agents have responded positively to the Brand Expressway, so we're excited to expand its co-branded marketing opportunities. These materials are being offered at little or no cost, and agents can use the system to customize each template with their agency information for a more personalized look."

The Drive Brand Expressway was launched in February 2006 to give eligible Drive independent agents access to co-branded opportunities like Yellow Pages ads, billboards, radio commercials and Drive's quarterly customer e-Newsletter, which is customized with agents' information and automatically sent to their customers. The Expressway features technology that automatically recognizes each agent and enables them to order only those co-branded tools for which they're eligible based on their size, growth, and commitment to grow with Drive.

"The Brand Expressway will let agents know which materials are available to them, but we also encourage agents to talk with their Drive territory sales managers to determine which tools best meet their needs," said Skove.

The products and services of the Drive Group of Progressive Insurance Companies are marketed to consumers under the Drive Insurance from Progressive brand through more than 30,000 independent insurance agencies in the U.S.

Source: Drive Brand, Progressive Insurance (www.progressive.com)

From Insurance Journal (www.insurancejournal.com)

Florida Gov. Bush Urged to Veto Auto No-Fault Insurance Law

The National Association of Mutual Insurance Companies has urged Florida Gov. Jeb Bush to veto a bill that would extend the sunset provision of Florida's current no-fault auto insurance law to Jan. 1, 2009.

NAMIC Senior State Affairs Manager David Reddick wrote Bush on Tuesday, "that extending the law's sunset provision to Jan. 1, 2009 will do nothing to help reduce rates for Florida drivers."

"A March 2006 report prepared by the Insurance Research Council found that PIP claims costs in Florida increased at double-digit rates in the past three years, far outpacing the rate of inflation. These increases are likely to continue if the PIP law is re-enacted through 2009.

"NAMIC also believes the provisions in the current law allow for more than enough time for Florida drivers to adjust to the tort system after having been subjected to the PIP law for the past 35 years.

"For these reasons, NAMIC asks you to please veto Senate Bill 2114 and bring rate relief to Florida drivers," Reddick concluded.

The IRC report can be read on NAMIC's website, NAMIC Online at http://www.ircweb.org/News/20060303.pdf.

Source: National Association of Mutual Insurance Companies

From Insurance Journal (www.insurancejournal.com)

Louisiana Regulators to Check Over 2,500 Complaints Against Three Insurers

By Alan Sayre
Associated Press

Louisiana's top insurance regulator ordered reviews Wednesday into consumer complaints about the way Allstate Insurance Co. and St. Paul Travelers Cos. handled homeowner claims after hurricanes Katrina and Rita.

Insurance Commissioner Jim Donelon said the Department of Insurance also would perform a market conduct examination on Louisiana Citizens Property Insurance Corp., which administers the state's high-risk pools for homeowner coverage, after it completes its examination of Allstate and St. Paul Travelers.

Donelon also said examinations into the handling of homeowner claims could be extended to other insurers in the future.

The examinations of Allstate and St. Paul Travelers were ordered after the insurance department reviewed the number of customer complaints received in relation to each company's market share, Donelon said.

The insurance department received 1,287 from Allstate customers, 230 from St. Paul customers and 1,011 from Citizens, said department spokeswoman Amy Whittington.

If the complaints are upheld, the companies could face fines. Whittington said the investigations would each take about three months.

Over 90 percent of the claims resulting from Hurricane Katrina have been settled, according to the New York-based Insurance Information Institute. However, consumer advocates contend that most claims were settled well below a homeowner's policy limit, making it difficult to cover major damage or totally replace residencies.

St. Paul Travelers spokeswoman Jennifer Wislocki said such examinations are "a common practice after such a large event as Hurricane Katrina and we will give the department our full cooperation."

Allstate, through spokesman Mike Siemienas, also said his company would cooperate fully. He said Allstate had settled about 94 percent of its storm claims.

Allstate, Louisiana's second-largest home insurer behind State Farm Insurance Co., has two major homeowner coverage companies in Louisiana Allstate Indemnity Co. and Allstate Insurance Co. that, together, comprise about 22 percent of the Louisiana homeowner market. State Farm has about 35 percent of the market.

St. Paul Travelers carries about 3.6 percent of the market. Citizens has about 7.6 percent of the market.

Citizens is the target of a state court lawsuit seeking class-action status that claims the Citizens Fair Plan, the insurance plan of last resort for homeowners and renters who do not live in coastal areas of the state, did not adjust claims in a timely fashion, leading to additional property damage for policyholders.

Citizens officials have said 92 percent of the claims have been paid and any delays were due to communications difficulties after the storms.

In Mississippi, hundreds of homeowners have sued Allstate and other insurers for denying their claims after Hurricane Katrina.

Mississippi Attorney General Jim Hood has said he is investigating allegations that insurance companies fraudulently denied policyholders' claims. As part of Hood's criminal investigation, a judge has ordered State Farm to turn over copies of their Katrina engineering reports.

Richard Scruggs, a high-profile attorney who represents nearly 3,000 homeowners in Mississippi, has accused State Farm of pressuring engineers to alter their conclusions about whether wind or water damaged homes. Insurers say damage from wind-driven water, or "storm surge," is classified as flooding and is not covered by their homeowners' policies.

Source: Associated Press (www.ap.org)

From Insurance News Net (www.insurancenewsnet.com)

Fla. Apprehends 28 in Fake Insurance Card Scheme

Twenty-eight individuals have been arrested in Florida for manufacturing, selling or buying fraudulent insurance binders and insurance identification cards according to Tom Gallagher, Florida's chief financial officer. The arrests were the result of a multi-agency operation called "Bogus Binders."

Most of the arrests involved dump truck owners and operators, but it is also suspected that these fake insurance cards were also sold to private vehicle owners."

If one of these uninsured drivers had injured someone, it could have resulted in financial devastation for the innocent victim," Gallagher said. "I commend the law enforcement officers who uncovered this fraud and worked to quickly bring those involved to justice."

The agencies involved included the Department of Financial Services, Division of Insurance Fraud; the Miami-Dade State Attorney's Office; the Miami-Dade Police Department; the Florida Department of Transportation, Motor Carrier Compliance Office; and the United States Postal Service, Office of Inspector General.

In December 2005, MDPD Organized Crime Section received information that an individual by the name of Roberto Dominguez was providing fraudulent motor vehicle certificates of liability insurance for $1 million and insurance identification cards to owners of dump trucks in Miami-Dade County. Dominguez allegedly sold fraudulent $1 million liability certificates for $300, when actual certificates of liability for $1 million normally range in price from $8,000 to $10,000.

Dominguez has never been a licensed insurance agent in the state of Florida and was arrested in 2003 and 2005 by DIF for similar violations. Dominguez was arrested again and charged with 110 counts of fraud, uttering a forged instrument and transacting insurance without a certificate.

On June 15, 2005, DIF conducted an investigation of an insurance agency known as "Insurance Express," which was determined to be a phony insurance agency in Miami owned and operated by Rosa and Peter Bajdor. This investigation revealed that the Bajdors were writing and selling numerous fraudulent certificates of liability insurance binders listing Canal Insurance Company and Lincoln General Insurance Company as the insuring companies. Canal Insurance Company and Lincoln General Insurance Company are legitimate insurance companies, but company representatives advised that the liability insurance certificates issued by the Bajdors were fraudulent.

Rosa and Peter Bajdor were arrested on July 25, 2005, but failed to appear for court and are currently considered fugitives.

In March and April, "Operation Bogus Binders" was initiated to identify owners of dump trucks in possession of these fraudulent insurance identification cards. The investigation identified 25 individuals who presented false and fraudulent cards to law enforcement officers during routine traffic investigations.

Source: Florida Departmentg of Financial Services

From Insurance Journal (www.insurancejournal.com)

Hispanic Health Leadership Tells Congress Not to Criminalize Aid

The National Alliance for Hispanic Health (the Alliance), the nation's leading Hispanic health advocacy group, has launched an innovative mobile phone text messaging program as Congress debates immigration legislation.

The campaign urges Members of Congress not to criminalize caring services to immigrants. Elements of the Border Protection, Antiterrorism, and Illegal Immigration Control Act of 2005 make it a felony to provide food, shelter, or other caring services to undocumented immigrants and are a part of Congress' current debate on final immigration legislation.

According to Dr. Jane L. Delgado, President and CEO of the Alliance, as it stands, this proposal is unconscionable as it directs health care professionals not to help those in need. The Alliance's text messaging campaign allows members to just text the word UNITY to 56658 to receive a direct link to the caller's Congressional delegation offices to call and tell them that they oppose legislative language that would criminalize caring services to immigrants. The text message can be forwarded to other mobile phones.

"I believe the outcry from all corners of the nation is being heard by Congress and that final legislation will respect contributions of immigrants to our nation and will not criminalize the vital services provided by health care professionals to all who live and work in our communities. It serves the public health of the entire nation to provide services to all those who live within our borders," concluded Dr. Delgado.

About the National Alliance for Hispanic Health:

The National Alliance for Hispanic Health is the nation's oldest and largest network of Hispanic health professionals. The nation's action forum for Hispanic health, Alliance members deliver caring services to over 14 million persons every year making a daily difference in the lives of Hispanic communities. For more information, visit the Alliance's website (http://www.hispanichealth.org/) or call 1-866-SU-FAMILIA (866-783-2645).

Spitzer Sues Liberty Mutual, Charging Carrier With Bid-Rigging, Fee Abuse

By Steven Tuckey
National Underwriter

Following a breakdown in settlement negotiations, New York Attorney General Eliot Spitzer filed a civil lawsuit against Liberty Mutual, alleging that the carrier participated in a pervasive bid-rigging scheme with some of its top brokers.

The civil complaint-filed in State Supreme Court in Manhattan-alleges that Liberty Mutual conspired with brokers from Marsh and other intermediaries in a scheme to steer business its way in return for volume-based contingency fees.

In a statement issued hours after the suit was announced, Boston-based Liberty Mutual said it had tried to resolve the issue with the attorney general, only to find his demands "excessive and unreasonable-both in terms of magnitude and demands that would change legitimate business practices in states outside their legal jurisdictions."

According to the complaint, brokers and agents responded to Liberty Mutual's explicitly stated incentives by steering their clients to the carrier-in many cases violating their fiduciary duty to assist in finding the best insurance for the lowest price.

The lawsuit also charges that Liberty Mutual repeatedly rigged bids for excess casualty insurance as part of an anti-competitive customer allocation scheme led by accomplices at the Marsh Inc. brokerage.

"It is simply appalling that a major financial institution would rig bids and induce brokers and agents to abuse their position of trust with the insurance-buying public," Mr. Spitzer said.
In its lawsuit, New York seeks disgorgement of Liberty Mutual's illegal profits from any allegedly rigged placements, restitution to injured policyholders and damages-including punitive and treble damages for the company's illegal business practices.

Mr. Spitzer said that from 2001 through 2004, Marsh repeatedly solicited from Liberty Mutual and other insurers fake bids-called "B quotes"-that were intentionally higher or otherwise less favorable to the customer in order to "support" or "protect" the bid of a favored carrier.

Through this scheme, he said, "Marsh was able to deceive its clients into thinking that the insurance policies and premiums it offered were the result of true competition among insurers."

In August 2005, a former Liberty Mutual executive, Kevin Bott, pled guilty to criminal charges in connection with his bid-rigging conduct while employed at Liberty Mutual.

In his plea elocution, Mr. Bott said that in many instances, "brokers at Marsh instructed me to submit protective quotes on certain pieces of business where Marsh had predetermined which insurance carrier would win the bid...I understood that such quotes were intended to allow Marsh to maintain control of the market and to protect the incumbent [carrier]."

The Liberty Mutual statement said two former lower-level employees seriously violated "our trust and our standards of conduct in their quotation activity."

However, the carrier added, more widespread "allegations of wrongdoing regarding commission payments and reinsurance brokering are incorrect. Liberty Mutual's conduct in both areas was appropriate and lawful...Liberty Mutual has a culture not just of compliance, but of 'doing the right thing.'"

Liberty Mutual added that "despite cooperating with the attorney general's investigations for nearly two years, we have been unable to reach a reasonable consensual resolution. Thus it is in the best interest of our policyholders and employees that we vigorously defend these allegations and allow the judicial process to work."

The Spitzer suit is the latest chapter in the long saga that began in October 2004 with allegations of bid-rigging against Marsh. The insurance broker-the largest in the world-eventually settled with Mr. Spitzer's office for $850 million.

The still unfolding scandal led to the major brokers abandoning contingency commissions and several states adopting laws aimed at regulating broker compensation methods.

Source: National Underwriter (www.nuco.com)

From Insurance News Net (www.insurancenewsnet.com)

With Pricing Soft, Auto Insurers Hope To Stay In Driver's Seat On Loss Costs

By Steven Tuckey
National Underwriter

With auto insurers struggling to achieve top-line growth as pricing remains flat, no factor is more critical for healthy underlying margins than keeping loss costs favorable. Indeed, divining such trends has become a favorite pastime for equity analysts seeking to separate the winners from the losers in the world of personal lines insurers.

The carriers themselves shy away from offering their own projections of such trends for fear of tipping off the competition on what their own data tells them. So comments from them at reporting time remain fairly Delphic in their brevity.

Last month, Progressive posted some impressive profitability figures despite less than impressive premium growth-which the company in its commentary attributed to below-average frequency and severity trends.

Bear Stearns analyst David Small seized on that comment as the one bright spot given declining premium-per-policy figures.

"These comments should quell investor fears that these factors were changing directions," he wrote in a recent report. "We have not been believers that a reversal of the declining trend for frequency and severity was imminent, and continue to believe the industry will benefit from a secular decline in auto frequency."

Factors behind the decline in frequency over the past two decades remain solid enough to confound those skeptics who believe in general that in these matters what goes down must come back up, he added.

To figure out the future with most matters-but particularly with auto premiums-analysts start by looking at the present and how that came about. The short version for auto insurance is that while frequency has shown a favorable decline, just the opposite is true with severity.

Diana Lee, vice president of the Property Casualty Insurers Association of America, sees certain symmetry in the trend. "Over the last four years, the average cost of insured losses nationwide rose almost 15 percent for the major [auto] coverages-liability, collision and comprehensive-while the reporting of claims went down by the same amount," she noted.

Automobiles rising in value-along with the cost to repair them-combined with higher medical costs to treat those injured in auto accidents have contributed to severity rates trending unfavorably, analysts contend.

But the same cars-while more expensive-are also safer thanks to features such as anti-lock brakes and airbags.

"Programs such as the graduated driver's license have helped to ease beginning, young motorists into the driving environment by restricting their time of driving and having adult supervision while in the car, unless they have more experience on the roads," Ms. Lee noted.

Earlier this month, the New York-based Insurance Information Institute predicted that auto premiums will remain virtually flat this year, expected to rise a half-point after last year's 2.5 percent increase.

One factor altering the frequency-severity equilibrium of the past few years is the record catastrophe losses of 2005, with predictions of more of the same for the foreseeable future.
While homeowner insurance losses and disputes over flood versus wind coverage received the bulk of media coverage following Hurricane Katrina, insurers received nearly 674,000 claims for vehicles that were damaged or destroyed by last year's storms. "Those claims occurred across a wide swath of Southern states and cost insurers some $3.2 billion," said Robert Hartwig, the Insurance Information Institute's chief economist.

Looking into her crystal ball, Ms. Lee said the current balance could be tipped in favor of greater severity and higher premiums in future years, with more common and severe catastrophe losses a major factor.

But on the positive side, the current spike in gasoline prices could curtail driving and with it auto frequency, although it will be several months before any reliable data on that can be assembled, Ms. Lee said.

Mr. Small said that so far for all the relative data concerning gas prices and miles driven, correlations show there is generally no decline in the latter when the former rises. "What generally affects miles driven is the Gross Domestic Product," he said. "Only in the case of a shortage will people drive less."

The abundant supply is one reason why Kim Hazelbaker, senior vice president of the Highway Loss Data Institute, feels Congress won't mount its own version of "That 70s Show" with a return to the 55 mile-per-hour speed limit. Such a move would presumably impact frequency favorably, but would not seem likely from lawmakers facing election in a few months.

The favorable frequency trend in auto thefts will also impact comprehensive coverage costs, analysts note.

In 2004, the number of stolen cars decreased by 1.9 percent-the first such drop in five years.

The good news is that preliminary FBI data for the first half of 2005 indicates that the auto theft rate fell by 2.1 percent," Mr. Hartwig said, with declines posted in every region except the West.

Analysts credit new security devices-such as electronic tracking systems that help police find stolen vehicles-with helping to keep these premiums down.

One puzzling trend Mr. Hazelbaker hopes will continue is the sharp decline in collision costs. "Basically, when you don't really know why something is happening in cases like this, you always worry that it might end for the same unknowable reason," he said.

New safety features just now going into production have a great potential to keep the frequency trend favorable-but worsen severity as they will increase repair costs when a collision does occur, according to Mr. Hazelbaker.

Fraud expenses continue to contribute to premium costs, but news on that front is improving as well. "However, crackdowns by law enforcement agencies and insurers have put a definite dent into organized insurance fraud," Mr. Hartwig said.

In November 2004, then New York Superintendent of Insurance Greg Serio announced a major jaw-boning effort to get insurers to lower rates after the loss ratio in the state's private passenger auto market declined to .61 from .86 two years previous.

Among other factors, Mr. Serio said back then it was time for insurers to return the anti-fraud "dividend" to state policyholders.

Earlier this year, New York's current superintendent, Howard Mills, said state anti-fraud efforts in 2005 have cut premium costs by between 3 percent and 10 percent.

Perhaps one of the most important trends impacting loss costs is their overall diminishment in importance, as other factors such as credit and education assume new importance in ratemaking and underwriting.

Mr. Hartwig said efforts in states to ban credit scoring will have the effect of raising premiums for good drivers while lowering them for drivers involved in most accidents.

In its update on p-c insurance premium growth forecasts, the Tillinghast business of Towers Perrin said the increasing use of tiered pricing in the auto world has resulted in a general price flattening over the years.

"We do not necessarily believe that companies see a revenue-neutral impact from tier pricing," the report said. "The competitive environment within this line is such that higher-rated insureds are able to move their business to other companies and find more favorable prices."

Morgan Stanley analyst William Wilt said p-c insurers-particularly in auto-are moving into the top-tier of television advertisers, and he sees this as one of the new components to be studied when separating the wheat from the chaff.

"From our perspective, analysis beyond monitoring loss-cost trends and premium rates will be needed to pick the likely winners and losers over the next two-to-three years," he said.

Source: National Underwriter (www.nuco.com)

From Insurance News Net (www.insurancenewsnet.com)

Florida Property Insurance Bill Doesn't Satisfy Everyone

By Urvaksh Karkaria
The Florida Times-Union

The property insurance bill hashed out by lawmakers earlier this month is, to many, like a hurried at-your-desk lunch -- somewhat satiating, but hardly satisfying.

The bill tries to appeal to multiple constituents -- but in the end leaves all parties wanting more.

While Florida homeowners get some short-term rate relief and financial help with shoring up their homes, state and private carriers also have more wiggle room to jack up premiums.

The insurance industry protests the incentives offered in the bill, such as matching state loans for new capital raised and more rate flexibility, may not be quite enough to lure them back into the state for what is expected to be yet another harrowing hurricane season.

The bill will encourage insurers to write new policies in Florida and "keep companies' doors open that if not for the legislation may have closed," said Bob Lotane, spokesman with the Florida Office of Insurance Regulation.

Jeff Grady, president of the Florida Association of Insurance Agents, is not so cheerful.

The legislation "is like using a water hose on an inferno," he said.

With insurance companies aching financially after two bruising hurricane seasons, many Florida homeowners are grappling with double digit increases in their premiums -- that is if they can find a company to cover their home in the first place.

State Farm on Friday said it is requesting average statewide rate hikes of 58.8 percent and 12.7 percent on the roughly 941,000 homes it covers in Florida. It cited the rising cost of reinsurance as a main reason.

While about six carriers have exited Florida's homeowners insurance market since the 2004 hurricane season, an estimated 10 others have trimmed coverage. Tampa-based Poe Financial Group's three property insurance companies are also on the track toward liquidation -- a move that will hit more than 280,000 people statewide, including over 1,300 on the First Coast.

Jim McCormack a Fruit Cove resident, has seen his homeowners insurance premiums spike 25 to 30 percent over the past two years.

Despite the surge, the retiree is surprised his bill hasn't increased more, based on the recent losses insurers in the state have had to bear.

While he would like to be paying less in premiums, McCormack is glad he still has coverage.

"A lot of people are having a difficult time getting homeowners [coverage]," he said. "I'm just thankful to have it."

The new bill allocates $715 million in sales tax money to offset insurance assessments to be levied by Citizens Property Insurance Corp. for a deficit caused by losses from the 2005 hurricane season.

The state-run insurer, by law, has to pass its losses to private carriers through an assessment. Private insurers pass the increase on to policyholders through a surcharge on their premiums.
Citizens losses from the 2005 storms are expected to exceed $2 billion, which could trigger a $1.7 billion assessment. While that assessment could have translated into an estimated 20 percent increase in the average policyholder's premium this year, it will now result in a roughly 3.5 percent increase because of the $715 million infusion, Lotane said.

If Citizens runs up a deficit in the future, vacation homeowners would be asked to pay a 10 percent assessment first. Citizens policyholders would be next to take a hit -- with a 10 percent assessment. And, if that doesn't cover the deficit, all Florida homeowner policyholders would face an assessment for the remaining deficit.

But residents shouldn't look toward the legislation for any long-term rate relief. State and private carriers will also have more flexibility in raising rates because of the deal.

Citizens policyholders who live in high-risk coastal areas can expect rates to potentially double over the next three years partly due to the legislation, regulators said.

Private carriers will be allowed to increase premiums by 5 percent statewide and 10 percent in any single territory without regulatory approval. Those increases, however, can go into effect only if insurance regulators are confident the market is competitive, with other companies also writing policies in that area.

That in itself is rate regulation, Grady argues.

Private carriers "have been frustrated by the inability to get the rate for the risk that they feel they bear in Florida," Grady said. "And I'm not sure this bill did anything to address that."

The rate hike provision is not nearly enough at a time when insurers in Florida are getting hammered by monstrous hurricanes, State Farm spokesman Chris Neal said.

"Companies are putting in really large rate increases," Neal said. "I don't see 5 or 10 percent being that big of a help for insurance companies right now."

New business

The bill also includes provisions that encourages private insurers to keep writing policies in the state.

Companies with $25 million or less in financial reserves -- which accounts for about a third of the state's property insurance market -- will be able to buy up to $10 million in reinsurance from the Catastrophe Fund for one year.

The state's Catastrophe Fund, paid for through insurer premiums, sells reinsurance to the private carriers at discounted rates. Insurers buy reinsurance to help pay for claims after a major hurricane or other catastrophes.

Without this provision many smaller carriers might have gone out of business or significantly cut back coverage, sending tens of thousands of Floridians to an already-burdened Citizens, Grady said.

Lotane acknowledges that legislators did what was feasible -- politically and financially.

"Is the [legislation] a magic bullet? Absolutely not," he said. "Is it heading in the right direction? It sure is."

Source: Florida Times-Union (www.jacksonville.com)

From Insurance News Net (www.insurancenewsnet.com)

New Effort to Educate Californians About Pending Auto Insurance Rate Increase

A diverse group of local elected officials, chambers of commerce, tax groups and insurance companies todayannounced that Californians to Stop Unfair Rate Increases (CSURI) will begin immediately educating Californians through television ads and mail to their homes about proposed auto insurance regulations that will unfairly raise rates for millions of drivers statewide.

To see a list of CSURI Steering Committee members, a PDF of the mailpiece and the script for the TV ad, go to http://www.stopunfairrates.org

"I testified at a town hall meeting in Fresno and expressed my concerns when these auto rating changes were being discussed in early 2004," said Kings County Supervisor Jon Rachford. "I also drove from Hanford to San Francisco in February of this year to testify against the changes again at the public hearing. I'm not alone in my opposition or in my frustration. Over the past several months, dozens of local elected officials, chambers, and other community leaders have registered concerns with the regulations. Unfortunately, we have been ignored."

"I want to ensure my constituents understand how this regulatory changewill impact their pocketbooks," said Inyo County Supervisor Linda Arcularius. "I'm sure elected officials from other negatively affected regions would feel the same. We are confident that when more Californians are made aware that they are about to pay as much as 30% more for auto insurance -- just to subsidize arbitrary rate decreases for drivers in the state's biggest cities -- they will take action and urge Insurance Commissioner Garamendi to drop the plan before it is implemented."

The law requires auto insurance rates to be based on the actual costs and risks associated with providing insurance to each driver. That's the way rates are calculated today and that's the way it should be. But, under the plan first announced by the Department of Insurance in December, 2005, drivers in the state's biggest cities will receive arbitrary rate reductions, while drivers in other regions of the state will be forced to pay more.

The proposed changes seek to reduce the influence location carries in the formula when insurers calculate auto rates. By reducing the influence of location, drivers in more congested areas of the state like Los Angeles, San Francisco and Beverly Hills, where there are more people on the road and more risk of an accident or theft, will pay less for auto insurance. Alternatively, rates will go up for drivers in more rural and suburban areas, where there are fewer people on the road and less risk of an accident.

The proposed changes ignore factors that greatly contribute to risk associated with certain regions. Population density and congestion are two such factors, another is fraud. According to the National Insurance Crime Bureau, there are more staged accidents in Los Angeles than any other city in the country, except Miami.

"This proposed regulation is simply unfair," said Michael Turnipseed, executive director of the Kern County Taxpayers Association. "Rather than invest time and resources in fighting fraud so that insurance rates can be reduced for all drivers -- this misguided proposal would shift the cost of that fraud to drivers who live in less populated regions of the state --like ours, where there is less fraud."

Some members of CSURI also participate in Californians Against Higher Insurance Rates, a loosely formed coalition that has been speaking out against the proposal during regulatory proceedings held by the Departmentof Insurance. Many local leaders became frustrated with the lack of response to their opposition and look forward to participating in a more expansive effort to educate and engage more Californians before it's too late.

CSURI will be requesting contributions from the public and businesses, but in the meantime a few insurance companies, Farmers, 21st Century, StateFarm, Safeco and Allstate agreed to fund the education effort because they strongly believe that auto insurance rates should be based on actual costs and risks and not arbitrary desire to reduce rates for certain customers.

A budget of approximately $2 million will allow the coalition toe ducate households in the following counties: Butte, Del Norte, Humboldt, Imperial, Inyo, Kern, Kings, Mendocino, Nevada, Lake, Plumas, Santa Barbara, San Benito, San Diego, Solano, Tulare and Yolo. Additional counties may be added later.

Source: Californians to Stop Unfair Rate Increases (www.stopunfairrates.org)

From PR Newswire (www.prnewswire.org)

State Farm Seeks Homeowners Rate Increase in Florida

By David Royse
Associated Press

State Farm Insurance Co.is seeking to boost premiums by an average of about 70 percent in Florida, the company said Friday.

If approved by state regulators, the increase would be effective Aug. 15.

The Bloomington, Ill.-based company, which covers about one in five Florida homeowners, said the premium increase is largely due to higher reinsurance costs. Reinsurance is coverage for insurance companies, bought to back up the company should it have massive claims.

Home insurers have been requesting large rate increases and in some cases not renewing policies in Florida. Two years of heavy claims from hurricanes and fears of a more active period have led to a spike in the cost of reinsurance.

State Farm, which as just over 1 million Florida homeowner's policies, says it is trying hard to remain in the state.

"I'm not going to say there's any good news in this, those increases will have big impacts on our customers," said State Farm spokesman Chris Neal. "But if there is a silver lining, it is that we can continue to do business in Florida."

Also, about 30,000 mobile home owners will see their rates nearly double if State Farm is granted a request for an average 95.3 percent increase on mobile home policies.

"We've certainly learned the last two seasons that manufactured houses are far more likely to be destroyed or badly damaged in a hurricane," Neal said.

In addition to increases of more than 70 percent for the average homeowner, State Farm also announced it is canceling about 1,500 policies held by condominium complexes. Those policies cover the roof and other common parts of condo buildings, not individual units. Condo owners typically have individual policies for their unit.

Meanwhile, another large insurer, Allstate Corp., has potentially good news for many of its customers. Northbrook, Ill.-based Allstate is seeking to reduce its exposure in Florida, but it has found a new company to take over about 120,000 policies.

With Ormond Beach-based Royal Palm Insurance agreeing to take over those policies, those customers won't have to go into state-run Citizens Property Insurance Corp., which is required by law to charge the highest rates in the state.

Customers shouldn't notice a huge change under the plan, said Allstate spokesman Bill Mellander. Allstate agents will sell Royal Palm policies, and Allstate will process claims.
"Our intent is that it should be a seamless transition for those customers starting in November," Mellander said.

Allstate currently has about 686,000 homeowners policies in Florida. With the move, it will reduce that number to about 506,000.

Allstate has found itself overexposed in some areas - facing the prospect that a hurricane hitting areas where it has saturated the market could cause too big of a financial hit.

Royal Palm is able to assume some of that risk because it can avoid overexposure in any one place.

"We can pick the policies that we want," said Locke Burt, a former state senator who heads Royal Palm. "One of the keys to success is spreading your business around the state. The mistake a lot of companies have made has been to be over-concentrated in one geographical area."

It's not clear yet exactly what impact transferring the policies from Allstate to Royal Palm will have on rates.

"The rates they get from Royal Palm should be competitive," said Mellander. "Are they likely to be identical? No. But it's going to be comparable to what they see."

Allstate also announced Friday that it will no longer write policies for mobile homes. The company has about four percent of the mobile home market in Florida. It will also stop writing residential fire policies in Florida.

State Farm also said Friday that it will drop wind coverage for about 39,000 customers in certain coastal parts of the state. Neal said State Farm will continue to cover other damages for those customers, but coverage for wind damage will shift to Citizens Property.

From Belleville News-Democrat (www.bellevillenewsdemocrat.com)

Gov. Bush Signs Bill Aimed At Fixing Insurance Market

By David Royse
Associated Press

Gov. Jeb Bush said it was a tough but necessary choice to sign a property insurance bill Tuesday that he and others hope will keep coverage available in Florida. He acknowledged that it won't stop rates from going up in the short-run, but said there's "really no other option."

The state's residents have seen premiums shoot up after eight hurricanes caused $30 billion worth of damage in two years more than the losses from all previous years since Florida has been keeping hurricane loss data.

And just as dire from a long-term perspective, Floridians have also seen insurance companies pull back dramatically from underwriting risk in the state, jettisoning policies and in many cases refusing to write new ones.

The bill (SB 1980), passed on the last day of the annual legislative session this month, does have a provision that will provide some immediate relief.

Without it, Florida homeowners had faced 20 percent surcharges on their bills to bail out Citizens Property Insurance Corp., the government-run insurer that covers those who can't get a policy from a private company. When Citizens comes up short, as it has the last two years, all Florida homeowners normally get stuck with the bill in the form of an assessment on their own policy.

The bill Bush signed puts $715 million in tax money into Citizens to blunt the impact of the shortfall, meaning far lower assessments on bills.

Under the measure, homeowners will see an assessment of 1 to 2 percent this year, or $10 to $20 per $1,000 in premium. Then they'll pay roughly another 1 percent a year for the next 10 years to make up the rest of the 2005 deficit.

Without the bill, homeowners had faced at least an 11 percent assessment this year, plus an emergency assessment that could have been 10 percent on top of that, although that would likely have been spread out over several years. In total, that could have meant extra charges of up to about $200 per $1,000 in premium.

Premiums, however, are still expected to go up, and could increase even more under the bill. As part of a plan to try to lure insurance companies back to Florida and persuade those here to stay, it allows for higher rates in some cases.

Bush echoed what several lawmakers said as they crafted the bill it wasn't the best medicine because most Floridians will continue to see higher rates. Just this week, the state's largest home insurer, State Farm, announced it was seeking increases this year that could average about 70 percent.

"We're going to have higher rates," Bush said. "Part of the job of being a leader is accepting responsibility. I will."

But, Bush said, "There's really no other option right now."

Some Democrats had urged Bush to veto the bill, citing the State Farm announcement as evidence that it wouldn't help. Sen. Ron Klein, D-Delray Beach, said if lawmakers had known State Farm was planning such a huge rate increase once the bill passed, it would have changed the debate on the bill.

Bush responded that critics don't have any better answers either. Bush, a Republican who will leave office in January because of term limits, praised the Legislature for having the courage to pass a bill that may be unpopular because it won't bring down premiums quickly.

"Sometimes people run for cover and avoid making the tough choices," Bush said before signing the bill in a morning ceremony. "If we had not made the tough choice this year, it would come back to haunt us."

House Speaker Allan Bense also sounded a bit apologetic.

"Is it perfect legislation? No," said Bense, who is leaving politics after two terms in charge of the House. "It was as good as we could pass."

Insurers have to be persuaded to provide policies in the state, said Bense, R-Panama City. If not, it doesn't matter how much it costs.

"If insurance is not available, it is not going to be affordable," Bense said.

Bottom line, Florida is vulnerable to hurricanes, and lawmakers don't have all the answers to that, said Senate President Tom Lee, R-Brandon.

"Mother Nature has not done us any favors of late," Lee said.

State Chief Financial Officer Tom Gallagher praised another part of the legislation, one that is intended to release insurance companies' losses.

That provision provides $250 million to provide free home inspections to Florida residents and upgrades to bolster houses against storms. Lowering losses is the key to making insurance more affordable, Gallagher said.

From Insurance News Net (www.insurancenewsnet.com)

Brouhaha Erupts in N.J. Over Auto Rating Factors

A consumer group and a nonprofit auto carrier in New Jersey are asking state regulators nationally to bar insurers from using underwriting criteria that, all other factors being equal, bases rates on an applicant's education level and occupation.

GEICO denies these factors are used in isolation to underwrite auto insurance, while the Property Casualty Insurers Association of America defended the use of education and occupation as "valid factors for insurers to use in the marketplace. Some insurers have used these factors with the approval of state regulators for many years."

The request to stop the practice was made in a letter to the National Association of Insurance Commissioners from NJ CURE, a nonprofit insurer in the state, with its position supported by the Consumer Federation of America. NJ CURE provided a 61-page supporting document.

GEICO, in a letter to the NAIC, called the allegations "absolutely untrue." Hank Nayden, GEICO vice president and legislative counsel, wrote that: "Despite what this letter alleges, neither education nor occupation is ever solely used to determine someone's rate. Persons of all educational levels and occupations are offered insurance at our best rate based on all criteria."

But Eric Poe, a lawyer and accountant at NJ CURE and its vice president of operations, disagrees. After overseeing a study cited by NJ CURE and CFA in their letter to the NAIC, he said GEICO's response is misleading. The study showed that, through use of the application on GEICO's Web site or through a telephone application, a blue collar worker in New Orleans with only a high school diploma will pay 124 percent more for auto insurance than the same driver with a white collar job and a graduate-level degree.

He said the study shows the same results in certain cities in 44 of the 50 states. He added that unlike what GEICO is saying, while rates might also vary depending on the type of vehicle, age and driving record of applicants, "all other factors being equal, the rates will vary at GEICO based on education and employment."

Earlier this month, New Jersey Assemblyman Neil Cohen, D-Union, introduced a bill--A2819--to bar the use of education and occupation as auto rating factors, as well as the collection of such information for an initial application or renewal.

"It is unrelated to someone's ability to drive and their filing a claim in the future," said Assemblyman Cohen., who chairs the Assembly Financial Institutions and Insurance Committee. "What if you drop out of college to feed your family, or what if you can't afford to go to college because you have to work? Why should these people be punished? It's just a mechanism so that insurance companies can charge more money."

Assemblyman Cohen said he has seen no studies from the company or the state's Department of Insurance and Banking to justify the use of such information in underwriting. However, he indicated he would be open to reconsidering his position based on the facts.

LeRoy A. Boison Jr., a consulting actuary for Pinnacle Actuarial Resources Inc. in Garden City, N.Y., noted that carriers are seeking to refine their classifications, looking at nontraditional rating elements such as occupation and education. But he pointed out that the classifications are part of multiple variables used in underwriting an individual risk.

"Carriers test as many variables as they can and refine it all as much as they can to get data," said Mr. Boison. "Everyone is searching for a better mouse trap."

COMPLEXITY RULES

John Rollins, an actuary with Citizens Property Insurance Corp. in Tallahassee, Fla., said he has never seen a system where education and occupation dominate the underwriting of a policy. Underwriting guidelines, he said, are too complex to allow one or two factors such as education or employment to dominate all risk factors.

"Rating classification is discriminatory," said Mr. Boison. "The question is, is it fair discrimination?" he added, noting that the viability of the plan must be proven to the insurance department before it is implemented.

Earlier this month, GEICO responded to questions about its rating with an e-mail saying it evaluates over two dozen potential risk factors in underwriting applicants, and the factors were approved by the state's insurance department. The department noted that GEICO is not the only company using these factors, and said it has also seen data supporting the use of such data.

In his own letter to the NAIC, CFA Insurance Director J. Robert Hunter said the practice should be barred before it gets into general use. "If an insurer sees competitors doing this and believes the competitors will take away their richer clients, to whom they could sell home, life, boat insurance and banking products, the insurer may feel forced to adopt this approach," he wrote. "We urge you to prohibit this practice before it becomes more widespread."

Elizabeth Northrup, director of public affairs at the American Insurance Association, noted that New Jersey, where the issue seems hottest, has turned into a "really competitive marketplace over the last few years," adding that while GEICO might be using these factors, other companies might not be. She urged consumers to "shop around." (GEICO is not a member of AIA.)

Joseph Annotti, senior vice president of public affairs for PCI, added that insurers must be able to use the most accurate underwriting and rating tools available to them.

From Insurance News Net (www.insurancenewsnet.com)

Out-of-State Insurers Face Roadblock at the Border

By Marc Lifsher
Los Angeles Times

In the summer of 2001, U.S. customs agents asked the California Department of Insurance to verify the validity of insurance policies presented by Mexican truckers at the border.

The request unexpectedly plunged state investigators into a murky corner of the insurance market — the growing, often unregulated business of insuring Mexican motorists who drive their cars, motorcycles and pickup trucks into the United States.

It led them to a Chula Vista insurance broker who told officials that since 1997, he'd sold more than 85,000 automobile policies to motorists in Mexico who had driven into California.

Investigators determined that the insurer selling the policies, AEA Insurance Co., was licensed in neither California nor Mexico, but in the British Virgin Islands — a colonial remnant in the Caribbean famous for scuba diving and offshore banking.

The Department of Insurance, citing a law that requires insurers doing business in California to be licensed by the state, ordered AEA in January 2005 to stop selling policies to drivers in Mexico crossing into California. Two months ago, a state judge upheld the order.

Officials said the crackdown on AEA — the first by the department — was a message to insurers that they couldn't operate outside the law if they wanted to sell state-required liability coverage to the estimated 80,000 motorists in Mexico who drive into California every day.

The Department of Insurance contends that the AEA case backs up the agency's position that auto policies issued by companies in Mexico — or even in other U.S. states — that are not regulated by California aren't valid in California. And that could leave California drivers unprotected against damages caused by a motorist covered by an insurer not licensed by the state.

"The danger with these companies is that, just overnight, they are gone," said Bernardine Spivey, the department's chief investigator in San Diego. "We're always on the lookout for new ones that could pop up. And a case like AEA sends a message that we're going out and aggressively stopping this," she said. "If you want to do business here, you've got to get a California license."

AEA disputes that claim, and said it was appealing the March court ruling. AEA contends that it doesn't need a license from California because it sells all its policies to Mexicans in Mexico. The insurer's attorney, Raul Aguilar, said AEA had moved its administrative and underwriting operations to Mexico pending the resolution of the appeal.

Although AEA paid claims and received a positive financial rating from A.M. Best Co., an independent insurance analyst, it still needs to be licensed so that the state can protect consumers from poorly managed or unscrupulous operators, Insurance Commissioner John Garamendi said.

"Who knows where the company is or where the money is to pay claims?" he said.

Only 20% of drivers in Mexico who cross into California carry valid liability coverage, said Juan Buendia, a specialist in border-related insurance at Los Angeles brokerage MacAfee & Edwards Inc. But sales of the so-called northbound coverage are growing, and regulators fear that under-funded, fly-by-night companies could flood the market with cheap — but worthless — policies.

Unlike Mexican trucks crossing into California under the auspices of the North American Free Trade Agreement, automobile drivers are not required to show proof of insurance at U.S. ports of entry. The lack of inspections makes it easy for auto owners to carry fraudulent documents such as photocopies of old or nonexistent policies, Buendia said — or no documents at all.

Industry experts said they were aware of at least eight companies in the United States and Mexico now selling insurance to motorists coming into the United States. Only one of the companies — Monterey Insurance Co. of Monterey, Calif. — holds a California license; a second — San Antonio-based National Unity Insurance Co. — has applied for a state license. Policies from the other six companies are not considered valid in California, regulators said.

The cross-border policies, which vary in duration from a few days to a year, provide the minimum amount of state-required liability coverage: $15,000 for bodily injury per person, to as much as $30,000 per accident, plus $5,000 for property damage.

During Garamendi's first term as insurance commissioner from 1990 to 1994, California was plagued by dozens of Caribbean-based insurance companies that regularly changed their names and license locations, leaving behind millions of dollars in unpaid claims and sometimes ruining the lives of policyholders and accident victims.

California regulators want to encourage more drivers in Mexico to buy insurance, but want to make sure that it's legal and issued by a company that meets the state's standards for financial strength, Department of Insurance attorney Danette C. Brown said.

Bob Winn, vice president for underwriting at Monterey's parent company, Capital Insurance Group, said northbound coverage sold to motorists in Mexico grew sixfold to $14 million from 1999 to 2005.

Given the number of potential customers, "it's a huge market," said Buendia, the Los Angeles broker.

From Los Angeles Times (www.latimes.com)

Sleeping Giant of American Politics Continues Its Siesta

By Alan Greenblatt
San Francisco Chronicle

The day after one of the big pro-immigrant marches, a woman sat on a bench chatting about the event on her cell phone. She was recapping in Spanish, but switched to English to quote its key slogan: "

Today we march, tomorrow we vote.

"Many commentators have taken the marchers at their word, believing that the congressional debate over immigration has finally roused Latinos to become more engaged in the political process. But there's reason to suspect that Latinos -- long considered the "sleeping giant" of American politics -- may yet continue to slumber.Latinos have never voted at the same rate as Anglos or blacks. Latinos cast just 6 percent of the ballots in 2004 -- even though a year earlier they had surpassed African Americans as the nation's leading minority group. (Blacks cast 11 percent of that year's votes.)

"The sleeping giant may have a sleeping sickness," says Larry Sabato, director of the University of Virginia's Center for Politics. "Occasionally, he rolls over and yawns, and looks like he's waking, but it's going to be a long time before Hispanic turnout approaches that of other groups.

"There's certainly precedent for Latinos suddenly to take a more-active interest in politics and government. It happened in California after the 1994 passage of Proposition 187 (later overturned), which denied illegal immigrants access to most government services. About a million immigrants quickly signed up to become citizens after the election.The rise of Latino voters is one of the major factors that turned California into one of the bluest of blue states. In Los Angeles County alone, 100,000 Spanish-surname people registered to vote between 1994 and 1998, according to Harry Pachon, president of USC's Tomas Rivera Policy Institute. Nearly 90 percent of them registered as Democrats.

"In the area of naturalization and in possible voting, these marches will have an impact if they follow the pattern of the 1990s," Pachon said.But part of the post-Prop. 187 pattern was that the increase in Latino voting was short-lived. Latino turnout dropped notably in the 2000 and 2002 elections.

"After 1998 or so, I guess you could say (the sleeping giant) went back to having a siesta," said Sergio Bendixen, a Miami pollster.

And naturalization won't be as easy to achieve as it was during the 1990s. The Clinton administration put the process on a fast track. That's not the way things are in the post-Sept. 11 world. Even if illegal immigrants aren't termed felons, as would be the case under the House-passed bill, they and their legal neighbors still won't have an easy time earning full citizenship.

The huge number of immigrants, both legal and illegal, not only drives the current policy debate but skews perceptions about Latino political apathy. Latino citizens don't, in fact, vote at all that much lower a rate than other voters.

Only 7.6 million Latinos voted in 2004, out of a total population of 40.4 million. That looks pretty bad. But once you subtract noncitizens and minors, the percentage of voting-age Latinos who actually voted was just under 50 percent -- a lower rate of participation than for blacks and Anglos, to be sure, but not vastly lower.

"People who look at the overall size of the Latino population and look at the vote think, oh my God, what if these people ever get mobilized," says Ruy Teixeira, a liberal polling expert at the Century Foundation. But many of those people can't vote because they're either too young or illegal immigrants.

Another reason Latino voting rates look anemic is that the median age of Latinos in the United States is just 27, compared with 36 for Anglos. About 750,000 Latinos will turn 18 every year for the next 20 years, Bendixen said.That could mean that Latino voting rolls will swell enormously -- or it could mean that young Latinos, just like young Americans of every race, will fail to exercise their right to vote in very great numbers. "We know that younger voters tend to vote at lower rates regardless," said Michael McDonald, a visiting fellow at the Brookings Institution.Latinos, in other words, already behave pretty much like everybody else. Give them cause to vote, and they will. They are already an important swing group and will be more motivated than usual come autumn, particularly in the handful of states that have recently passed anti-immigrant laws or have propositions addressing the issue on the November ballot.

(Petitions are circulating for an initiative to create a California Border Patrol.)

Certainly more people have been drawn out to march in more cities in support of immigrants than for any other issue in decades. But if Congress fails to pass an immigration bill -- a fairly likely scenario -- this spring's show of political strength will probably remain a seasonal fancy.

Alan Greenblatt writes the Observer column for Governing Magazine. A.G. Newmyer III is managing director of U.S. Fiduciary Advisors. Contact us at insight@sfchronicle.com.

From San Francisco Chronicle (www.sfchronicle.com)

State Farm and Mayor Peterson's Commission on Latino Affairs Launch

State Farm Insurance and Indianapolis Mayor Peterson's Commission on Latino Affairs have launched a Hispanic Public Service Campaign on Child Safety to broadcast on radio. The radio spots are on the airwaves of two local Spanish language radio stations, WEDJ FM 107.1 and WNTS AM 1590.

The sixty-second radio commercial, created by Hispanic ad agency Ponce Publicidad, aims to educate the Hispanic community of Indianapolis about the importance of utilizing appropriate child restrains and the consequences of not using them.

"Child Safety among our Latino families is a great concern for us at the Mayor's Commission on Latino Affairs," said Ricardo Gambetta, Director of Latino Affairs for the Mayor's Office. "Our thanks go to State Farm for sponsoring the initial phase of this positive initiative. We want Latinos to be educated about the risks of not having their children properly restrained in their cars."

As part of this initial initiative, State Farm will also donate booster seats to Latino families and will conduct clinics to teach parents how to install them in their cars at the Mayor's Latino Forum on July 22. "State Farm has always been committed to safety in the communities we serve," said Ed Perez, Public Affairs Specialist for State Farm. "We mean what we say about being a good neighbor. We are proud to sponsor this public service radio campaign and we are pleased to donate child booster seats and teach our community how to install them appropriately."

Roberto Ponce, President of Ponce Publicidad explains that the radio spot revolves around the idea that unfortunately many times, people don't think about the seriousness of not having a child appropriately restrained in their cars, especially during short trips. "We saw this as a great opportunity to position moms as champions when it comes to the safety of their children," said Ponce.

Since its creation in February 2000, the Mayor's Commission on Latino Affairs (MCOLA) has worked with Mayor Peterson to address issues of particular concern to the Latino/Hispanic community of Indianapolis. MCOLA has been nationally recognized for several Latino initiatives such as public safety among others.

State Budget Revision Adds $23M for Children's Health Insurance

By Kathy Roberston
San Francisco Business Times

The governor's proposed revision of the new state budget -- slated for release today -- will include $22.8 million to provide health insurance to about 24,000 more low-income children in the state.

The money is intended to expand insurance to kids on the waiting list in 18 counties that have established Children's Health Initiatives.

The first phase of the money, or $11 million, will go to counties that had waiting lists as of May 1, said Sabrina Lockhart from the governor's press office. The rest will go to those that can show a waiting list is coming.

The new money is intended to pick up children who do not quality for government programs such as Medi-Cal and Healthy Families because their family income is too high.

The 18 Children's Health Initiatives in the state have expanded coverage to an estimated 80,000 of these children, state Health and Human Services Secretary Kimberly Belshe said in a press call announcing the new allocation. The goal is to reduce the number of kids in the state without health insurance, estimated at 780,000 late last year.

From Sacramento Business Journal (www.bizjournals.com)

Soraya, 37, Winner of Latin Grammy, Is Dead

The Colombian-American singer Soraya, who won a Latin Grammy for best singer-songwriter album in 2004 and worked to educate Hispanic women about breast cancer, died here on Wednesday. She was 37.

The cause was breast cancer, diagnosed in 2000, Lorena Oriani, a spokeswoman for her record label, EMI Latin, confirmed.

Soraya (pronounced so-RYE-ah) was born Soraya Lamilla in New Jersey to Colombian parents in 1969. Her biggest hits, "Solo por Ti" and "Casi," were both released on the 2003 album "Soraya," which won the Grammy the following year. She was also known for integrating cumbia and flamenco music with her own style of pop-rock.

In addition to her Grammy, she won a Billboard Latin Music Spirit of Hope award in 2004. Last year, she was nominated for a Latin Grammy for best female pop vocal album for "El Otro Lado De Mi."

In a letter to fans posted on her Internet site Tuesday, she wrote in Spanish about her battle with cancer, saying she was sure her life was ending. "In a world where physical beauty reigns, speaking of such a complicated topic as is breast cancer would not be an easy task without you," she wrote.

Soraya's mother and grandmother and an aunt died because of breast cancer, which encouraged her to inform Hispanic women about the disease. She joined the Susan G. Komen Breast Cancer Foundation and traveled all over Latin America to inform women about early detection.

From Associated Press (www.ap.org)

Brokerage Told to Compensate Trucker for Loss of Claim, Cover

By Charlene Clayton

A broker's failure to exercise due care, skill and diligence resulted in the rejection of an accident claim and in the cancellation of the insurance on 25 trucks worth R23 million, Charles Pillai, the Ombud for Financial Services Providers, has found.

Brokers are obliged, in terms of the Financial Advisory and Intermediary Services (FAIS) Act, to exercise due care, skill and diligence when obtaining short-term insurance on your behalf.

Premium Trucking insured its fleet of trucks with Imperial Commercial Insurance, while its goods in transit were insured with Senate Transit Underwriters. Smit Garun Brokers in Tzaneen had a mandate from Premium Trucking to obtain all relevant information from the trucking company's insurance companies when the brokerage sought a new insurer on the company's behalf.

Smit Garun Brokers received Premium Trucking's policy schedule and claims history from Imperial on October 11, 2004. The Imperial policy schedule covered the period from March 1, 2004 to October 31, 2004. The broker received Premium Trucking's claims history from Senate on November 29, 2004.

Jaco Nel, a representative of Smit Garun Brokers, arranged cover for Premium Trucking with Association of Motor Underwriters (AMU) from January 1, 2005.On October 23, between the dates on which Smit Garun Brokers received Imperial and Senate's respective claims histories, one of Premium Trucking's trucks overturned. The company submitted claims to Imperial and to Senate and was paid out in December 2004.

The claims history that Imperial sent to Smit Garun Brokers did not refer to a claim for the October 23 incident, but the claims history provided by Senate did.

On March 15, 2005, another one of Premium Trucking's vehicles was involved in an accident. Premium Trucking submitted a claim to AMU for under R277 000.

AMU repudiated the claim and cancelled Premium Trucking's cover on its entire fleet on the grounds of material non-disclosure. AMU said the October 23 incident had not been disclosed to it before the insurer accepted Premium Trucking as a policyholder. In his determination, Pillai found that Smit Garun Brokers failed to comply with the FAIS Act in that it had not exercised due care, skill and diligence when arranging Premium Trucking's insurance with AMU.

Smit Garun Brokers had a duty to ensure that the information it received on behalf of Premium Trucking and passed on to its prospective insurers was correct, he said. The ombud said Smit Garun Brokers failed to notice, and to inquire about, the discrepancies between Imperial and Senate's respective claims histories.

Pillai said Smit Garun Brokers had a duty to take reasonable care to ensure that the claims histories it received from Imperial and Senate were accurate as at the date the brokerage submitted the proposal to insure Premium Trucking with AMU.Pillai said more than two months elapsed between Imperial providing Smit Garun Brokers with the claims history and the brokerage submitting it to AMU. Premier Trucking operated a large-scale transport business, and Smit Garun Brokers should have foreseen that further claims could have arisen after it received the claims histories from Imperial and Senate, he said.

He ordered Smit Garun Brokers to compensate Premium Trucking for the loss it incurred in the accident on March 15, 2005. However, Pillai reserved judgment on the amount of the claim pending the settlement of this issue between Premium Trucking and the brokerage.

Nel disputes that Renier Reyneke, the head of Premium Trucking, informed Smit Garun Brokers about the October 23 incident. Reyneke claims that he did, but Nel claims the brokerage was not told.

Pillai also ordered Smit Garun Brokers to refund the commission of R39 322 it earned for placing Premium Trucking's insurance with AMU, because the brokerage had not kept its side of the bargain in terms of its agreement with Premium Trucking.

Immigration Rallies Force L.A. Mayor into Political Tight Spot

By James Sterngold
San Francisco Chronicle

When the immigration rights movement erupted from coast to coast beginning in March, Mayor Antonio Villaraigosa embraced it with greater energy and visibility than just about any other political leader.

Villaraigosa, the first Latino elected mayor here in modern times, spoke at every major demonstration in the city, in Spanish and in English, backing the calls for a fair path to citizenship for millions of undocumented immigrants. He was lauded by many of the demonstrators as a champion of their cause.

But the normally voluble mayor was uncharacteristically restrained in discussing the issue in an interview last week. What initially seemed to him a basic, practical appeal for dignity and understanding, as well as a consistent new immigration policy, has become, he acknowledged, a vexing political minefield.

In a long, late afternoon conversation in his office, Villaraigosa, 53, often pausing to collect his thoughts, said he fears that his conspicuous involvement may make him vulnerable to being branded a one-issue politician, aligned with one community. He also worried that the sudden dominance of immigration as a political issue risks knocking his stated priorities as mayor of America's second-biggest city -- such as school reform and better policing -- off track.

In a sense, Villaraigosa is struggling to avoid becoming caught up in the confusion and polarization that have crept into the increasingly emotional debate.

"People want to put me in a little box, define me as just one thing, but I won't let them do it," he insisted, while admitting that the immigration issue has made that more difficult.

Political analysts and supporters said the challenge goes to the heart of Villaraigosa's political prospects, which many observers have considered bright. If he is to seek higher office -- there is talk of his running for governor in the not-too-distant future -- he will need to garner support from more than one constituency, and he will need to prove he can address a broad range of issues.

Indeed, several people close to the mayor said they tried to persuade him to avoid the marches just for that reason."

I can tell you there are people who have told him they think it would be best for him to duck the issue altogether," said Jack Weiss, a member of the City Council and one of the mayor's closest advisers.Villaraigosa said he simply followed his gut.

"The first time, everyone argued against my going to greet the crowds," he said, referring to the March 25 rally in Los Angeles, which attracted 500,000 people, a number that stunned most observers. "

I listened, then said, 'I have to do this.' "But while a supporter of immigrant rights, Villaraigosa has been careful not to align himself with some of the more forceful demands and actions of the rights movement.

'Political suicide'

He has not endorsed the idea of blanket amnesty for illegal immigrants. He opposed calls for strikes and boycotts and urged schoolchildren not to join school walkouts. He dismissed the idea of an alternative national anthem sung in Spanish, and he insists that if the marchers choose to wave a flag, it should be the Stars and Stripes.

"I'm not going to commit political suicide, and I'm cognizant of what people are saying," Villaraigosa said. "My job is to know where people are at on the issues. But I believe I'm doing the right thing."

Born in East Los Angeles to working-class Mexican American parents, Villaraigosa was elected mayor last May, avenging a loss four years earlier by defeating James Hahn, the incumbent, with a resounding 59 percent of the vote. A former speaker of the state Assembly, he became Los Angeles' first Latino mayor in more than 130 years, a symbol of the changes in a city now more than 50 percent Latino.

His election was a point of enormous pride for the city's new majority, which gave him an overwhelming 84 percent of the Latino vote. But although they are a majority of the population, Latinos made up 25 percent of the voters in the mayoral election. As Villaraigosa constantly stresses, he also won 48 percent of the African American vote, 50 percent of whites and 55 percent of the usually conservative San Fernando Valley, demonstrating his crossover appeal.

He still fumes at a Time magazine cover on his election victory that bore the headline "Latino Power." He insists he was elected not because of his name or heritage, but because of his proposals on issues like improving education, reducing violence and improving health care in Los Angeles.

"Some people say I won because of this growing 'Latino power,' " said Villaraigosa, his finger stabbing the air. "I won because the people of Los Angeles ... judge people based on their talent and what they can do."

He is aware of his ability to galvanize the Latino community -- including immigrants, legal and illegal."I recognize that as mayor of Los Angeles, I can provide a credibility and a focus on this issue that few others can," he said, then added, "but I get the same response from all these other groups. It's not about one community."

Robert Suro, the director of the Pew Hispanic Center, a Washington research institute, said Villaraigosa's appeal to Latinos is a potential liability as well as a strength.

"It's true, he didn't get elected just with the Latino vote," said Suro. "He's going to need to be a crossover candidate to be successful."One complication, Villaraigosa said, is that his position on immigration reform has been distorted, leaving him vulnerable to charges that he is pandering.

He said he has consistently backed firm border control and the need for immigrants to learn English, yet has been characterized merely as "pro-immigrant," suggesting he wants the border left more or less open.

Barbara Coe, chairwoman of the California Coalition for Immigration Reform and a staunch opponent of providing rights to illegal immigrants, said that in her view, and in the view of people like her, Villaraigosa endorsed lawlessness, plain and simple.

"He only represents one ethnicity and not all the citizens of the city," Coe said. "He's pandering. He feels he's going to ride the tide of the illegal aliens in Los Angeles."

The mayor said he is aware of such criticisms, and he makes clear he finds them objectionable. Asked if he fears that opposition to the immigrant rights movement could be shadowed by nativism or racism, he replied:

"I know what you're getting at, and I'll say this: You take the world as it is. I don't spend a lot of time focusing on that."

Villaraigosa said he has tried to articulate what he calls a sensible approach to the immigration issue, one that gives illegal immigrants an opportunity to earn citizenship, if they are willing to wait in line and learn English.

Border security

He supports the U.S. Senate bill that would provide a path to citizenship for many of the estimated 12 million undocumented immigrants and establish a guest-worker program. While adamantly opposing a House bill that would make illegal immigrants, and those who help or employ them, felons, Villaraigosa restated his insistence on the need for a secure border.

"There should be consequences for breaking the law," he said, adding that the federal government has an obligation to install tougher border protection.Such statements have led to criticisms that he is trying to have it both ways and resorting to political calculation.

"I'm not a Pollyanna," Villaraigosa said in response. "I'm not saying those issues don't get thought about. But I'm committed to immigration reform."He said he will not attend every future demonstration. He wants to get back to his other priorities, he said, which include seizing control of the Los Angeles school board and hiring more police officers.

But Villaraigosa has become inextricably linked to the immigrant issue, and it is not clear where that will take him.

"My suspicion is the state is moving on this issue right now toward compromise, like the mayor's position," said Kam Kuwata, a senior campaign strategist for former Mayor Hahn and now a consultant to Sen. Dianne Feinstein. "But you don't know what is going to happen on the issue in the future."

From San Francisco Chronicle (www.sfchronicle.com)

Immigrants Courted as Good Customers

By Edward Iwata
USA Today

While the debate rages over immigration reform, U.S.-based companies are charging into the growing market to serve immigrant consumers — including undocumented workers.
Critics may see illegal immigrants as lawbreakers and threats to the U.S. economy. But some banks, health insurers, retailers and other businesses see millions of potential consumers, taxpayers and homeowners.

Figures on how much undocumented workers spend are hard, if not impossible, to come by. But researchers from the Federal Reserve to PricewaterhouseCoopers predict that the Hispanic and immigrant economy will grow rapidly as those populations soar in the coming years.

The University of Georgia's Selig Center for Economic Growth projects that Hispanics' spending power — personal income after taxes — will rise from $490 billion in 2000 to $1 trillion in 2010.

"Every Census decade has shown phenomenal growth in the Hispanic consumer market," says Ernest Bromley of Bromley Communications, an advertising firm in San Antonio. "For (corporate) clients, it's no longer a question of whether there's a market or not. The question now is: How much should we spend to make as much as we can possibly make?"

Why is the market getting more attention now?

Undocumented immigrants — 10 million to 20 million in the USA, depending on estimates — blended long ago into the mainstream Hispanic market, which corporations are courting furiously.

Besides, Bromley and others point out, businesses aren't law enforcement agencies, and it's not illegal to sell products to undocumented immigrants.

Moreover, at least 200 U.S. financial firms and other businesses accept an identification card called matricula consular, which is issued to Mexican nationals by Mexican consulates. More than 4 million immigrants carry the cards, according to the Mexican government and the Congressional Research Service.

Lastly, the Internal Revenue Service, frowning at lost tax revenue to the underground cash economy, is encouraging undocumented workers to enter the U.S. financial system. The IRS issues individual taxpayer identification numbers (ITINs) to undocumented workers and others without Social Security numbers.

Companies charging into the immigrant market include:

•The Hispanic retailer. La Curacao, a fast-growing department store chain, boasts six "big box" stores in Southern California that sell furniture, household appliances, toys, computers and other goods. The company's money-transfer and telephone services, plus an Internet-access service called Pasito.com, also are growing in popularity.

The stores are jammed with shoppers on weekends, just like Costco outlets. Stores feature Mayan architectural facades, bright festival colors and musical and kids' entertainment.
La Curacao's main target audience: first- and second-generation Hispanics "who feel very comfortable in our environment," says Mauricio Fux, senior vice president for corporate development. Many are undocumented workers with matricula consular cards who don't show up in mainstream credit or banking records, he says.

Fux says La Curacao's 1 million credit card holders are loyal customers who "buy products of good quality that are going to last." Shoppers now, for instance, are snapping up big-screen television sets to watch the World Cup soccer championship next month.

La Curacao executives, who project annual double-digit sales growth in the coming years, hope to open 20 more outlets through 2010 in the Southwest.

"We've become a destination for our customers," Fux says.

•The banking giant. Bank of America is focusing heavily on the immigrant market, with 48% of U.S Hispanic households using at least one Bank of America financial product, from checking accounts to mortgages, says company spokeswoman Diane Wagner.

Nearly half of Bank of America's new hires last year were bilingual Spanish speakers. Bank literature and signs in many branches are printed in Spanish. And the company makes strong showings at Hispanic community events such as Fiesta Broadway, a Cinco de Mayo celebration in Los Angeles that draws a half-million Latinos.

Since 2002, the bank has accepted the matricula consular cards — plus other forms of identification such as driver's licenses — as valid identification to open bank accounts.
Bank of America also puts on "financial literacy" seminars at Mexican consulate offices to educate immigrants about banking services, including SafeSend, a remittance service that's free if customers also open a checking account.

"We want to establish a good and solid financial relationship with the Hispanic population," Wagner says. "We know they want to save and put their money in a safe place."

•The health insurer. Blue Cross, owned by WellPoint, estimates that 6.4 million people in California are uninsured, nearly 60% of them Hispanic.

Health care benefits are complex even for U.S. citizens, so Blue Cross puts on more than 300 educational programs for California's Spanish-speaking community, says Leonor McCall-Rodriguez, vice president for emerging markets.

When Blue Cross heard from the Guatemalan consulate's office that a large number of Guatemalan immigrants in California speak an obscure Mayan dialect, the company produced a video for those potential customers.

Blue Cross will enroll undocumented workers if they have a matricula consular card and proof of the same residency for at least three months. Customers are coded confidentially by numbers.

"Bringing them into the pool of insured certainly benefits the whole community and brings down the cost of health care," McCall-Rodriguez says.

Rob Paral, a demographics researcher in Chicago, says that, contrary to stereotypes, undocumented immigrants make up "an untapped market of economic actors" who are stable, family-oriented consumers.

In a study for the National Association of Hispanic Real Estate Professionals, Paral estimates that 231,000 undocumented immigrant households can afford to buy homes — a $44 billion economic boon if they had mortgages.

Advertising executive Bromley, speaking of the dollar impact of immigrants on all sectors, says: "It's a very dynamic market that's not going away."

From USA Today (www.usatoday.com)

Analysis Finds Boom in Hispanics' Home Buying

By Haya El Nasser
USA Today

Home buyers with names such as Rodriguez, Garcia and Hernandez bumped Brown, Miller and Davis down the list of most common buyers' names in 2005, reflecting Hispanics' rapid advance into the middle class.

A DataQuick Information Systems analysis of deeds and county assessment data shows a dramatic rise in the number of Hispanic and Asian home buyers since 2000.

Smith and Johnson remain the two most popular, but Rodriguez has replaced Brown in third. Four Hispanic names are in the top 10, compared with two in 2000.

Hispanic surnames made up 14.6% of all home buyers' names, up from 10.3% five years earlier.

"The Latino population is really integrating into the middle class — and rapidly," says John Karevoll, analyst at DataQuick, a San Diego real estate information company that scoured public records in 37 states that accounted for 91% of the USA's real estate activity.

Asians also are bigger players. Nguyen, a common Vietnamese name, moved from 23rd to 14th.
In California, almost 28% of home buyers are Hispanic, and the five most common surnames are Hispanic. Only one was in the top five in 2000.

The changes are dramatic elsewhere, too. No Hispanic names appeared in the top five in Illinois in 2000. Now, Garcia is third and Rodriguez fifth. Nevada went from zero to three and New Jersey from one to three.

"It's startling how rapid the changes are," says Dowell Myers, a housing demographer at the University of Southern California. "People assume that Latinos are poor and that they're not a factor in homeownership. They're really integrating economically."

The rate of homeownership among the nation's 42.7 million Hispanics hit a record 50% in the last quarter of 2005, according to the department of Housing and Urban Development.

Two major factors contributing to the spike: low interest rates and flexible lending rules. Twenty-five years ago, lenders would not consider a spouse's income when evaluating a home loan, Karevoll says. Now, various relatives can qualify by pooling their earnings.

"It's not just dual but triple and quadruple income," he says. "Husband, wife and husband's brother and then wife's brother."

Tracking race and ethnicity through surnames is not an exact science. "Lee," for example, can be Chinese or Anglo.

Hispanics are expected to make up 40% of first-time home buyers over the next 20 years, the Harvard Joint Center for Housing Studies says. A study by the Toms Rivera Policy Institute at the University of Southern California projects that 2.2 million Hispanic households will buy homes between now and 2010.

"When we start showing up on the top list of names, that's fabulous," says Frances Martinez Myers, chairman of the National Association of Hispanic Real Estate Professionals. "It speaks to the growing economic clout of the Hispanic community. They are willing to assimilate ... to be part of the country and to pay their way. "

From USA Today (www.usatoday.com)

Texas Auto Insurance 101 Video Now Available Online

The easiest way to learn about auto insurance in Texas is now just a click away, according to the Insurance Council of Texas. An 18-minute video produced by ICT entitled, Auto Insurance 101, has been video streamed and can be viewed by clicking on ICT's Web site at www.insurancecouncil.org/consumertips.asp.

The video features a University of Texas at Austin actress and a real Texas Department of Public Safety trooper who discuss what auto insurance is all about. The setting starts off on an urban street, proceeds to a classroom and then ends back on the roadway.

"We produced the video with teenagers in mind, but people of all ages could benefit from viewing it," said Mark Hanna, the video's producer and a spokesman for the Insurance Council of Texas. "We hope by having it available on our Web site that both young and older drivers can finally get an education on auto insurance in Texas."

The video was distributed to every high school in Texas through the Regional Education Service Network and also to Texas driver's training and driver's education courses. It has also been made available to insurance agents throughout the state.

Auto Insurance 101 is divided into three segments allowing viewers to pause during the video and discuss what they've learned. The video describes what insurance is mandatory in Texas and what a typical auto insurance policy offers. The video also covers what to do if you have an accident and where to turn for information or filing a complaint.

"This is one of the few videos that give drivers a basic understanding of an auto insurance policy," Hanna said. "Very few people have ever received any classroom instruction on auto insurance. Here's their chance."

Source: Insurance Council of Texas

From Insurance Journal (www.insurancejournal.com)

Texas Auto Insurance 101 Video Now Available Online

The easiest way to learn about auto insurance in Texas is now just a click away, according to the Insurance Council of Texas. An 18-minute video produced by ICT entitled, Auto Insurance 101, has been video streamed and can be viewed by clicking on ICT's Web site at www.insurancecouncil.org/consumertips.asp.

The video features a University of Texas at Austin actress and a real Texas Department of Public Safety trooper who discuss what auto insurance is all about. The setting starts off on an urban street, proceeds to a classroom and then ends back on the roadway.

"We produced the video with teenagers in mind, but people of all ages could benefit from viewing it," said Mark Hanna, the video's producer and a spokesman for the Insurance Council of Texas. "We hope by having it available on our Web site that both young and older drivers can finally get an education on auto insurance in Texas."

The video was distributed to every high school in Texas through the Regional Education Service Network and also to Texas driver's training and driver's education courses. It has also been made available to insurance agents throughout the state.

Auto Insurance 101 is divided into three segments allowing viewers to pause during the video and discuss what they've learned. The video describes what insurance is mandatory in Texas and what a typical auto insurance policy offers. The video also covers what to do if you have an accident and where to turn for information or filing a complaint.

"This is one of the few videos that give drivers a basic understanding of an auto insurance policy," Hanna said. "Very few people have ever received any classroom instruction on auto insurance. Here's their chance."

Source: Insurance Council of Texas

From Insurance Journal (www.insurancejournal.com)

Hispanics Gain in Census

By June Kronholz
Wall Street Journal

The nation's Hispanic population grew by almost 1.4 million in a year, with much of the growth coming from births rather than immigration -- a finding that has big implications for the nation's demographic makeup and for its simmering immigration debate.

Hispanics accounted for nearly half the 2.8 million people added to the U.S. population from July 2004 to July 2005, more than any other group, according to a mid-decade estimate from the Census Bureau. Over the last five years, three times more Hispanics than whites were added to the nation's population.

Whites accounted for less than 67% of the overall population in 2005, down from about 70% in 2000 -- and their share is certain to continue slipping because of high Hispanic birth rate. The number of African Americans, meanwhile, about equal to Hispanics five years ago, now trails them by more than six million people.

The Census figures underscoring the rapid growth of Hispanics could be drawn into the immigration debate when it resumes in the Senate as early as next week.

Among other things, cultural conservatives, who fear their way of life is being changed by immigration, could stiffen their opposition to a compromise Senate bill that they see as an amnesty for illegal immigrants. The Republican Party's security-first wing also could be energized by a census finding that the country added one million immigrants in the 2004-2005 year, many of them likely illegal.

The Census Bureau didn't differentiate between legal and illegal immigrants, but illegal immigration has ballooned in the past decade, with the number of illegal immigrants in the U.S. now estimated to be about 12 million.

By showing that Hispanics are now by far the nation's largest minority group, the census estimates also could fuel a simmering unease among blacks that they are losing ground, politically and economically, to recent arrivals.

Blacks have largely remained on the sidelines in the immigration debate. But recently, some black leaders have worried that massive immigration in the past decade has undercut wages and job opportunities for lower-skilled workers, and has diverted attention from the problems of the black community.

At the same time, the census estimates provide ammunition to supporters of an immigration-overhaul bill, particularly business groups and employers who have been a loud voice on Capitol Hill. They increasingly depend on Hispanic and other immigrant workers as the native-born population grows older.

The census estimates put the median age for U.S. whites now at 40.3 years, 13 years older than it is for Hispanics and 10 years older than it is for blacks. The median is the age at which half the population is older and half is younger. With native-born workers now older and better educated than in the past, employers want freer access to immigrant workers who can replace them. Employers especially have opposed a House bill, passed last year, that would criminalize illegal immigration and force workers to leave the country.

Currently, only about 19% of eligible Mexicans have become U.S. citizens, says the Center for Immigration Studies, a Washington think tank. But the tough House bill, and the high visibility of immigration generally could prompt more Hispanics to register to vote, creating a potentially powerful bloc.

The census estimates come as the Senate is set to resume debate on a bill that would give legal status to most illegal immigrants now in the U.S. and allow millions more to enter the country through a guest-worker program. Hispanics account for about 82% of the illegal population, according to the Pew Hispanic Center, a Washington research group.

The Senate bill has sparked huge rallies among Hispanics, who see the measure as an avenue to permanent residency. But it also is generating opposition among conservatives Republicans and some Democrats. A compromise fell apart last month, in part because the Democratic leadership feared handing Republicans a political success and possible enduring Hispanic loyalty.

The Census Bureau uses birth, death and immigration data to calculate its mid-decade estimates. The figures are July 1, 2005, estimates and show a total U.S. population of 296.4 million, an increase of 15 million since the last census in 2000.

Hispanic immigration added 500,000 from 2004 to 2005, but natural growth -- that is, births over deaths -- accounted for 800,000.

The census calculations also show that whites, while their numbers are still growing, are likely to account for an increasingly smaller share of the population. The number of whites grew by 500,000 from 2004 to 2005, with 200,000 of that growth from immigration.

But immigrant and native-born whites accounted for just 19% of the population growth, although whites are two-thirds of the population. And because whites are generally older than minorities, their share of the population is certain to continue to slip.

About 22% of whites are under age 18 compared with one-quarter of the population generally and one-third of Hispanics. The U.S. fertility rate -- that is, the number of births per woman -- is about 2. But the fertility rate among Mexican-born women is about 3.5.

The growth in the black population comes mainly from births -- the Census Bureau recorded just 89,000 black immigrants from 2004 to 2005. But with a far lower birth rate than among Hispanics, blacks also are likely to have a shrinking share of the population.

From Wall Street Journal (www.wsj.com)

Agents Benefit From Tax Cut Bill

By Arthur D. Postal
NU Online News Service

Small businesses, such as insurance agencies, will benefit from tax-cut provisions Congress will likely approve by May 11.

The provisions are contained in tax reconciliation legislation agreed to by a conference committee late Tuesday.

One provision will extend for two years an enhanced Section 179 expensing for small businesses.

Under current law, passed in 2001, small businesses may expense (deduct in the first year) up to $100,000 of investments in depreciable assets.

The deduction phases out dollar-for-dollar to the extent the business's annual investments exceed $400,000. Without action, the expensing limit would have declined to $25,000 and the phase-out threshold would have declined to $200,000 after 2007.

Another provision extends for the same two years an exemption for income earned by certain environmental cleanup funds that is taxable to the company that contributed to the fund.
This is the case even though the taxpayer has permanently surrendered all control and dominion over the money in the fund. The provision treats environmental cleanup settlement funds as governmentally owned (not subject to tax) if certain standards and requirements are met.

Eliminating the tax surcharge will encourage more companies to establish settlement funds devoted to environmental cleanup, according to tax-writers.

The primary purpose of the bill is to extend tax cuts enacted in 2001 (and scheduled to expire in 2008) for an additional two years.

Under current law, capital gains and dividend income are taxed at a maximum rate of 15 percent through 2008. For taxpayers in the 10- and 15 percent tax brackets, the tax rate is 5 percent through 2007 and zero in 2008. The bill extends the rates effective in 2008 through 2010. Without action, these rates would have increased after 2008.

The bill also extends the Alternative Minimum Tax exemption levels though the end of 2006 at a higher level than in 2005. The new exemption levels for 2006 are $62,550 for joint filers and $42,500 for single filers.

From National Underwriter (www.nuco.com)

Texas Finally Getting Tough on Uninsured Drivers

Think uninsured drivers are not your problem? Think again. Insured Texans paid over $900 million in premiums last year to protect themselves from uninsured drivers.

The numbers are astounding. Between 30 and 40% of all drivers in San Antonio don't have insurance. Think about that: That means one of every three cars stopped at a red light next to you is driven by someone without insurance.

And as News 4 WOAI Trouble Shooter Jeff Coyle found, the state has made it easy to get away with it.Any time a San Antonio police officer pulls over a driver, the officer asks, "Can I see your drivers license and your proof of insurance, please?" Recently the City of San Antonio began towing drivers who do not provide proof of insurance. Hundreds of drivers have been forced to buy insurance to get their cars back from the impound lot.

But thousands of other uninsured drivers are still out there, in part because drivers flash insurance cards that are not legitimate. When officers check proof of insurance, they typically look at the insurance card and that's it. They have no way of knowing whether the policy is any good or not. As a result, many people buy, or even make, fake insurance cards.

The Trouble Shooters have uncovered dozens of examples of fake insurance cards. On some, the typing is so different, the names and address have obviously been manipulated. Others list legitimate insurance agencies, but policy numbers that don't exist.

"If they see (our agency's name) on the newspaper or your local reporters, they'll just put it on there and sell the card for $50 to $100," says Annette Gomez of Josie Perez Insurance Agency.

One person thought it would be funny to put an adult hotline as the insurer's phone number.

When we called the number, the recording said, "Only $3.99 per minute for live one-on-one talk with a hot guy."Of course, the driver whose name is on the card denied knowing anything about it.I

n fact, the Trouble Shooters tracked down lots of people who tried to use fake cards and the story was always the same.

One driver, by the name of Norma, answered "I don't know," when asked where she got the fraudulent card. "I don't know where he got it... my brother-in-law."Another woman, Olga, claimed, "I don't know. You would have to talk to my son cause he's the one that got it."

Employees at the motor vehicle office are required to ask for proof of insurance before issuing registration stickers, but they too rarely verify whether the policies exist.

"Some of them, you can look at it one time and it looks so fake... white out, it's ridiculous," says Tax Assessor Sylvia Romo, "And some of them can be quite clever and a little bit harder to detect."

But that's all about to change. Beginning January 1st, the state will add a $1 fee to your vehicle registration to pay for a computerized database that allows police officers and state employees to verify insurance policies instantaneously.

State Senator Todd Staples, of Palestine, drafted the new law. "This is an issue that's been studied for years and years without a proper resolution," he says. "I felt like it was high time uninsured motorists get off of Texas roads."

At least 27 other states already have a computerized insurance verification system. On average the number of uninsured drivers on the road dropped by 63% after the systems were implemented in those states.

By law, the Texas Department of Insurance is required to have the system up and running by January 1st, 2007.

From WOAI-TV News, San Antonio (www.woai.com)

Castellanos joins MexiPass

After being responsible for the Mexican Insurance operation for Marsh - Brockman y Schuh in the United States, Roberto Castellanos has joined MexiPass Global Assurance as senior vice president in charge of sales & marketing. Castellanos will be coordinating the nationwide sales activities for commercial and personal lines products and services.

Castellanos has worked in the international insurance area in the USA and Mexico for the past 20 years with companies such as Marsh, AIG, Grupo Nacional Provincial, Johnson & Higgins and Brockman y Schuh.

MexiPass Global Assurance, headquartered in South Pasadena, Calif., is a managing general agent in the United States for placement of Insurance in Mexico.

From Insurance Journal (www.insurancejournal.com)

Latinos Boost U.S. Population

By Nicole Gaouette
Los Angeles Times

Latino population growth accounted for nearly half of the nation's population increase of 2.8 million from July 2004 to July 2005, according to U.S. Census Bureau data released today.

The numbers reaffirm Latinos as the country's largest minority group, at 42.7 million, and as the fastest-growing segment of the population, with a 3.3% growth rate. The Census Bureau data show that Latino population growth is driven more by births than by immigration.

The new figures put the total U.S. population at 296.4 million and paint a picture of an increasingly diverse country, with one in three residents belonging to a minority group.

The size of the Latino population has been an issue in the illegal immigration debate, with conservatives questioning Latinos' effect on national culture and political strategists looking for ways to woo the growing constituency.

As the Senate plans to resume debate next week on an overhaul of immigration laws, some analysts see the census figures as evidence of the need for greater immigration controls, while others say the numbers reaffirm the central role Latinos and other minorities will occupy in decades to come.

"Latinos and Asians and Africans are the wave of the future," said William F. Frey, a demographer with the Brookings Institution, a nonpartisan think tank. "Whites are the past and aging quickly."

The census figures put the non-Hispanic white population at 198.4 million, with an increase of 500,000 that accounted for about 19% of total population growth. Immigration accounted for 40% of the increase in the non-Hispanic white population.

Blacks remained the nation's second-largest minority group, with a population of 39.7 million, up 1.3%, or 496,000. Just 18% of the increase was driven by immigration.

Asians were the third-largest minority group, with a population of 14.4 million, an increase of 3%, or more than 420,000. Immigration was responsible for 57% of the growth.

Among Latinos, immigration accounted for 38% of the 1.3-million population growth, or about 500,000 people. The census data did not distinguish between legal and illegal immigrants.

By contrast, estimates by the nonpartisan Pew Hispanic Center say that illegal immigration has averaged more than 500,000 people per year since 2000. The center estimates that 56% of the illegal population comes from Mexico.

Advocates of tighter restrictions on immigration argue that even though the majority of Latino population growth was driven by a natural increase — births minus deaths — it is closely tied to immigration, both legal and illegal.

"When you look at children born to all immigrants, it accounts for 75% of population growth," said Mark Krikorian, executive director of the conservative Center for Immigration Studies. "What that really points to is the fact that immigration policy is a kind of social engineering. It represents a decision by Congress to change the American population.

"Frey drew a different conclusion. "What's really important is that the growth is largely from fertility rather than immigration," he said.

"The Latino population is already a substantial part of the U.S. citizen population and will continue to be, irrespective of immigration policy," he said.

From Los Angeles Times (www.latimes.com)

Illegals' Plight Elicits Empathy, Not Outrage

Chaiwon Kim wasn't surprised when five staffers asked for time off to walk alongside tens of thousands of Latinos in a march for immigrant rights and to protest legislative crackdowns on illegal immigrants.

"It's an issue we're all facing together," said Kim, director of the Center for Pan Asian Community Services in Doraville.

Although the issue of illegal immigration has been viewed largely through a Latino lens, it affects others as well, including some of the clients at CPACS.Some of the people who seek help at the center are illegal, Kim said.

"They don't want to go back, so they try to find a way to stay," she said. Some come to the United States on temporary visas and overstay their allotted time here, thus becoming illegal. Others sneak into the country originally.

Latinos might find empathy in the Asian community, but Asians have been largely absent in the public debate over immigration reform."We don't have the outrage like the Hispanic community," said Lani Lee Wong, the Indonesian-born chairwoman of the National Association of Chinese Americans. "It's still an issue, but we are so passive. These people are breaking the law, so they don't want to be out there [in the public eye]. They don't want to be in the newspaper. They don't want to be in rallies. They want to stay invisible."

That's due in part to the sheer size and breakdown of illegal immigrants.According to the Pew Hispanic Center, there are between 11.5 million and 12 million illegal immigrants living in the United States, of which the overwhelming majority is from Latin America.In 2005, an estimated 11.1 million illegal immigrants lived in the United States, of which 1.5 million, or 14 percent, were from Asia. About 6 percent were from Europe and Canada, about 3 percent from Africa and other countries.Of Asian countries, India has the largest number of illegal immigrants -- about 400,000 -- living the United States, followed by China with 250,000 to 300,000, according to Jeffrey Passel, senior research associate at the Pew Hispanic Center.

The Asian community is more diverse, which makes it harder to organize.

For instance, Latinos largely share one language, Spanish. But the Asian community speaks many languages, including Tamil, Hindu, Chinese, Thai, Korean and Urdu.

Traci Hong, director of immigration programs at the Asian American Justice Center in Washington, said her organization has worked with Latino groups on the issue, even writing Congress to urge its members to rethink harsh legislation.

"This is incredibly important for us," Hong said. State and local crackdowns also will affect illegal immigrants from Asia who seek services, look for work and send money home. "We need to make sure that immigration reform gets worked out in a manner that is beneficial to both of us."According to the AAJC, most of the Asians immigrating to the United States do so through the family reunification immigration system. In 2004, Hong said, 63 percent of immigrants from Asia came here through family immigration.

But it can be a tedious process. It can take more than a decade for a family to be reunited.

Further, history has not always been kind to Asian immigrants, beginning with the Chinese Exclusion Act of 1882, which prohibited Chinese laborers from coming into the United States.

"What people are saying about Latinos is what they used to say about the Chinese," Hong said. "It was fear of labor competition, fear of the unknown and differences."

But opinions on how best to remedy the problem of illegal immigration vary.

Anu Banerjee, a metro Realtor from India, said she has mixed emotions."On the one hand, I know they are here illegally," Banerjee said, "but, on the other hand, I wish that the government could do something about these people who are doing jobs that no one else wants to do."

Wong, of the National Association of Chinese Americans, thinks the best way to fix the "broken border" is to go after businesses that employ illegal immigrants and perhaps increase the number of border guards.

But she also favors a path to citizenship for some that might include a system to make restitution.

Charu Dayal, a software engineer and Realtor from India, said she thinks immigrants should have the proper documents to stay in the United States.

"We came here many years ago," Dayal said. "We had to wait and go through all the procedures to be the legal immigrants. I expect others to follow the procedures also."

But Nack Paek, chairman of the Metro City Bank, worries about the impact on the state's economy if there is a crackdown.

"I'm really concerned with the immigration reform act signed by [Georgia] Gov. [Sonny] Perdue," Paek said. "If we have this tough policy compared [with] other states, what's going to happen is people will leave this state. They'll see Georgia as a place where immigrants aren't welcome."

Korea-born Paek, who has lived in Georgia for 32 years, said that how Latinos are treated could reflect how all immigrants are treated.

"I'm afraid," he said, that "Georgia may project an unintended impression that immigrants, legal or illegal, are not welcome."

Shelia M. Poole and Nadirah Sabir write for The Atlanta Journal-Constitution.

From the Atlanta Journal-Constitution (www.ajc.com)

Fuel Cost Increases Shrink Pinnacle West's 1Q Profits

Higher fuel costs reduced quarterly profits at Pinnacle West Capital Corp.

The Phoenix-based company Tuesday said first quarter net income was $12.5 million, or 13 cents per share, down from $24.4 million, or 27 cents per share, a year earlier.

Wall Street analysts were expecting earnings of 25 cents per share, according to Thomson Financial Network.

Pinnacle West revenue for the quarter was up to $670.2 million from $585.4 million a year earlier. However, operating expenses rose to $613 million in the first quarter of 2006 from $493.5 million in 2005.

Pinnacle West's Arizona Public Service Co. (APS) unit posted a $5.5 million quarterly loss, compared with a profit of $27 million in the first quarter of last year.

"APS' first quarter sales growth was strong, increasing 4 percent in 2006," said Bill Post, Pinnacle West chairman. "But the associated revenue growth was more than offset by high natural gas and purchased power prices. The (7.6 percent) power supply adjustor approved by the Arizona Corporation Commission last week allows us to begin collecting a significant portion of our fuel cost increases on a timely basis."

The company's real estate unit, SunCor Development Co., posted earnings of $22 million, up from $9.4 million in the year-earlier quarter.

Pinnacle West (NYSE: PNW) is a Phoenix-based company with consolidated assets of about $11 billion. Through its subsidiaries, the company generates, sells and delivers electricity and sells energy-related products and services to retail and wholesale customers in the western U.S.
For more: www.pinnaclewest.com.

From Business Journal of Phoenix (www.bizjournals.com)

Blue Cross Sued Over Claims Refusals

By Lisa Girion
Los Angeles Times

Five nonprofit Southern California hospitals alleged in a lawsuit Monday that Blue Cross routinely authorized surgery and other expensive treatment for its members and later refused to pay.

The suit is the latest development in an unfolding scandal over charges that the state's largest health plan operates a special department that illegally searches for excuses to dump individual policyholders after they develop costly conditions, such as breast cancer and heart disease.

Two state agencies are investigating the allegations made in a series of suits filed recently throughout the state by more than two dozen former Blue Cross members.

The suit, filed Monday by Long Beach Memorial and four sister hospitals in Los Angeles and Orange counties, underscores the patients' charges and says the alleged scheme hurt the providers' bottom line.

Indianapolis-based WellPoint Inc., parent of Blue Cross, said it could not comment because it had not seen the suit, spokesman Robert Alaniz said. But he said the company's relationship with its provider hospitals was "very important."

The company has repeatedly denied any wrongdoing in the suits filed by former policyholders. It has said it legally cancels policies if it discovers that members misrepresented something on their applications.

The hospitals' suit may be the first of many against Blue Cross, which has contracts with most hospitals in California. The newest suit alleges the practice is widespread.

"There are many other hospitals in the same boat," said Daron L. Tooch, a lawyer whose Los Angeles firm, Hooper, Lundy & Bookman, represents many California hospitals, including the Memorial group. "It's going to get a lot bigger before it comes to a conclusion."

According to the suit, filed in Los Angeles County Superior Court, the hospitals provided treatment after obtaining authorization from Blue Cross. The health plan later dumped patients retroactively -- alleging that they lied on applications -- and refused to pay the hospitals.

The vague denial letters from Blue Cross mislead the hospitals "into believing that the patients lacked coverage at the time the services were provided without explaining that [Blue Cross] really had rescinded that coverage after services were provided," the suit says.

Echoing the patients' allegations, the hospitals contend that Blue Cross doesn't bother to investigate the information on an application until after it receives a bill. The hospitals allege the investigations -- an illegal practice known as "post-claims underwriting" -- are triggered by bills that reach a threshold cost.

Whether or not the rescissions are proper, the hospitals contend, state law requires health plans to pay them for treatment they authorize in advance.

The hospitals are seeking a court order that Blue Cross stop the alleged scheme and are seeking an unspecified amount of back payments and other damages. Hospitals often are forced to write off the bills, some of which exceed $100,000, because the patients can't pay. The allegations involve individual policies, not those issued through employers or other groups.

WellPoint has said it believes state law allows a health plan to retroactively cancel a policy if it discovers misrepresentations on the application.

But a Blue Cross executive with expertise in its rescission procedures testified in a court case last year that the health plan made no effort to determine whether an application discrepancy was a deliberate attempt at fraud or an innocent mistake.

Legal experts say health plans may rescind coverage only if the member had intentionally withheld material information.

In addition to Long Beach, the hospitals that brought the suit are Anaheim Memorial Medical Center, Miller Children's Hospital in Long Beach, Orange Coast Memorial Hospital in Fountain Valley and Saddleback Memorial Medical Center with facilities in Laguna Hills and San Clemente.

From Los Angeles Times (www.latimes.com)

Wholesale Agents Missing A Market: Expert

By Mark Ruquet
NU Online News Service

Wholesale agents are missing a huge opportunity by failing to properly market professional liability coverage to retail agents, a knowledgeable executive advised an industry conference here.

The comments came during a seminar on professional liability held Sunday during the 80th annual meeting of the American Association of Managing General Agents.

David S. Charlton, executive vice president for United States Liability Insurance Group, in Wayne, Pa., and a member of the Berkshire Hathaway Company, shared some of his insights into marketing and judging the adequacy of coverage for professional liability policyholders.

Mr. Charlton's main message to the wholesale brokers and MGAs assembled was that they are overlooking a major new market because they are not actively promoting the need for such coverage to small and midsized policyholders.

Too often, he said, a wholesaler may place professional liability onto the policy and hope the client purchases it. More often than not, the retail agent asks what the coverage is, and the wholesaler does not have a satisfactory answer.

"The retailer does not understand what this is for, and it would be helpful for the wholesaler to load their lips," said Mr. Charlton. "Too often wholesalers are trying to sell professional liability and are not marketing it. It is not enough to just put it on a policy and hope it is purchased."

What wholesale brokers need to do is overcome the anxiety retail agents may feel not to "look dumb in front of their clients," and educate these agents on the need and how it fills a void in coverage.

Up until the 1990s, he explained, a standard commercial policy covered professional liability claims. However, the development of exclusions eliminated the coverage, making it necessary by 1992 for insurers to develop a separate line of coverage to fill the void.

The fact that there is a void in coverage, Mr. Charlton explained, is not being communicated to retailers and, ultimately, the policyholder.

At one time, the coverage was prohibitively expensive, making it unaffordable for small and midsized risks. But technology and better underwriting have lowered the cost, he said.
Mr. Charlton said lowered rates and the potential for defense costs running into the tens of thousands or more if an insured is hit with an employment practices liability (EPL) suit, for instance, make the need for such coverage not only affordable but necessary.

As for the size of the market, he reviewed a number of statistics from different studies that indicate few small and midsized risk businesses and nonprofit organizations have purchased EPL, directors and officers (D&O), or errors and omissions (E&O) coverage.

Increased litigation over discrimination for age or sex, or sexual harassment increases the need for EPL cover, said Mr. Charlton.

He also cautioned about the potential exposure of an individual's assets if there is no D&O coverage for board members in a private company.

Mr. Charlton mentioned the exposure of a consultant who lacks E&O and faces defense costs should a client feel the consultant has not lived up to what was marketed. Such examples, he said, are situations where small and midsized accounts lacking the risk management skills need risk transfer.

Technology risks are one area where there is booming potential for professional liability coverage, noted Mr. Charlton. Exposures here could include such things as copyright infringement, inadvertent transmission of a virus, or mishandling of personal information.
Another growth area for brokers he pointed to is real estate risks, specifically E&O, and property managers professional liability.

Real estate brokers are getting out of the business of writing this risk, he noted, and insurers are beginning to step back in. The growth of condo and homeowners associations, apartments, and the like, he described as a great opportunity for brokers, in an area where very few managers are known to have the coverage.

To ultimately become successful with this product, wholesale brokers need to present themselves to retail agents as specialists in this market, willing to review a policyholder's coverage, find the gaps and provide the solution. The wholesale broker should also seek to cross sell with other liability writings.

"Be able to say to your retail agents: 'Let me be your outsource for this, don't just rely upon me when you need it,'" Mr. Charlton said.

From National Underwriter (www.nuco.com)

Insurers Accused of Political Blackmail

By Marc Lifsher, Los Angeles Times

Insurance Commissioner John Garamendi accused California insurers Monday of trying to blackmail him in an attempt to block new regulations and said he planned to ask federal and state law enforcement authorities to investigate the matter.

Garamendi, who is running for lieutenant governor in a three-way Democratic primary election June 6, said the insurance industry offered to drop a planned $2-million "political attack" campaign against him if he agreed to postpone proposed auto insurance rate regulations opposed by the industry.

The commissioner said he learned of the alleged offer April 24 through an intermediary -- Los Angeles lawyer and longtime Democratic strategist Darry Sragow.

Garamendi said he told Sragow that he "would not give in to political extortion under any circumstances" and hoped to put the new rate plan into effect by late June.Monday morning, an industry-backed coalition officially launched a statewide television and direct-mail advertising campaign to urge motorists to tell Garamendi "to drop this unfair plan now." The campaign is being funded by five of the state's largest auto insurance providers: State Farm Mutual Insurance Co., Allstate Corp., Farmers Insurance Group, Safeco Corp. and 21st Century Insurance Group.

Insurance industry executives acknowledged warning Garamendi that the campaign was in the works, but denied seeking a quid pro quo under which the media blitz would be axed if the commissioner shelved the new regulations.

Sragow said Monday he talked on two occasions last month with an insurance industry representative about the alleged offer to cancel the media campaign.He declined to identify the industry representative.

Sragow, who worked for Garamendi on two previous political campaigns and served as deputy insurance commissioner in the early '90s, didn't characterize the industry overture as attempted blackmail."

This kind of dialogue is not unusual when it comes to affecting politics and government policy, but the approach the insurance industry is taking is unusually blatant," he said.

However, Garamendi said he interpreted the industry's overture as an effort to get him to back off the regulations and let the next commissioner do the job," Garamendi said.The commissioner is making "baseless and inflammatory accusations that are completely untrue," said Rick Claussen, a political consultant representing the insurer-backed coalition, Californians to Stop Unfair Rate Increases.

Claussen said insurers contacted Garamendi, via Sragow, as a courtesy "to let him know we were going to do this, so he would not be caught completely by surprise."

The industry indirectly contacted Garamendi through an intermediary simply out of curiosity "about what reaction we could expect from the commissioner," said Bill Sirola, a spokesman for State Farm, California's largest auto insurer with 14% of the market.Garamendi said he would file complaints with state and federal law enforcement officials today. The U.S. attorney's office in Sacramento declined to comment on Garamendi's allegations.

A spokesman for state Atty. Gen. Bill Lockyer said his office would study any complaint it received.

The overture to Garamendi, if it occurred as described by the insurance commissioner, "is walking awfully close to criminal extortion," said Robert Fellmeth, director of the Center for Public Interest Law at the University of San Diego.

Mounting a media campaign to protest an elected official's actions is constitutionally protected as free speech, he said, but threatening an official with unfavorable publicity as a way of influencing policy isn't.

The media campaign, which will hit the airwaves early next week, is strictly an educational outreach to policyholders, said Claussen.

He charged Garamendi with trying to distract insurance policyholders from learning that the new rating system would boost premiums by as much as 30% for rural and suburban motorists, who make up about three-fifths of California's drivers.

Garamendi and his consumer advocate supporters contend that the proposed regulations are part of a long-running effort to fully implement Proposition 103, the landmark auto insurance initiative approved by voters in 1988.

Proposition 103 requires insurers to base auto coverage premiums primarily on a policyholder's driving record, the number of miles driven each year and number of years behind the wheel.
Other criteria that are now weighed heavily by insurance company underwriters, such as the ZIP Code where a car is registered, would be downplayed.Insurers contend that Garamendi's regulations, by arbitrarily lowering rates for motorists in Los Angeles, San Francisco and other major cities, would be unfair to drivers in other parts of the state.

Garamendi's term as insurance commissioner ends Dec. 31. He faces state Sens. Jackie Speier (D-Hillsborough) and Liz Figueroa (D-Fremont) in the Democratic primary for lieutenant governor.

From Los Angeles Times (www.latimes.com)

Insurance Commissioner Garamendi Seeks Investigation Into "Attempted Blackmail" By Insurance Industry

Below is the text of a letter in which Insurance Commissioner John Garamendi asks the Federal Bureau of Investigation (FBI), the U.S. Attorney’s Office, and the Attorney General of California to investigate the insurance industry’s latest attempt to derail the implementation of new auto insurance regulations that would create a more fair system for all Californians.

Commissioner Garamendi was approached by an industry representative recently who conveyed an offer to cancel a massive $2 million negative advertising campaign against him if he would delay implementing the new regulations until the next Insurance Commissioner is elected. The Commissioner refused the offer and on Tuesday initiated formal action to have the “blackmail” attempt investigated by authorities.

“I am writing to request that you investigate an extremely disturbing threat that was made to me by representatives of the insurance industry.

“As you may know, the Department of Insurance is now finalizing new regulations governing the pricing of auto insurance. The rules would require insurers to comply with Proposition 103 and give greater weight to how people drive than to where they live. Not surprisingly, the insurance industry vehemently opposes this position.

“Until recently, that opposition has been voiced through the normal and appropriate channels; speaking at the Department’s public hearings, communicating to the media, and backing legislation that would, at the very least, delay implementation of the regulations. But things changed dramatically on April 24. On that day the insurance industry veered dangerously off track in its efforts, and I firmly believe that its leaders have attempted blackmail and extortion against me.

“On that afternoon (April 24) I received a telephone call from Darry Sragow, a lawyer and political consultant whom I have known for many years. Mr. Sragow said that we needed to talk about a very serious problem for me. As we spoke later that evening, he informed me that he had been contacted by a female representative of either the insurance industry or an insurance company. She gave him a message to deliver. That message gave me a choice – either delay implementation of the new regulations until the next Commissioner takes office, or face a $2 million attack campaign in the days leading up to the June primary election, in which I am running for Lieutenant Governor. It has now been reported that State Farm, Farmers, Allstate, Safeco, 21st Century Insurance, and others are financing this campaign.

“As I told Mr. Sragow, I will not give in to extortion under any circumstances. I also advised him that the revised version of the regulations was scheduled to be issued in the next day or so, and that schedule would not change.

“On April 26 the revised regulations were indeed issued and a 15-day comment period commenced, during which the public and the insurance industry is encouraged to comment on the revisions. The final regulations, which will finally fulfill the promise of Proposition 103, are scheduled to be issued in June.

“In the meantime, Mr. Sragow had delivered my message to the industry on April 25. He contacted me that day with a response. Astoundingly, despite my complete and utter rejection of the threat, the industry representative was adamant – postpone the regulations or the massive negative advertising campaign would begin.

“In search of confirmation, on April 25 I directed my Chief Deputy, Rick Baum, to contact Greg Jones, the regional president of State Farm, to find out if the industry was indeed planning the attack campaign. Mr. Baum told Mr. Jones that a message had been delivered to the Commissioner, warning him to delay the regulations or face a $2 million negative advertising campaign. Mr. Jones confirmed that he was aware of Mr. Sragow’s call. Clearly, the day after the call was made, State Farm’s highest official in California was aware of it.

“I firmly believe that this amounts to a serious attempt to blackmail me in my role as California’s elected Insurance Commissioner. Clearly, I was offered a significant advantage. If I abandoned my responsibilities and delayed implementing the will of the voters, I would not be hit by a $2 million negative advertising campaign in the final weeks leading up to the June election.

“I do take this threat very seriously, but I will continue to carry out my constitutional duties and the expressed will of the voters in passing Proposition 103. Apparently, the people making this threat had hoped to hear otherwise. They mistakenly believed that I would consider the outcome of the next election to be more important than my obligations as Insurance Commissioner. They were dead wrong.

“While this threat was unsuccessful, I believe it is now my responsibility to stand up to this powerful special interest group and set in stone that they cannot engage in, much less succeed with such tactics. This is a serious threat not only to me, but also to the Insurance Commissioners who follow. They, and all other regulators, must be allowed to protect the consumers of California and carry out the laws of the State and people in an atmosphere free of coercion, blackmail and extortion.

“Therefore, I request that you investigate the facts in order to determine whether any violation of law took place. I stand ready to assist in your investigation in any way I can.”

Sincerely,

JOHN GARAMENDI
Insurance Commissioner

Insurers Oppose California Auto Repair Dispute Legislation

California is scheduled to consider a bill today, May 9, that is designed to resolve auto repair disputes between insurers and policyholders, according to Jeff Fuller, executive vice president and general counsel of the Association of California Insurance Companies (ACIC). The bill is SB 1492 by Sen. Jackie Speier, D-Hillsborough,. It is scheduled to be considered by the Senate Judiciary Committee.

According to ACIC, the bill is unnecessary. "As a threshold issue, there appears to be no demonstrated problem that SB 1492 would resolve. There is no need to establish a rapid dispute resolution program, as proposed by the legislation, because there is no evidence that such a program is necessary," Fuller said.

In addition, he said that the proposed program, which would be created in the Department of Insurance, would bind insurers to the state's decision, but not claimants. Fuller also questioned placing such a program within the Department of Insurance because the agency does not have any expertise in auto body repairs.

He added, "SB 1492 would accomplish nothing of benefit for consumers. Indeed, the bill would involve more inconvenience and waste of time for them, for insurers and the Department of Insurance. ACIC believes insurance consumers are well served by the current system which allows for both free market operation and consumer choice."

Source: Association of California Insurance Companies (www.acic-1.org)

From Claims Guides (www.claimsguides.com)

Auto Theft Declines for Second Straight Year; West Leads Nation in Car Theft

Des Plaines, Ill.-based National Insurance Crime Bureau (NICB) reported that for calendar year 2005, the West, and particularly California, leads the nation in auto theft. All of the nation's top ten areas with the highest vehicle theft rates are in the West with six of them in California.

For 2005 the 10 metropolitan statistical areas with the highest vehicle theft rates are:

1. Modesto, Calif.
2. Las Vegas/Paradise, Nev.
3. Stockton, Calif.
4. Phoenix/Mesa/Scottsdale, Ariz.
5. Visalia/Porterville, Calif.
6. Seattle/Tacoma/Bellevue, Wash.
7. Sacramento/Arden-Arcade/Roseville, Calif.
8. San Diego/Carlsbad/San Marcos, Calif.
9. Fresno, Calif.
10. Yakima, Wash.

According to Hot Spots, its annual report on auto theft rates, NICB reviewed data supplied by the National Crime Information Center (NCIC) for each of the nation's 360 metropolitan statistical areas (MSAs). MSAs are designated by the Office of Management and Budget and may include areas surrounding a specific city. For example, the number one Hot Spot in the current report is Modesto, Calif. The Modesto MSA, however, includes data not only from the city of Modesto, but the entire county of Stanislaus in which Modesto is located.

The rate is determined by the number of vehicle theft offenses per 100,000 inhabitants using the 2004 U.S. Census Population Estimates, the most current figures available.

Preliminary FBI data shows a 2.1 percent decrease in motor vehicle thefts during January to June 2005 when compared with the same period in 2004. Nationally, this is the second straight year of decreases in vehicle theft and that is good news.

"The continued reduction in auto thefts is good news for our member companies and the general public," said NICB President and Chief Executive Officer Robert M. Bryant. Bryant says that NICB programs, such as the bait car program, have led to significant declines in the auto theft problem.

"Bait cars are just one of the many tools that the insurance industry provides -- through NICB -- to local law enforcement to help prevent and deter vehicle theft," Bryant said.

NICB recommends the following actions under its "layered approach" to protection that automobile owners can take to minimize their risk and prevent their car from becoming the next statistic:

Common Sense -- An unlocked vehicle with a key in the ignition is an open invitation to any thief, regardless of which anti-theft device you use. The common sense approach to protection is the simplest and most cost-effective way to thwart would-be thieves. Secure your vehicle even if parking for brief periods.

Warning Device -- The second layer of protection is a visible or audible device which alerts thieves that your vehicle is protected. Popular second layer devices include: Audible alarms, steering column collars, steering wheel/brake pedal lock, wheel locks, theft deterrent decals, identification markers in or on vehicle, and VIN etching.

Immobilizing Device--The third layer of protection is a device which prevents thieves from bypassing your ignition and hot-wiring the vehicle. Some electronic devices have computer chips in ignition keys. Other devices inhibit the flow of electricity or fuel to the engine until a hidden switch or button is activated. Popular third layer devices include: smart keys, kill switches, and starter, ignition, and fuel pump disablers.

Tracking Device -- The final layer of protection is a tracking device which emits a signal to police or a monitoring station when the vehicle is stolen. Tracking devices are very effective in helping authorities recover stolen vehicles.

Source: National Insurance Crime Bureau

From Claims Guides (www.claimsguides.com)

No car insurance? Soon, you'll get no mercy

By Michelle Groh-Gordy, DriveTime

The winds of change are blowing in California, and if you are one of the nearly 3 million California motorists driving without automobile insurance, you better hold on to your hat.
A few years back, a young woman ran a red light and smashed into my car. She had small, weeping children by her side and no driver?s license. After a frantic phone call, her husband arrived with their insurance information scrawled on a rumpled piece of notebook paper.

I wrote down the information and dutifully reported the incident to my insurance company.

My insurance agent called me back within minutes. The policy information on the crumpled note was bogus. The woman who mangled my vehicle was uninsured.

Many of us shell out a seemingly endless stream of cash year after year in order to comply with mandatory auto insurance laws. We pay the bills and push back our dismay at spending such large sums on something we cannot immediately see or touch.

California legislators now are rolling out a three-phase plan with the sole intent of making uninsured motorists in California a thing of the past.

As of Jan. 1, insurance agencies are required to electronically submit evidence of financial responsibility to the DMV. If your insurance is discontinued for any reason, the DMV will be notified. They will then send you an unpleasant little note along with your registration renewal, requesting that you submit proof of financial responsibility before they will send your new registration.

If you are pulled over on or after July 1 of this year, the excuse that you left your car insurance card in your other pants will no longer fly. As of that date, law enforcement will have access to the current status of your insurance, as well.

The final ax will fall on Oct. 6. As of that date, the California DMV will be required to suspend the registrations of uninsured motorists.

While some people undoubtedly choose to not have car insurance as some sort of snub to bureaucracy and authority, it?s more likely that sky-high auto insurance premiums are simply out of reach for many lower-income drivers.

No worries, though. The state has that base covered for many Californians, as well. As of April 1, the California Low Cost Auto Insurance Program (CLCA), previously available only in Los Angeles and San Francisco counties, is being offered to low-income drivers in Alameda, Fresno, Orange, Riverside, San Bernardino and San Diego counties, as well.

The insurance is available from any licensed insurance agent at a cost of just over $300 per year. Lower-income drivers who meet the qualifying guidelines will be able to protect themselves and their families while complying with the law. More information about the program is available at the state Department of Insurance web site, http://www.insurance.ca.gov/ .

If you drive into Los Angeles County today, it is estimated that one in four people on the road with you are driving without insurance.

If the new laws work as they are designed to, that will soon not be the case.


Michelle Groh-Gordy is a longtime traffic school instructor and the owner of InterActive! Traffic School Online (http://www.trafficinteractive.com) . Send questions to drivetime@dailybulletin.com or write to DriveTime c/o The Inland Valley Daily Bulletin, PO Box 4000, Ontario, CA 91761.

Insurance Commissioner John Garamendi Exposes Insurance Industry's "Attempted Political Blackmail" Effort to Derail New Regulations on the Pricing of

Insurance Commissioner John Garamendi on Monday addressed the insurance industry’s recently unveiled attack campaign against his efforts to reward good drivers and create a fairer system for the pricing of auto insurance. The following is his statement:

“As you may know, the Department of Insurance is now finalizing new regulations governing the pricing of auto insurance. The rules would require insurers to comply with Proposition 103 and give greater weight to how people drive than to where they live. Not surprisingly, the insurance industry vehemently opposes this position.

“Until recently, that opposition has been voiced through the normal and appropriate channels; speaking at the Department’s public hearings, communicating to the media, and backing legislation that would, at the very least, delay implementation of the regulations. But things changed dramatically on April 24. On that day the insurance industry veered dangerously off track in its efforts, and I firmly believe that its leaders have attempted political blackmail and extortion against me.

“On that afternoon I received a telephone call from Darry Sragow, a lawyer and political consultant whom I have known for many years. Mr. Sragow said that we needed to talk about a very serious problem for me. As we spoke later that evening, he informed me that he had been contacted by a female representative of either the insurance industry or an insurance company. She gave him a message to deliver. That message gave me a choice – either delay implementation of the new regulations until the next Commissioner takes office, or face a $2 million attack campaign in the days leading up to the June primary election, in which I am running for Lieutenant Governor. It has now been reported that State Farm, Farmers, Allstate, Safeco, 21st Century Insurance, and others are financing this campaign.

“As I told Mr. Sragow, I won’t give in to political extortion under any circumstances. And I advised him that the revised version of the regulations was scheduled to be issued in the next day or so, and that schedule would not change.

On April 26 the revised regulations were indeed issued and a 15-day comment period commenced, during which the public and the insurance industry is encouraged to comment on the revisions. The final regulations, which will finally fulfill the promise of Prop. 103, are scheduled to be issued in June.

“In the meantime, Mr. Sragow had delivered my message to the industry on April 25. He contacted me that day with a response. Astoundingly, despite my complete and utter rejection of the threat, the industry representative was adamant – postpone the regulations or the massive negative advertising campaign would begin.

In search of confirmation, on April 25 I directed my Chief Deputy, Rick Baum, to contact Greg Jones, the regional president of State Farm, to find out if the industry was indeed planning the attack campaign. Mr. Baum told Mr. Jones that a message had been delivered to the Commissioner, warning him to delay the regulations or face a $2 million negative advertising campaign. Mr. Jones confirmed that he was aware of Mr. Sragow’s call. Clearly, the day after the call was made, State Farm’s highest official in California was aware of it.

“As I have said, I firmly believe that this amounts to a serious attempt to blackmail me in my role as California’s elected Insurance Commissioner. Clearly I was offered a significant advantage. If I abandoned my responsibilities and delayed implementing the will of the voters, I would not be hit by a $2 million negative advertising campaign in the final weeks leading up to the June election. I do take this threat very seriously, but I will continue to carry out my constitutional duties and the expressed will of the voters in passing Prop 103. Apparently, the people making this threat had hoped to hear otherwise. They mistakenly believed that I would consider the outcome of the next election to be more important than my obligations as Insurance Commissioner. They were dead wrong.

“While this threat was unsuccessful, I believe it is now my responsibility to stand up to this powerful special interest group and set in stone that they cannot engage in, much less succeed with such tactics. This is a serious threat not only to me, but also to the Insurance Commissioners who follow. They, and all other regulators, must be allowed to protect the consumers of California and carry out the laws of the state and people in an atmosphere free of coercion, political blackmail and extortion.

“Let me make it clear, I will not be intimidated – not even by the political clout of a $120 billion industry that is willing to go to any length to get its way. This action by the special interest insurance lobby is pure blackmail and extortion, an attempt to stop me from issuing new regulations that will finally implement the will of the voters as expressed in Prop. 103 in 1988. The new rules will make auto insurance pricing fairer. They will reward those who drive safely in rural as well as urban areas. And they will put an end to the unfair insurance industry practice of charging a good driver who lives in one zip code more than a good driver who lives across the street in another zip code.

From California Department of Insurance (www.insurance.ca.gov)

Bustamante Hopes to Win Insurance Post by Losing

By Jennifer Oldham
Los Angeles Times

Lt. Gov. Cruz Bustamante is hoping his considerable girth will give his campaign for state insurance commissioner a little weight. His recipe for winning: Shed pounds by racing around California collecting multicolored bibs in community 5Ks and post the results online.

"I want to become an example to others to lead healthier lives by losing weight myself," Bustamante exhorted in his campaign statement in the information guide sent to voters for the June 6 primary. "Fighting the obesity epidemic will lower insurance costs."

But there's a missing ingredient. The lieutenant governor's current weight, and documentation of his progress in shedding pounds — or not — isn't sprinkled among the nutrition and fitness information and weight loss tips on his campaign website at http://www.startwithcruz.com.

Bustamante, a Democrat, has said publicly that he weighed 278 pounds in January and his initial goal was to lose 50 pounds. He tipped the scale at 235 pounds April 30, his staff said.

"They're looking at a situation where they don't have any real money running against a guy who can clearly fund whatever level he wants," said Bill Carrick, a veteran Democratic strategist. "This is a quirky, but sort of an interesting, attention-getting thing. But you have to really do it. You have to get out there and have some measurement to follow."

In the fall, Bustamante is likely to face Republican Steve Poizner, a Los Gatos technology millionaire who has never held public office, in a race for an office that regulates a $119-billion industry. He faces Democratic businessman John Kraft in June.

The lieutenant governor had raised a little under $800,000 as of May 4, compared to about $3 million raised by Poizner. About 20% of Bustamante's contributions were from companies the commissioner regulates. Poizner has said he won't accept donations from insurance firms.

Poizner's representatives said the light fare on Bustamante's campaign site is an attempt to divert voters' attention from the contributions he's accepted from insurance companies and his lack of qualifications to run the state's Department of Insurance.

"He has a huge negative because he takes insurance company money for a regulatory office," said Wayne Johnson, a spokesman for Poizner's campaign. "So how does he shift the issues away from that?"

In contrast, Poizner's website, at http://www.joinsteve.com , gives voters a little more to chew on, including a primer on the insurance commissioner's duties and a list of his endorsements.

Bustamante, who apparently is the author of several recipes on his site, including "Cruzin in the Tropics" and "Berry Bustamante," could not be reached for comment Friday.

The weight loss shtick has helped other politicians attract voters' attention. Arkansas Gov. Mike Huckabee gained popularity over the last few years by conducting a very public dieting effort. Huckabee, who is exploring a run for president in 2008, shed 120 pounds off his 300-pound frame after his doctor warned him he would die if he didn't lose weight. In California, pundits couldn't resist dishing out some advice for Bustamante's opponent.

"Poizner looks a little too thin to me, maybe they ought to have a rival campaign, maybe he should bulk up," Carrick joked. "Then we would have a supply-side Republican versus a fiscally disciplined Democrat."

From L.A. Times (www.latimes.com)

Insurance Czar Will Face New Challenges

By Jennifer Oldham
Los Angeles Times

In a state prone to fires, floods and earthquakes, which has more vehicles on the road than any other and ever-escalating home values, the job of policing its $119-billion insurance industry is crucial to Californians' pocketbooks.

Voters will go to the polls this fall to elect the state's fifth insurance commissioner since Proposition 103 was approved in 1988. The measure made the post an elective office, rather than filled through appointment by the governor, and gave the commissioner power to approve rate changes.

California's insurance commissioner performs a tricky balancing act: making sure the industry stays robust so it can pay claims, while appeasing consumers who demand strong oversight.

Consumer advocates already are calling on the next commissioner for changes in auto insurance pricing, regulation of underwriting guidelines and revisions to ballyhooed reforms in the workers' compensation market.

Insurers, meanwhile, are demanding less bureaucracy, are pushing back on proposed changes to auto insurance pricing and underwriting rules and are asking for a less adversarial relationship with the commissioner.

Despite the position's power, the race to replace Insurance Commissioner John Garamendi, who is running for lieutenant governor, has been low-key, primarily because most of the debate will occur this fall between major party nominees.

In the June 6 primary, voters will choose between two Democrats to run against a Republican candidate in the fall. The two are Lt. Gov. Cruz Bustamante and John Kraft, a South Pasadena businessman who has yet to demonstrate that he will have the money to offset Bustamante's familiarity to voters. Kraft ran unsuccessfully in 1994.

Republicans already have a putative nominee, Steve Poizner, a Los Gatos technology millionaire who has never held public office. Several minor party candidates are also running. Poizner has promised he would, if elected, combat insurance fraud, prepare the state for the next natural disaster and increase competition to reduce rates.

"The cost of insurance is a big chunk of most peoples' budgets," Poizner said in an interview. "For me, driving down the cost of insurance is going to be my top priority."

In speaking engagements, Bustamante has stressed his experience on the Assembly's insurance committee and as speaker of the Assembly. In his candidate statement in the voter information guide for the primary, however, the lieutenant governor focuses his campaign on his efforts to lose weight. The lieutenant governor's campaign refused repeated phone calls and e-mail requests for an interview.

Poizner, who raised about $3 million in contributions as of May 4, has said he will not accept money from insurers. Bustamante, who had raised a little less than $800,000 during the same period, took $158,250, or 20% of his total contributions, from insurance companies and bail bonds firms.

Garamendi, a two-term insurance commissioner, will leave office with consumer advocates and insurers, however grudgingly, agreeing that he has lowered rates and stabilized the market.

Consumer advocates say the next commissioner must ensure the state doesn't lose ground gained since 1988, when Proposition 103 was approved.

"An analysis of rates in California since Prop. 103 passed puts savings in auto insurance alone at $23 billion," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights. "The question is, do those savings trends continue, or is the next commissioner going to slow that down, or reverse the trend entirely?"

But insurers argue that increased regulation comes at a price.The regulatory process for insurers doing business in California is among the most onerous in the country, said Sam Sorich, president of the Assn. of California Insurance Companies.

"In other states, the law is different, insurance operates in a more competitive environment. The law doesn't require the prior approval of every rate change," he said.

Insurance companies complain that Proposition 103 hobbles their ability to change rates quickly and boosts administrative costs, forcing them to take some business, such as call centers, and jobs that go along with it to other states.

Even so, California is a goldmine for insurers. In 2004, the latest year for which figures are available, companies wrote more premiums here — $56 billion — for property and casualty insurance than in any other state, according to the National Assn. of Insurance Commissioners.

Insurance companies are also connected with the state's lawmakers, spending $25 million on lobbyists, campaign contributions and perks for representatives since 2003. Critics charge the donations have made legislators reluctant to toughen regulations on insurers.

Consumers groups say that a top priority for the next commissioner is requiring insurers to change the way they price auto insurance, a yet unfulfilled provision of Proposition 103. Garamendi has proposed that insurers base rates on motorists' driving records and miles driven. Currently, rates are largely set according to ZIP Code. Consumer watchdogs argue this places an unfair burden on poor residents in large cities.

Insurers disagree, saying risk is not a racial issue, but a geographic one, and that ordering them to recalculate auto rates ignores the realities of congested urban areas.

"It's a priority for the insurance industry to preserve the link between underlying risk and the ultimate price of insurance, which the current commissioner is seeking to undermine," said Rex Frazier, vice president and general counsel of the Personal Insurance Federation, a trade group that has contributed to Bustamante's campaign. "If you push rates down in Los Angeles, then they pop up everywhere else."

Garamendi hopes to file new regulations to require a change in auto insurance pricing by the end of summer, said Norman D. Williams, the assistant deputy commissioner. The next commissioner will be charged with ensuring the new rules are implemented and could face litigation from insurance companies. A similar battle can be expected when the next commissioner reviews underwriting guidelines.

Advocates are demanding that insurers not penalize policyholders for making legitimate claims.

"The word is out there on the street that if you file a claim, your rates are going to go up, and you're going to get non-renewed," said Amy Bach, director of United Policyholders, a San Francisco-based nonprofit. "I think a lot of people don't file claims anymore because they are afraid."

Garamendi has tried repeatedly to regulate underwriting practices, but has been unable to convince the Legislature that he should be allowed to do so. The insurance industry has also resisted, saying some people file claims for damage to their homes caused by neglect. Changes in workers' compensation law will also be on the new commissioner's plate, specifically the debate among Democratic legislators, unions and Gov. Arnold Schwarzenegger over how to fine-tune laws that overhauled the insurance system. The laws were an attempt to stop increases in premiums that forced many companies to leave the state.

The changes have saved employers at least $8.1 billion since 2002, according to a study commissioned by the state Department of Industrial Relations sent to the governor in February.

"I think that it's hard to deny that the reforms have been a big success in terms of reducing the costs of workers' comp," said Frank Neuhauser, a workers' compensation expert at UC Berkeley's Survey Research Center.

But unions believe the reforms went too far, reducing permanent disability payments for some workers by up to 70% because a new rate schedule was unclear about how workers should be compensated for different injuries, Neuhauser said.

From L.A. Times (www.latimes.com)

McClellan Says Bush's Spanish Not Good

President Bush likes to drop a few words of Spanish in his speeches and act like he's proficient in the language. But he's really not that good, his spokesman said Thursday.

"The president can speak Spanish but not that well," White House press secretary Scott McClellan said. "He's not that good with his Spanish."

McClellan's comment was noticeable because presidential press secretaries usually boast about a president's ability rather than talk about any shortcomings. McClellan is in the last days of his job, leaving the White House next week.

McClellan made his remark in response to a report that Bush had sung the Star-Spangled Banner in Spanish during the 2000 campaign. Just last week Bush said the national anthem should be sung in English, not Spanish.

"It's absurd," McClellan said of the report, suggesting that Bush couldn't have sung it in Spanish even if he had wanted to.

From Associated Press (www.ap.org)

Progressive Direct Begins Advertising Agency Review

The Progressive Direct Group of Insurance Companies, which sells auto insurance directly to consumers over the phone and the Internet, announced that it has begun a search for a primary advertising agency.

Progressive Direct(SM), the second largest direct seller of auto insurance in the U.S., has grown an average of 19 percent over the last three years to $4.2 billion.

Doner Detroit has been the primary advertising agency for Progressive Direct since 1999. "As one of the largest and most recognized U.S. insurance brands, we are constantly seeking compelling ways to help consumers understand our superior value proposition," said Alex Ho, brand development director. "We want to review all of our options to ensure future advertising success."

From Business Wire (www.businesswire.com)

Brooke Franchise Corp. Acquires InsWeb Retail Insurance Business

Brooke Franchise Corp., a subsidiary of Brooke Corp., is acquiring all property/casualty retail customer accounts from InsWeb Insurance Services. These auto and homeowners policies were written through InsWeb's Web site. Most of the acquired accounts are located in geographical areas where Brooke franchises are located and Brooke Franchise plans to sell these accounts to existing franchisees who want to generate additional revenues.

Brooke Franchise also acquired from InsWeb a significant amount of account information that provides cross-selling and other opportunities to Brooke franchisees. This marketing information will be analyzed by Brooke's advertising center and distributed to local franchisees in a manner that protects customer privacy.

Source: Brooke Franchise Corp.

Insurance Commissioner John Garamendi Announces Low Cost Auto Now in San Diego

Insurance Commissioner John Garamendi announced Wednesday that the California Low Cost Automobile Insurance program, launched in San Diego County on April 1, is now available county wide, offering an opportunity for eligible low income good drivers to get state-required liability insurance for as little as $268 a year.

Standing at a local DMV office, the Commissioner encouraged eligible San Diego County drivers to apply for the program by calling 1-866-60-AUTO-1, and do their part to help make California’s roadways safer. There are more than 3 million motorists driving uninsured on California roads every day. According to available data, 165,016 of them are in San Diego County.

"When drivers risk traveling our roadways without insurance it’s a disaster waiting to happen every mile they drive,” said Commissioner Garamendi. “It is understandable that many people cannot afford the cost of auto insurance in the private market. However, this program is an affordable alternative that allows eligible uninsured drivers to operate within the law.”

Recent legislation, Senate Bill 20, authored by Senator Martha Escutia, (D-Montebello) and sponsored by Commissioner Garamendi, helped to expand the program to the counties of San Diego, Fresno, Alameda, Orange, Riverside, and San Bernardino effective April 1.

Sen. Escutia said the program is vital to improving the lives of many who cannot afford insurance. “When we created the Low Cost Auto Insurance Program six years ago, my goal was simply to provide an affordable alternative for consumers who are required to have, but simply cannot afford, a conventional auto insurance policy,” said Sen. Escutia. “The expansion of the program to additional California counties is a blessing for many working families who are searching for affordable auto insurance.”

The legislation also authorized the Commissioner to launch the program throughout the state based upon his determination of need and a public meeting to solicit public input. In January, the Commissioner announced plans to expand the program to eight additional counties: Contra Costa, Imperial, Kern, Sacramento, San Joaquin, San Mateo, Santa Clara, and Stanislaus counties.

Between January and March, the Commissioner held evaluation of need and town hall meetings in each of these counties to gauge the need and desirability of the program. Based on a combination of consumer interest, a consideration of the number or percentage of uninsured motorists, the number or percentage of low-income residents, and the price of auto insurance in the voluntary market in each of the counties, the Commissioner determined that the program was necessary and desirable. It is anticipated that the program will be operational in the eight additional counties by summer 2006.

"Local leaders and residents are very enthusiastic about the program,” said Commissioner Garamendi. “Since its inception over 25,000 policies have been issued and the low cost automobile insurance program is successfully helping communities rid the roadways of uninsured motorists.”

The California Low Cost Automobile Insurance program was created in 1999 to provide low income good drivers with access to affordable automobile insurance and was initially available in Los Angeles and San Francisco counties only. With the introduction of the program to San Diego, Alameda, Fresno, Orange, Riverside, and San Bernardino counties on April 1, and the additional eight counties expected to be operational by summer, eligible motorists from 16 counties will soon be able to take advantage of the program.

Program policies are issued by California licensed insurers and the program is administered by the California Automobile Assigned Risk Plan. Rates are set in each county so that premiums are sufficient to cover losses and expenses in each county – no state funding is used.

To be eligible for the program, applicants must be a "good driver" – no more than one at-fault property damage only accident, or one point for a moving violation in the past three years; and no at-fault accident involving bodily injury or death in the past three years; and no felony or misdemeanor conviction for a violation of the Vehicle Code.

Additionally, family income cannot exceed 250 percent of the federal poverty level ($24,500 for a single person, $33,000 for two persons and $50,000 for a family of four). The value of an insured vehicle must not exceed $20,000.

For more information about the program, call 1-866-60-AUTO-1 (1-866-602-8861).

From California Department of Insurance (www.insurance.ca.gov)

Agents Gun Shy After Initial Tech Failures

Some agents who were burned when they were early adopters of technology in the past are now reluctant to embrace more mature tech products because of that experience, the newly-elected president of the AMS Users' Group contends.

In an exclusive interview with National Underwriter, Kay Barrett--who is also vice president of economic development at The IMA Financial Group in Wichita, Kan.--said the biggest challenge the users' group faces is that "there's a lot of caution in agents wanting to take on new technology developments." The interview took place here during AMSUG's 30th National Conference earlier this month.

Some of those agents, Ms. Barrett explained, were early adopters of agency technology products that didn't work as advertised. "We don't have time to do [research and development] on these products [for vendors]," she noted. "Some things were introduced prematurely."

As an example, Ms. Barrett said commercial lines download capability on her agency's AMS platform had been "attempted too early," before all the "kinks" had been worked out. "Now, we need to do a sales job to convince ]agents who were burned] that we won't have a recurrence."

Ms. Barrett added that AMS, as well as agents, can play a role in restoring agents' confidence in the technology. "AMS has to help us get through those carrier issues--the proprietary workflows," she said. "And as agents, we need to embrace [new AMS] technology. [AMS is] ready for prime time, but as an agent, I'm still going to have problems internally."

Yet another obstacle, according to Ms. Barrett, is that "some carriers are reluctant to work with us. When we have to do something special just for [the insurer], there has to be a better way.

"Insurers just get a mindset of how they want to do systems and they forget what it's like on the other side," she continued. "I don't think the carrier operational people and the carrier technology people talk to each other."

Agents, according to Ms. Barrett, need to take responsibility by using the technology AMS is providing. "We have to get in there and refine it," she asserted. "We have to help them. This has to be a collaborative effort."

Ms. Barrett also said the AMS Users' Group has not given up on the Holy Grail of insurance technology--SEMCI. "In some ways, [single-entry, multiple-company interface] is already a reality--it's just coming to us in a different way," through technologies such as AMS' TransactNow, a software product that enables communications among carriers, agents and AMS agency management system users."

I don't think the industry should give up on SEMCI or real-time transactions," she said. "I want to have all the information from the carrier at my fingertips, but in some cases, the carriers won't let me have the information."

For example, she said, some carriers will not provide a loss run electronically to agents. "Having to know the idiosyncrasies of each [carrier] is a lot to know," she noted. "It has to be simpler."

Ms. Barrett said her goal for this year as president of AMSUG is to encourage agents "to embrace the technology that is available to them today. If we use what we have today, the carriers are more apt to spend money and discover what we actually need. That will help the collaborative effort."

She added that education will be the user group's primary tool in trying to persuade agents to get on board with AMS technologies.

Asked what she would like to convey to carriers, Ms. Barrett said: "Expand what is available to us. The things I do most are endorsements, but [carriers are] too busy focusing on new business offerings. Endorsements are the number-one transaction in an agency and they need to be automated."

Ms. Barrett noted that AMS needs to work on enabling such automation as well. "They're doing it, but it's never fast enough," she concluded.

Copyright © 2005 LexisNexis

From Insurance News Net (www.insurancenewsnet.com)

Life Insurance For Hispanics

Middle-market Hispanics who are more highly acculturated to life in the U.S. are more open to term life insurance, according to a recent study by insurance giant Genworth Financial, which is trying to build its reputation in the rapidly growing market. Not surprisingly, the study found that Hispanics who speak English and and were born in the U.S. tend to have higher incomes, levels of education and live in non-hispanic neighborhoods. English speakers are more likely to own individual life insurance than Spanish speakers (67% versus 25%).

The main challenge in reaching the Hispanic middle market is that consumers prefer to buy insurance face to face from an agent or through a banker, but they seldom have personal agents to sell to them because most insurance brokers have moved upmarket. That means that Genworth, like other financial services firms, will have to convince their contracted brokers of the benefits of engaging Hispanic consumers.

Consumers in the study said that price is the main information they want about insurance and many think life insurance is too expensive, although they don't think it is only for the rich: 46% of Spanish speakers and 25% of English speakers. They estimated the monthly cost of a $100,000 policy at $30 per month when in fact the average policy is $18. Interestingly, 30% of Spanish-speaking respondents felt the insurance company would find an excuse to not pay a death benefit.

Spanish-speaking households where members were familiar with their country of origin were less likely to see the need for life insurance because they hadn't used it in the past. Nonetheless, Spanish speakers demonstrate a high level of family values and respect for supporting relatives that makes them an ideal audience to educate on the benefits of insurance products.

(c) 2006 Financial Planning (www.Financial-Planning.com), SourceMedia, Inc. (www.sourcemedia.com)

From Insurance News Net (www.insurancenewsnet.com)

Auto Insurance Costs Holding Steady; Average Nationwide Premium at $867

The cost of auto insurance is expected to rise by just 0.5 percent in 2006, the smallest increase in six years, reports the Insurance Information Institute.

A declining number of auto accidents, safer cars and fraud-fighting efforts are some of the forces contributing to the cost slowdown.

However, rising medical care and vehicle repairs continue to put upward pressure on rates, along with hurricane-related claims, the industry group also noted.

The average cost for auto insurance nationwide for 2006 is estimated at $867?an increase of just $4 per vehicle from last year, according to the I.I.I, despite record vehicle-related losses arising from the 2005 hurricane season. The projected increase represents a continued slowdown from 2005 when auto insurance costs rose by 2.5 percent.

"The cost of auto insurance is increasing by about one-sixth the rate of inflation and little more than a single gallon of gasoline," said Robert Hartwig, senior vice president and chief economist of the I.I.I.

"Many people who, for example, drive safe cars, have excellent safety records and good credit-based insurance scores may see their rates go down, often by 3 to 5 percent or about $25 to $50 per vehicle. This is welcome news for drivers who have been battered by record high gas prices over the past year," he added.

What's more, Hartwig said, people who trade-in their expensive gas-guzzlers for smaller, more fuel efficient and less expensive vehicles may see even lower insurance costs in many cases. Smaller cars that cost less with fewer horsepower are often less expensive to insure because repair costs are less. Some insurers now even offer special discounts for hybrid vehicles.
It may also pay to just leave the car at home. "People who make the switch to public transportation may also qualify for lower insurance premiums if they no longer use the vehicle commuting and drive it significantly fewer miles each year," said Hartwig.

Hartwig cited the declining number of auto accidents, safer cars, new auto theft technology, fraud-fighting efforts and graduated licensing laws for teen drivers as additional key factors contributing to the cost slowdown.

However, he observed that rising costs for medical care and vehicle repairs as well as defense costs and jury awards remain a problem, according to I.I.I.'s analysis.

Restrictions on the use of credit-based insurance scores in several states are also a cost threat to millions of drivers, according to its analysis.

"Insurance scores are highly accurate predictors of future loss, allowing insurers to more accurately price insurance and create a more fair and equitable rating environment for all drivers. Efforts to ban scoring will lead directly to higher insurance rates for good drivers while, ironically, lowering rates for people who are involved in the most accidents," said Hartwig, adding that efforts by some states to restrict other underwriting factors that have been used by some insurers for decades could have a similar negative impact.

Katrina Clobbered Cars Too

Record catastrophe losses associated with Hurricanes Katrina, Rita, Wilma, Dennis and Ophelia (the five storms that hit the Southeast in 2005) and predictions by leading meteorologists of more of the same for the next 15 to 20 years are putting pressure on the cost of auto insurance in some parts of the country.

Insurers received nearly 674,000 claims for vehicles that were damaged or destroyed by last year's storms. Those claims occurred across a wide swath of southern states and cost insurers some $3.2 billion," said Hartwig.

Florida, Louisiana and Mississippi saw the most claims, but large numbers of claims were also filed in Texas, Alabama, Georgia and North Carolina. Even the landlocked states of Arkansas and Tennessee reported significant numbers of claims despite being located hundreds of miles from where the storms made landfall.

Weather-related damage to vehicles, including flooding, is covered under the "comprehensive" portion of auto insurance policies. Banks issuing car loans and leasing companies generally require vehicle owners to carry comprehensive coverage. People who own their vehicles outright are not required to carry comprehensive coverage, though many do. The coverage is frequently dropped, however, on older vehicles.

Claim Severity Continues to Rise

"Unfortunately, while drivers today are filing fewer claims, those that are filed cost more," Hartwig said. "It costs more to repair cars, particularly following accidents involving sport utility vehicles."

This year insurers will pay between $15 and $20 billion in medical claims, the I.I.I. reported. Higher costs for hospitalization and pharmaceuticals, and state regulations that encourage abuse of medical treatments and associated legal costs are also to blame. "Collectively, these high costs in some states more than offset the decline in accident frequency, pushing overall rates upward," Hartwig observed.

Cost Drivers in Insurance

Medical costs are an important factor in the auto insurance market. Each year more than three million car accidents involve injuries. More than one in four auto accidents resulted in injury claims in 2003, according to the Insurance Research Council (IRC).
The average cost of a bodily injury claim exceeded $10,000 in 2005, but can easily run into the tens of thousands of dollars.

Higher jury awards in vehicular liability cases continue to put additional upward pressure on auto insurance rates. The average jury award in auto liability cases was $261,000 in 2003, according to the most recent available data from Jury Verdict Research.

"Auto insurance litigation is very expensive," said Hartwig. "In 2004 auto insurers spent more than $4.1 billion defending policyholders from lawsuits brought against them. Auto liability issues are much more important than people realize," he continued. "About 60 percent of auto premiums paid in 2005?almost $60 billion?was for liability coverage. As we look at 2006 and into 2007, we see this trend continuing."

Auto theft is another significant factor that affects rates. According to the Federal Bureau of Investigation (FBI), an automobile is stolen every 26 seconds in the United States. While the number of auto thefts decreased by 1.9 percent in 2004, the first decrease in five years, there were still 1.24 million vehicles reported stolen. The good news is that preliminary FBI data for the first half of 2005 indicate that the auto theft rate fell by 2.1 percent. Declines were posted in every region except the West.

The decreases over the past two years come on the heels of a 1.2 percent increase in auto thefts in 2003, 1.5 percent in 2002, 5.9 percent in 2001 and 0.7 percent in 2000. The nation's highest theft rates were found in the West and South, with the lowest rates occurring in the Midwest and Northeast. Automobile theft is a much bigger problem for some cities than others. Modesto, California, was the auto theft capital of the United States in 2004, with an auto theft rate nearly quadruple that of the country overall. Other problem cities include Las Vegas, Phoenix and Seattle.

New vehicle security devices, such as electronic tracking systems can help police find stolen vehicles and keep premiums down. Some insurers offer car owners these tracking systems at a special price in combination with premium discounts.

Fraud and abuse remain major problems in some states, such as New York, Maryland, Florida and Massachusetts. However, crackdowns by law enforcement agencies and insurers have put a definite dent into organized insurance fraud.

Factors Affecting What People Pay for Auto Insurance

The average driver will pay $867 in 2006. But what an individual driver pays will vary by state, insurance company and motorist characteristics."

Factors that influence the cost of coverage may include:
* Type of car and specific safety features;
* Number of miles driven and type of driving;
* Family claim record, including the number of accidents and their severity;
* Driving record, including speeding tickets;
* Age, gender and experience of driver; and
* Credit-based insurance score.

For more information on auto insurance, go to the I.I.I. Web site: http://www.iii.org/individuals/auto.

Source: The I.I.I. is a nonprofit, communications organization supported by the property/casualty insurance industry.www.iii.org

From Claims Guides (www.claimsguides.com)

Hispanic Community Speaks Out for Health Coverage During "Cover the Uninsured" Week

More than 1,000 events will be held across the nation this week to help millions of Hispanics who do not have health care coverage. The activities are planned as part of Cover the Uninsured Week, a nonpartisan, nationwide effort to urge U.S. leaders to make health coverage for Americans a top priority. Organizations representing Hispanics are actively involved in the effort.

According to government statistics, one in three Hispanics in America is uninsured. Hispanics who have insurance are three times as likely to see a doctor when they need to, compared to Hispanics who do not have coverage. Nationally, nearly 46 million Americans have no health care coverage, including more than 8 million children. Eight out of 10 of the uninsured are in working families.

"Millions of Hispanics work hard every day but are either not offered health insurance benefits through their jobs, or they cannot afford the coverage that is offered," said Jane Delgado, Ph.D., President and CEO of the National Alliance for Hispanic Health, the nation's oldest and largest network of Hispanic health and human services providers. "Too many Hispanics are living without health insurance, forced to hope every day that they won't get sick or injured. That is why it's so important that Hispanic communities are involved in Cover the Uninsured Week activities to find out if they are eligible for public programs, receive needed health services, and voice their concerns to our lawmakers."

Some of the most influential organizations in the country, including the National Alliance for Hispanic Health (the Alliance), are cosponsoring Cover the Uninsured Week, which occurs from May 1-7. Co-chaired by Presidents Gerald Ford and Jimmy Carter, the effort is supported by 10 former Surgeons General and U.S. Department of Health and Human Services Secretaries appointed by both Republican and Democratic presidents.

During Cover the Uninsured Week, hundreds of enrollment events will be held at hospitals, medical centers, malls, community centers, and in places of worship nationwide. A comprehensive listing of all events being held across the nation can be found at http://www.covertheuninsured.org/ .

In addition, the Alliance announced the availability of help with enrollment in programs that provide low-cost or free coverage to those who are eligible. By calling the Alliance's 1-866-SU-FAMILIA (1-866-783-2645) National Hispanic Family Health Helpline, callers get free, reliable, and confidential health information in Spanish and English. Bilingual health information specialists can also refer callers to a local health care provider in their community."Hispanics are mobilizing their communities throughout the nation to be the voice for millions of others who live without health coverage," said Risa Lavizzo-Mourey, M.D., M.B.A., president and CEO of the Robert Wood Johnson Foundation, which organizes Cover the Uninsured Week. "Millions of people are suffering each day -- either not getting treatment when they are sick and need a doctor, or worrying that just one illness or injury could wipe out their bank account. Whether insured or not, everyone needs to get involved."

People can express their concerns about health insurance coverage by instantly e-mailing a member of Congress through the campaign Web site, http://www.covertheuninsured.org/.

Organizations sponsoring Cover the Uninsured Week include the U.S. Chamber of Commerce, AFL-CIO, Healthcare Leadership Council, AARP, United Way of America, American Medical Association, National Medical Association, American Nurses Association, Families USA, Blue Cross and Blue Shield Association, America's Health Insurance Plans, American Hospital Association, Federation of American Hospitals, Catholic Health Association of the United States, Service Employees International Union, National Alliance for Hispanic Health, The California Endowment, W.K. Kellogg Foundation, and the Robert Wood Johnson Foundation.

To download state-specific resource guides, or locate Cover the Uninsured Week activities, log on to http://www.covertheuninsured.org/ . Information is also available in Spanish at http://www.covertheuninsured.org/espanol/ .

Immigration Issue Becomes Main Battling Point in Senate Race

By Mike Sunnicks
Business Journal of Phoenix

Both Arizona Sen. Jon Kyl and his Democratic challenger, real estate developer Jim Pederson, are trying to distance themselves from hot-button words in the contentious immigration debate and to counter advertisements and claims from political rivals.

Kyl, a Republican, stresses he does not support the "mass deportation" of the estimated 12 million illegal immigrants already in the U.S. Kyl also said Monday that the U.S. Senate hopes to reconsider immigration and border security compromise proposals before the Memorial Day break. Democrats have criticized the Republican Congress for not getting something done on the key issue.

Kyl said Monday that a mass deportation of illegals does not have the political support and that a bill he sponsored last year would not result in major deportations. That bill, which was co-sponsored by U.S. Sen. John Cornyn, R-Texas, requires illegals already in the U.S. to return to their home countries and apply for legal status and a guest worker program. Democrats and supporters of a guest worker plan favored by Sen. John McCain, R-Ariz., have hit Kyl's proposal as unworkable and too costly.

Pederson, who has made immigration a top issue in his U.S. Senate bid, equally stresses he does not favor amnesty for those same illegals in the U.S. Republicans and the Kyl campaign have said Pederson supports amnesty. Pederson counters that such a claim is false and that he supports a guest worker plan, tougher enforcement and penalties against employers who hire illegals, and requiring illegals already in the U.S. to pay fines and go through background checks before they can apply for legal status.

From Business Journal of Phoenix (www.bizjournals.com)

W's Anthem-nesia: He Sang in Spanish

By Kenneth R. Bazinet
Daily News Washington Bureau

President Bush says the national anthem should only be sung in English, but he was apparently singing a different tune during his first run for President and at his inaugural festivities.

On the campaign trail in 1999, Bush would often sing along as the national anthem was sung in Spanish during stops in Hispanic communities, GOP scholar Kevin Phillips wrote in his book "American Dynasty."

After Bush was elected, Cuban exile and pop vocalist Jon Secada also sang the "The Star-Spangled Banner" in both English and Spanish at the 2001 opening ceremony of the presidential inaugural, according to media reports at the time.

The White House had no immediate comment, claiming it was unaware of the reports of those instances, which Democrats and their allies eagerly shared with reporters.

Bush and Secada sang the actual national anthem in Spanish, and not the new song with different lyrics and music that has angered many English-speaking Americans.

Nonetheless, Bush still appeared to have amnesia when he suggested last week that the "The Star-Spangled Banner" is an English-only tune.

"I think the national anthem ought to be sung in English," Bush said.

From Daily News (www.dailynews.com)

B of A Calls Wal-Mart Bank a Threat

Bank of America's CEO said the retail giant's plans to offer consumer banking services pose a competitive threat, especially for small banks and community banks. He also sees Wal-Mart drawing Hispanic customers who may not trust banks.

It already offers money orders and transfers, payroll check-cashing. Wal-Mart refuted the notion that it threatens community banks, which are lobbying against its banking charter.

Shares rose 0.5% to 46.16.

Proponents of Spanish Anthem Point to Rice

By Pauline Jelinek
Washington Post

President Bush wants people to sing the national anthem in English only. Promoters of singing it in Spanish are pointing to comments by Secretary of State Condoleezza Rice -- and her department's Web site --- as ammunition for their side of the argument.

There are four Spanish versions on USINFO.State.gov, a multi-language Web site."

I've heard the national anthem done in rap versions, country versions, classical versions," Rice said Sunday on CBS's "Face the Nation." "The individualization of the American national anthem is quite under way."

The State Department site for some time has offered translations of the U.S. Constitution, pledge of allegiance and other documents in French, Arabic and other foreign languages to help people understand America better.

This is what promoters say they had in mind with the Spanish anthem recording, which has drawn criticism from Internet bloggers.

Weighing in on Bush's side of the argument was Sen. Lamar Alexander, R-Tenn., who introduced a resolution affirming that the song, pledge allegiance to the flag and other "statements of national unity" should be done in English.

When 'Nuestro Himno,' a Spanish version of the anthem, debuted last week, Bush said "people who want to be a citizen of this country ought to learn English and they ought to learn to sing the national anthem in English."

After Bush rejected the idea, British music producer Adam Kidron said, "We instead view `Nuestro Himno' as a song that affords those immigrants that have not yet learned the English language the opportunity to fully understand the character of 'The Star-Spangled Banner,' the American flag and the ideals of freedom that they represent."

From Washington Post (www.washingtonpost.com)

Insurance Commissioner John Garamendi Announces Sentencing of Unlicensed Los Angeles Man for Theft of Premiums

Insurance Commissioner John Garamendi announced today that on May 1, 2006, unlicensed insurance agent Jose Miguel Marquez, 23, was sentenced to one year of summary probation and ordered to reimburse the California Department of Insurance (CDI) $10,000 for investigative costs for his crime of theft of premiums.

Marquez pled guilty to one misdemeanor count of theft of funds, after an investigation by the CDI Investigation Division.

According to investigators, Marquez committed his crimes at Unitrans Insurance Services, where he collected $18,000.00 during an 18-month period from several truck driver clients for commercial truck insurance. Instead of sending their payments to insurance companies, Marquez kept the money and issued bogus proof of insurance documents. In order to make the policies appear legitimate, he used real insurance company names that specialize in providing insurance to the trucking industry. The companies Marquez used include the following: Liberty Mutual, Sutter Insurance Company, General Security Insurance, TOPA Insurance, Adriatic Insurance and Ranger Insurance Company.

"This individual put the safety and protection of these truck drivers at risk by selling bogus insurance," said Insurance Commissioner John Garamendi. "Those who wish to cheat the system need to think twice before playing this game; you will be caught and prosecuted."

Marquez targeted Latino truck drivers and mislead them to believe they were receiving bonafide commercial trucker policies. Since the monies collected were not used to issue policies, the truckers were in great jeopardy by driving without valid insurance including liability, physical damage and cargo coverage. After being contacted by the CDI, Carlos Vasquez Marquez, a licensed agent and brother of Jose Marquez, refunded the premium to the victims. However, by law because there was an initial theft, a crime was committed. The case was prosecuted by the Los Angeles County District Attorney's Auto Insurance Fraud Division.

From California Department of Insurance (www.insurance.ca.gov)

Love Your Classic Car? They'll Insure It for You

Until a white 1960 Cadillac Eldorado convertible appeared last February in the window of a new $6 million service center in town, not many people here paid attention to Hagerty Insurance.

They do now.

The handsome brick-and-glass building and eye-catching $85,000 car reflect the rising prominence of this family-owned company, which employs 325 people in Traverse City and is commanding a place at the head of this country's multibillion-dollar collector car industry.

Hagerty's primary business is insuring valuable cars that are at least 25 years old. The company also insures vintage military transports, motorcycles, hot rods, wooden boats and other specialty vehicles. But it is the classics, the showy muscle cars that adorned high school parking lots in the 1960's and 70's, that stoke the enterprise.

The company's second-generation principals, Kim Hagerty, 49, and her brother McKeel Hagerty, 38, say they insure 400,000 of the four million collector cars in the United States, which makes Hagerty the nation's largest insurer in one of the industry's most profitable segments. Though neither sibling would disclose the company's revenue, their competitors estimate that Hagerty's sales are about $100 million annually.

The Hagertys are ambitious, and their business plan reflects a desire to get bigger. The company now finances collector car purchases up to $1 million. It also gives policy holders the option to buy 24-hour roadside assistance. Every collector vehicle now sold on eBay, the country's largest collector car market, comes with a free 30-day roadside assistance package from Hagerty.

Two factors lie at the core of Hagerty's performance. The first is the potent blend of demographic, gender and economic trends that are fueling the popularity of collector cars. Millions of male baby boomers with money, time and investment skills have transformed a onetime garage hobby into a chic addition to their portfolios. A 1960 Chevrolet Impala convertible in superb condition is valued at $35,000. A 1968 Shelby Mustang GT500 convertible can fetch $275,000.

"It's amazing how much people are putting into it," said David Goodman, vice president of InPro, an insurance agency in Troy, Mich., that sells Hagerty Insurance. "There are a lot of girls out there who would love to have that kind of attention and money thrown at them."

While there are no formal statistics available on how large the collector car industry is, it is growing quickly. The business of supplying parts is said to be $2 billion annually, according to trade journals. Half of the nation's 6,000 auto-body shops do some work in restoring old cars, experts say. In January, the Barrett-Jackson collector car auction in Scottsdale, Ariz., sold 1,000 cars for $100 million. Prices are rising 10 percent to 15 percent annually, car experts say.

The second factor elevating the fortunes of Hagerty Insurance and its competitors is the collector car insurance segment's exceptional "loss ratio." Most classic car owners coddle their vehicles and rarely drive them. Accidents are uncommon. The low payout versus the premiums coming in gives Hagerty a higher rate of return than other areas of the insurance industry.

It took some time for the family to recognize the full promise of insuring collector cars. The company's roots go back to 1956, when Frank and Louise Hagerty opened a storefront general insurance agency in Traverse City, then sold the business in 1979 because the economy was weak and Frank was seeking new opportunities. Serendipity followed. When each of Frank Hagerty's three children -- his middle daughter, Tammy, 46, is not involved in the company's management -- got their drivers' licenses, he encouraged them to buy old cars and restore them. His son, McKeel, still owns the 1967 black Porsche 911S that he and his father pulled out of a snowbank 23 years ago.

Frank Hagerty owns and dotes on six vintage mahogany speedboats that no company would insure. "They're seen in the industry as dried-up pieces of wood filled with gasoline," McKeel Hagerty said.

In 1983, Frank and Louise started up Hagerty Insurance again. After measuring the extent of the vintage wooden boat population in the United States (about 40,000), and negotiating with insurance underwriters, the couple introduced a full-protection policy at a reasonable rate. In a few years, the company was selling insurance to half the vintage wooden boat owners in the nation.

Many boat owners also collected old cars and often asked the Hagertys for guidance in securing policies at much lower cost than those carried by conventional insurers. Collector car policies, they felt, were expensive and inadequate. Insurers assumed that, like ordinary cars, the value of collector vehicles steadily declined. In an accident, owners were paid far less than the value of the loss.

The Hagertys were interested enough to focus on that part of the business, which grew so fast it inspired Kim to leave a successful law practice and McKeel to cut short graduate studies in philosophy. Both returned to Traverse City to take over the company in 1995. Though the young Hagertys had vowed earlier on never to make a career in insurance, their familiarity with the industry, experience in writing policies for old boats and knowledge of old cars proved to be the right fit.

The siblings knew that, like the owners of old speed boats, collector car enthusiasts babied their vehicles. The company designed a low-cost policy for owners who have good driving records and occasionally put their vehicles on the road. Full coverage under a Hagerty policy is surprisingly inexpensive: $150 a year for a $25,000 vehicle; $650 a year for a $100,000 vehicle.

Hagerty's other important innovation is that it pays policy holders the "agreed value" of the vehicle if there is a claim. This means the company understands that collector cars increase in value and that Hagerty Insurance agrees to compensate its policy holders for the full value of the loss.

The company advertised in collector car magazines, at auctions and industry gatherings, and waited for the toll-free phone calls to flood the sales office. "At that time the world was still not accustomed to buying insurance over the phone," McKeel Hagerty said. "People just didn't feel comfortable buying insurance out of a magazine from someone they don't know."

The calls came and policies were sold. And the Hagertys, who have made it a priority to adopt the most up-to-date technology, were well positioned to take advantage of the Internet as a sales tool when interest and prices of collector cars began to soar in 2000. Another marketing innovation that the Hagertys embraced was a series of offbeat advertisements in collector car magazines and on television. "We always want to make it fun," McKeel Hagerty said, "seriously."

From New York Times (www.nytimes.com)

Latino boycott being felt here

Richmond Times-Dispatch
May 1, 2006

Uly Linares passes out a publication supporting the upcoming pro-immigration boycott during Fiesta Broadway, an annual Hispanic celebration which closes off several blocks of the downtown area, Sunday, April 30, 2006, in Los Angeles. (AP/Phil McCarten) Buenas días, Richmond!

The nationwide "Day Without Immigrants" began in the Richmond area this morning with a number of Latino-run convenience stores closing for the day, and with the construction trade showing some effects of the work walkout.

At a construction site at the new Bon Secours St. Francis Medical Center in Chesterfield County, a superintendent said the Latino workers on his crews were at the site bright and early.

Phil DeBruler, superintendent of construction operations for Lauth Property Group, said he had expected about a dozen Hispanics on his crew to stay home.

"They are here," he said about 8:15.

RELATED
SPECIAL: A day without immigrants

Immigration Protests: PHOTO & VIDEO

AP COVERAGE: U.S. prepares for 'day without immigrants'

SPECIAL: Voices from the Southeast

TODAY: Catch the sights and sounds as the protest unfolds today on TimesDispatch.com.

TOMORROW: Read The Richmond Times-Dispatch online and in print to find out what happened around the state and what it means to you.

DeBruler said he thought three Latinos who have to drive from Charlotte, N.C., would have taken the opportunity to stay home.

"They were here earlier than usual," he said.

Miguel Pérez, one of three workers from Charlotte, said he came to work but would support the boycott by not buying anything.

Pérez, who came from Mexico three years ago, said many of his friends from their construction company in Charlotte were staying home.

DeBruler said one contractor, Piedmont Concrete Contractors from Charlottesville, did not show up today because his workers were staying home in sympathy with the boycott.

A construction project near the Stony Point Fashion Park, where several apartments and town homes are going up, had near the appearance of a ghost town this morning.

A man in a pickup truck who identified himself as the job superintendent said most of the Hispanic workers on the site had not shown up for work. Many had not been to work since the middle of last week.

The exception was a three-man landscaping crew, whose members who were grading an area along a ditch line and didn't want their photographs taken. The boss said he expected work to be back to normal today.

Local Latino business owners approached the boycott with varying attitudes. The Chesterfield-based Virginia Hispanic Chamber of Commerce has urged its members not to participate in the boycott, which urges all Latinos not to work or buy or sell goods today. Walkout organizers are trying to show the economic power of Latino immigrants in the United States.

On the other hand, a number of business owners were scheduled this morning to lead a cleanup of part of Hull Street Road in South Richmond as a show of solidarity with the boycott. They were to begin at La Milpa, a grocery-restaurant, in midmorning.

Officials in a number of local school districts said it was too early to assess whatever impact the walkout might have had on school attendance.

For updates on the boycott, keep checking TimesDispatch.com. For full coverage, see tomorrow's Times-Dispatch.

Six Ways for Adults to Learn Spanish

By Jennifer Chamberlain
The Dallas Morning News

Many of us have studied language in high school or college, but truly gaining fluency is no easy task. And it only gets more difficult with age.

"Linguists say that most children will learn a foreign language well up to age 12. After that, the brain works differently, and it is difficult to learn a foreign language," explains Dr. Pierina Beckman, associate professor in the Department of Foreign Languages and Literature at the University of North Texas.

Spanish is everywhere, and even learning a little can expand your cultural horizons. So if you're looking to improve your skills, what works and what doesn't? Here are six ways to learn Spanish and the effectiveness of each.

---STUDY ON YOUR OWN

There are dozens of books, tapes and software programs promising an easy way to learn Spanish. Pros: Language programs can be very inexpensive. You can even check them out free from the library. They're also convenient. Audio programs let you study in your car during a long commute or trip. Cons: The biggest problem with self-study is motivation. Beckman admits she's bought many programs for learning new languages that have never made it out of the box.

"The commitment of having someone else involved - if you have to pay a tutor, if you have to pay an institution, if you have to enroll in a class. ... If you're accountable for something, I think you will make the extra effort," she says. "That's just human nature."

Tips: Seek out conversation opportunities to augment your lessons. If you're not comfortable with a crowd, find a Spanish-speaking friend or co-worker who can help you practice.

"There are so many Spanish-speaking enclaves, you'd be surprised at how far you can get just by being here and making a friend or two who are Spanish speakers," says Theresa Kiefer, who teaches Spanish and ESL classes at El Centro College in Dallas.

If you decide to do it:

Montana Walsh, who teaches Spanish through her Language Cafe business, suggests Pimsleur Basic Spanish, (Simon & Schuster, $24.95), as an inexpensive introduction to the language.

---TAKE A CLASS

Many universities and community colleges offer continuing education classes for various levels of Spanish. Pros: By paying for a class, you've made a commitment to set aside time to learn. And your instructor can point out pronunciation errors or other mistakes. Cons: Classes can be very grammar-intensive, like the ones you may remember from high school or college, as opposed to a more conversational approach. Walsh suggests sitting in on a class before you sign up so that you'll know what to expect.

Tips: You're not likely to become fluent in Spanish by just attending a class a couple of times a week. As with self-study, practicing outside of the class is critical.Ruth Jackson, who's taking classes at El Centro College in Dallas, spends time outside of class studying Spanish language and culture in books and on the Internet - as well as practicing with her children and grandchildren.

"You have to do more on your own. You've got to go home and study and get more information, and you also must practice," she says. "You can't wait until you get to class and be able to speak Spanish."

---FIND (OR START) A PROGRAM IN YOUR WORKPLACE

Some companies will pay employees and offer time off to take continuing-education classes. Others will offer classes on-site if there's enough interest. If a program doesn't exist, consider getting one started.

Ellen Osburn, 42, owner of Therapeutic Innovations in Dallas, recently enlisted Walsh's company to teach Spanish to her administrative staff. Therapeutic Innovations provides pediatric therapy, and many of its clients are Spanish-speaking.

"The children are our clients, but so are the parents, and to be able to show them that you're making an effort to try to communicate with them is big," Osburn says.Pros: "If you want to learn Spanish for work, that's going to open up all kinds of possibilities because the Spanish market is big right now and everybody is trying to sell to the Spanish market," says Acela Garrett, vice president of Liaison Language Center in Dallas. "We have students that within the first 60 hours are in a very good position to talk to clients."

For the employee, taking classes at work or during a lunch break is convenient, and having co-workers in your class offers instant conversation opportunities. Cons: Not all companies are willing to pay for classes, and for a small business, it can be a big investment.Tips: "Get someone who is able to customize the program to be relevant to your profession," Osburn advises.

One such option is Command Spanish (http://www.commandspanish.com/), a nationally accredited program that offers classes in several states.

If you decide to do it:

Berlitz (www.berlitz.com), one of the oldest language-learning programs, offers workplace programs that teach both language and culture. Prices vary.

---HIRE A PRIVATE TUTOR

Pros: Instruction is tailored to your needs and schedule. Attorney Lisa Henry, 37, decided to learn Spanish when she became pregnant with her first child."It's so much easier to learn a language in the first five years of your life, and I thought it would give him a leg up," says Henry of her 5-month-old son, Beck.

Henry found tutor Henry Alfaro over the Internet and has been working with him since last August. She says she's been particularly pleased that Alfaro adapts the lessons to her learning style.

Now she's teaching her son some basic Spanish words so they'll be familiar as he learns to talk.

Cons: Tutoring is more expensive than taking a class. Rates range from $25 to $60 an hour.

If you decide to do it:

_www.language-school-teachers.com lets you search for tutors in your area, or you can work with a tutor online. Registration is free, and your e-mail address is kept hidden.

_Craigslist (www.craigslist.org) is also a good place to find a tutor.

---IMMERSE YOURSELF

Immersion programs can put you on the fast track to learning Spanish, language experts say.

"Not everyone can afford it. I understand that, but if they really want to have any kind of fluency, they need to do this," says Beckman. "I know this from experience."

Growing up in Mexico City, Beckman studied English for years in private school, but "I'm convinced to this day that if I didn't live here, I still couldn't speak it," she says.

Pros: In an immersion program, you're not only studying Spanish for several hours a day, you're also interacting in the language. Many programs offer the opportunity to stay with a host family who can help you further hone your skills.Brooke Hersh, 29, a doctoral student in psychology at the University of Texas, studied Spanish in Oaxaca, Mexico, last summer at the Instituto Cultural Oaxaca (www.inscuoax.net).

After just a month at the school, Hersh was able to speak a little Spanish with the children and parents she works with as part of her clinical training.

"That felt really good," she said. "I definitely have a foundation I can go back to, and I have the intent to keep that up."

Cons: Immersion programs cost anywhere from about $400 to more than $1,000 plus airfare. Also, because of the cost and time required, many people can't afford to spend more than a couple of weeks in an immersion program, which may limit their progress, says Beckman. Students at the university who study abroad generally spend five weeks in a program.

"If you sent me to France today for two weeks, even though I've studied some French, I don't know how much I would be able to loosen up my tongue and be able to speak," says Beckman.

If you decide to do it:

_AmeriSpan (www.amerispan.com) offers a wide selection of programs in various locales. Although the company does earn a commission from the schools, it also offers an assessment of the advantages and disadvantages of each.

"We actually choose the schools that we work with in each location, so basically we evaluate them based on curriculum, facilities, reputation and cost," says vice president Elizabeth Gregory.

_Once you've found some programs you're interested in, Hersh suggests asking the school for names of former students who can tell you more about it.

---HELPFUL LINKS TO LEARN SPANISH ON THE INTERNET

As with everything else, language learning has entered cyberspace, and while the Web won't teach you everything you need to know, there are plenty of fun - and free - resources to help you in your journey toward fluency.

Spanicity.com: has useful phrases, grammar lessons and vocabulary, with audio clips so you can hear how the words and phrases should be pronounced.

StudySpanish.com: Spanish Learning Resources sells learning materials, but they also have a section of free stuff including grammar and pronunciation tutorials, quizzes and a random Spanish idiom generator.

Spanish.About.com: About.com's Spanish area has free lessons, articles on a variety of Spanish topics and newsletters that offer mini-courses and a word or phrase of the day via e-mail.

Spanish.bz/blog/blogger.htm: On the Spanish Learning Blog, you can listen to free podcasts on topics such as Spanish slang and listening comprehension on the virtual iPod or sign up for a free newsletter featuring a different Spanish topic each week with audio clips.

RollingRs.com: Junior high school Spanish teacher Larry Keim offers free mini-lessons in Spanish via video podcasts, making you feel like you're in the classroom. Expanded-content podcasts cost $1.

From Dallas Morning News (www.dallasnews.com)

Latino Boycott Being Felt in Virginia

Uly Linares passes out a publication supporting the upcoming pro-immigration boycott during Fiesta Broadway, an annual Hispanic celebration which closes off several blocks of the downtown area, Sunday, April 30, 2006, in Los Angeles.

Buenas días, Richmond!

The nationwide "Day Without Immigrants" began in the Richmond area this morning with a number of Latino-run convenience stores closing for the day, and with the construction trade showing some effects of the work walkout.

At a construction site at the new Bon Secours St. Francis Medical Center in Chesterfield County, a superintendent said the Latino workers on his crews were at the site bright and early.

Phil DeBruler, superintendent of construction operations for Lauth Property Group, said he had expected about a dozen Hispanics on his crew to stay home.

"They are here," he said about 8:15

From Richmond Times-Dispatch (www.timesdispatch.com)