By Lilla Zuill - Analysis

NEW YORK (Reuters) - A coalition of U.S. insurers is calling on lawmakers to close a tax loophole that helps foreign insurers, and although it has won the support of presidential hopeful Hillary Clinton, it faces a harder task convincing others.

The coalition, led by William Berkley, chairman of a U.S. insurance company that bears his name, says foreign insurers are cutting their U.S. tax bills through reinsurance deals with affiliates in countries with lower tax rates. Berkley said the tax on such agreements must be raised to level the playing field, or else U.S. insurers may leave the country.

Despite quietly lobbying Capitol Hill over the past year, the coalition has not succeeded in getting a bill introduced by Congress. It recently ramped up efforts, including a $1 million donation by bond insurer MBIA Inc (MBI.N: ), a coalition member.

The group has also hired Jon Talisman, an assistant secretary of tax policy in former President Bill Clinton's administration, to lobby on its behalf.

But those who closely track tax developments say the group faces an uphill battle to win wider support. 

Two similar measures over the past 20 years have failed to get a nod from lawmakers, who fear essentially raising taxes on foreign insurers would ignite a trade war with powerful European insurers and encourage some overseas insurers to stop writing policies in the United States.

And insurers in the U.S. are posting strong profits, which makes it difficult for lawmakers to be sympathetic to complaints about competitiveness, or to view threats to leave the country as credible.

For U.S. insurers to move their headquarters to another country could leave them with a large capital gains tax bill, Fitch wrote in a recent report.

But Berkley, Chairman of W.R. Berkley Corp BER.N, said the potential for U.S. insurers to leave is real.

"The government either has to find a way for us to be competitive, or the rules of economics will apply," said Berkley, who last year addressed the Senate Finance Committee on the matter.

While the coalition largely has Bermuda insurers in its sights, Berkley said it is a global issue.

Bermuda, a mid-Atlantic British territory with no corporate income tax, has over the past few decades built itself into the world's fourth-largest insurance market after Germany, the U.S. and Switzerland.

"If there was a way to just go after Bermuda they (the coalition) might have a chance of success; but it goes beyond that, and once you start changing the rules on insurance for the rest of the world, you are in a trade war," said a person close to tax developments in Washington, and to those that could be affected by the measure.

Berkley said he has no imminent plans to pull up W.R. Berkley's Greenwich, Connecticut, roots, but he sees European domiciles as more attractive than Bermuda, which he cites as "expensive in every way."

"In Ireland or Switzerland you are going to be paying 7 to 15 percent (tax), which is a heck of a lot higher than (no corporate tax) in Bermuda, but less than half the tax we pay here," Berkley added.

A UK ISSUE AS WELL

Britain has also battled a similar tax issue, but insurance bosses there have called for taxes to be lowered across the board, rather than for foreign firms to be penalized.

"You don't build competition by building barriers and being protectionist," Lloyd's of London LOL.UL Chief Executive Richard Ward said in an interview last month.

Lloyd's, which continues to meet with the UK government on the matter, counts on business in the United States for about 40 percent of annual premium written.

Foreign insurers pay U.S. tax on income generated by their U.S. operations, but they can minimize their U.S. tax bills by entering reinsurance agreements with overseas affiliates. Companies do have to pay an excise tax on those deals.

Insurers transferred $32.5 billion of U.S. business to affiliated companies in 2006, according to the Reinsurance Association of America. Of that, more than half was ceded to Bermuda-based affiliates, while Swiss company transactions accounted for about one-quarter of the transactions.

(Editing by Gerald E. McCormick)

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WASHINGTON (Reuters) - Bankruptcy filings by U.S. consumers jumped 47.7 percent in April from one year ago as families cope with fallout from the subprime mortgage crisis, the American Bankruptcy Institute said on Friday.

The 92,291 bankruptcy filings in April also marked an increase of 7 percent from March, the non-partisan institute said.

"The sharp spike in consumer bankruptcies reflects the growing financial stress faced by American families, saddled with household debt and mortgage woes," said Samuel Gerdano, executive director of the institute. "We expect consumer bankruptcies to top 1 million new cases this year".

For all of 2007, there were 850,912 U.S. bankruptcy filings, up 38 percent from 2006.

(Reporting by Julie Vorman, editing by Dave Zimmerman)

© Thomson Reuters 2008 All rights reserved

By Mathieu Robbins

LONDON (Reuters) - Private equity firm Texas Pacific Group is considering a bid for Royal Bank of Scotland's (RBS.L: ) insurance arm, a source familiar with the matter said on Friday. The unit could be worth 8 billion pounds ($15.9 billion).

(Additional reporting by Simon Challis; Reporting by Mathieu Robbins and Mark Potter; Editing by John Irish)

Auerbach made the comments during an address to the Maine Insurance Agents Association on April 28 in Portland, Maine. He outlined the various efforts that are currently underway by those who want to impose federal regulation of insurance and end its supervision by the states.

“We are witnessing a number of Trojan Horses being rolled up to our gates,” Auerbach told the Maine agents. “We have a so-called ‘optional’ federal charter. We have attempts to reclassify insurance products as banking products. We have a bill now before Congress to establish an ‘Insurance Information Office.’ And we have the Treasury Department proposing an insurance regulatory office as an ‘interim step.’ An interim step to what?”

“And bear in mind, all of these regulatory efforts must be funded – at the expense of the states and at the expense of Main Street insurance agents.”

Auerbach said that despite the arguments advanced by advocates of federal insurance regulation, of which a proposal for a federal Optional Federal Charter for insurers and some agents is only one part, what is really underway is a competition for market share by major players.

He said that federal regulation in general and the OFC in particular “are being pushed by a handful of large banks, securities firms and a few carriers who want to expand their market share by using a federal regulatory system to gain an unfair advantage over their competitors, particularly the regional and mutual insurance carriers that play such an important role in our industry, our agencies and in providing consumers with a wide variety of insurance products in an efficient marketplace.”

“Federal involvement is being marketed as a way of making insurance regulation more efficient, but the subprime mortgage meltdown occurred under federal regulation,” Auerbach said. “All at the same time that the insurance industry -- which is under state regulation -- remained on a firm financial footing, achieving record profits and lower prices for consumers.”

“So our question is, why would it be more efficient for the one sector of financial services that has prudently conducted its business to be subsumed into a federal regulatory structure that has failed in the supervision of banking and securities?” he said.

Auerbach said it would be easy to be negative and tear down someone else’s concept of a remedy, but PIA’s message is positive. “We offer alternative, common sense solutions. The state system of insurance regulation works well. Yes, it needs improvements. Yes, it needs more modernization. But we shouldn’t toss out a system that works well for our industry and consumers. All PIA members, together with their PIA affiliates, must continue to work together to achieve the needed reforms to the state system.”

Auerbach said that such common-sense reforms by the states are what is needed, rather than the creation of a dual regulatory system which would lead to market instability, an increase in litigation and fewer choices for consumers.

“The National Insurance Producer Registry is just one example of such state-based action,” he said. “Like many of you, my agency is licensed in many states. I long for simplified licensing. We have a solution in the NIPR and the Producer Licensing Model Act created by the NAIC. The NIPR has made interstate licensing much easier. It is in 47 states and can be in all 50 in short order. And importantly, the system has already been built and it’s fully funded.” PIA is a member of the National Association of Insurance Commissioners’ Working Group on Producer Licensing and is helping to perfect the NIPR.

PIA’s mission statement is “to promote, protect and defend the integrity of our members, the value of their profession and the success of their businesses.”

“The beauty of our mission statement is its simplicity, which I know is an odd thing for a lawyer to say,” Auerbach told the Maine insurance agents. “Basically, it means that we do what needs to be done for our members to be able to continue to succeed and prosper.”

“Sometimes, it means we are proactive: identifying legislative problems and proposing solutions or coming up with new, innovative ways to help Main Street agents market themselves, like our award-winning PIA Branding Program. Sometimes, it means we must be reactive, such as filing lawsuits when agents’ contingent commissions come under threat. The bottom line is, our job is to work to protect your business interests.”  www.pianet.com

CLEVELAND--(BUSINESS WIRE)--For the first time in a year, car insurance rates are on the rise, according to a study by Insurance.com, the largest online auto insurance agency in the United States. The company expects auto insurance rates to continue to move up at least through 2008, which means consumers will need to be even more savvy shoppers as they try to keep their car insurance rate low.

Additional Findings

* Among the top 10 states seeing the sharpest increase in car insurance rates in the 1st Quarter were Florida (up 6.6%), Ohio (up 4.8%), Pennsylvania (up 4.2%), Georgia (up 3.2%) and Texas (up 2.4%).

* States seeing the sharpest decline in auto rates include Kentucky (down 7.6%), Maine (down 5.5%) and North Dakota (down 4.3%).

* The most expensive auto insurance quotes were in Louisiana ($2674), Washington, DC ($2515), and New Jersey ($2499). These annual rates were twice as high as those quoted to drivers in Wisconsin ($1237), Iowa ($1276) and Ohio ($1278).

“Insurance costs generally represent about 5% of the full cost of operating a car, so increases in car insurance rates – on top of rising gas prices – will hurt consumers across the board,” added Roush. “This is the perfect time to comparison shop and take advantage of every opportunity to save money. There are some very good strategies that consumers can follow that potentially add up to hundreds of dollars a year in lower rates.” http://www.iihs.org  www.insurance.com

Connecticut Attorney General Richard Blumenthal is investigating how credit rating agencies grade the risk of municipal bonds. He has joined other state officials in calling for changes at a House of Representatives committee hearing.

Blumenthal told the FT that Berkshire's ownership of 19.5 percent of Moody's, which issued a top rating to Berkshire's new bond insurance business, "certainly creates an appearance of a conflict of interest".

Blumenthal said in the report that the examination was only "a slice" of the probe, adding: "We are not making any allegations, and we reached no conclusions. We are not challenging any of the specific ratings."

(Reporting by Aarthi Sivaraman, editing by Will Waterman)

With cancer topping 12 percent of its long term disability claims, Unum is driving a research and education effort that shows employers how they can support workers through cancer diagnosis and treatment and help those employees return successfully to the workplace.

“The individual who is a cancer survivor does not want to be a hostage to the disease,” said Kenneth Mitchell, Ph.D., Unum’s vice president of health and productivity. “The employer can be the difference.”

May, which is Disability Insurance Awareness Month, presents a good opportunity to highlight the increasingly important role benefits play in keeping employees and businesses strong, Mitchell said.

As the workforce ages, the prevalence of cancer grows, and treatments for cancer become more effective, employers will need to adapt their human resource, employer relations and benefit strategies – a shift that benefits both the employer and the employee, Mitchell said. www.unum.com

"SilverPlume is responding to a challenge from our 2,500 agency subscribers to develop an affordable solution to help them deliver a higher level of professional, value-added services," said Eric Maki, senior product manager, SilverPlume. "Agents can offer ClientConnect P&C as a trusted risk management resource to their clients. Leveraging technology to help companies make more informed decisions about their risk portfolio really gets to the core of what it means to be a successful insurance professional today."

ClientConnect is an innovative, affordable and easy-to-use communication solution, risk management resource and employee benefits and administration tool. By delivering up-to-date content from SilverPlume, ClientConnect significantly reduces the time and overhead normally spent maintaining insurance or benefits sites. ClientConnect includes three portals: broker, client and employee.

For more information on ClientConnect, please visit www.silverplume.com.

SilverPlume, a Vertafore company, is the insurance industry's premier provider of aggregated insurance information, client communications and comparative rating solutions. SilverPlume provides an unparalleled depth and breadth of information to over 3,000 agencies, brokers, insurance companies and reinsurers. Visit SilverPlume at www.silverplume.com  or call 800.677.4442 for more information.

Now you can go online and see how others cope with your same issues. “Ask Julia” is a Q&A format advice column that would make Dilbert sit up in his cubicle and take notice. Ask Julia is written by Julia Kramer, an HR consultant and contributing writer to Leader’s Edge magazine.

Here is a sampling of concerns sent to Julia:

Our workday starts at 9 a.m. Many employees arrive at work right on time, greet their co-workers, meander into the kitchen for more socializing, to get coffee and/or to prepare breakfast, and actually start working at about 9:20 a.m. Our day ends at 5:30 p.m. About 15 minutes before quitting time, employees go to the restroom and/or brush their hair and fix their make-up at their desks, take their dishes to the kitchen, say good-bye to their co-workers and are out the door not a minute later than 5:30 p.m. In my opinion, I’m losing a half-hour of productivity from each employee every day. What’s your take on this?

—Clock Watcher

To read her answers to these questions and many more, visit Ask Julia at www.leadersedgemagazine.com/ask-julia.aspx

"Because Allstate's auto insurance rates were excessive, I ordered a 15.9 percent rate reduction starting Monday, April 28 that will save policy holders nearly $250 million a year," said Commissioner Poizner. "Allstate tried to get the court to delay implementation of the rate reductions last week and lost. I am taking action to ensure that Allstate expeditiously and fully complies with my rate reduction order and I will not tolerate any further delays in passing these savings onto consumers."

Allstate indicated to the Department of Insurance that technical computer hurdles prevented it from immediate implementation of the rate cut for some of its customers. To ensure that all of Allstate's customers receive the rate reductions to which they are entitled on as short a time frame as possible, Commissioner Poizner has required Allstate to remedy technical barriers and fully implement the rate reduction for all its customers by May 12, provide refunds or credits of overcharges to those whose policies go into effect in the interim and notify new automobile insurance customers that a rate cut has taken effect.  

In March, Insurance Commissioner Poizner announced a 15.9 percent decrease in auto insurance rates for customers of Allstate Insurance Company and Allstate Indemnity Company. This $244,672,212 reduction was the result of months of negotiations and an administrative hearing, which began with Allstate requesting no change to their auto insurance rates, and mirrors reductions made by other major auto insurers. Allstate's request was denied

Allstate's customers will save on average approximately $124 per year.

The administrative law judge agreed with the California Department of Insurance (CDI) claim that Allstate's rates should be reduced significantly because they were excessive to begin with. Many insurers in California have significantly lowered auto insurance rates for their policyholders. In 2007, Californians saved more than $700 million through reduced auto insurance rates.

CDI maintains that Allstate should be held to the same standard as other auto insurers, based on data submitted to the department. In October 2007, Commissioner Poizner approved $100 million in reduced auto insurance rates for AAA of Northern California. In July 2007, he approved a $65.8 million reduction for GEICO customers.

Allstate Indemnity Company is the fifth largest auto insurer in California; Allstate Insurance Company is ranked ninth. Collectively, they earned $1.7 billion in auto premiums for insuring approximately 2 million vehicles in 2007. Allstate has nearly 9 percent of California's auto insurance market.

NEW YORK, April 30, 2008 — Victims of the tornadoes that swept through Virginia on Monday, are struggling to put the pieces of their lives back in place and getting ready to begin the claims filing process.

Standard homeowners and business insurance policies cover wind damage caused by tornadoes and severe weather. Homeowner’s insurance policies also provide coverage for additional living expenses policyholders will need to finance temporary housing costs and other daily necessities. Damage to vehicles is covered under the comprehensive section of standard auto insurance policies, which is optional.

Over 140 homes, and several buildings, including a hospital, were destroyed by three twisters that hit Suffolk, Virginia, and two towns close to Richmond. Each year about 1,200 tornadoes with wind speeds as high as 300 mph touch down in the United States. Though not generally as destructive as hurricanes, tornadoes are more frequent and can also cause severe damage.

The Insurance Information Institute (I.I.I.) offers the following advice to speed the insurance claims settlement process: www.iii.org

A recent survey from Aetna (NYSE:AET) found that 86 percent of consumers with a chronic condition would “always” adhere to their prescription medication if they were enrolled in a program that reduced or eliminated co-pays for filling prescriptions, seeing doctors, or getting recommended tests (like blood tests).

The finding comes from an Aetna survey of 1,000 consumers who had one of five common conditions – hypertension (high blood pressure), asthma, diabetes, heart disease or hyperlipidimia (abnormal levels of lipids in the blood) – to assess their opinions about being enrolled in such a plan. Programs that waive or reduce co-pays for care for certain chronic conditions, thereby encouraging compliance with the care needed to manage those conditions, are known within the health insurance industry as a value-based insurance design program (VBID).

“There are a number of reasons why members may not adhere to their prescriptions,” said Ed Pezalla, M.D., national medical director for Aetna Pharmacy Management. “Members may be concerned about potential side effects or high out-of-pocket costs, or they may not understand why they are taking the medication. However, enrolling members in a program that educates them on the importance of continuing therapy and reduces their out-of-pocket costs can help them adhere to their medications.” www.aetna.com

ANNAPOLIS, Md.--(BUSINESS WIRE)--The newly released book, “The Patient Will See You Now -- How Advances in Science, Medicine, & Technology Will Lead to a Personalized Health Care System” by Carey James Kriz, promises to spark new debate about how to fix health care in the U.S. Kriz questions popular proposed bandaid solutions to the health care crisis.

“Will universal health insurance fix our health care system?” asks Carey Kriz. “The answer is easy, absolutely not. A bumper sticker approach to solving problems means that you identify one big emotional issue and suggest an obvious solution. Often times this story comes back to the failure of our insurance industry. This is a great cause, but it is not the answer.”

The new book represents one of the first serious attempts to address the major issues facing the health care community and has the potential to become a platform for the next round of debates on health care in the presidential election. www.thepatientwillseeyounow.com

Launched in 2007, The Center for Health Value Innovation is a not-for-profit (501c3) organization representing industry stakeholders committed to sharing the evidence that value-based  health designs improve health status and reduce health cost inflation. Visit www.vbhealth.org.

The U.S. central bank said it was stepping up the amounts offered in its Term Auction Facility auctions, which are held every two weeks, to $75 billion from $50 billion, beginning with an auction on May 5.

It also said it was increasing an existing temporary currency swap line with the European Central Bank to $50 billion from $30 billion and increasing a swap line with the Swiss National Bank to $12 billion from $6 billion.

The swap lines, which the Fed said it was extending through January 30, 2009, are aimed at sating demand for dollars in European markets.

(Reporting by Tim Ahmann, Editing by Chizu Nomiyama)

© Thomson Reuters 2008 All rights reserved

NEW YORK (Reuters) - For many bankers and traders, the days of company perks such as sleek limos, cushy business class seats, and fat steaks are gone.

Multibillion dollar write-downs have forced trading desk heads and senior bankers to chip away at small comforts to reduce expenses and strengthen the bottom line.

(Editing by Richard Chang)

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