Recently, for our Benefit Plan Clients, we have been asked to review contracts with Pharmacy Benefit Managers. Use of Pharmacy Benefit Managers is a growing trend. Standard & Poor's recently reported that the three major Pharmacy Benefit Managers are "flush with cash and are expected to be strong cash flow generators." "The industry... is benefiting from long term trends of increasing need for pharmaceutical cost-control services, rising demand for pharmaceuticals in the U.S., growing mail-order usage, and greater generic drug penatration."
As a Benefit Fund Administrator the use of Benefit Managers is an attractive option, but go into such arrangements with your eyes wide open and having read the "fine print." Our review of several "form agreements" has caused us to explain to our clients that they are taking on certain exposures that they were not aware of and would be, without modification of their insurance program, uninsured.
Our company is working with a major carrier to try to cover these gaps for our Benefit Plan Clients. We are happy to review any proposed Pharmacy Benefit Management Contract and assist you in understanding the 'hidden" risks and address them.
Wednesday, August 31, 2005
Tuesday, August 30, 2005
Hurricane Katrina
As the pictures of the devastation start to come in from Louisiana, Mississippi, and Alabama, and the number of deaths continues to rise, it is time for a pause. Hundreds of thousands of our fellow human beings wait anxiously, unable to even head home and determine the extent of the loss they have suffered. They deserve our thoughts, our prayers, and a person-by-person examination of, "how can I help" in the days and weeks ahead.
Thursday, August 25, 2005
Union Liability Insurance -- Addendum
We have previously posted new trends that explain why a Union should consider obtaining Union Liability Insurance. Here is another. HR 1074 has been introduced that would allow any "worker" who 'believes" his union has been misappropriating money to file a complaint with the U.S. Dept. of Labor, and the DOL would have the authority to file a civil suit based on the complaint.
No matter how frivolous the complaint a Union faced with a suit by the U.S. government can expect to incur tremendous legal defense costs. The newly enforced DOL --LM-30 requirements are reason enough for a Union to consider adding this coverage. If HR 1074 becomes law, union liability coverage becomes even more critical.
Go to www.mclaughlin-online.com to learn more about this important insurance coverage.
No matter how frivolous the complaint a Union faced with a suit by the U.S. government can expect to incur tremendous legal defense costs. The newly enforced DOL --LM-30 requirements are reason enough for a Union to consider adding this coverage. If HR 1074 becomes law, union liability coverage becomes even more critical.
Go to www.mclaughlin-online.com to learn more about this important insurance coverage.
Monday, August 22, 2005
ID Theft is not always computer related
The newspapers scare us all about wholesale computer ID theft, but most cases begin with lost or stolen wallets or purses. In 68 percent of reported cases the stolen information was obtained offline. Checks, credit card statements, and applications are often taken out of mailboxes in rural areas where people tend to leave mail unguarded, and people send out mail with checks and other information unaware that the red flag standing up is an attractive target for identity theives. Simple steps can help -- arrange for the post office to hold your mail when out of town and drop off mail with sensitive information or checks at a secured mailbox at the post office. It is disappointing, that something as simple as one's mailbox has become a source of risk, but it is reality.
Monday, August 15, 2005
Back to School Insurance
by Webb Hubbell
It’s August, parents and students alike are making checklists of what to purchase, what to pack, and what last minute items are needed before the school year begins. Very few lists contain the words, “call my independent insurance agent.” Here are several reasons why it should be on every parent’s list.
1. As college students start taking more and more valuable items to school – computers, televisions, expensive stereos, and jewelry -- the risk of theft or damage at the fraternities’ “Toga party” increases. Although some of these items may be covered under Mom and/or Dad’s homeowners policies a lot of items may be excluded. For example, off-campus students may not be protected at all under their parent’s policies and need to purchase renters insurance.
2. Cars owned by the parents still carry coverage when Junior takes it to school, but what if the young student purchased a car in his/her own name with summer job money? What if the young student is going away without a car, can the parents take the young student off their policy sometimes saving big bucks.
3. Most colleges require health insurance for all their students. Some offer very comprehensive plans at very low costs. Are there financial benefits to the family by eliminating the child from the parent’s health insurance plan and purchasing the colleges plan.
4. A fall semester abroad? Do you need to by a supplemental health insurance policy?
5. College is very expensive. How can you use your existing life insurance program to help or do you need more life or disability insurance to guarantee your child’s ability to go to college.
These are just a few examples of why spending a few minutes with your independent insurance agent in August may just as important as buying that new set of sheets.
It’s August, parents and students alike are making checklists of what to purchase, what to pack, and what last minute items are needed before the school year begins. Very few lists contain the words, “call my independent insurance agent.” Here are several reasons why it should be on every parent’s list.
1. As college students start taking more and more valuable items to school – computers, televisions, expensive stereos, and jewelry -- the risk of theft or damage at the fraternities’ “Toga party” increases. Although some of these items may be covered under Mom and/or Dad’s homeowners policies a lot of items may be excluded. For example, off-campus students may not be protected at all under their parent’s policies and need to purchase renters insurance.
2. Cars owned by the parents still carry coverage when Junior takes it to school, but what if the young student purchased a car in his/her own name with summer job money? What if the young student is going away without a car, can the parents take the young student off their policy sometimes saving big bucks.
3. Most colleges require health insurance for all their students. Some offer very comprehensive plans at very low costs. Are there financial benefits to the family by eliminating the child from the parent’s health insurance plan and purchasing the colleges plan.
4. A fall semester abroad? Do you need to by a supplemental health insurance policy?
5. College is very expensive. How can you use your existing life insurance program to help or do you need more life or disability insurance to guarantee your child’s ability to go to college.
These are just a few examples of why spending a few minutes with your independent insurance agent in August may just as important as buying that new set of sheets.
Saturday, August 13, 2005
News From The McLaughlin Company
Our Chairman, John T. Pappas, has made history – or at least he has donated some to the Senate. He recently 
contributed nine albums with pictures of Senators and Senate staff dating back to the late 18th century. An article in the Senate newsletter stated “The gift is significant not only because of the albums contents, but because of the individual responsible for creating many of the photographs (Matthew Brady) and the background and personal history of the donor.”
We always knew that Mr. Pappas was a bit of living history, but
who knew he had so much in his attic.
contributed nine albums with pictures of Senators and Senate staff dating back to the late 18th century. An article in the Senate newsletter stated “The gift is significant not only because of the albums contents, but because of the individual responsible for creating many of the photographs (Matthew Brady) and the background and personal history of the donor.”We always knew that Mr. Pappas was a bit of living history, but
who knew he had so much in his attic.
Tuesday, August 09, 2005
Identity Theft
It seems that every day we read in the news about identity theft. The Washington Post reports that over 50 Million accounts have been exposed to the possibility of identity fraud since the beginning of the year. The McLaughlin Company decided to do something about it for our clients. We have purchased for all our Personal Lines clients at, no cost, a St. Paul Travelers Identity Fraud Expense Coverage Master Policy with up to $25,000 in coverage and no deductible. Just by reason of being a personal lines client of The McLaughlin Company you are covered.
Some highlights of the coverage are:
- Lost wages as a result of time taken off work to deal with the fraud up to $500 per week for four weeks.
- Notary and certified mailing charges.
- Fees to reapply for loans that were denied due to erroneous credit information.
- Long distance telephone charges.
- Attorney fees incurred, with St. Paul Traveler’s consent, for defending suits, removing criminal or civil judgments, and challenging information in a credit report.
We are always looking for better ways to serve our clients. When you need insurance think The McLaughlin Company.
Webb
Thursday, August 04, 2005
Thank you!
Today was our first day with this form of communication. We welcome your comments and thoughts. Webb
SEC Issues Warning About Pension Consultants With Undisclosed Financial Ties
By Webster Hubbell
On May 16, 2005 the Securities and Exchange Commission issued a study finding that many firms that provide advise to pension plans appear to have undisclosed financial ties. Lori Richards, Director of the agency’s Office of Compliance and Examinations, said, “ We do think these findings are quite serious.” A copy of this study can be obtained by going to the SEC’s website http://www.sec.gov/.
Over a year ago The McLaughlin Company warned that Pension Funds should be wary of consultants, advisors, and actuaries who were “wearing multiple hats.”[1] The SEC goes much further raising concerns that only a few consultants informed pension-plan clients of their financial relationships. Ms. Richards described disclosure information as ranging from “none to very poor.” She said the SEC’s aim is to prompt fuller disclosure by consultants and more and better questions by pension plan sponsors and trustees.
The report on 24 pension consultants primarily dealt with ties the consultants had with money managers, but the principles of disclosure and conflicts of interest apply to all pension advisors and consultants. Ms. Richards did not reveal any of the names of the 24 consulting firms but acknowledged that a “large number of the firms have been referred to the SEC’s enforcement division for investigation and possible legal action. Ms Richards said, “ It is my hope and expectation that these firms will be dealt with in the enforcement context.” Two firms that have acknowledged that they are part of the study and report are Segal Advisors and Mercer Investment Consulting, Inc, the pension-advising unit of Marsh & McClellan Cos.
The study states that Pension Funds should have information about the Fund’s consultant’s real or potential conflict of interest in order to assess the objectivity of the advice that is or may be provided by the consultant. In The McLaughlin Company’s warning we used as an example of a clear conflict of interest an actuary, charged with evaluating the financial health of the fund, helping broker the fund’s fiduciary insurance thus “advocating” the financial health of the fund. The study raises additional concerns that consultants may steer clients based on other business relationships stating, “Such a conflict of interest can compromise the fiduciary duty that the … advisors owe their client.”
The study also raises concerns about the extent of conflict of interest disclosure. In our actuarial example, questions now must go beyond fees received for brokering insurance, to whether the actuarial firm has other business relationships with the insurance company it recommends and the extent and nature of those relationships. Also whether the actuarial firm has subsidiaries that advise pension funds and the nature and extent of those subsidiary’s financial ties to money managers and other consultants. Mere separate corporate entities with common ownership are nothing more than form over substance. Of course, the study contains many other examples of conflicts and non-disclosures. The McLaughlin Company anticipates that underwriters for fiduciary coverages will be soon be asking questions about consultants with multiple ties especially when the insurance broker is providing “other services.” Underwriters who determine that consultants are providing multiple services or have financial ties to other consultants may be forced to increase premiums to cover the plan’s increased exposure.
The McLaughlin Company believes that each of its clients is entitled to an insurance representative free of any conflicts of interest. Plan trustees have a duty to ask their insurance brokers do you have potential conflicts of interest or financial ties to other consultants. Or simple questions such as are you licensed to sell this service and do you have errors and omissions insurance for this “other service.” The McLaughlin Company has been dedicated to providing, first and foremost, excellent and ethical service to each and every one of its clients. Pension Plan’s fiduciary insurance is very important to the Funds and its trustees. The placing of such complex and important insurance needs to be handled professionally, and not as an afterthought or part of a package of “other services” provided by a plan consultant. We welcome the opportunity to discuss this further at any time and we appreciate you considering The McLaughlin Company for your insurance needs.
[1] To obtain a copy of the article Are Your Consultants and Advisors Wearing Multiple Hats, Lest They doubt Our Sincerity go to http://www.mclaughlin-online.com/.
Insurance for Labor Unions
Several individuals have asked our opinion regarding the discussion that is going on about insurance coverages for Unions. It is important that there not be confusion about these coverages. Of course, each individual Union may have special circumstances that may affect what an insurance company may be willing to write.
The McLaughlin Company designed the Union Liability policy in order to address certain unique issues created by the Taft-Hartley and Landrum-Griffin Acts. We are most aware of the difficulties faced by Unions in obtaining insurance coverage, and on behalf of the International and Local Union clients around the country we represent, we have been able to address many of the concerns raised in recent e-mails. We also have had an on going dialogue with both AIG and Ulico about improvements that are needed in their respective Union Liability policies. These discussions have led to AIG issuing, unique to our clients, the "McLaughlin endorsement" which allows the Union client to pick attorneys from a list of approved union counsel, not corporate counsel, and lowers the premium for the individual labor leader endorsement. Ulico has partnered with State National to upgrade their policy to an "A" rating and we are working with them to make improvements to their policy, as well. We have never failed in securing UL coverage for a client.
A little background is required to understand the problem with General Liability Policies and Personal Injury and Advertising exclusions.. The commercial lines manual, which is the rules and regulations used by the insurance industry to have consistency in underwriting, states that Personal Injury and Advertising Injury is to be excluded for labor unions. They are in the same category as a number of advocacy and non-profit organizations; it is not just discriminatory against labor unions.
Some insurance companies that have little background with labor unions have written locals describing them not as labor unions but as employee associations. This was particularly true of State Farm, which ended up being involved in a number of Caterpillar cases. Their answer was to cancel all policies when they discovered this. They may be back to writing locals again because underwriters have changed and memories fade, but if there is another series of claims, they will again start canceling policies.
When Ulico was active in the Property and Casualty business and started writing labor unions, they did not exclude personal injury. Because of losses, they exited the Property and Casualty business and turned over their business to Seneca, which from the get-go, was adamant in following the commercial lines manual and excluding Personal Injury and Advertising Injury. Despite this atmosphere, w e have been successful in almost every case in convincing insurance companies to provide Personal Injury and Advertising Injury on national and international unions due to our experience and Knowledge of each client and the class in general.
When we designed the Union Liability Policy, we were able to get the companies to agree to provide Personal Injury and Advertising Injury. This is available to local unions. Again, we have never failed to place a Union Liability policy for a union, be it an International or local. There is a possible exclusion in the Union Liability Policy for strikes and boycotts which is troublesome in organizing campaigns.
You will still find some underwriters and carriers who are not familiar with this class of business and will occasionally provide Personal Injury coverage but most companies when approached to write a local union say "No" even though we find carriers that will refuse in the District of Columbia and in another part of the country will insure them.
We have also been successful in getting standard carriers, like St.Paul/Travelers, to cover Local Unions under a General Liability policy when there is a Union Liability Policy in place.
We have been at the forefront of getting Joint Apprentice Training Funds covered. For several years we have been working on a program for Apprenticeship and Training Funds. We want to create an insurance product that would coordinate all of a training fund’s liability coverages so that in theory, there would be no gaps or overlaps between the policies.
There are four areas in which gaps or overlaps most commonly occur. These are (1) personal injury liability and employment related suits, (2) fiduciary liability exposures, (3) professional liability exposures, and (4) publisher’s liability exposures. In addition we needed to be sure coverage would provided for claims alleging violation of ADA, ADEA, FMLA etc. that might arise from the selection criteria used by the Funds.
In a nutshell, Labor Unions are our niche, and we take pride in meeting our Union client's needs whatever they may be. We were the first insurance agency to write an insurance policy specific to a Union and are proud of our affiliation with the labor movement over the past 75 years.
That said we want everyone to have a clear understanding of what can and cannot be covered. If you are interested in learning more go to www.mclaughlin-online.com or e-mail info@mclaughlin-online.com either requesting a list of Questions and Answers about Union Liability coverage or with your specific question. We recently sent out a letter highlighting the increased need for Union Liability coverage as a result of the DOL's increased focus on LM-30's and issues of privacy.
Although this may be more than you want to know about the unique problems facing Labor Unions and coverages I hope it is helpful. We would welcome the opportunity to discuss any insurance issue with you, especially concerning the unique coverages needed by a Labor organization.
Webb
The McLaughlin Company designed the Union Liability policy in order to address certain unique issues created by the Taft-Hartley and Landrum-Griffin Acts. We are most aware of the difficulties faced by Unions in obtaining insurance coverage, and on behalf of the International and Local Union clients around the country we represent, we have been able to address many of the concerns raised in recent e-mails. We also have had an on going dialogue with both AIG and Ulico about improvements that are needed in their respective Union Liability policies. These discussions have led to AIG issuing, unique to our clients, the "McLaughlin endorsement" which allows the Union client to pick attorneys from a list of approved union counsel, not corporate counsel, and lowers the premium for the individual labor leader endorsement. Ulico has partnered with State National to upgrade their policy to an "A" rating and we are working with them to make improvements to their policy, as well. We have never failed in securing UL coverage for a client.
A little background is required to understand the problem with General Liability Policies and Personal Injury and Advertising exclusions.. The commercial lines manual, which is the rules and regulations used by the insurance industry to have consistency in underwriting, states that Personal Injury and Advertising Injury is to be excluded for labor unions. They are in the same category as a number of advocacy and non-profit organizations; it is not just discriminatory against labor unions.
Some insurance companies that have little background with labor unions have written locals describing them not as labor unions but as employee associations. This was particularly true of State Farm, which ended up being involved in a number of Caterpillar cases. Their answer was to cancel all policies when they discovered this. They may be back to writing locals again because underwriters have changed and memories fade, but if there is another series of claims, they will again start canceling policies.
When Ulico was active in the Property and Casualty business and started writing labor unions, they did not exclude personal injury. Because of losses, they exited the Property and Casualty business and turned over their business to Seneca, which from the get-go, was adamant in following the commercial lines manual and excluding Personal Injury and Advertising Injury. Despite this atmosphere, w e have been successful in almost every case in convincing insurance companies to provide Personal Injury and Advertising Injury on national and international unions due to our experience and Knowledge of each client and the class in general.
When we designed the Union Liability Policy, we were able to get the companies to agree to provide Personal Injury and Advertising Injury. This is available to local unions. Again, we have never failed to place a Union Liability policy for a union, be it an International or local. There is a possible exclusion in the Union Liability Policy for strikes and boycotts which is troublesome in organizing campaigns.
You will still find some underwriters and carriers who are not familiar with this class of business and will occasionally provide Personal Injury coverage but most companies when approached to write a local union say "No" even though we find carriers that will refuse in the District of Columbia and in another part of the country will insure them.
We have also been successful in getting standard carriers, like St.Paul/Travelers, to cover Local Unions under a General Liability policy when there is a Union Liability Policy in place.
We have been at the forefront of getting Joint Apprentice Training Funds covered. For several years we have been working on a program for Apprenticeship and Training Funds. We want to create an insurance product that would coordinate all of a training fund’s liability coverages so that in theory, there would be no gaps or overlaps between the policies.
There are four areas in which gaps or overlaps most commonly occur. These are (1) personal injury liability and employment related suits, (2) fiduciary liability exposures, (3) professional liability exposures, and (4) publisher’s liability exposures. In addition we needed to be sure coverage would provided for claims alleging violation of ADA, ADEA, FMLA etc. that might arise from the selection criteria used by the Funds.
In a nutshell, Labor Unions are our niche, and we take pride in meeting our Union client's needs whatever they may be. We were the first insurance agency to write an insurance policy specific to a Union and are proud of our affiliation with the labor movement over the past 75 years.
That said we want everyone to have a clear understanding of what can and cannot be covered. If you are interested in learning more go to www.mclaughlin-online.com or e-mail info@mclaughlin-online.com either requesting a list of Questions and Answers about Union Liability coverage or with your specific question. We recently sent out a letter highlighting the increased need for Union Liability coverage as a result of the DOL's increased focus on LM-30's and issues of privacy.
Although this may be more than you want to know about the unique problems facing Labor Unions and coverages I hope it is helpful. We would welcome the opportunity to discuss any insurance issue with you, especially concerning the unique coverages needed by a Labor organization.
Webb
Welcome
Welcome to our newly created Blog. We will be commenting on current trends on insurance issues, but occasionally we will veer off path to comment on current events, sports and a variety of topics. We welcome your participation, but please keep them dignified. Webb
Welcome to "Webb Says"
Webb Hubbell is the former Associate Attorney General of the United States. Before coming to Washington with the Clinton administration, he was Chief Justice of the Arkansas Supreme Court. He practiced law for over 20 years specializing in litigation involving insurance, fiduciary liability and malpractice. He is now a Vice President of The McLaughlin Company.
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