Long Term Care Facts From Unum

• 57% of LTCI Claimants are under 65
• The average age is 54
• More that 15% under 45
• Nearly 2/3rds of claims are paid to ages 55-65
• The leading causes of claims under 65 are cancer, trauma,stroke or neurolical disease
• More than 70 % of claimants received care at home.

Theft of Personal Data More Than Triples This Year

Theft of sensitive data from companies, government agencies, colleges and hospital more than tripled in 2007 to more than 162 Million in 2007. People's names, birth dates, account and Social Security numbers are highly coveted. The amount of such information generated as they convert from paper into digital records is swelling.

U.S. Supreme Court opens Floodgates to Retirement Plan Participants Lawsuits

Participants in 401(k) and other retirement plans can file lawsuits claiming their individual accounts were mishandled, the U.S. Supreme Court ruled in a decision that bolsters the legal rights of 70 million people.

The justices today unanimously allowed a suit by a man who says he lost almost $100,000 because his employer didn't make investment changes he requested. The court rejected business contentions that participants can sue only to enforce the rights of the entire plan, not to recover losses incurred by a single account.

The ruling affects participants in so-called defined- contribution retirement programs -- a category that includes 401(k), employee stock ownership and profit-sharing plans. Those accounts hold $3.3 trillion in assets.

In the case before the justices, James LaRue says he tried to change the investments in his 401(k) plan in time to avoid the brunt of the 2001-02 stock market plunge. LaRue claims his employer, Dallas-based management-consulting firm DeWolff Boberg & Associates, didn't follow his instructions, costing him almost $100,000.

The 4th U.S. Circuit Court of Appeals in Richmond, Virginia, barred the suit, saying it wasn't allowed under the 1974 Employee Retirement Income Security Act, known as ERISA.
The Supreme Court today rejected that reasoning, saying Congress intended to provide broader protection to participants in retirement plans.

"Whether a fiduciary breach diminishes plan assets payable to all participants, or only to persons tied to particular individual accounts, it creates the kinds of harms that concerned the draftsmen'' of ERISA, Justice John Paul Stevens wrote for the court.

DeWolff Boberg argued that ERISA entitles LaRue to a court order directing the plan to change his investments but not to recoup the money he says he lost.

LaRue's legal team, backed by the Bush administration, said that approach would leave participants in defined-contribution plans with no recourse in the event their accounts are mishandled by the fiduciaries who administer the plan.

LaRue no longer works at DeWolff Boberg. In 2006, he closed his 401(k) account and withdrew the $119,000 balance.

Offered by employers, 401(k) plans let workers put a percentage of their paychecks into a tax-deferred investment account.

The case is LaRue v. DeWolff Boberg, 06-856.

ERISA Claim

U.S. Department of Labor Sues Advisers to Pension Plan

Co-advisers of a Michigan pension plan were sued by the U.S. Department of Labor for alleged violations of their fiduciary duties under the Employee Retirement Income Security Act (ERISA) in connection with the sale of real estate held by an employee pension plan.

The Department of Labor alleged in its complaint filed in the U.S. District Court for the Eastern District of Michigan on December 28, 2007 (Case No. 2:07-CV15519), that Fifth Third Bank and Carrie Milestone Advisors, LLC violated their fiduciary obligations to their client, Operating Engineers Local 324 Pension in Troy, Michigan, by abruptly selling investment property held by the plan when they informed the plan they would be managing this real estate asset as a long-term investment. The complaint states that the advisors' fiduciary violations caused the plan to sell a $28-million property for $4.5 million.

The Department of Labor asked the Court to prevent the defendants from acting as ERISA fiduciaries in the future and to order compensation to the plan for its losses.

Eleventh Hour Authorization of TRIA

After much wrangling in the Senate and the House, just shy of the December 31, 2007 expiration date, Congress enacted legislation (H.R. 2761) and the President signed into law the Terrorism Risk Insurance Program Reauthorization Act of 2007 on December 26, 2007 extending the widely relied upon Terrorism Risk Insurance Act of 2002 (TRIA) until 2014. TRIA was enacted in 2002 to respond to the disruption in the insurance market created after the 9/11 terrorist attacks. TRIA requires commercial property and casualty insurers to offer clients insurance coverage for damages caused by terrorist attacks. In return, the federal government provides a backstop for the insurance industry against truly catastrophic aggregate terrorism losses that exceed $100 million. Since its inception in 2002, TRIA coverage has been widely accepted and used by many as a primary means of terrorism insurance.
This reauthorization significantly changed the definition of an "Act of Terrorism" removing the previous limitation that only acts of terrorism committed "on behalf of any foreign person or foreign interest" are covered under TRIA. Many insureds complained that TRIA's limitation in applying only to acts of terrorism committed on behalf of foreign persons or interests left insureds vulnerable to losses from "homegrown" terrorists such as those that masterminded the Oklahoma City bombings and the 2005 London bombings. With this limitation removed, TRIA now includes coverage for acts of terrorism committed by any "individual or individuals acting as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States government by coercion."
The revision of the definition did not, however, amend the requirement that only damages within the U.S. or outside of the U.S. to an air carrier, vessel or U.S. mission are covered under TRIA. This limitation may create an incongruous situation for those Sellers of SAFETY Act approved technologies that rely on TRIA to satisfy their SAFETY Act insurance requirement and deploy their technologies outside the U.S. For instance, under the SAFETY Act's definition of an Act of Terrorism, the Department of Homeland Security has concluded that the SAFETY Act applies extra-territorially and that Acts of Terrorism may be certified that occur on foreign soil "if it causes harm to a person, property, or an entity in the United States." Because TRIA's definition is narrower, a Seller could find that its SAFETY Act coverage protects it from an Act of Terrorism abroad but its insurance does not apply.
For certified Acts of Terrorism, the Reauthorization Act of 2007 maintains the annual liability cap of $100 billion for the U.S. and insurers meaning that neither the U.S. nor insurers are responsible for paying losses that exceed $100 billion in the aggregate unless Congress acts otherwise with respect to these losses. The Act has always contemplated pro rata payment to insureds when the aggregate losses exceed $100 billion and now requires insurers to "provide clear and conspicuous disclosure to the policyholder" of this annual liability cap in policies issued after the Reauthorization Act of 2007. In addition, instead of leaving the pro rata determinations to the Secretary of the Treasury, the Act now requires the Secretary to issue final regulations within 240 days for determining the pro rata share to be paid by insurers when the aggregate insured loss exceeds $100 billion.
While many had pushed for coverage of losses from terrorist acts involving nuclear, biological, chemical, or radioactive materials, this reauthorization does not require insurers to offer such coverage. The Government Accountability Office has been tasked to study and issue a report in the next year on the availability of terrorism insurance specifically for acts of terrorism using nuclear, biological, chemical, or radioactive materials.
TRIA was intended to provide a temporary mechanism, expiring at the end of 2005, to allow the marketplace to adapt after the economic dislocations caused by the 9/11 attacks. While the market for terrorism insurance has improved since 2002 when TRIA was first enacted, clearly this reauthorization until 2014 reflects the fact that doubts remain as to the capacity of the private sector to insure against large-scale terrorism risk in the U.S. With this reauthorization, insureds can breathe easier that they are covered for certain catastrophic terrorist losses, at least until 2014.

Confined Space Work Rule Upsets Small Contractors

The U.S. Occupational Safety and Health Administration extended the deadline for comments on a proposed rule for construction in confined spaces from Jan. 28 to Feb. 28 following vocal opposition from utility contractors and others in the construction industry. The proposed rules were issued unexpectedly on November 28, 2007, and establishes four classifications for confined spaces - isolated hazard, controlled atmosphere, permit required, and continuous system permit required. OSHA started work on the rule in 1993 at the behest of the construction industry; previous OSHA training and education offered little guidance. Contractors have been using the general industry standard as a result, and they say that the new classification system is confusing and that it is now unclear which category to use at particular sites. The proposed rule would also put all liability on the primary contractor and imposes onerous and costly mandates for work in trenches, manholes, and other confined spaces, say utility contractors. Ted Saito of the Engineering and Utility Contractors Association says that requirements such as early warning systems, reevaluation of procedures, and additional reassessments in the event of an emergency or ventilation failure will "cause an enormous amount of record keeping for training ... that will result in financial hardship to all employers without increasing employee safety." Another provision, that a rescue team be on standby in some cases, is cost prohibitive to smaller contractors, says George Kennedy, vice president of safety at the National Utility Contractors Association.