Insurers like Travelers work very hard to fight insurance fraud. Travelers feels that every dollar they can keep out of the hands of criminals will benefit Traveler's customers, their business partners, and ultimately, the entire U.S. economy.
That's why they wanted to make everyone aware of a scam involving bogus checks with Travelers name and what appears to be a Travelers claim number.
Here are the details: To date, about 250 people have received a letter purporting to be from "Indemnity Financial - A Subsidiary of Travelers Indemnity Company" and containing a counterfeit Travelers Insurance Company check. The letter informs the victim they have won either a "North American Prize Pool" valued at $250,000 or a $65,000 Readers Digest / Publishers Clearing House Online Sweepstakes. The letter also references a "claim number" which is not a valid Travelers claim number. The letter instructs recipients to call a phone number, where they are advised to deposit the check to their bank account and wire the funds to an individual in Canada. They have also learned that other insurance companies' names have been used in the same scam.
If you receive a check from "Travelers Indemnity Company" accompanied by a request similar to this one, please do not deposit the check. You should contact their local law enforcement authority instead. By being alert to this scam, you may be able to help others avoid being victimized by criminals who are using Travelers' name to prey on the public. If you have any questions, you can contact KWJONES@Travelers.com.
Friday, July 27, 2007
Monday, July 16, 2007
DOL Finalizes LM-30 Rules
The U.S. Department of Labor has finalized the rules for disclosure form LM-30. This form requires officers and employees of labor organizations to report specified financial transactions and payments received to effect public disclosure of any possible conflicts between their personal financial interests and their duty to the labor union and its members. This rule clarifies the Form LM-30 and its instructions by explaining key terms and providing examples of the financial matters that must be reported, eliminates or modifies administrative exceptions in the old Form LM-30 that impeded the full disclosure of financial matters that constitute conflicts, or potential conflicts, of interest, and improves the usability of the reports by union members and the public.
The final regulations change the longstanding de minimis exception by adopting a quantitative standard of $250 as the amount above which a report is required and $20 as the amount above which payments or benefits must be counted when calculating whether the union official’s $250 reporting threshold has been met. The rule also includes a limited exclusion for widely attended gatherings, allowing union officials to attend two such gatherings without incurring a reporting obligation provided the employer or business paying for the gathering spent $125 or less per attendee per gathering. The rules are effective August 16, 2007.
The final regulations change the longstanding de minimis exception by adopting a quantitative standard of $250 as the amount above which a report is required and $20 as the amount above which payments or benefits must be counted when calculating whether the union official’s $250 reporting threshold has been met. The rule also includes a limited exclusion for widely attended gatherings, allowing union officials to attend two such gatherings without incurring a reporting obligation provided the employer or business paying for the gathering spent $125 or less per attendee per gathering. The rules are effective August 16, 2007.
Friday, July 06, 2007
Risk Managers Urged To Plan for Pandemic
It's not a question of if a pandemic will happen, but a question of where and when, said Michael Osterholm, director for the Center for Infectious Disease Research and Policy.
Osterholm was the keynote speaker April 30 at the RIMS annual conference in New Orleans. He urged risk managers to take the lead in planning how to respond to a pandemic for their companies, their communities and their families.
The risk of a flu pandemic spreading across the globe is greater today than it was in 1918, when a deadly flu killed about a half million people in the United States alone.
Osterholm said with improved transportation, diseases can be spread through airplane travelers very quickly.
Also, while some argue that improved medical technology would help prevent a flu pandemic from taking so many lives, Osterholm said there's a shortage of hospital beds and medical staff personnel.
For instance, there are only 105,000 ventilators in U.S. hospitals, which tend to keep a two-day supply of oxygen on hand, Osterholm said. "We'd run out of oxygen before we ran out of ventilators," Osterholm said.
In addition to the medical system being overwhelmed, Osterholm said, communities would have to find a way to manage the number of corpses.
"We'd run out of caskets overnight," Osterholm said. "Most communities don't have plans."
And a pandemic would also have tremendous economic ramifications. In the recent SARS outbreak, 80% of flights into and out of Hong Kong were canceled for 10 weeks.
Osterholm was the keynote speaker April 30 at the RIMS annual conference in New Orleans. He urged risk managers to take the lead in planning how to respond to a pandemic for their companies, their communities and their families.
The risk of a flu pandemic spreading across the globe is greater today than it was in 1918, when a deadly flu killed about a half million people in the United States alone.
Osterholm said with improved transportation, diseases can be spread through airplane travelers very quickly.
Also, while some argue that improved medical technology would help prevent a flu pandemic from taking so many lives, Osterholm said there's a shortage of hospital beds and medical staff personnel.
For instance, there are only 105,000 ventilators in U.S. hospitals, which tend to keep a two-day supply of oxygen on hand, Osterholm said. "We'd run out of oxygen before we ran out of ventilators," Osterholm said.
In addition to the medical system being overwhelmed, Osterholm said, communities would have to find a way to manage the number of corpses.
"We'd run out of caskets overnight," Osterholm said. "Most communities don't have plans."
And a pandemic would also have tremendous economic ramifications. In the recent SARS outbreak, 80% of flights into and out of Hong Kong were canceled for 10 weeks.
Thursday, July 05, 2007
IRS Eliminates Form 5500 Schedule P
To reduce administrative burdens of employers, plans, their administrators and trustees and custodians, and in anticipation of the transition to a wholly electronic filing environment under the ERISA Filing Acceptance System (EFAST), the Internal Revenue Service (IRS) has said in Announcement 2007-63 that the continued use of a Schedule P, Annual Return of Fiduciary Benefit Trust, in connection with the filing of a plan’s Form 5500 is no longer necessary. The elimination of Schedule P is effective for the 2005 and later plan years for Form 5500-EZ filers. For all other Form 5500 series filers, the elimination of Schedule P is effective for the 2006 and later plan years.
Tuesday, July 03, 2007
California Lawyers Must Disclose Malpractice Coverage
California lawyers will have to tell their clients whether they carry malpractice insurance under a proposed rule that opponents say could add to the costs of going to court.
About 20% of the state's 150,000 lawyers don't have malpractice coverage, according to Jim Towery, chairman of the State Bar of California task force that drafted the proposed rule.
Towery and others who support the rule said most clients want to know whether a prospective lawyer has insurance, or a history of complaints, but many fail to ask.
Opponents fear that requiring disclosure might effectively force all lawyers to buy such insurance and pass on the costs -- up to $9,000 a year -- to clients.
Most of those who lack the insurance are sole practitioners who represent accident or consumer fraud victims.
"They're the people who really provide access to justice, as opposed to tall-building lawyers," said Diane Karpman, a legal ethics expert who predicted that some small practitioners would be put out of business.
The number of disgruntled clients who sue their attorneys is small relative to other types of civil lawsuits but the number of claims is rising, according to an American Bar Assn. study. For instance, legal malpractice cases worth $2 million or more jumped 60% between 1996 and 2003, the latest year for which data are available. In most cases, clients ask for much less, but the number of claims under $10,000 has risen too, by 8% in the same period.
Most legal malpractice claims result from personal injury and real estate cases, according to the study, and close to 70% of these suits were lodged against sole practitioners or members of firms with 10 lawyers or fewer.
"There are so many ways that the lawyer can make an error," said Edith Matthai, a Los Angeles lawyer who generally represents other lawyers in malpractice cases.
Proponents of the rule, including lawyers who handle malpractice cases for plaintiffs, say the requirement would protect consumers whose claims are mishandled.
"Prospective clients should at least know that an attorney chooses to practice without insurance or is unable to get it," said Robert Sall, a Laguna Beach lawyer.
In the '90s, Sall said, he represented an Orange County woman whose divorce lawyer "failed to take the most basic steps to protect the marital assets." The woman's estranged husband squandered hundreds of thousands of dollars before the divorce was final.
She sued the lawyer for malpractice, winning a $450,000 judgment but collecting a tiny fraction of it because the lawyer, who had no liability coverage, filed bankruptcy. The woman, then in her 60s and with meager resources, had to move in with one of her children.
"There are victims here," Sall said.
Some lawyers feel uncomfortable carrying malpractice insurance. Newport Beach plaintiffs' lawyer Mary Shea has never been sued for malpractice but carried insurance for 10 years. Financial and philosophical reasons prompted her to let her policy lapse in 2005.
The premium took a big bite out of her income, she said, and she felt there was an inherent conflict of interest in relying on the same insurance companies she often sued on behalf of wronged clients to defend her if she herself was sued.
The American Bar Assn adopted a model insurance disclosure rule in 2004, and 20 states now embrace some form of it. Several others are considering proposals. The requirement was in effect in California between 1992 and 2000 but the Legislature let the rule sunset during an unrelated dispute over State Bar funding.
The proposed rule would have to be approved by the State Bar's Board of Governors and the California Supreme Court.
The State Bar's comment period closes Aug. 6. To submit comments, go to the State Bar's website at calsb.org, click on "public comment" and search for "insurance disclosure."
molly.selvin@latimes.com
Copyright 2007 Los Angeles Times
About 20% of the state's 150,000 lawyers don't have malpractice coverage, according to Jim Towery, chairman of the State Bar of California task force that drafted the proposed rule.
Towery and others who support the rule said most clients want to know whether a prospective lawyer has insurance, or a history of complaints, but many fail to ask.
Opponents fear that requiring disclosure might effectively force all lawyers to buy such insurance and pass on the costs -- up to $9,000 a year -- to clients.
Most of those who lack the insurance are sole practitioners who represent accident or consumer fraud victims.
"They're the people who really provide access to justice, as opposed to tall-building lawyers," said Diane Karpman, a legal ethics expert who predicted that some small practitioners would be put out of business.
The number of disgruntled clients who sue their attorneys is small relative to other types of civil lawsuits but the number of claims is rising, according to an American Bar Assn. study. For instance, legal malpractice cases worth $2 million or more jumped 60% between 1996 and 2003, the latest year for which data are available. In most cases, clients ask for much less, but the number of claims under $10,000 has risen too, by 8% in the same period.
Most legal malpractice claims result from personal injury and real estate cases, according to the study, and close to 70% of these suits were lodged against sole practitioners or members of firms with 10 lawyers or fewer.
"There are so many ways that the lawyer can make an error," said Edith Matthai, a Los Angeles lawyer who generally represents other lawyers in malpractice cases.
Proponents of the rule, including lawyers who handle malpractice cases for plaintiffs, say the requirement would protect consumers whose claims are mishandled.
"Prospective clients should at least know that an attorney chooses to practice without insurance or is unable to get it," said Robert Sall, a Laguna Beach lawyer.
In the '90s, Sall said, he represented an Orange County woman whose divorce lawyer "failed to take the most basic steps to protect the marital assets." The woman's estranged husband squandered hundreds of thousands of dollars before the divorce was final.
She sued the lawyer for malpractice, winning a $450,000 judgment but collecting a tiny fraction of it because the lawyer, who had no liability coverage, filed bankruptcy. The woman, then in her 60s and with meager resources, had to move in with one of her children.
"There are victims here," Sall said.
Some lawyers feel uncomfortable carrying malpractice insurance. Newport Beach plaintiffs' lawyer Mary Shea has never been sued for malpractice but carried insurance for 10 years. Financial and philosophical reasons prompted her to let her policy lapse in 2005.
The premium took a big bite out of her income, she said, and she felt there was an inherent conflict of interest in relying on the same insurance companies she often sued on behalf of wronged clients to defend her if she herself was sued.
The American Bar Assn adopted a model insurance disclosure rule in 2004, and 20 states now embrace some form of it. Several others are considering proposals. The requirement was in effect in California between 1992 and 2000 but the Legislature let the rule sunset during an unrelated dispute over State Bar funding.
The proposed rule would have to be approved by the State Bar's Board of Governors and the California Supreme Court.
The State Bar's comment period closes Aug. 6. To submit comments, go to the State Bar's website at calsb.org, click on "public comment" and search for "insurance disclosure."
molly.selvin@latimes.com
Copyright 2007 Los Angeles Times
Friday, June 29, 2007
As Predicted -- Pension Plan Consultant's Conflicts under Scrutiny
Copyright 2007 Los Angeles TimesAll Rights Reserved
Los Angeles Times
June 29, 2007 Friday Home Edition
Conflicts of interest may hurt pension plans; Unreported business dealings can affect consultants' advice and drive down returns, a federal agency finds.
Jonathan Peterson, Times Staff Writer
WASHINGTON
Undisclosed conflicts of interest by pension consultants could be taking a bite out of your retirement plan.
In a report released Thursday, the Government Accountability Office said such conflicts appeared to drive down annual returns for traditional pension plans by 1.3% a year.
Pension consultants advise pension plans on a range of matters, such as investment goals, where to allocate assets and whom to use as money managers. Conflicts may arise if a consultant's advice is influenced by other, unreported business dealings.
Though lower returns are borne by the employer in such pensions, they can add up significantly over time and ultimately lead to benefit cuts, said lawmakers who requested the report.
The findings are the latest piece of evidence that retirement savings may be affected by business decisions made in pursuit of fees and profits rather than the worker's best interest. They follow congressional hearings on the effect of hidden fees and conflicts on 401(k) plans, and seemed likely to stir new calls for stricter oversight of the business arrangements that may affect retirement savings.
"Our overarching concern when it comes to hidden fees or conflicts of interest is this: Are the people entrusted with managing other people's money held to the highest possible ethical standard?" asked Rep. George Miller (D-Martinez), chairman of the House Committee on Education and Labor. "Are they looking to serve the best interests of the pensioners, or are they looking to line their own pockets? That's what this is all about."
Miller is preparing legislation that would address concerns about conflicts of interest and hidden fees in retirement plans, including traditional pensions and 401(k) plans.
In the report, government auditors described the lower returns as "suggestive" of the effect of undisclosed conflicts but stopped short of saying there was an absolute connection. The finding "nevertheless illustrates the importance of detecting the presence of undisclosed conflicts of interest" in pension plans, the GAO said.
The study built on a 2005 analysis by the Securities and Exchange Commission, which scrutinized the dealings of 24 pension consultants and concluded that 13 had conflicts that should have been revealed.
For example, the SEC found that pension consultants were often affiliated with brokerage firms that provided brokerage services to the consultants' client pension plans. It also found that pension consultants sometimes charged money managers to attend conferences and sold them software.
"Concerns exist that pension consultants may steer clients to hire certain money managers and other vendors based on the pension consultant's (or an affiliate's) other business relationships and receipt of fees from these firms, rather than because the money manager is best suited to the clients' needs," the SEC said in its analysis.
At the request of Miller and Rep. Edward J. Markey (D-Mass.), the GAO tried to figure out whether such conflicts cost people money.
Based on the finding, Miller said in a statement that there was "potentially a significant cost to workers and retirees when consultants or money managers have conflicts of interest."
Not everyone shared the concern, however. Mark Ugoretz, president of a group that represents major corporations on pension matters, said the report produced scant evidence of damage and based it on shaky assumptions about business relationships.
"They have made assumptions that these are conflicts of interest, and when they made these assumptions they found a minimal effect," said Ugoretz, of the ERISA Industry Committee (ERISA is an acronym for the Employee Retirement Income Security Act, the 1974 law that set pension standards). "That's not a sound basis on which to take legislative action."
Members of Congress, however, seized on the findings as a further sign that retirees could be victimized by obscure conflicts in the investment world.
"When it comes to the management of pension funds and workers' hard-earned savings, investment decisions should be driven by thorough analysis and research, not by the pursuit of fees that pad profit margins of consultants to the detriment of fund beneficiaries," Markey said.
Questions about the proper handling of retirement savings by financial professionals have become increasingly widespread in recent years, particularly as members of the baby boom generation start to reach their 60s.
The Labor Department is reviewing pension disclosure requirements and expects to unveil soon a proposal that would require pension consultants and other pension service providers to disclose details of their direct and indirect compensation, fees and "other financial arrangements," Bradford P. Campbell, an acting assistant Labor secretary, told the GAO in a letter.
Los Angeles Times
June 29, 2007 Friday Home Edition
Conflicts of interest may hurt pension plans; Unreported business dealings can affect consultants' advice and drive down returns, a federal agency finds.
Jonathan Peterson, Times Staff Writer
WASHINGTON
Undisclosed conflicts of interest by pension consultants could be taking a bite out of your retirement plan.
In a report released Thursday, the Government Accountability Office said such conflicts appeared to drive down annual returns for traditional pension plans by 1.3% a year.
Pension consultants advise pension plans on a range of matters, such as investment goals, where to allocate assets and whom to use as money managers. Conflicts may arise if a consultant's advice is influenced by other, unreported business dealings.
Though lower returns are borne by the employer in such pensions, they can add up significantly over time and ultimately lead to benefit cuts, said lawmakers who requested the report.
The findings are the latest piece of evidence that retirement savings may be affected by business decisions made in pursuit of fees and profits rather than the worker's best interest. They follow congressional hearings on the effect of hidden fees and conflicts on 401(k) plans, and seemed likely to stir new calls for stricter oversight of the business arrangements that may affect retirement savings.
"Our overarching concern when it comes to hidden fees or conflicts of interest is this: Are the people entrusted with managing other people's money held to the highest possible ethical standard?" asked Rep. George Miller (D-Martinez), chairman of the House Committee on Education and Labor. "Are they looking to serve the best interests of the pensioners, or are they looking to line their own pockets? That's what this is all about."
Miller is preparing legislation that would address concerns about conflicts of interest and hidden fees in retirement plans, including traditional pensions and 401(k) plans.
In the report, government auditors described the lower returns as "suggestive" of the effect of undisclosed conflicts but stopped short of saying there was an absolute connection. The finding "nevertheless illustrates the importance of detecting the presence of undisclosed conflicts of interest" in pension plans, the GAO said.
The study built on a 2005 analysis by the Securities and Exchange Commission, which scrutinized the dealings of 24 pension consultants and concluded that 13 had conflicts that should have been revealed.
For example, the SEC found that pension consultants were often affiliated with brokerage firms that provided brokerage services to the consultants' client pension plans. It also found that pension consultants sometimes charged money managers to attend conferences and sold them software.
"Concerns exist that pension consultants may steer clients to hire certain money managers and other vendors based on the pension consultant's (or an affiliate's) other business relationships and receipt of fees from these firms, rather than because the money manager is best suited to the clients' needs," the SEC said in its analysis.
At the request of Miller and Rep. Edward J. Markey (D-Mass.), the GAO tried to figure out whether such conflicts cost people money.
Based on the finding, Miller said in a statement that there was "potentially a significant cost to workers and retirees when consultants or money managers have conflicts of interest."
Not everyone shared the concern, however. Mark Ugoretz, president of a group that represents major corporations on pension matters, said the report produced scant evidence of damage and based it on shaky assumptions about business relationships.
"They have made assumptions that these are conflicts of interest, and when they made these assumptions they found a minimal effect," said Ugoretz, of the ERISA Industry Committee (ERISA is an acronym for the Employee Retirement Income Security Act, the 1974 law that set pension standards). "That's not a sound basis on which to take legislative action."
Members of Congress, however, seized on the findings as a further sign that retirees could be victimized by obscure conflicts in the investment world.
"When it comes to the management of pension funds and workers' hard-earned savings, investment decisions should be driven by thorough analysis and research, not by the pursuit of fees that pad profit margins of consultants to the detriment of fund beneficiaries," Markey said.
Questions about the proper handling of retirement savings by financial professionals have become increasingly widespread in recent years, particularly as members of the baby boom generation start to reach their 60s.
The Labor Department is reviewing pension disclosure requirements and expects to unveil soon a proposal that would require pension consultants and other pension service providers to disclose details of their direct and indirect compensation, fees and "other financial arrangements," Bradford P. Campbell, an acting assistant Labor secretary, told the GAO in a letter.
Obesity and Workers Comp. Claims
Duke Hospital conducted a study on obesity and Workers' Comp. Results:
There was a clear linear relationship between BMI (Body Mass Index) and rate of claims
Employees in obesity class III (BMI40) had 11.65 claims per 100 FTEs, while recommended weight employees had 5.80
The effect on lost workdays (183.63 vs 14.19 lost workdays per 100 FTEs)
Medical claims costs ($51,091 vs $7,503 per 100 FTEs)
Indemnity claims costs ($59,178 vs $5,396 per 100 FTEs) was even stronger The claims most strongly affected by BMI were related to the following:
Lower extremity, wrist or hand, and back (body part affected)
Pain or inflammation, sprain or strain, and contusion or bruise (nature of the illness or injury)
Falls or slips, lifting, and exertion (cause of the illness or injury) The combination of obesity and high risk occupation was particularly detrimental.
This information should really cause you to consider an obesity program in your business.
There was a clear linear relationship between BMI (Body Mass Index) and rate of claims
Employees in obesity class III (BMI40) had 11.65 claims per 100 FTEs, while recommended weight employees had 5.80
The effect on lost workdays (183.63 vs 14.19 lost workdays per 100 FTEs)
Medical claims costs ($51,091 vs $7,503 per 100 FTEs)
Indemnity claims costs ($59,178 vs $5,396 per 100 FTEs) was even stronger The claims most strongly affected by BMI were related to the following:
Lower extremity, wrist or hand, and back (body part affected)
Pain or inflammation, sprain or strain, and contusion or bruise (nature of the illness or injury)
Falls or slips, lifting, and exertion (cause of the illness or injury) The combination of obesity and high risk occupation was particularly detrimental.
This information should really cause you to consider an obesity program in your business.
Thursday, June 28, 2007
Dear Doctor: What You Need To Know About Own Occupation Disability Insurance Policies
You've worked hard to get through medical school, gone on to specialize and now, you need to protect one of your most important assets: your income stream, says Frank N. Darras, the nation's leading disability and long-term care insurance lawyer.
Purchasing disability insurance, however, can be tricky and expensive. Policy features, advantages and benefits vary greatly. While some policies are iron-clad and pay benefits when you need them, others have holes and can cause financial disaster, should you become disabled. See http://www.darrasnews.com.
Darras offers the following tips:
-- Always buy as much individual coverage as you can afford. While doctors think (like everyone else) that they will never become disabled, the reality is that one third of all Americans between the ages of 35 and 65 will become disabled for more than 90 days.
-- Buy your policy as soon as you can, as coverage is the cheapest when we are young and healthy.
-- Even if your practice offers a group policy, be sure you buy your individual coverage first, and pay the premiums for the policy yourself so any benefits will flow tax-free. With individual coverage you also have more rights and remedies in the event your claim is wrongfully denied.
-- Only purchase "non-cancelable" and "guaranteed renewable" coverage. These features mean the insurance company cannot cancel your policy, increase your premiums or change the contract language as long as you pay your premiums on time -- even if the insurer is "taking a bath" on the claim side or decides to stop writing new business in your state.
-- Obtain the longest benefit period possible -- lifetime if available, but at least until you reach age 65. Always buy "own occupation" coverage.
-- Remember, when it comes to insurance, "the big print giveth ... the small print taketh away," so be careful and read the fine print.
-- Be a smart shopper and don't miss a premium payment.
"Finally, physicians often make fatal mistakes early in the claim process," says Darras. "Be sure to seek out the most experienced disability counsel before you file your claim so the carrier doesn't schnooker you with legalese or fine print.
Webb's Tip -- Use a qualified Independent agent to help you. For more information contact us at info@mclaughlin-online.com
Purchasing disability insurance, however, can be tricky and expensive. Policy features, advantages and benefits vary greatly. While some policies are iron-clad and pay benefits when you need them, others have holes and can cause financial disaster, should you become disabled. See http://www.darrasnews.com.
Darras offers the following tips:
-- Always buy as much individual coverage as you can afford. While doctors think (like everyone else) that they will never become disabled, the reality is that one third of all Americans between the ages of 35 and 65 will become disabled for more than 90 days.
-- Buy your policy as soon as you can, as coverage is the cheapest when we are young and healthy.
-- Even if your practice offers a group policy, be sure you buy your individual coverage first, and pay the premiums for the policy yourself so any benefits will flow tax-free. With individual coverage you also have more rights and remedies in the event your claim is wrongfully denied.
-- Only purchase "non-cancelable" and "guaranteed renewable" coverage. These features mean the insurance company cannot cancel your policy, increase your premiums or change the contract language as long as you pay your premiums on time -- even if the insurer is "taking a bath" on the claim side or decides to stop writing new business in your state.
-- Obtain the longest benefit period possible -- lifetime if available, but at least until you reach age 65. Always buy "own occupation" coverage.
-- Remember, when it comes to insurance, "the big print giveth ... the small print taketh away," so be careful and read the fine print.
-- Be a smart shopper and don't miss a premium payment.
"Finally, physicians often make fatal mistakes early in the claim process," says Darras. "Be sure to seek out the most experienced disability counsel before you file your claim so the carrier doesn't schnooker you with legalese or fine print.
Webb's Tip -- Use a qualified Independent agent to help you. For more information contact us at info@mclaughlin-online.com
Tuesday, June 26, 2007
"Feds Indict Adviser for Huge Borrowing"
The adviser, who managed investments for the Ohio Bureau of Workers' Compensation, allegedly borrowed 4500 percent of a fund's assets.
Charging Mark D. Lay with failing to report to investors overleveraging that had grown to more than 4000 percent, U.S. attorneys for the Northern and Southern Districts of Ohio indicted the investment manager on four counts concerning his handling of an offshore hedge fund that allegedly resulted in the Ohio Bureau of Workers Compensation losing $216 million of its $225 million investment.
In directing the bulk of the trade activity of the MDL Active Duration Fund, an investment consisting primarily of government, corporate, and mortgage-backed fixed-income securities, Lay far exceeded the fund's pre-set limit of 150 percent in borrowing, according to the indictment issued Friday. In an April 2004 meeting with the workers' comp board's chief investment officer, Lay did not admit that the fund's leverage was 900 percent, according to the U.S. attorneys.
In September 2004, the CIO and CFO of the board confronted Lay about the fund's poor performance, which by then had a value of $57 million despite the $200 million the workers' comp board had invested, according to the indictment. While Lay admitted at that meeting that the fund was overleveraged, he "falsely" told the board executives that he had only borrowed 900 percent of the funds assets while knowing that the leverage exceeded 4500 percent, the U.S. attorneys contended.
The indictment charges that Lay, the chairman and chief executive officer of MDL Capital Management, hid the true nature and effect of the use of leverage in the fund by failing to disclose the overleveraging and its effect on the investment funds to the comp board, thus breaching his fiduciary role as an investment advisor. He was charged with investment advisory fraud, mail fraud, and conspiracy to commit mail fraud and wire fraud.
CFO.com could not reach Lay at press time for comment on the indictment. Lay stated last week, however, that "Recent reporting and comments concerning MDL Capital Management and its investment performance have painted an inaccurate and misleading picture of the Company and our track record." Lay claimed that all his company's fixed-income products, with the exception of the one the workers' comp board invested in, had made money.
The indictment seeks forfeiture of nearly $1.8 million , which represents the amount of compensation MDL received from the workers' comp board for managing the Fund. If convicted, Lay faces up to 20 years in prison and a fine of $500,000.
Lay is the 19th person to be charged in the case, according to the Columbus Dispatch. So far, the task force probing the fraud has produced 16 convictions, the paper added."
Next time your Pension Fund Trustees meet, maybe you should ask about Fiduciary Insurance and your limits. If one of your advisors also sells insurance to the fund, maybe its time to make a change. That advisor may not want an Independent agent asking hard questions.
Charging Mark D. Lay with failing to report to investors overleveraging that had grown to more than 4000 percent, U.S. attorneys for the Northern and Southern Districts of Ohio indicted the investment manager on four counts concerning his handling of an offshore hedge fund that allegedly resulted in the Ohio Bureau of Workers Compensation losing $216 million of its $225 million investment.
In directing the bulk of the trade activity of the MDL Active Duration Fund, an investment consisting primarily of government, corporate, and mortgage-backed fixed-income securities, Lay far exceeded the fund's pre-set limit of 150 percent in borrowing, according to the indictment issued Friday. In an April 2004 meeting with the workers' comp board's chief investment officer, Lay did not admit that the fund's leverage was 900 percent, according to the U.S. attorneys.
In September 2004, the CIO and CFO of the board confronted Lay about the fund's poor performance, which by then had a value of $57 million despite the $200 million the workers' comp board had invested, according to the indictment. While Lay admitted at that meeting that the fund was overleveraged, he "falsely" told the board executives that he had only borrowed 900 percent of the funds assets while knowing that the leverage exceeded 4500 percent, the U.S. attorneys contended.
The indictment charges that Lay, the chairman and chief executive officer of MDL Capital Management, hid the true nature and effect of the use of leverage in the fund by failing to disclose the overleveraging and its effect on the investment funds to the comp board, thus breaching his fiduciary role as an investment advisor. He was charged with investment advisory fraud, mail fraud, and conspiracy to commit mail fraud and wire fraud.
CFO.com could not reach Lay at press time for comment on the indictment. Lay stated last week, however, that "Recent reporting and comments concerning MDL Capital Management and its investment performance have painted an inaccurate and misleading picture of the Company and our track record." Lay claimed that all his company's fixed-income products, with the exception of the one the workers' comp board invested in, had made money.
The indictment seeks forfeiture of nearly $1.8 million , which represents the amount of compensation MDL received from the workers' comp board for managing the Fund. If convicted, Lay faces up to 20 years in prison and a fine of $500,000.
Lay is the 19th person to be charged in the case, according to the Columbus Dispatch. So far, the task force probing the fraud has produced 16 convictions, the paper added."
Next time your Pension Fund Trustees meet, maybe you should ask about Fiduciary Insurance and your limits. If one of your advisors also sells insurance to the fund, maybe its time to make a change. That advisor may not want an Independent agent asking hard questions.
Wednesday, June 20, 2007
U.S. Supreme Court to decide right to sue for mishandling 401(k) plans.
The U.S. Supreme Court will decide whether a federal pension law gives workers who participate in 401(k) plans the right to sue claiming their accounts were mishandled.
The justices on Monday agreed to hear arguments from a man who says his retirement account is $150,000 short because the consulting firm that employed him didn't make investment changes he requested. A federal appeals court barred the suit.
The case will shape the rights of participants in "defined contribution" plans, a category that also includes employee stock ownership and profit-sharing plans. Together, those plans hold more than $3.2 trillion in U.S. employee assets.
The case before the court concerns James LaRue, who says his employer, management-consulting firm DeWolff Boberg & Associates, didn't follow his investment instructions in 2001 and 2002. He sued the firm, the administrator of the plan, in 2004 in federal court in Charleston, S.C. The suit invokes the 1974 Employee Retirement Income Security Act.
The 4th U.S. Circuit Court of Appeals in Richmond, Va., said the pension law allows suits for damages only when a participant is seeking to vindicate the rights of a plan "as a whole," not just the interests of a single account.
DeWolff Boberg urged the Supreme Court not to hear the case, saying the appeals court correctly applied a 1985 Supreme Court ruling.
The justices on Monday agreed to hear arguments from a man who says his retirement account is $150,000 short because the consulting firm that employed him didn't make investment changes he requested. A federal appeals court barred the suit.
The case will shape the rights of participants in "defined contribution" plans, a category that also includes employee stock ownership and profit-sharing plans. Together, those plans hold more than $3.2 trillion in U.S. employee assets.
The case before the court concerns James LaRue, who says his employer, management-consulting firm DeWolff Boberg & Associates, didn't follow his investment instructions in 2001 and 2002. He sued the firm, the administrator of the plan, in 2004 in federal court in Charleston, S.C. The suit invokes the 1974 Employee Retirement Income Security Act.
The 4th U.S. Circuit Court of Appeals in Richmond, Va., said the pension law allows suits for damages only when a participant is seeking to vindicate the rights of a plan "as a whole," not just the interests of a single account.
DeWolff Boberg urged the Supreme Court not to hear the case, saying the appeals court correctly applied a 1985 Supreme Court ruling.
Monday, June 11, 2007
Fast-Growing, State-Run Property Insurers Pose Risk for Taxpayers
Exponential growth of state-run property insurers of last resort ultimately may shift much of the long-term risk of hurricane-related losses to policyholders and taxpayers, even those who live nowhere near the coast, reports the private insurance industry's Insurance Information Institute.
By year-end 2006, total exposure to loss in state-run property insurers is estimated to have surged to more than $600 billion, compared with $54.7 billion in 1990. Total policies in force had also risen to in excess of 2 million.
The explosive growth in these plans is attributable to a number of factors, including the rapid rise in coastal development and property values, and the changing shape and role of state-run property insurers in a number of states, according to a new study from the I.I.I.
'While state-run insurers of last resort fulfill a key role by ensuring that policyholders can obtain insurance coverage, many have morphed from their traditional role as urban property insurers into major providers of insurance in high-risk coastal areas," said Dr. Robert P. Hartwig, president and chief economist of the I.I.I.
According to Dr. Hartwig, this shift of high risk exposure away from the private property insurance market is placing an enormous financial burden on state-run insurers, leaving a number of them operating at substantial deficits. As a result, state-run insurers of last resort may end up shifting the long-term risks of hurricane-related losses to policyholders and taxpayers who do not live near the coast.
"Depending on the state, the redistribution of costs is commonly achieved via laws that allow state-run insurers (which are often the largest insurers in the most hazardous areas) to recover their losses in excess of their claims-paying resources by assessing (effectively taxing) the insurance policies of homeowners and business owners throughout the state, including those well away from the coast and those who have never filed a claim," Dr. Hartwig said. "In some cases, even unrelated types of insurance such as auto insurance and commercial liability coverage can be assessed."
"Even in states where the value of insured coastal property represents a relatively small percentage of total insured property values, this does not mean that state-run property insurers are not experiencing rapid growth," added Claire Wilkinson, vice president, Global Issues at the I.I.I. and co-author of the study.
For example, North Carolina's $105.3 billion in insured coastal exposure represents just 9 percent of the state's total insured property values. Yet the state's beach and windstorm plan saw its exposure and total policy count more than double between 2003 and 2006.
"The insurance industry is committed to working in partnership with public policymakers, consumers and businesses in developing solutions to the formidable challenges posed by catastrophe risks in future," said Dr. Hartwig.
By year-end 2006, total exposure to loss in state-run property insurers is estimated to have surged to more than $600 billion, compared with $54.7 billion in 1990. Total policies in force had also risen to in excess of 2 million.
The explosive growth in these plans is attributable to a number of factors, including the rapid rise in coastal development and property values, and the changing shape and role of state-run property insurers in a number of states, according to a new study from the I.I.I.
'While state-run insurers of last resort fulfill a key role by ensuring that policyholders can obtain insurance coverage, many have morphed from their traditional role as urban property insurers into major providers of insurance in high-risk coastal areas," said Dr. Robert P. Hartwig, president and chief economist of the I.I.I.
According to Dr. Hartwig, this shift of high risk exposure away from the private property insurance market is placing an enormous financial burden on state-run insurers, leaving a number of them operating at substantial deficits. As a result, state-run insurers of last resort may end up shifting the long-term risks of hurricane-related losses to policyholders and taxpayers who do not live near the coast.
"Depending on the state, the redistribution of costs is commonly achieved via laws that allow state-run insurers (which are often the largest insurers in the most hazardous areas) to recover their losses in excess of their claims-paying resources by assessing (effectively taxing) the insurance policies of homeowners and business owners throughout the state, including those well away from the coast and those who have never filed a claim," Dr. Hartwig said. "In some cases, even unrelated types of insurance such as auto insurance and commercial liability coverage can be assessed."
"Even in states where the value of insured coastal property represents a relatively small percentage of total insured property values, this does not mean that state-run property insurers are not experiencing rapid growth," added Claire Wilkinson, vice president, Global Issues at the I.I.I. and co-author of the study.
For example, North Carolina's $105.3 billion in insured coastal exposure represents just 9 percent of the state's total insured property values. Yet the state's beach and windstorm plan saw its exposure and total policy count more than double between 2003 and 2006.
"The insurance industry is committed to working in partnership with public policymakers, consumers and businesses in developing solutions to the formidable challenges posed by catastrophe risks in future," said Dr. Hartwig.
Tuesday, May 29, 2007
Cyber Insurance
So-called cyber attacks threaten businesses of all sizes, yet business use of various insurance products to protect against such attacks substantially differ among insurers, industry experts say.
According to American International Group Inc., cyber attacks compromised nearly 90 million identities in the United States since 2005.
Of 200 data breach claims, AIG said 33% were from hacking, 25% were from stolen equipment, 10% were from missing or lost data, 7% were from dishonest insiders and 22% from ``other security failures,'' with 3% unaccounted for.
``The victim must determine what happened, how information was accessed, what was accessed and if it was criminal,'' said Nancy Callahan, vp of AIG's identity theft and fraud division. ``If it was criminal, they have to bring in law enforcement.''
``The sheer magnitude of the loss of almost 90 million customer records and the variety of causes is shocking,'' Ms. Callahan said. ``It's urgent to protect middle-market companies and small businesses against the aftermath of an identity breach theft.''
Experts estimate indirect costs for lost productivity from stolen or misplaced data average $15 per customer record, while lost customers and recruiting new customers costs $75 per customer record.
Ms. Callahan said the average total cost of an information breach is $50 million.
Data security breaches pose an enormous threat and cost businesses a huge amount of money, said Kate Armfield, co-chair of RiskProNet International's marketing/placement practice group, a network of 28 independent brokers in the United States and Canada. She is also principal-account marketing at brokerage Armfield, Harrison & Thomas Inc. in Leesburg, Va.
Examine differences
``We have reviewed multiple forms that provide this type of coverage and caution there are differences that need to be reviewed during the placement process,'' Ms. Armfield said. ``Some, for example, provide coverage for `Dumpster diving' or data from stolen laptops and others do not.''
Businesses have been slow to buy technology and cyber liability coverage for several reasons, said Patrick Deaver, vp of operations at digital media company i-Mark Inc. in Holly Springs, N.C.
``This is still a concept. There is a lack of awareness due to slow rollout and penetration among business insurers,'' Mr. Deaver said.
``Where the coverage has been promoted, the value of the coverage has yet to exceed the cost. The insured is still willing to accept the risk of exposure due to a lack of monumental cases that illustrate true impact dollars resulting from security breaches,'' Mr. Deaver said.
Kirk Sexton, former chief information officer with CHOICE Medical Management Services L.L.C., a Tampa, Fla.-based workers compensation and disability management services provider, has used data breach insurance provided by Unisource Administrators Inc., its parent company in Sarasota, Fla. Mr. Sexton, now an independent consultant, said data breach claims were part of a roll-up technology/Internet rider attached to a general liability policy.
``There were some general conditions that we put into internal policy that helped protect ourselves and lower the premium cost as well,'' Mr. Sexton said. ``Among those were the policy of requiring our trading partners to carry a minimum of a $10 million policy as well.''
Data security breach coverage can be purchased as part of a technology liability policy or on a stand-alone basis, said Joshua Gow, vp of Philadelphia-based ACE Professional Risk, a unit of ACE USA.
``We are seeing a lot of demand from a lot of industries that do not have full-line professional liability exposure like retail, hospitality, restaurant chains,'' he said.
``Companies outsource a ton of different tasks from payroll to accounting to consulting contracts and call centers,'' Mr. Gow said. ``The natural result is that they are taking their confidential client information and entrusting it to third parties.''
``If I am entrusting my payroll to an outside company, I say, `Fine, as part of our contract you are required to maintain $5 million coverage in private liability limits,' '' Mr. Gow said.
Data security policy limits are available from $1 million to $50 million.
Responsible outsourcing
``It's a matter of going in and transferring liability,'' Mr. Gow said. ``Even though I have outsourced that service to a third party, if that third party loses my customer data, the customers are going to sue me. I'm the one who trusted this third party to handle the data.''
``So I want my own insurance and I want them to have insurance to subrogate against in case there is a problem,'' Mr. Gow said.
Numerous insurers write data security coverage.
Mark Ware, director of IMA Financial Group Inc.'s technology industry practice, a Denver-based brokerage, said the market penetration is low because some brokers do not understand the issue and companies with strong information technology departments think they are beyond claims.
``Cost of such insurance depends on what a company considers to be its exposure,'' said David Halstrom, an underwriter at Beazley Group P.L.C. in Farmington, Conn. ``A risk manager and a company protecting stakeholders (are) going to have elaborate and technologically related controls available to fend off these risks.
``It's going to be a risk/reward related to the premium vs. the protection you get,'' Mr. Halstrom said. ``Also, it is a matter of do you include that into your total risk management process as a risk manager.''
``There are a lot of moving parts to these issues. At the end of the day, the good guys in network security are having trouble keeping up with the bad guys,'' Mr. Halstrom said. ``At the end of the day, that is when insurance is there to protect against those types of situations, where the companies we insure did all that they could, but weren't able to fend off.''
Copyright 2007 Crain Communications Inc.
According to American International Group Inc., cyber attacks compromised nearly 90 million identities in the United States since 2005.
Of 200 data breach claims, AIG said 33% were from hacking, 25% were from stolen equipment, 10% were from missing or lost data, 7% were from dishonest insiders and 22% from ``other security failures,'' with 3% unaccounted for.
``The victim must determine what happened, how information was accessed, what was accessed and if it was criminal,'' said Nancy Callahan, vp of AIG's identity theft and fraud division. ``If it was criminal, they have to bring in law enforcement.''
``The sheer magnitude of the loss of almost 90 million customer records and the variety of causes is shocking,'' Ms. Callahan said. ``It's urgent to protect middle-market companies and small businesses against the aftermath of an identity breach theft.''
Experts estimate indirect costs for lost productivity from stolen or misplaced data average $15 per customer record, while lost customers and recruiting new customers costs $75 per customer record.
Ms. Callahan said the average total cost of an information breach is $50 million.
Data security breaches pose an enormous threat and cost businesses a huge amount of money, said Kate Armfield, co-chair of RiskProNet International's marketing/placement practice group, a network of 28 independent brokers in the United States and Canada. She is also principal-account marketing at brokerage Armfield, Harrison & Thomas Inc. in Leesburg, Va.
Examine differences
``We have reviewed multiple forms that provide this type of coverage and caution there are differences that need to be reviewed during the placement process,'' Ms. Armfield said. ``Some, for example, provide coverage for `Dumpster diving' or data from stolen laptops and others do not.''
Businesses have been slow to buy technology and cyber liability coverage for several reasons, said Patrick Deaver, vp of operations at digital media company i-Mark Inc. in Holly Springs, N.C.
``This is still a concept. There is a lack of awareness due to slow rollout and penetration among business insurers,'' Mr. Deaver said.
``Where the coverage has been promoted, the value of the coverage has yet to exceed the cost. The insured is still willing to accept the risk of exposure due to a lack of monumental cases that illustrate true impact dollars resulting from security breaches,'' Mr. Deaver said.
Kirk Sexton, former chief information officer with CHOICE Medical Management Services L.L.C., a Tampa, Fla.-based workers compensation and disability management services provider, has used data breach insurance provided by Unisource Administrators Inc., its parent company in Sarasota, Fla. Mr. Sexton, now an independent consultant, said data breach claims were part of a roll-up technology/Internet rider attached to a general liability policy.
``There were some general conditions that we put into internal policy that helped protect ourselves and lower the premium cost as well,'' Mr. Sexton said. ``Among those were the policy of requiring our trading partners to carry a minimum of a $10 million policy as well.''
Data security breach coverage can be purchased as part of a technology liability policy or on a stand-alone basis, said Joshua Gow, vp of Philadelphia-based ACE Professional Risk, a unit of ACE USA.
``We are seeing a lot of demand from a lot of industries that do not have full-line professional liability exposure like retail, hospitality, restaurant chains,'' he said.
``Companies outsource a ton of different tasks from payroll to accounting to consulting contracts and call centers,'' Mr. Gow said. ``The natural result is that they are taking their confidential client information and entrusting it to third parties.''
``If I am entrusting my payroll to an outside company, I say, `Fine, as part of our contract you are required to maintain $5 million coverage in private liability limits,' '' Mr. Gow said.
Data security policy limits are available from $1 million to $50 million.
Responsible outsourcing
``It's a matter of going in and transferring liability,'' Mr. Gow said. ``Even though I have outsourced that service to a third party, if that third party loses my customer data, the customers are going to sue me. I'm the one who trusted this third party to handle the data.''
``So I want my own insurance and I want them to have insurance to subrogate against in case there is a problem,'' Mr. Gow said.
Numerous insurers write data security coverage.
Mark Ware, director of IMA Financial Group Inc.'s technology industry practice, a Denver-based brokerage, said the market penetration is low because some brokers do not understand the issue and companies with strong information technology departments think they are beyond claims.
``Cost of such insurance depends on what a company considers to be its exposure,'' said David Halstrom, an underwriter at Beazley Group P.L.C. in Farmington, Conn. ``A risk manager and a company protecting stakeholders (are) going to have elaborate and technologically related controls available to fend off these risks.
``It's going to be a risk/reward related to the premium vs. the protection you get,'' Mr. Halstrom said. ``Also, it is a matter of do you include that into your total risk management process as a risk manager.''
``There are a lot of moving parts to these issues. At the end of the day, the good guys in network security are having trouble keeping up with the bad guys,'' Mr. Halstrom said. ``At the end of the day, that is when insurance is there to protect against those types of situations, where the companies we insure did all that they could, but weren't able to fend off.''
Copyright 2007 Crain Communications Inc.
Wednesday, May 23, 2007
U.S. Supreme Court Toughens Standards for Antitrust Suits
The justices, in a 7-2 opinion, ruled that an allegation that two or more companies are acting in parallel isn't enough for an antitrust lawsuit to proceed. Even if the result benefited the companies and diminished competition, the plaintiffs must go further and include some allegation indicating that the companies were actively working together.
When independent self-interest also could explain the conduct, Justice David Souter wrote for the court, plaintiffs must allege "some factual context suggesting agreement" to restrain trade.
The ruling doesn't radically upend the rules for antitrust actions. Nevertheless, it marks the latest in a sequence of cases where the court has tightened the scope of the Sherman Antitrust Act, the 1890 statute that took aim at monopoly by outlawing any "contract, combination . . . or conspiracy in restraint of trade or commerce."
Business interests contend that many companies are forced to settle even meritless lawsuits, because the cost of discovery may dwarf a payment that would make the case go away. But the court was vague about what it had in mind as the minimum allegation for a suit to proceed.
Justice Souter wrote that "the problem of discovery abuse" could cost innocent defendants huge sums. In the telecom case, "determining whether some illegal agreement may have taken place between unspecified persons at different [companies], (each a multibillion dollar corporation with legions of management level employees) . . . is a sprawling, costly and hugely time-consuming undertaking."
The 1996 Telecommunications Act sought to foster competition by allowing the so-called Baby Bells, the Bell System's successors, to sell long-distance service while also requiring them to open their local exchanges to rival carriers. But instead of promoting a robust marketplace for local telephone service, the Baby Bells largely declined to enter each others' regions and, plaintiffs alleged, they made it hard for upstart competitors to use their exchanges.
Citing this parallel conduct, plaintiffs, represented by the class-action firm Milberg Weiss Bershad & Schulman, filed suit. They alleged that the mutually beneficial parallel conduct by the Baby Bells -- which, after various mergers and name changes, now include AT&T Inc., Qwest Communications International Inc. and Verizon Communications Inc. -- suggested some sort of agreement. Plaintiffs sought to begin discovery in search of evidence supporting the claim.
A federal judge in Manhattan dismissed the case, ruling that plaintiffs must also allege facts that tend "to exclude independent self-interested conduct as an explanation for defendants' parallel behavior."
But the Second U.S. Circuit Court of Appeals, in New York, reinstated the case, citing a 1957 Supreme Court opinion that a suit shouldn't be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim." Since a conspiracy was a conceivable explanation for conduct that undercut competition, the court ruled the case could proceed.
Not so, wrote Justice Souter, joined by Chief Justice John Roberts and Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, Stephen Breyer and Samuel Alito.
In this case, Justice Souter wrote, the plaintiffs didn't list "a single fact in a context that suggests an agreement." The Baby Bells, he observed, descended from a world where telecom was a monopoly and "doubtless liked the world the way it was." Thus, "a natural explanation for the noncompetition alleged is that the former government-sanctioned monopolists were sitting tight, expecting their neighbors to do the same thing."
In dissent, Justice John Paul Stevens, largely joined by Justice Ruth Bader Ginsburg, contended that the majority was driven not by settled law but a "transparent policy concern" to protect antitrust defendants from litigation costs.
When independent self-interest also could explain the conduct, Justice David Souter wrote for the court, plaintiffs must allege "some factual context suggesting agreement" to restrain trade.
The ruling doesn't radically upend the rules for antitrust actions. Nevertheless, it marks the latest in a sequence of cases where the court has tightened the scope of the Sherman Antitrust Act, the 1890 statute that took aim at monopoly by outlawing any "contract, combination . . . or conspiracy in restraint of trade or commerce."
Business interests contend that many companies are forced to settle even meritless lawsuits, because the cost of discovery may dwarf a payment that would make the case go away. But the court was vague about what it had in mind as the minimum allegation for a suit to proceed.
Justice Souter wrote that "the problem of discovery abuse" could cost innocent defendants huge sums. In the telecom case, "determining whether some illegal agreement may have taken place between unspecified persons at different [companies], (each a multibillion dollar corporation with legions of management level employees) . . . is a sprawling, costly and hugely time-consuming undertaking."
The 1996 Telecommunications Act sought to foster competition by allowing the so-called Baby Bells, the Bell System's successors, to sell long-distance service while also requiring them to open their local exchanges to rival carriers. But instead of promoting a robust marketplace for local telephone service, the Baby Bells largely declined to enter each others' regions and, plaintiffs alleged, they made it hard for upstart competitors to use their exchanges.
Citing this parallel conduct, plaintiffs, represented by the class-action firm Milberg Weiss Bershad & Schulman, filed suit. They alleged that the mutually beneficial parallel conduct by the Baby Bells -- which, after various mergers and name changes, now include AT&T Inc., Qwest Communications International Inc. and Verizon Communications Inc. -- suggested some sort of agreement. Plaintiffs sought to begin discovery in search of evidence supporting the claim.
A federal judge in Manhattan dismissed the case, ruling that plaintiffs must also allege facts that tend "to exclude independent self-interested conduct as an explanation for defendants' parallel behavior."
But the Second U.S. Circuit Court of Appeals, in New York, reinstated the case, citing a 1957 Supreme Court opinion that a suit shouldn't be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim." Since a conspiracy was a conceivable explanation for conduct that undercut competition, the court ruled the case could proceed.
Not so, wrote Justice Souter, joined by Chief Justice John Roberts and Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, Stephen Breyer and Samuel Alito.
In this case, Justice Souter wrote, the plaintiffs didn't list "a single fact in a context that suggests an agreement." The Baby Bells, he observed, descended from a world where telecom was a monopoly and "doubtless liked the world the way it was." Thus, "a natural explanation for the noncompetition alleged is that the former government-sanctioned monopolists were sitting tight, expecting their neighbors to do the same thing."
In dissent, Justice John Paul Stevens, largely joined by Justice Ruth Bader Ginsburg, contended that the majority was driven not by settled law but a "transparent policy concern" to protect antitrust defendants from litigation costs.
I have health insurance -- Why do I need Workers Compensation?
This question highlights the need to use a full service Independent Agent qualified to coordinate Health, Disability and Workers Compensation coverage. Many health insurers are starting to qualify or exclude coverage for work-related injuries under group health plans yet the old rule of thumb was exclude corporate officers from Workers Compensation to save money. A corporate President injured in an auto accident or by a falling file cabinet may face a huge medical bill with no insurance unless all the company's coverages are coordinated.
In most states, sole proprietors and partners are not covered as employees under the Workers Compensation act, but may elect to be covered. In some states the option to be covered applies only to sole proprietors and partners whose employees are covered under the act (either by law or by the employer's election).
With respect to executive officers of a corporation, the general rule is the opposite of the general rule for sole proprietors and partners. In most states, the officers of a corporation (including the executive officers) are covered, but provision is made for at least some officers to exempt themselves from coverage under the act. Many states allow only the corporation's executive officers to exempt themselves; which officers are considered executive officers may or may not be spelled out in the act. Other states do not specify which officers can exempt themselves, but allow only a specified number of corporate officers to exempt themselves.
A number of states address the status of limited liability company members and managers. This relatively new type of legal entity is a hybrid that combines features of both corporations and partnerships.
Keep in mind that, in many states, those who voluntarily exempt themselves from coverage under the act retain the right to sue the employer for damages caused by the employer's negligence. However, the standard endorsement used to exempt corporate officers and others from coverage under the employer's workers compensation insurance policy eliminates both workers compensation and employers liability coverage for injury to these individuals.
Bottom line, coordinate coverages -- don't just try to save a WC penny and end up having multiple pounds of your own pocketbook eroded.
In most states, sole proprietors and partners are not covered as employees under the Workers Compensation act, but may elect to be covered. In some states the option to be covered applies only to sole proprietors and partners whose employees are covered under the act (either by law or by the employer's election).
With respect to executive officers of a corporation, the general rule is the opposite of the general rule for sole proprietors and partners. In most states, the officers of a corporation (including the executive officers) are covered, but provision is made for at least some officers to exempt themselves from coverage under the act. Many states allow only the corporation's executive officers to exempt themselves; which officers are considered executive officers may or may not be spelled out in the act. Other states do not specify which officers can exempt themselves, but allow only a specified number of corporate officers to exempt themselves.
A number of states address the status of limited liability company members and managers. This relatively new type of legal entity is a hybrid that combines features of both corporations and partnerships.
Keep in mind that, in many states, those who voluntarily exempt themselves from coverage under the act retain the right to sue the employer for damages caused by the employer's negligence. However, the standard endorsement used to exempt corporate officers and others from coverage under the employer's workers compensation insurance policy eliminates both workers compensation and employers liability coverage for injury to these individuals.
Bottom line, coordinate coverages -- don't just try to save a WC penny and end up having multiple pounds of your own pocketbook eroded.
Monday, May 21, 2007
Employment Liability Practices Coverage -- Think you don't need it? Consider this.
Scary Compliance Facts:
-Tens of Thousands of employment practices claims filed every year (DOL)
-Employees win 63% (Jury Verdict Research)
-Average verdict exceeds $250K (JVR)
-Sex discrimination easiest for plaintiffs to win (JVR)
-Age discrimination highest average verdict- over $275K (JVR)
-Awards even higher in state court (JVR)
-Retaliation is fastest growing claim category (DOL, JVR)
-Median Settlement $89K (JVR)
-Entry level settlement $30K (JVR)
-Top filings in health services, business services, eating and drinking places (GenRe)
-None of these figures includes cost of legal fees, loss of time and emotional strain
-Tens of Thousands of employment practices claims filed every year (DOL)
-Employees win 63% (Jury Verdict Research)
-Average verdict exceeds $250K (JVR)
-Sex discrimination easiest for plaintiffs to win (JVR)
-Age discrimination highest average verdict- over $275K (JVR)
-Awards even higher in state court (JVR)
-Retaliation is fastest growing claim category (DOL, JVR)
-Median Settlement $89K (JVR)
-Entry level settlement $30K (JVR)
-Top filings in health services, business services, eating and drinking places (GenRe)
-None of these figures includes cost of legal fees, loss of time and emotional strain
Thursday, May 03, 2007
While You Are Sleeping?
You have read a lot and taken steps to limit your children's access to certain areas of the Internet, but have you given a minute of thought or checked with your Independent Insurance Agent about exposure to personal injury claims? You should have, especially if you have adolescent children.
Up until 10 or 15 years ago, chances were remote that a household would be sued for libel, slander, invasion of privacy, or some other offense. Unless they were picked up in a publication, damaging comments tended to remain within small circles of people and faded away soon after they were uttered.
In the Internet age, however, the potential for personal injury claims has increased substantially. Thanks to the global reach of e-mail, blogs, and shared sites such as MySpace and YouTube, damaging comments can be instantly transmitted to millions of people throughout the world and live on, so to speak, in electronic files that may never be fully expunged.
The growth in personal electronic communications is staggering. According to an August 2006 report by General Reinsurance Corporation, an estimated 57% of American teens had posted material on the Internet; and more than 53 million American adults had created online content. Those figures do not include the text and photos shared in supposedly private e-mails.
As a result of this communications revolution, households and personal lines insurers are seeing personal injury suits filed by individuals who have been ridiculed in electronic communications or had embarrassing information or photos of themselves posted online. Businesses are also taking legal action against “gripe sites” and individuals who post disparaging comments about their products and services online.
“The concern [today] is that the trickle of claim activity may become a torrent, as Internet usage continues its sharp growth among younger, and perhaps less worldly, insureds.” one report begins.
The American Association of Insurance Services (AAIS) has responded to the transformation in personal injury exposure by introducing new policy language for personal injury coverage.
AAIS is a national advisory organization that develops policy forms and rating information used by more than 600 property/casualty companies throughout the United States. Several states have already approved a comprehensive revision of the AAIS Homeowners forms, due to take effect in some states on July 1, 2007.
Among other things, the revision introduces several changes in wording in the optional endorsement for providing personal injury coverage.
First, the definition of “personal injury” is modified to explicitly include injury that arises from electronic publication of material that slanders or libels a person or organization, disparages the products or services of a person or organization, or violates another’s right to privacy.
With coverage for electronic publication established, the revised AAIS endorsement then clarifies the extent of coverage for electronic
publication by implementing a new exclusion that includes a key exception. This new provision generally excludes coverage for personal injury arising from “chat rooms,” "bulletin boards,” “gripe sites,” and other electronic forums that an insured hosts or controls. However, it contains an exception that preserves coverage for personal injury arising from content posted or provided by an insured.
Thus, in a general sense, the exclusion and exception are crafted to preserve coverage for an insured’s own comments, but not for his or her potential liabilities as a publisher of the comments and ideas of others.
In today’s world, one’s liability for personal injury does not necessarily end after a libelous, slanderous, or compromising comment is transmitted for the first time. A key characteristic of modern electronic communications is that the person initiating a communication usually loses control of it once it is released into cyberspace. No one can completely prevent others from forwarding malicious e-mails, or from copying malicious Web content and passing it along, even if the original is “taken down.”
This characteristic of electronic communications is raising legal questions that are now being weighed in the courts. When does publication happen? Is existing content on a blog re-published anew—and, thus, potentially a new offense—every time the blog is updated with additional new content? What is the extent of liability for the originator of injurious content when others link to it, or when it finds its way into search engines?
The one thing you can do is make sure your Homeowners Insurance has the broadest coverage possible for this activity, that you have an Umbrella policy that gives you comfort so you can go back to sleep.
Up until 10 or 15 years ago, chances were remote that a household would be sued for libel, slander, invasion of privacy, or some other offense. Unless they were picked up in a publication, damaging comments tended to remain within small circles of people and faded away soon after they were uttered.
In the Internet age, however, the potential for personal injury claims has increased substantially. Thanks to the global reach of e-mail, blogs, and shared sites such as MySpace and YouTube, damaging comments can be instantly transmitted to millions of people throughout the world and live on, so to speak, in electronic files that may never be fully expunged.
The growth in personal electronic communications is staggering. According to an August 2006 report by General Reinsurance Corporation, an estimated 57% of American teens had posted material on the Internet; and more than 53 million American adults had created online content. Those figures do not include the text and photos shared in supposedly private e-mails.
As a result of this communications revolution, households and personal lines insurers are seeing personal injury suits filed by individuals who have been ridiculed in electronic communications or had embarrassing information or photos of themselves posted online. Businesses are also taking legal action against “gripe sites” and individuals who post disparaging comments about their products and services online.
“The concern [today] is that the trickle of claim activity may become a torrent, as Internet usage continues its sharp growth among younger, and perhaps less worldly, insureds.” one report begins.
The American Association of Insurance Services (AAIS) has responded to the transformation in personal injury exposure by introducing new policy language for personal injury coverage.
AAIS is a national advisory organization that develops policy forms and rating information used by more than 600 property/casualty companies throughout the United States. Several states have already approved a comprehensive revision of the AAIS Homeowners forms, due to take effect in some states on July 1, 2007.
Among other things, the revision introduces several changes in wording in the optional endorsement for providing personal injury coverage.
First, the definition of “personal injury” is modified to explicitly include injury that arises from electronic publication of material that slanders or libels a person or organization, disparages the products or services of a person or organization, or violates another’s right to privacy.
With coverage for electronic publication established, the revised AAIS endorsement then clarifies the extent of coverage for electronic
publication by implementing a new exclusion that includes a key exception. This new provision generally excludes coverage for personal injury arising from “chat rooms,” "bulletin boards,” “gripe sites,” and other electronic forums that an insured hosts or controls. However, it contains an exception that preserves coverage for personal injury arising from content posted or provided by an insured.
Thus, in a general sense, the exclusion and exception are crafted to preserve coverage for an insured’s own comments, but not for his or her potential liabilities as a publisher of the comments and ideas of others.
In today’s world, one’s liability for personal injury does not necessarily end after a libelous, slanderous, or compromising comment is transmitted for the first time. A key characteristic of modern electronic communications is that the person initiating a communication usually loses control of it once it is released into cyberspace. No one can completely prevent others from forwarding malicious e-mails, or from copying malicious Web content and passing it along, even if the original is “taken down.”
This characteristic of electronic communications is raising legal questions that are now being weighed in the courts. When does publication happen? Is existing content on a blog re-published anew—and, thus, potentially a new offense—every time the blog is updated with additional new content? What is the extent of liability for the originator of injurious content when others link to it, or when it finds its way into search engines?
The one thing you can do is make sure your Homeowners Insurance has the broadest coverage possible for this activity, that you have an Umbrella policy that gives you comfort so you can go back to sleep.
Wednesday, May 02, 2007
Canadian Excise Tax on Insurance
The Canadian federal excise tax imposes a 10 percent premium tax on entities resident in Canada, including international corporations, that place insurance against risk in Canada with insurers not authorized by federal or provincial insurance authorities. The tax is also applicable when coverage is placed by a non-resident broker or agent — even if the insurer is authorized in Canada.
The tax furthermore applies to master controlled programs where a non-Canadian parent company purchases insurance for a Canadian subsidiary. The involvement of a
Canadian broker or the Canadian branch of a global broker or underwriter may or may not
change the situation. For the Canadian government, the primary source of coverage takes
precedence.
The local buyer must be able to prove that the Canadian agent/broker was not merely processing the document(s). On admitted master controlled programs, the primary non-resident broker is typically considered the original point of contact and therefore the Canadian government considers the tax applicable.
Canadian tax authorities recently changed the way the federal excise tax on insurance premiums is collected. The tax authorities will no longer forward tax notices to insurance buyers but instead the insurance buyer must file an excise tax return (form B243E) and remit the federal excise tax by April 30 of each year. Previously, the tax authorities invoiced insurance buyers by forwarding to them a Notice of Excise Tax. These notices were derived from the excise tax returns submitted by brokers or insurers.
If the Canadian federal government discovers unpaid premium taxes, they will likely charge the 10 percent tax, plus interest, for current and prior years. They may also disallow the insurance premium (current and prior years) as a legitimate business expense for other tax purposes. Sorting out such problems can be time-consuming and costly.
In addition to the federal excise tax, there are provincial taxes on unlicensed coverage. The tax rates range from two percent to 50 percent. The latter is imposed by the province of Alberta.
Ontario, Quebec and Newfoundland have an additional provincial sales tax on insurance premiums. Ontario charges eight percent on all lines except Auto, for which there is no tax in respect of any premium payment due after March 31, 2004. Quebec levies nine percent for all lines except Auto (for which the rate is five percent). Newfoundland charges 15 percent on all lines. Some lines are exempt in some provinces — automobile, surety, agriculture and reinsurance contracts to name a few.
Some classes of insurance are exempt entirely under the Federal Excise Tax Act. These include Personal Accident, Life, Sickness and Marine. The point -- If you are insured or insuring in Canada check with your accountant.
The tax furthermore applies to master controlled programs where a non-Canadian parent company purchases insurance for a Canadian subsidiary. The involvement of a
Canadian broker or the Canadian branch of a global broker or underwriter may or may not
change the situation. For the Canadian government, the primary source of coverage takes
precedence.
The local buyer must be able to prove that the Canadian agent/broker was not merely processing the document(s). On admitted master controlled programs, the primary non-resident broker is typically considered the original point of contact and therefore the Canadian government considers the tax applicable.
Canadian tax authorities recently changed the way the federal excise tax on insurance premiums is collected. The tax authorities will no longer forward tax notices to insurance buyers but instead the insurance buyer must file an excise tax return (form B243E) and remit the federal excise tax by April 30 of each year. Previously, the tax authorities invoiced insurance buyers by forwarding to them a Notice of Excise Tax. These notices were derived from the excise tax returns submitted by brokers or insurers.
If the Canadian federal government discovers unpaid premium taxes, they will likely charge the 10 percent tax, plus interest, for current and prior years. They may also disallow the insurance premium (current and prior years) as a legitimate business expense for other tax purposes. Sorting out such problems can be time-consuming and costly.
In addition to the federal excise tax, there are provincial taxes on unlicensed coverage. The tax rates range from two percent to 50 percent. The latter is imposed by the province of Alberta.
Ontario, Quebec and Newfoundland have an additional provincial sales tax on insurance premiums. Ontario charges eight percent on all lines except Auto, for which there is no tax in respect of any premium payment due after March 31, 2004. Quebec levies nine percent for all lines except Auto (for which the rate is five percent). Newfoundland charges 15 percent on all lines. Some lines are exempt in some provinces — automobile, surety, agriculture and reinsurance contracts to name a few.
Some classes of insurance are exempt entirely under the Federal Excise Tax Act. These include Personal Accident, Life, Sickness and Marine. The point -- If you are insured or insuring in Canada check with your accountant.
Tuesday, May 01, 2007
Risk Managers Urged To Prepare For Pandemic
It's not a question of if a pandemic will happen, but a question of where and when, said Michael Osterholm, director for the Center for Infectious Disease Research and Policy.
Osterholm was the keynote speaker April 30 at the Risk and Insurance Management Society's annual conference in New Orleans. He urged risk managers to take the lead in planning how to respond to a pandemic for their companies, their communities and their families.
The risk of a flu pandemic spreading across the globe is greater today than it was in 1918, when a deadly flu killed about a half a million people in the United States alone. Osterholm said with improved transportation, diseases can be spread through airplane travelers very quickly.
Also, while some argue that improved medical technology would help prevent a flu pandemic from taking so many lives, Osterholm said there's a shortage of beds in hospitals and medical staffs.
For instance, there are only 105,000 ventilators in U.S. hospitals, which tend to keep a two-day supply of oxygen on hand, Osterholm said. "We'd run out of oxygen before we ran out of ventilators," Osterholm said.
In addition to the medical system being overwhelmed, Osterholm said communities would have to find a way to manage the number of corpses. "We'd run out of caskets overnight," Osterholm said. "Most communities don't have plans."
And a pandemic would also have tremendous economic ramifications. In the recent SARS outbreak, 80% of flights in to and out of Hong Kong were cancelled for 10 weeks.
(By Meg Green, senior associate editor, Best's Review: Meg.Green@ambest.com) Copyright 2007 A.M. Best Company, Inc.
Osterholm was the keynote speaker April 30 at the Risk and Insurance Management Society's annual conference in New Orleans. He urged risk managers to take the lead in planning how to respond to a pandemic for their companies, their communities and their families.
The risk of a flu pandemic spreading across the globe is greater today than it was in 1918, when a deadly flu killed about a half a million people in the United States alone. Osterholm said with improved transportation, diseases can be spread through airplane travelers very quickly.
Also, while some argue that improved medical technology would help prevent a flu pandemic from taking so many lives, Osterholm said there's a shortage of beds in hospitals and medical staffs.
For instance, there are only 105,000 ventilators in U.S. hospitals, which tend to keep a two-day supply of oxygen on hand, Osterholm said. "We'd run out of oxygen before we ran out of ventilators," Osterholm said.
In addition to the medical system being overwhelmed, Osterholm said communities would have to find a way to manage the number of corpses. "We'd run out of caskets overnight," Osterholm said. "Most communities don't have plans."
And a pandemic would also have tremendous economic ramifications. In the recent SARS outbreak, 80% of flights in to and out of Hong Kong were cancelled for 10 weeks.
(By Meg Green, senior associate editor, Best's Review: Meg.Green@ambest.com) Copyright 2007 A.M. Best Company, Inc.
Wednesday, April 25, 2007
Read The Fine Print - Part II
Previously, we have cautioned about contractual indemnity language and how if you are not careful you can become exposed as a result of contractual risk transfer. Well contractual risk avoidance is present even where you might not expect it, such as insurance policies. Exclusions to coverages are a traditional way of insurance companies saying you are covered on one hand and taking it away with the other. If you and your Independent Agent aren't careful what you do every day may be the one thing excluded from your insurance. Here are just a few examples -- Lobbyist Policies containing an exclusion for Lobbying activities; Union Insurance excluding Organizing activities; Law Office E&O coverage excluding attorneys acting as Fiduciaries; the list of exclusions to coverage is growing faster than Kudzu in a swamp.
When that policy arrives in the mail don't just stick it in a drawer. More importantly, make sure that your Independent Agent has a good understanding of what you do so he/she can review the exclusions when they come in as well. Finally, just because the original policy doesn't obtain an exclusion do not assume at renewal that the new policy is identical to the old policy.
TV commercials make you think that purchasing insurance is just like buying a book on Amazon. Nothing can be further than the truth. If you are not careful and well advised you may "save 15%," but get nothing for the 85% you pay.
When that policy arrives in the mail don't just stick it in a drawer. More importantly, make sure that your Independent Agent has a good understanding of what you do so he/she can review the exclusions when they come in as well. Finally, just because the original policy doesn't obtain an exclusion do not assume at renewal that the new policy is identical to the old policy.
TV commercials make you think that purchasing insurance is just like buying a book on Amazon. Nothing can be further than the truth. If you are not careful and well advised you may "save 15%," but get nothing for the 85% you pay.
Terrorism Insurance
If the terrorism insurance program were allowed to expire, coverage would become largely unavailable and unaffordable, and the gears of commercial real estate would grind to a halt, according to the National Association of Realtors(R) and the Coalition to Insure Against Terrorism.
"The potential unavailability of terrorism risk insurance at the end of this year impacts our financing agreements and potentially hurts the commercial real estate market," said Joseph Ditchman, former president of the Ohio Association of Realtors(R) and a partner at Colliers Ostendorf-Morris, one of Cleveland's largest commercial real estate firms.
Speaking on behalf of NAR and CIAT in testimony before the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, Ditchman urged Congress to extend the coverage that was originally enacted after September 11, 2001, and extended in September 2005. "This hearing recognizes that the essential facts have not changed from when Congress enacted the Terrorism Risk Insurance Act in 2002. Terrorism continues to be an unpredictable threat."
NAR agrees with a set of joint principles that the new legislation should contain that were developed by CIAT, along with the American Insurance Association. "We agree that the new legislation should be long term, eliminate the distinction between foreign and domestic acts of terrorism, and ensure coverage against losses from nuclear, biological, chemical or radiological events (NBCR)," said Ditchman.
NAR believes including those principles in legislation will strengthen the terrorism risk program. "The principles strengthen the economic security provided to the commercial real estate market by reducing the uncertainty of terrorism coverage availability, and covering most conceivable forms of terrorist activity," according to Ditchman.
In earlier reports, the Government Accountability Office and the President's Working Group on Capital Markets determined that no meaningful amount of insurance against NBCR events is available in the property market today, notwithstanding that TRIA backstops such insurance. NBCR events have been described as virtually uninsurable and there does not appear to be any mechanism to price such coverage. "To make sure businesses have access to this important coverage, we urge Congress to ensure that NBCR perils be added to the 'make available' requirements under TRIA," Ditchman said.
NAR testified that it believes that the "proper" long-term solution should focus on what private markets have been unwilling or unable to do. "The ideal solutions must enable businesses to purchase insurance for the most catastrophic conventional terrorism risks, provide adequate insurance capacity in all major commercial real estate markets, particularly in high-risk urban areas, and provide meaningful insurance against the so-called NBCR risks," said Ditchman.
NAR believes that this comprehensive approach can be an ideal program that will over time seek to reduce the federal role in the conventional terrorism markets and will maximize long-term private capacity by facilitating entry of new private capital.
"The potential unavailability of terrorism risk insurance at the end of this year impacts our financing agreements and potentially hurts the commercial real estate market," said Joseph Ditchman, former president of the Ohio Association of Realtors(R) and a partner at Colliers Ostendorf-Morris, one of Cleveland's largest commercial real estate firms.
Speaking on behalf of NAR and CIAT in testimony before the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, Ditchman urged Congress to extend the coverage that was originally enacted after September 11, 2001, and extended in September 2005. "This hearing recognizes that the essential facts have not changed from when Congress enacted the Terrorism Risk Insurance Act in 2002. Terrorism continues to be an unpredictable threat."
NAR agrees with a set of joint principles that the new legislation should contain that were developed by CIAT, along with the American Insurance Association. "We agree that the new legislation should be long term, eliminate the distinction between foreign and domestic acts of terrorism, and ensure coverage against losses from nuclear, biological, chemical or radiological events (NBCR)," said Ditchman.
NAR believes including those principles in legislation will strengthen the terrorism risk program. "The principles strengthen the economic security provided to the commercial real estate market by reducing the uncertainty of terrorism coverage availability, and covering most conceivable forms of terrorist activity," according to Ditchman.
In earlier reports, the Government Accountability Office and the President's Working Group on Capital Markets determined that no meaningful amount of insurance against NBCR events is available in the property market today, notwithstanding that TRIA backstops such insurance. NBCR events have been described as virtually uninsurable and there does not appear to be any mechanism to price such coverage. "To make sure businesses have access to this important coverage, we urge Congress to ensure that NBCR perils be added to the 'make available' requirements under TRIA," Ditchman said.
NAR testified that it believes that the "proper" long-term solution should focus on what private markets have been unwilling or unable to do. "The ideal solutions must enable businesses to purchase insurance for the most catastrophic conventional terrorism risks, provide adequate insurance capacity in all major commercial real estate markets, particularly in high-risk urban areas, and provide meaningful insurance against the so-called NBCR risks," said Ditchman.
NAR believes that this comprehensive approach can be an ideal program that will over time seek to reduce the federal role in the conventional terrorism markets and will maximize long-term private capacity by facilitating entry of new private capital.
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