Daily Quote: "Adapt or perish, now as ever, is nature's inexorable imperative." - - H. G. Wells 1. Joe Plumeri: “Price is an Issue in the Absence of Value” - --Willis Chairman Highlights Insurance Megatrends at IIL Lecture-- London, UK, March 17, 2008 – One of the biggest challenges facing the insurance industry is the demand for differentiated value, according to the Chairman and CEO of Willis Group Holdings (NYSE: WSH) Joe Plumeri, who concluded the Insurance Institute of London (IIL) 2007/2008 lecture programme at Lloyd’s last week. Highlighting several other insurance industry megatrends from the changing nature of risks to the war for distribution and the convergence of capital and insurance markets, Mr. Plumeri encouraged the industry to find innovative ways to meet these new challenges. Addressing a packed audience in the Old Library at Lloyd’s—an attendance record--Mr. Plumeri stressed the need for brokers and insurers to demonstrate what he termed their “Value Gap” to clients who today demand exceptional quality and best cost. “Value is the gap between what clients can do for themselves and what we can do for them. As an industry we do not have great self-esteem and as a result we don’t get adequately compensated for the value we deliver,” said Mr. Plumeri. “Our industry only gets paid for the placement of business and not all the invaluable advice and service that we provide clients throughout the entire process. What you put into that gap will differentiate your client offering.” Mr. Plumeri discussed the volatility of today’s risk environment and urged the industry not to try and give old answers to new questions like cyber risk, terrorism and climate change. One way to do this is to embrace technology for improved productivity. “I believe in enhancing technology not instead of people, but on behalf of people,” he said. The demand for and retention of professional talent was flagged up by Mr. Plumeri as another megatrend for the industry to take action on. “We have to stop recycling people. We need an injection of fresh, new talent into the industry because that’s the only way we will grow our business,” he said, citing investment in training of staff as a critical component in retention. A passionate advocate for the industry, Mr. Plumeri concluded by saying, “The insurance industry is the DNA of capitalism and we have a responsibility to the global economy to meet these new challenges. We need to navigate all these megatrends to define our future success.” www.willis.com Return To Top - - Print Article / Read Entire Article 2. AIG Confirms Settlement with Pennsylvania Insurance Department NEW YORK--(BUSINESS WIRE)--American International Group, Inc. (AIG) confirmed today that it has reached a settlement with the Pennsylvania Insurance Department relating to the Department’s investigation into the affairs of AIG and certain of its Pennsylvania-domiciled insurance company subsidiaries. The settlement calls for total payments of approximately $13.5 million, of which approximately $4.4 million has already been paid. During the term of the settlement agreement, AIG will provide annual reinsurance reports, as well as maintain certain producer compensation disclosure and ongoing compliance initiatives. Under the settlement agreement, AIG neither admits nor denies the allegations made by the Department. Return To Top - - Print Article / Read Entire Article 3. CITIC Sec Says Its Bear Stearns Deal Is Off Tue Mar 18, 2008 8:10am EDT SHANGHAI (Reuters) - CITIC Securities, China's biggest listed brokerage, said on Tuesday it has decided to terminate its planned strategic cooperation with Bear Stearns, including a $1 billion investment in the U.S. bank, after the troubled bank was bought by JPMorgan. "The preconditions and basis for the strategic cooperation agreement announced on November 2, 2007, do not exist any more after the JPMorgan acquisition," CITIC Securities said in a statement. "As a result, the company has decided to terminate cooperation plans with Bear Stearns including originally planned investments by Bear Stearns and CITIC Securities in each other," it added. On Sunday, JPMorgan said it had agreed to pay just $2 a share for Bear Stearns, or a total of $236 million, although the bank put a total $6 billion price tag on the deal including litigation and severance costs. Last October, CITIC Securities announced plans to invest about $1 billion in Bear Stearns securities that would convert into about 6 percent of the New York-based investment bank. In return, Bear Stearns would buy $1 billion of CITIC Securities' debt that would over time amount to a 2 percent stake in the Beijing-based firm. CITIC Securities had told Reuters in an e-mailed statement late on Saturday that, because of Bear Stearns' financial crisis, it could not guarantee it would reach a final agreement on the deal. (Reporting by George Chen; Editing by Edmund Klamann) © Reuters 2008 All rights reservedReturn To Top - - Print Article / Read Entire Article 4. Stunned Bear Stearns Investors Bring Legal Claims Mon Mar 17, 2008 6:30pm EDT NEW YORK (Reuters) - Angry Bear Stearns Co Inc shareholders have wasted no time in bringing legal claims following the company's stunning stock collapse and $2-a-share fire sale to JPMorgan Chase & Co. At least one federal lawsuit in New York seeking class- action status for alleged securities fraud was filed on Monday by an investor contending the company hid its true financial condition from shareholders. Also filed was a lawsuit from a company worker who held Bear Stearns shares in his retirement portfolio and says the company failed to properly manage risks in the pension plan. That suit also seeks class-action status. Other investors may bring cases challenging the company's pact to sell itself for a rock-bottom price, legal experts say. But courts are seen as unlikely to kill the buyout deal. That is because the venerable investment bank, which agreed to the emergency deal under pressure from the U.S. Federal Reserve as the credit crunch widens, appears to have few other options short of filing for bankruptcy, legal experts say. Shareholders "could move to enjoin the deal, but that's a tough hurdle," said Michael Kelly, a partner at law firm McCarter & English in Wilmington, Delaware, who specializes in defending corporations in litigation. "I'm sure the board is going to say this is the best option in our judgment." Another lawyer, Ira Press of class-action firm Kirby McInerney, said "there is a possibility that investors will challenge the fairness of the deal, though I would suspect that at this point, Bear Stearns must be in dire straits" and that's why it agreed to the buyout. The company is being sold for just $236 million. The deal's value is more than 90 percent below the company's Friday closing share price of $30.85. But JPMorgan said the price tag would total about $6 billion to account for litigation and severance costs. In a lawsuit filed in U.S. District Court in Manhattan on Monday, investor Eastside Holdings Inc accused Bear Stearns as well as several officers and directors of issuing false and misleading statements that led to massive losses for investors. © Reuters 2008 All rights reserved Return To Top - - Print Article / Read Entire Article 5. Citi Gets License to Underwrite Israel Offerings Tue Mar 18, 2008 8:02am EDT TEL AVIV (Reuters) - Citigroup (C.N) said on Tuesday it received a license from the Israeli Securities Authority (ISA) to underwrite public offerings in the Israeli capital market. Citi is the first international bank to lead local public offerings following new regulations approved by the ISA six months ago, the U.S. banking giant said in a statement. (Reporting by Tova Cohen; Editing by Quentin Bryar) © Reuters 2008 All rights reservedReturn To Top - - Print Article / Read Entire Article 6. UnitedHealth Stock Sinks As Medicare Disappoints NEW YORK, March 17 (Reuters) - Shares of UnitedHealth Group Inc (UNH.N) fell 8 percent on Monday after the largest U.S. health insurer by market value posted sluggish enrollment in its Medicare plans for the elderly, analysts said. UnitedHealth shares were down $3.10 to $34.09 in afternoon trade on the New York Stock Exchange. The shares are off about 24 percent since rival WellPoint Inc (WLP.N) cut its 2008 profit forecast last Monday, sparking a broad sell-off in health insurer stocks. UnitedHealth, one of the largest Medicare plan providers, grew its monthly membership by about 4,000 members, according to March data from the U.S. government analyzed by several securities analysts. That compared to nearly 21,000 additions by Humana Inc (HUM.N), another Medicare player, said Stifel Nicolaus analyst Thomas Carroll. (Reporting by Lewis Krauskopf, editing by Leslie Gevirtz) © Reuters 2008 All rights reserved Return To Top - - Print Article / Read Entire Article 7. Merrill Riskiest After Bear Stearns, Says Wachovia Tue Mar 18, 2008 9:45am EDT (Reuters) - Merrill Lynch (MER.N) is the riskiest major broker after Bear Stearns (BSC.N), with gross exposure to subprime collateralized debt obligations of $30.4 billion, 3.3 times the sector average, Wachovia Capital Markets said. Merrill also had the worst liquidity ratio at 52 percent, compared to Goldman Sachs Group Inc (GS.N) and Lehman Brothers Holdings Inc (LEH.N), and now has the highest leverage in the industry at 31.9 times, analyst Douglas Sipkin said. Shares of Merrill Lynch rose 7 percent to $44.05 in morning trade, after upbeat earnings from Goldman Sachs and Lehman Brothers led to a rebound in financial stocks. (Reporting by Tenzin Pema in Bangalore; Editing by Vinu Pilakkott) © Reuters 2008 All rights reserved Return To Top - - Print Article / Read Entire Article 8. Ambac Says Has "Limited" Exposure To Bear Stearns NEW YORK, March 18 (Reuters) - Ambac Financial Group Inc (ABK.N), a struggling bond insurer, said on Tuesday it has "limited" exposure to Bear Stearns Cos (BSC.N), and no material exposure in its financial guaranty and financial services businesses. In those businesses, Ambac has exposure "through special purpose vehicles and, in its capacity as, a servicer, a (credit default swap) counterparty, a remarketing agent or an interest rate swap/cap provider." New York-based Ambac believes its exposures are "sufficiently structured" to protect it from any material loss. It also expects JPMorgan Chase & Co (JPM.N) to assume liabilities of Bear under contracts in which the latter "substantially collateralized" its exposure to Ambac under interest rate and cross-currency swap agreements. JPMorgan agreed on Sunday to buy Bear for about $2 per share. (Reporting by Jonathan Stempel; Editing by Derek Caney) © Reuters 2008 All rights reservedReturn To Top - - Print Article / Read Entire Article 9. Court Rules Against Bear Stearns In Insurance Case Mon Mar 17, 2008 4:56pm EDT NEW YORK (Reuters) - Here is more bad news for troubled investment bank Bear Stearns Co Inc: A New York appeals court has ruled that its insurers are not responsible for the costs of an $80 million settlement in late 2002 over the firm's stock research practices. The ruling, which was made last Thursday, came before the troubled bank agreed over the weekend to be bought for $2-a- share by JPMorgan Chase & Co and is unrelated to that deal. New York Court of Appeals said Bear Stearns' insurers are not liable for $45 million worth of settlement costs the firm had sought to have covered. The settlement was reached with various regulators to end a probe into its stock research practices. Bear Stearns was one of a group of investment banks accused of issuing biased stock ratings that were designed to help the firms win lucrative investment banking business. A wide-ranging settlement was struck between the Wall Street firms and regulators. The court said in its ruling that Bear had agreed its insurers would not be liable for any settlement of more than $5 million entered into without their consent and that the firm therefore could not force the insurers to pay. "Bear Stearns therefore may not recover the settlement proceeds from the insurers," said Judge Victoria Graffeo in a written decision. A Bear Stearns representative was not immediately available for comment on Monday. The ruling has implications for the role of insurers in a wide range of corporate settlements, said Joseph Finnerty III, a partner at law firm DLA Piper who represents two of the insurers in the case, both subsidiaries of Chubb Corp "There is now, unquestionably, a place at the settlement table for insurers in any case where an insured contemplates using insurance money to pay any part of a settlement," he said. Bear Stearns agreed late on Sunday to the buyout by JP Morgan for about $236 million, which said that total costs of the deal will be about $6 billion, including litigation and severance costs. (Reporting by Martha Graybow; Editing by Andre Grenon) © Reuters 2008 All rights reserved Return To Top - - Print Article / Read Entire Article 10. S.Korea Firms Put $433 Million Into Bear Stearns Tue Mar 18, 2008 3:04am EDT SEOUL (Reuters) - Total investments by South Korean banks, brokerages and insurers in former Wall Street giant Bear Stearns (BSC.N) stand at 443.1 billion won ($432.7 million), financial regulators said on Tuesday. Their exposure is in the form of bonds, derivatives and equity-linked securities issued by the U.S. investment bank, the Financial Services Commission and the Financial Supervisory Service said in a joint statement. Bear Stearns became one of the biggest casualties yet in the widening credit crunch that has slammed global markets, after JPMorgan Chase & Co (JPM.N) late on Sunday said it would buy the stricken rival for a rock-bottom price of $2 a share. [nL17118660] The regulators, however, played down the impact on domestic financial services firms of the fire sale of Bear Stearns, saying that JPMorgan would take over the debt or liabilities. "The amount is not too big in terms of size, compared with local companies' exposure to subprime mortgage-related assets," the statement added. South Korea's subprime-related exposure stood at $1.1 bln at end of 2007, but the value shrank to $350 mln after write-offs. Regulators will keep a close watch on market conditions and check on companies' exposure to other financial services firms. Equity-linked securities bought by South Korean brokerage firms accounted for almost half of the total of 443.1 billion won, followed by insurance companies that have put 192 billion won in bonds and derivatives issued by Bear Stearns. Banks accounted for the the remainder of 40 billion won. ($1=1023.9 Won) (Reporting by Kim Yeon-hee; Editing by Keiron Henderson & Louise Heavens) © Reuters 2008 All rights reservedReturn To Top - - Print Article / Read Entire Article 11. Sen. Schumer Endorses Fed Actions, Sees No Moral Hazard Tue Mar 18, 2008 3:04am EDT WASHINGTON (Reuters) - The chairman of the U.S. congressional Joint Economic Committee on Monday endorsed the actions of the Federal Reserve actions to broker JPMorgan Chase's purchase of Bear Stearns to fend off what he said was "the closest thing to a bank panic since the Great Depression." "The Fed's move was smart, timely and threads the needle just the right way. There is no moral hazard argument here against this action," Sen. Charles Schumer, a New York Democrat, said in a statement. "This was a totally necessary move to prevent these serious problems from spreading, and to avert a possible meltdown of the financial system." Moral hazard is the concept that investors might take greater risks on the belief that government policy will protect them from suffering losses. (Reporting By Joanne Morrison and Rachelle Younglai; Editing by Leslie Adler) © Reuters 2008 All rights reserved Return To Top - - Print Article / Read Entire Article 12. Misys To Merge Healthcare Arm With U.S. Rival Tue Mar 18, 2008 5:46am LONDON (Reuters) - British software company Misys said on Tuesday it would merge its healthcare arm with Nasdaq-listed Allscripts, a deal it said would help raise group revenue growth to 7-9 percent next year. The firm said it would raise around 75 million pounds ($150 million) in a share placing to help fund the deal, which will see it pay $330 million for a controlling 54.5 percent stake in the combined entity. "Misys healthcare has struggled in the last couple of years, but this is all about .. taking a very powerful footprint in the U.S ... Misys will become a growth company again," Chief Executive Mike Lawrie told reporters, adding that the deal was a key stage of the company's turnaround launched a year ago. © Reuters 2008 All rights reserved Return To Top - - Print Article / Read Entire Article 13. EF2 Tornado Touches Down in Downtown Atlanta, Georgia BOSTON, March 17, 2008-- At 9:38 p.m., on Friday, March 14—just eight minutes after a warning was issued by the National Weather Service—a tornado touched down in Atlanta, Georgia. Declared by the National Weather Service a category EF-1 tornado at touchdown, but intensifying to an EF-2, the twister's path has been estimated at 6 miles long and 200 yards wide at its widest. EF-2 tornadoes are characterized by estimated winds of between 111-135 mph. “Not surprisingly, older unreinforced masonry buildings in the path of Friday's tornado sustained significant damage,” said Dr. Tim Doggett, senior research meteorologist at AIR Worldwide. “Well engineered commercial buildings fared better, with the bulk of the damage confined to plate glass windows. Damage was worsened by the impact of airborne debris that built up as the tornado intensified.” Officials now believe that the tornado touched down just west of Atlanta's Georgia Dome in the Vine City neighborhood, where it damaged several homes, an apartment building and the roof of the Mount Gilead Missionary Baptist Church. “Many of the residential buildings suffered roof damage. Tornadic winds passing over the roof act like air moving over an airplane wing and create uplift," continued Dr. Doggett. "This lift tends to raise the roof vertically, and the resulting damage exposes the home to further devastation. Winds are then able to enter the structure, pressurizing the building and blowing out walls and windows—and with them, contents.” It then took a destructive track through the city center. Surprised spectators of a college basketball tournament at the Georgia Dome witnessed swaying light fixtures and falling dust and debris from a hole torn in the fiberglass roof structure. Just next to the Georgia Dome, gaping holes were left in the roof of the Georgia World Congress Center, a state convention facility near the Georgia Dome. According to Dr. Doggett, “Several nearby high-rise hotels and office buildings sustained heavy damage to glazing, including the 35-story Equitable Building, which alone lost an estimated 300 windows. The SunTrust Tower at 25 Park Place lost nearly 100 windows, while a comparable number were lost at the 73-story Westin Peachtree Plaza Hotel.” The headquarters of CNN, which shares space with the Omni Hotel, also sustained roof damage, allowing heavy rain to enter the atrium. Glass from hundreds of shattered windows littered area streets where parked automobiles were left crumpled by collapsed billboards. Just east of the city center, the unreinforced masonry walls of an auto parts warehouse collapsed, and a large hole could be seen in the 14th floor of a Georgia State University dormitory. The tornado continued its east-southeast path into the residential neighborhood of Cabbagetown. There, the roof was torn off an old industrial masonry building that had been converted to lofts. The exterior walls of the top (fourth) floor then collapsed inward; in two sections of the building the collapse progressed, in pancake fashion, all the way to the basement. “Numerous single-family, wood frame houses in the neighborhood sustained heavy damage from uprooted trees,” continued Dr. Doggett. Miraculously, there were no reports of fatalities as a result of Friday's tornado. However, the severe weather that spawned the tornado continued into Saturday, when the Storm Prediction Center received more than 40 tornado reports, 160 reports of hail and 70 reports of straight-line winds across north Georgia and South Carolina. Two deaths were reported in northwest Georgia counties. In a very preliminary estimate, Georgia's State Insurance Commissioner John Oxendine said the damage could be as high as $150 million to $200 million, with most of it at the Georgia World Congress Center. AIR is dispatching a team of engineers to survey the damage in Atlanta. Return To Top - - Print Article / Read Entire Article 14. Fireman’s Fund Insurance Company Offers New Uninsured/Underinsured Liability Protection NOVATO, Calif.--(BUSINESS WIRE)--Fireman’s Fund Insurance Company announced today that it will offer new Uninsured/Underinsured Liability protection as an endorsement to its Prestige Excess® policy – personal liability coverage that protects the customer from damages they incur due to the wrongful acts of others when the liable person is uninsured or underinsured. Fireman’s Fund is the only insurance company in the U.S. to offer such coverage to its policyholders. The new coverage is designed to cover bodily injury, property damage and personal injury resulting from occurrences not involving an auto in which a liable third party is at fault, but is uninsured or underinsured. For example, this would cover a policyholder if a dog attacks his child and the dog owner is not insured or is underinsured, or if a policyholder is injured at a party on a deck that collapses and the homeowner is not insured or is underinsured. The protection is an enhancement to Fireman’s Fund’s Uninsured/Underinsured Motorist coverage. It now protects individuals from uninsured/underinsured losses on a much broader basis than what other carriers offer. Coverage up to $10 million can be added and is excess over any other collectible insurance. There is no required underlying insurance. “Fireman’s Fund recognizes the importance of providing our policyholders with comprehensive financial protection should an accident occur and the responsible party is unable to adequately cover expenses associated with injury,” said Bob Courtemanche, President, Fireman’s Fund Personal Insurance. “This new innovative coverage provides a solution to a gap that exists in most people’s risk management portfolios.” A survey, “What Worries High Net Worth Americans,” conducted by Fireman’s Fund Insurance Company, suggests that affluent Americans are more concerned with the financial risks related to uninsured/underinsured individuals than they are about theft, personal assault or slander. This fear is not without basis - according to a study by the Insurance Research Council, when a car accident involving injuries happens in the US, chances are about one in seven that the at-fault driver is uninsured. www.firemansfund.com Return To Top - - Print Article / Read Entire Article 15. Thrivent Financial Offers Baby Boomers New Solution to Help Ensure Savings Last Throughout Retirement MINNEAPOLIS--(BUSINESS WIRE)--Baby boomers, the largest generation in history, are also poised to be the longest-lived generation in human history. While this means they will enjoy the longest retirement ever experienced, they are also the first generation faced with stretching their retirement savings to last 30 years or more—in many cases without the supporting guarantees of their former employer’s defined benefit plan. To help boomers navigate this unchartered territory, Thrivent Financial for Lutherans is launching its Thrivent Retirement Income Optimizer™ (TRIO) – a customized service to help retirees actively manage their invested assets and spending in retirement (www.thrivent.com/trio). “This is the first generation that really has a diverse portfolio of assets to manage and with the responsibility of making them last throughout their retirements,” said Mark Anema, vice president of accumulation and retirement income solutions for Thrivent Financial. “At the surface, saving for retirement may seem to be the challenging part of the retirement equation. But unknown factors like market performance, inflation, life expectancy and healthcare costs will make the task of managing income and spending not only complex but daunting for the average retiree.” TRIO pairs state-of-the-art technology, including an analysis of 1,000 market scenarios, with one-on-one consultation to create a customized framework for each retiree. Instead of setting up a program that transfers assets to an annuity or other investments right at retirement, the service is ongoing throughout retirement, signaling retirees at least annually when it might be time to reallocate assets, hold invested assets instead of spending, move some assets into an inflation-adjusted stream of income, or take no action. Through regular checkups, the technology and service provides peace of mind by actively helping retirees manage their income throughout their retirement years. Return To Top - - Print Article / Read Entire Article 16. Allianz Life Joins State Partnership to Offer Minnesotans Enhanced Long Term Care Services Company offers benefit to Minnesotans who have owned long-term policies since 2006 MINNEAPOLIS--(BUSINESS WIRE)--Allianz Life Insurance Company of North America (Allianz) today announced that it is one of 25 insurers participating in the Minnesota Long Term Care (LTC) Partnership, which is designed to give individuals more control over financing their long-term care needs. Minnesotans who purchase qualified long-term care insurance policies, like the Allianz Generation Protector II, will have the opportunity to protect more of their assets should they need in-home, hospice, or nursing home care during a serious illness. “Since the baby boomer generation is entering retirement – possibly the longest retirement in history - it is critical for them to prepare for their long-term care needs,” said Eric Thomes, vice president of fixed distribution at Allianz. “Generation Protector II helps consumers gain control of their future long-term care, including when and where they receive it.” www.mnltcpartnership.org Return To Top - - Print Article / Read Entire Article 17. TAX ALERT: Deductions for Long Term Care Insurance Premiums KIRKLAND, Wash., March 18 /PRNewswire/ -- As the April 15 tax deadline looms, filers should not overlook the deductions allowed for long term care insurance, according to LTC Financial Partners LLC, the nation's most experienced long term care insurance agency. "People with LTC policies can deduct substantial sums," says Cameron Truesdell, CEO of LTC Financial Partners (LTCFP), "and those who don't have policies, but want them, can set themselves up now for deductions next year." According to the Internal Revenue Code, the 2008 deductible amounts can be as high as -- -- $3,850 if you're 70 or over* -- $3,080 if you're over 60 but not over 70* -- $1,150 if you're over 50 but not over 60* -- $580 if you're over 40 but not over 50* -- $310 if you're 40 or under* * Before end of taxable year, if medical expenses exceed 7.5% of adjusted gross income But the tax benefits may not end there. "When people start taking their benefits, there can be additional deductions in some cases," Truesdell says. "When a policy is designed to pay on a per-diem basis, a limited portion of the benefits may be excluded from taxable income." Also, when a policy is paid for out of a Health Savings Account (HSA), there can be tax advantages. "HSAs are funded with pre-tax dollars, and long term care premiums are eligible medical expenses, according to the IRS (Publication 502)." For businesses, the tax breaks can be especially attractive, Truesdell says. "For example, when small business owners pay the premiums -- for employees or themselves -- it's generally deductible as a business expense." The self-employed, S-corporation owners, and C-corporation owners are NOT subject to the 7.5% rule that limits the medical-expense deductions of individual taxpayers. How can you make sure you don't miss out on the deductions? "We're glad to consult with anyone's tax preparer," says Truesdell. More than 400 LTCFP experts are available by phone or Internet. Requests for help, at no change, may be made at http://www.ltcfp.us/ltcfp/taxbreaks.html. Return To Top - - Print Article / Read Entire Article 18. A Massachusetts Court Rejects The Use Of “Usual And Customary” Medical Provider Payment Data To Prove Reasonable Reimbursement For Chiropractic Services Introduction http://www.lordbissell.com/Newsstand/2008-02_ChiroSvc_Janov.pdf Return To Top - - Print Article / Read Entire Article 19. Department of Insurance - Discrimination Against Minority Consumers? March 14, 2008 Why Does the Department of Insurance Discriminate Against Minority Consumers? Dear Commissioner Poizner, We are writing to you in regards to a serious matter that requires your immediate attention. It has recently come to our attention that the Department of Insurance seems to be selectively neglecting the enforcement of its own policies at the expense of minority consumers. While we hope that this is not the case, we urge you to provide a swift response to clarify the Department’s policies and practices. As you are well aware, California Insurance Code § 1861.05(c)(3) requires the Commissioner to hold a hearing when: 1) an insurer’s requested rate increase is more than 7% for a personal line or 15% for a commercial line, and 2) a consumer representative timely requests a hearing. For more than three years, the Department of Insurance has followed a clearly established procedure in handling rate increase applications that meet these two elements. The Department’s Advisory Notice set forth on February 18, 2005, published on the Department’s website, clearly states that “when these two conditions are met, the Department will initiate joint discussions that include the consumer representative and the applicant regarding the rate application.” (For your convenience, the Advisory Notice is enclosed with this letter.) Inequitable Deviation from Department Policies Since November of 2007, the Greenlining Institute has requested a hearing on three personal line rate increase applications that exceeded 7%: 1) Liberty Mutual – requesting a 22.76% increase; 2) Unigard – requesting a 26% increase; and 3) United Services Auto Association – requesting 13.3-23.5% increases. Each time, Greenlining intervened on behalf of California’s minority communities. Despite three instances that should have prompted the Department’s initiation of a joint discussion between Greenlining and the affected insurer, not once have you or the Department of Insurance done so. We find it extremely disconcerting that the Department of Insurance is deviating from its own stated policy, which has been in effect for at least three years. We are especially uneasy that this deviation is coming at the expense of California’s minority communities. We are especially troubled by the fact that the Department is suspiciously deviating from this policy in regards to Greenlining, while initiating joint discussions for other intervenors. For example, USAA’s rate application garnered the involvement of Greenlining and another consumer protection group, the Foundation for Taxpayer & Consumer Rights (FTCR). The attached article shows that FTCR had already had extensive discussions with USAA about their rate increase when the media was reporting on Greenlining’s intervention. And while it seems that the Department afforded FTCR the benefit of initiating the discussion with USAA, no such benefit was afforded to Greenlining. Our question, therefore is this: Why was Greenlining, a consumer protection group advocating on behalf of people of color, not afforded the same benefit in the same exact case as that of another intervenor? Furthermore, the Advisory Notice clearly states that “If the applicant [insurer] submits any written or electronic data or correspondence regarding the application to the Department, the applicant must also send a copy to the consumer representative.” Clearly, FTCR and USAA were communicating with each other and were going through the Department of Insurance as a conduit. If USAA had sent any communication to the Department, even as a carbon copy to a communiqué sent to FTCR, the Department was required to send a copy of this communiqué to Greenlining. Greenlining never received any copy or notice of any communiqué regarding USAA and FTCR. Return To Top - - Print Article / Read Entire Article 20. INSURANCE NEWSCAST "Pictures Of The Day" -- Sponsored By:
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