American Business Insurance What is on our mind

Insurance Fraud Rises As State Bureaus' Budgets Fall

2010-01-11T08:44:00.001-08:00

State insurance fraud fighting bureaus are seeing a significant spike in fraud cases while trying to manage with lower budgets and staffing in the downturned economy of 2009, according to a survey by the Coalition Against Insurance Fraud.

Cases increased in all 15 types of fraud schemes, these state agencies say.

“The troubled economic climate confronts many fraud bureaus with the severest challenge they’ve faced in years. But a positive outcome could be greater efficiency in combating schemes as fraud bureaus find better ways to fight crime with the resources they do have,” says Dennis Jay, the coalition’s executive director.

Agent schemes form by far the largest increases. Seven of 10 fraud bureaus report a spike in agent cases. Nearly 40 percent of fraud bureaus say their producer caseload was much higher, reveals the survey of 37 fraud bureau directors conducted in October 2009.

Anxious drivers continued ditching unwanted vehicles for insurance payouts in one of the defining fraud trends of the troubled economy. Seven of 10 fraud bureaus report more vehicle giveup cases, the coalition’s survey shows.

More homeowners literally are burning with desire for insurance bailouts as well. Nearly two thirds of fraud bureaus report increased home arson cases. This trend appears to involve regional or local hotspots instead of an evenly spread national problem, the coalition’s survey notes.

Shakedowns of businesses also appear to be spreading, with 60 percent of fraud bureaus seeing spikes in suspected bogus liability claims. “Reports of increases in slip-and-fall claims from insurers and self-insurers—especially grocers, department stores and restaurants—began surfacing in early 2009 and seem to have continued,” the coalition’s survey says.

Bogus health plans are spreading rapidly around the U.S. as well, exploiting the large market of uninsured Americans. Most fraud bureaus report a spike in fake health plans, with nearly 40 percent saying their caseload was much higher.

Prescription drug abusers also are on the loose. More than 60 percent of fraud bureaus report more cases involving diversion of painkillers and other addictive prescription drugs such as painkillers. Drug diversion has spread with alarming speed around the U.S. in recent years, with insurers paying billions of dollars for illicit prescriptions.

Many fraud bureaus are being forced to manage this spreading crime trend with smaller budgets and staff, the coalition’s survey reveals.

Some 63 percent of fraud bureaus report lower budgets for 2009. “This is somewhat surprising, given that a majority of the fraud bureaus were created with dedicated funding, specifically assessments on insurers,” the survey notes.

Nearly a quarter of the fraud bureaus also lost staff positions this year, and a third of these agencies were forced to leave vacant positions unfilled.

Why E&O Brokers Should Approach Additional Insured Requests With Caution

2010-01-08T08:40:00.001-08:00

Professional liability brokers repeatedly receive requests from insureds to add the insureds’ clients onto their errors and omissions policies as additional insureds. As outsourcing has become more prevalent, so has this request.

At first glance, this request seems quite reasonable. A client requests to be added as an additional insured (AI) with the intent to have the insured’s E&O policy provide defense and indemnification if an error or omission by the insured results in the client being sued.

For example, a Web designer—the insured—uses an unauthorized image on a client’s Web site. The holder of the copyright then sues the client.

Although this might seem like a good reason to add the client as an AI, most of the time, a request to add a client as an additional insured on an E&O policy stems from a misunderstanding of the policy. There are three questions a broker should ask when such a request comes in.

• Is it even possible? In other words, will the carrier take the risk?

• If it is possible, is it desirable?

• Finally, if the decision to add the client onto the policy as an additional insured is made, what changes to the program should the insured make?

Adding clients as additional insureds on a general liability policy is commonplace, so why not on an E&O policy?

Quite simply, some carriers will not allow additional insureds on E&O policies for several reasons.

First, many reinsurance contracts will not allow non-professionals to be added to the policy, so the carrier’s hands are tied.

Secondly, coverage under the policy is triggered by allegation of failure to render, or negligence in rendering a defined professional service. Typically, the AI is not rendering the professional service and therefore coverage will not be triggered.

Additionally, underwriters offer terms based on an analysis of the insured’s exposure (services, revenue and other measures). Adding AIs broadens the scope of potential liability, and is difficult to underwrite. When an AI submits a claim to the carrier, they expect defense to be tendered even when there are no allegations of professional misconduct or negligence. Furthermore, if the AI’s operations involve broader services than the insured’s, then it could potentially open the policy to claims from the AI’s other professional activities.

Professionals, by law, are liable for their own negligence and the negligence of those for whom they have assumed vicarious liability (those who they have a right, ability and duty to control). However, E&O policies, by and large, exclude liability assumed under contract except when liability would have existed regardless of the contract. Therefore, when an insured accepts additional liability via contract, the contractual liability exclusion would preclude coverage under the policy.

Additionally, E&O policies contain insured-versus-insured exclusions that preclude coverage when one insured sues another insured under the same policy. The thought behind this is not to cover internal disputes and to exclude such a moral hazard.

E&O policies are “pay on behalf of” policies, which means the insurer will pay damages in the insured’s stead when a client or third party is injured by the insured’s negligence in providing professional services. The E&O policy is designed to compensate parties other than the insured. In situations where the client, an AI, is suing the insured, the exclusion in the policy will be triggered and, therefore, no coverage will be provided.

Furthermore, defense costs in most E&O policies are included within the limit of liability. Therefore, covering the defense of AIs can rapidly erode one’s policy limit, thus potentially leaving the insured exposed. Moreover, if the carrier is tendering a defense for both the insured and the AI, then a potential conflict of interest could arise.

If the carrier agrees to add a client onto the policy as an AI, and, in spite of all the above reasons not to, the insured elects to add their client as an AI, there are several items the insured, the broker and the AI need to address.

First, the AI endorsement needs to be carefully written to consider the AI an insured only in certain limited and clearly defined circumstances so as to limit the effect of the insured-versus-insured exclusion. Even with such a well-written endorsement, however, once the client seeks coverage as an AI, then any related claims made against the insured by the AI will not be covered.

Secondly, the AI must be made aware of the reporting requirements under the policy. Some questions that must be addressed are: When must notice be given to the carrier? What is the definition of a claim? Is the policy a duty-to-defend policy? Does the policy contain a strict hammer clause? (See “Insureds Need To Sort Out Potential Hammer Effects,” NU, Aug. 4, 2008, http://bit.ly/7x1ctI).

Alternatively, rather than adding a client onto their policy as an AI, consider coaching the insured to respond to the client’s request by doing the following:

• Explain why such an action is not in the client’s best interest. It provides no added protection and could actually reduce or eliminate coverage entirely.

• Work with the client and carrier to set a minimum policy limit and maximum deductible/retention that all parties feel comfortable with—ones that will provide an adequate limit of liability and a deductible that the insured can meet even in a catastrophe, and at a premium that is affordable.

• Assure the client that all reasonable effort will be made to maintain coverage for a specified period of time after the contract has ended, and negotiate a preset bilateral tail option. A bilateral tail means the insured may elect to purchase tail coverage (or an extended reporting period) if either the carrier non-renews or the insured elects not to renew the policy.

By working with their clients in good faith, and by expressing a solid understanding of the E&O policy, insureds can demonstrate that they are thorough, reliable and informed. Ultimately, such a demonstration can only help assure the clients that they have selected the right professional with which to contract.

Hartford, GreenRoad Team To Improve Driver Safety

2010-01-01T11:12:00.001-08:00

The Hartford Financial Services Group, Inc., will seek to improve driver safety among its insureds by working with an outside vendor committed to using technology to improve driving behavior.

The Hartford, Conn.-based insurer said it has partnered with GreenRoad – a company that says it “helps commercial fleets, insurers and consumers measure, improve and sustain safe and fuel-efficient driving behavior.”

The carrier said it will use Redwood Shores, Calif.-based GreenRoad’s products and technology-based services—which include in-vehicle feedback, coaching, Web-based reporting and risk analysis tools—to help customers improve driver safety and overall vehicle operating costs. The GreenRoad tools “empower drivers to make immediate changes to their vehicle operating behavior,” The Hartford said.

The Hartford teamed with GreenRoad through its Hartford Ventures division, which identifies and teams with leading private companies with expertise in areas of key strategic importance to the insurance industry.

The Hartford Celebrates 200 Years

2010-01-01T11:11:00.001-08:00

The Hartford Financial Services Group, Inc. will celebrate its 200th anniversary with a new marketing campaign that includes a refreshed brand and new advertising.

The Hartford, Conn.—based insurer said it plans an “aggressive and optimistic campaign” that will include new television spots, a refreshed brand and a commemorative logo.

The campaign is part of a broader brand refreshing effort that began earlier this year in preparation for the company’s 200th anniversary and also includes updated print advertising, logo, Website, collateral and other marketing materials.

The said it will commemorate its 200th anniversary on May 10, 2010.

The company’s new television and print advertisement are available at www.thehartford.com/advertising.

Health Care Reform To Have Major Impact on Workers' Compensation

2009-12-16T08:57:00.001-08:00

Workers' compensation insurers and actuaries need to prepare for upcoming changes arising from proposed healthcare reform and the shifting medical landscape, attendees of the Casualty Actuarial Society (CAS) annual meeting heard.

Joseph Paduda, principal, Health Strategy Associates, LLC and writer of the blog "Managed Care Matters," observed that with or without healthcare reform, changes in the medical landscape will have a major impact on workers' compensation insurers.

Paduda noted that a number of pre-reform measures have already started to impact workers' compensation.

“The stimulus bill, the American Reinvestment and Recovery Act, included funding for development and implementation of Electronic Health Records (EHR). EHR supports clinical decision making, physician order entry for scripts or for imaging, and clinical data capture and sharing. Providers will all have access to the same amount of information instantly,” he said.

Paduda explained that the funding will improve the quality and depth of the data available, and pointed out that the use of electronic health records in workers' comp would be beneficial for actuaries practicing in that field.

The stimulus bill also calls for an estimated $1.3 billion investment in various agencies and research to evaluate the effectiveness of specific procedures and the impact of medical care on functionality, outcomes, and quality of life.

According to Paduda, this is likely to directly affect Medicare reimbursement policies, and over time, this will impact private pay and workers' compensation. “In my view this is a strong positive for workers' comp. A lot of medicine is more of an art than a science, so adding more science to medicine will dramatically improve outcomes and potentially reduce costs,” he said.

Paduda highlighted drug pricing as one area of potential change where the likely impact on workers' compensation will not be so positive. Currently, the United States is the only developed country where the government does not negotiate drug prices with pharmaceutical manufacturers, but this could change under several reform bills under consideration.

“The impact on workers' comp, if the Department of Health and Human Services negotiates for drug prices, is uncertain but not positive. Cost shifting is a distinct possibility. If one of the biggest payers of pharmaceuticals is suddenly paying them less, they’re going to want to make up their revenues from somewhere else, like workers' comp," Paduda said.

Alex Swedlow, executive vice president of the California Workers’ Compensation Institute (CWCI), gave an overview of the intended and unintended consequences of workers' compensation medical reforms in California.

Swedlow noted that prior to the 2003-2004 reforms, the California workers' compensation system was plagued by high rates and excessive variability in benefits paid to injured workers. Medical reforms focused on core elements of the system’s dysfunction, such as out-of-date fee schedules, the lack of a standard of care, and medical network utilization.

While enactment of the reforms in 2004 resulted in an immediate reduction in medical costs in the California workers' compensation system, Swedlow noted that the decline was short-lived. For example, in the post-reform period between 2005 and 2008, estimated ultimate medical benefit costs in California increased by 55 percent.

Swedlow observed: “The medical market has found a way to recover its pre-reform growth trends.” Another unintended consequence of California’s workers' compensation medical reforms is in the area of pharmaceutical utilization and cost.

Despite the reforms and the adoption of a pharmacy fee schedule, both the average number of prescriptions and average pharmaceutical payments per California workers' compensation claim have increased sharply since 2002.

Swedlow cited data showing that the average cost of “brand name” medications rose by 56 percent between 2002 and 2007. The average first-year cost of pharmaceuticals also jumped from $269 in 2002 to $462 in 2008 -- an increase of 72 percent.

One of the key cost drivers was a post-reform surge in the use of “Schedule II” drugs. These drugs are controlled substances that the federal government says have specific medical uses, but very high potential for abuse and addiction. “There has been a recent meteoric rise in the use of Schedule II drugs,” Swedlow noted.

The Casualty Actuarial Society's mission is to advance actuarial science through a focus on research and education. Among its 5,100 members are experts in property/casualty insurance, reinsurance, finance, risk management, and enterprise risk management.

Greenwood, township merger moves ahead to a vote in May

2009-12-09T13:53:00.001-08:00

A proposed merger between Greenwood and unincorporated White River Township nearly hit the skids Tuesday, but instead it moved forward with a new target date for implementation -- if it is approved by voters.

And the issue will be the topic of special town meeting at 7 p.m. Tuesday at the Center Grove High School auditorium.

On Monday, Greenwood Mayor Charles Henderson said he'd like to see a referendum delayed from May to November and, if approved, an effective date for the merger changed from July 1 to Jan. 1, 2012.

Tuesday, Henderson didn't make it to a joint meeting between the Greenwood City Council and the township board, at which the members went through the plan recommended by a study committee.

But before going through the plan, they talked about Henderson's suggestion.

After a fair amount of discussion -- the meeting began at 7 p.m. at the Center Grove school administration building and it was nearly 9 p.m. when the plan was almost derailed -- the Greenwood council voted to proceed with a May referendum but push back the effective date of an approved merger to Jan. 1, 2011.

Both dates were sooner than Henderson had proposed, but council members reasoned that it would still allow for plenty of time to study the plan and, if voters approve the merger, also provide more time for to arrange the logistics of a merger.

The township board then considered the same motion. Board member John Ebert voted yes and Joe Acker voted no; the third member, board chairman Mark Messick, recently had surgery and was not at the meeting.

That left it to township trustee Jay Marks to vote to break the tie. However, he abstained, which meant the motion died.

And because both bodies must approve identical reorganization plans to trigger a vote by citizens in both areas, that vote would have killed the merger proposal.

However, Greenwood council member Ron Deer, presiding over the meeting as council president in Henderson's absence, called for a bathroom break.

Afterwards, Acker asked for reconsideration of the previous motion, the township board voted again and this time approved, on a 2-0 vote, the holding of a May referendum and fixing as Jan. 1, 2011, the effective date of the proposed merger.

Acker said after the meeting that he supports the merger, thinks that it's the best option for township residents and wants to have the vote. He also said he believed the merger could be accomplished by July 1 but didn't want to stop the process at the expense of making that point.

The council and board members went on to amend several sections, including stipulating that the new 11-member council will be presided over by a president, not the mayor, during a 12-month adjustment period.

Marks said Wednesday that he has scheduled the town hall meeting so that township residents can ask about the plan. The township attorney and accountant also plan to attend to address legal and financial questions.

The next steps apparently are for the council and board to hold public hearings at separate meetings on Dec. 21 and Dec. 22, respectively, at which they could take final votes on putting the plan to a referendum.

Smith Retires as K and K Insurance Group President and CEO

2009-12-09T13:43:00.000-08:00

K and K Insurance Group Inc., based in Fort Wayne, Ind., reports that Ross T. Smith, the company’s president and chief executive officer, is retiring after a successful 40-year career in the insurance industry. Smith has been with K and K Insurance for more than six years.

Donald P. Koziol, president and CEO of the Aon Underwriting Managers group, is serving as interim CEO for K and K Insurance.

Founded in 1952, K and K Insurance Group is a managing general underwriter offering more than 50 specialty insurance programs to the sports, leisure and entertainment industries. K and K is a subsidiary of Aon Corporation.

Bar, Nightclub Owners Urged To Look Beyond Price When Seeking Coverage

2009-07-06T08:23:00.001-07:00

Combine a generous amount of alcohol with exotic entertainment, shake it up and what do you get—at least as far as the insurance industry is concerned? The answer is the unique risks served up at bars, nightclubs and some restaurants across the country.

While these exposures might give some standard insurers a headache, solutions can be found through wholesale brokers and excess and surplus lines carriers who specialize in this industry sector.

The average restaurant—whether it’s a small eatery, a family-style establishment or a fine-dining location—doesn’t fall in this category. Most are still written through the standard markets.

However, when an establishment adds a dance floor, live entertainment, a DJ or derives more than 40-to-50 percent of its gross receipts from the sale of alcohol, then it typically looks to the E&S industry for coverage.

Those bars, nightclubs and restaurants that rely on alcohol sales are holding their own, reporting relatively small declines in sales despite the poor economy.

Fine-dining restaurants cannot say the same, unfortunately. They are reporting sales down as much as 30-to-50 percent in some cases, shrinking insurable exposures for carriers of all stripes.

In addition, restaurants written by the standard markets are facing double-digit rate increases for insurance. This has pushed some of these risks to the E&S market, which is still reporting relatively low rates, plenty of capacity and broad terms available.

There are two primary risks that differentiate bars and nightclubs from restaurants.

The average restaurant finds its most common claims when patrons slip and fall, chip a tooth while eating, or became ill after eating.

Bars and nightclubs, on the other hand, identify assault and battery as well as liquor as the two biggest liability concerns.

In fact, about 60 percent of claims against bars and nightclubs result from assault and battery. These claims involve patrons who get into fights with one another or who claim the security people—either staff or contracted security guards—used unreasonable force in dealing with them.

Such claims can be expensive. Just one altercation could easily result in a $50,000 claim.

With the potential for assault and battery charges, these establishments need to beware of inexpensive general liability policies that exclude assault and battery or reduce the limits available to a small fraction of the typical $1 million policy—perhaps issuing a $25,000-to-$300,000 sublimit for this coverage.

A minimum limit of $1 million for assault and battery is recommended—or even better, have the GL carrier include the assault and battery coverage up to the policy limits.

Similar recommendations apply for liquor liability—as buyers are cautioned against policies that exclude this important coverage or contain a sublimit. Again, a minimum $1 million limit for liquor liability coverage is suggested.

This coverage protects establishments from claims that they served liquor to a visibly intoxicated person or to a minor who subsequently caused death or injury to third parties—those not having a relationship to the bar.

Coverage varies depending on the state.

In states such as Texas that have “dram shop” laws that specifically address these risks, the bar or nightclub is always held liable. There is no gray area.

In states such as California, however, a few more factors are taken into account, meaning the bar or nightclub has a better chance of mounting a defense.

In addition to having adequate liquor and general liability coverage and limits, buyers and their brokers should consider an excess or umbrella policy to further enhance coverage.

RISK MANAGEMENT

Given the potential for liquor and assault and battery claims, bars, nightclubs and restaurants are advised to use surveillance cameras inside and outside to monitor activity. This way, for example, when a patron claims that a security guard used excessive force, the camera will record the behavior of the patron who prompted the altercation.

Another risk control tool is an activity log, which bartenders and other employees can use to record the date, time and nature of any incident, as well as a description of the patron involved.

For example, if the bar stopped serving the patron because he or she was intoxicated, it can be documented and may be able to be used as a defense in a liquor liability claim.

Other loss control tools that should be in place include hand stamps and wristbands, which help identify those eligible to drink, as well as beverage service training for both bartenders and wait staff.

In addition, security practices are understandably important. Carriers want to know details—such as procedures for removing a rowdy patron, and whether the bar or nightclub employs its own security staff. If an outside agency is hired to provide security, that contractor should provide a certificate of insurance naming the establishment as an additional insured.

Employment practices liability insurance is another essential coverage that defends or indemnifies against employment-related suits. Some of the most common claims are discrimination, wrongful termination, sexual harassment, or failure to comply with statutory hiring requirements or practices.

These claims are more frequent in restaurants, but bars and nightclubs also have the same exposures.

With respect to EPLI, more bars, nightclubs and restaurants are increasingly requesting two very important components—wage and hour as well as third-party coverage.

Wage and hour claims involve allegations that an employer has violated federal or state laws that govern how employees get paid. Employee claims vary from a simple miscalculation of overtime pay, to whether they took all of their mandated break times.

Most surplus lines carriers offer wage and hour coverage—also known as FSLA (Fair Labor Standards Act) coverage—which provides a defense-only sublimit ranging from $50,000-to-$150,000.

Third-party coverage protects insureds for claims brought by customers, clients or vendors in regards to employment-related suits.

Like many specialty lines, the unique risks of bars, nightclubs and restaurants are well handled by the wholesale brokers and surplus lines carriers who specialize in this class of business and are willing to get involved and stay committed through hard and soft markets.

With the standard markets already showing some signs of hardening, more business is expected to move into surplus lines, where there is plenty of capacity to write these risks, as well as the industry expertise to provide the best rates and coverage available.

Jeffery M. Short is vice president at Partners Specialty Group, a specialty lines wholesale broker. He may be reached at jshort@psgins.com.
Combine a generous amount of alcohol with exotic entertainment, shake it up and what do you get—at least as far as the insurance industry is concerned? The answer is the unique risks served up at bars, nightclubs and some restaurants across the country.

While these exposures might give some standard insurers a headache, solutions can be found through wholesale brokers and excess and surplus lines carriers who specialize in this industry sector.

The average restaurant—whether it’s a small eatery, a family-style establishment or a fine-dining location—doesn’t fall in this category. Most are still written through the standard markets.

However, when an establishment adds a dance floor, live entertainment, a DJ or derives more than 40-to-50 percent of its gross receipts from the sale of alcohol, then it typically looks to the E&S industry for coverage.

Those bars, nightclubs and restaurants that rely on alcohol sales are holding their own, reporting relatively small declines in sales despite the poor economy.

Fine-dining restaurants cannot say the same, unfortunately. They are reporting sales down as much as 30-to-50 percent in some cases, shrinking insurable exposures for carriers of all stripes.

In addition, restaurants written by the standard markets are facing double-digit rate increases for insurance. This has pushed some of these risks to the E&S market, which is still reporting relatively low rates, plenty of capacity and broad terms available.

There are two primary risks that differentiate bars and nightclubs from restaurants.

The average restaurant finds its most common claims when patrons slip and fall, chip a tooth while eating, or became ill after eating.

Bars and nightclubs, on the other hand, identify assault and battery as well as liquor as the two biggest liability concerns.

In fact, about 60 percent of claims against bars and nightclubs result from assault and battery. These claims involve patrons who get into fights with one another or who claim the security people—either staff or contracted security guards—used unreasonable force in dealing with them.

Such claims can be expensive. Just one altercation could easily result in a $50,000 claim.

With the potential for assault and battery charges, these establishments need to beware of inexpensive general liability policies that exclude assault and battery or reduce the limits available to a small fraction of the typical $1 million policy—perhaps issuing a $25,000-to-$300,000 sublimit for this coverage.

A minimum limit of $1 million for assault and battery is recommended—or even better, have the GL carrier include the assault and battery coverage up to the policy limits.

Similar recommendations apply for liquor liability—as buyers are cautioned against policies that exclude this important coverage or contain a sublimit. Again, a minimum $1 million limit for liquor liability coverage is suggested.

This coverage protects establishments from claims that they served liquor to a visibly intoxicated person or to a minor who subsequently caused death or injury to third parties—those not having a relationship to the bar.

Coverage varies depending on the state.

In states such as Texas that have “dram shop” laws that specifically address these risks, the bar or nightclub is always held liable. There is no gray area.

In states such as California, however, a few more factors are taken into account, meaning the bar or nightclub has a better chance of mounting a defense.

In addition to having adequate liquor and general liability coverage and limits, buyers and their brokers should consider an excess or umbrella policy to further enhance coverage.

RISK MANAGEMENT

Given the potential for liquor and assault and battery claims, bars, nightclubs and restaurants are advised to use surveillance cameras inside and outside to monitor activity. This way, for example, when a patron claims that a security guard used excessive force, the camera will record the behavior of the patron who prompted the altercation.

Another risk control tool is an activity log, which bartenders and other employees can use to record the date, time and nature of any incident, as well as a description of the patron involved.

For example, if the bar stopped serving the patron because he or she was intoxicated, it can be documented and may be able to be used as a defense in a liquor liability claim.

Other loss control tools that should be in place include hand stamps and wristbands, which help identify those eligible to drink, as well as beverage service training for both bartenders and wait staff.

In addition, security practices are understandably important. Carriers want to know details—such as procedures for removing a rowdy patron, and whether the bar or nightclub employs its own security staff. If an outside agency is hired to provide security, that contractor should provide a certificate of insurance naming the establishment as an additional insured.

Employment practices liability insurance is another essential coverage that defends or indemnifies against employment-related suits. Some of the most common claims are discrimination, wrongful termination, sexual harassment, or failure to comply with statutory hiring requirements or practices.

These claims are more frequent in restaurants, but bars and nightclubs also have the same exposures.

With respect to EPLI, more bars, nightclubs and restaurants are increasingly requesting two very important components—wage and hour as well as third-party coverage.

Wage and hour claims involve allegations that an employer has violated federal or state laws that govern how employees get paid. Employee claims vary from a simple miscalculation of overtime pay, to whether they took all of their mandated break times.

Most surplus lines carriers offer wage and hour coverage—also known as FSLA (Fair Labor Standards Act) coverage—which provides a defense-only sublimit ranging from $50,000-to-$150,000.

Third-party coverage protects insureds for claims brought by customers, clients or vendors in regards to employment-related suits.

Like many specialty lines, the unique risks of bars, nightclubs and restaurants are well handled by the wholesale brokers and surplus lines carriers who specialize in this class of business and are willing to get involved and stay committed through hard and soft markets.

With the standard markets already showing some signs of hardening, more business is expected to move into surplus lines, where there is plenty of capacity to write these risks, as well as the industry expertise to provide the best rates and coverage available.

I-65 interchange plays key role in Johnson County thoroughfare

2009-06-29T05:22:00.000-07:00

Funding remains the critical issue as Greenwood officials seek to build a new interchange at I-65 and Worthsville Road that would be the linchpin in a proposed east-west corridor.

How to transform Worthsville Road into a major thoroughfare in a way that would attract federal dollars -- and possibly secure an interchange -- also remains a challenge for officials.
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The goal is to create an east-west corridor through Johnson County that would connect Morgan and Shelby counties using a patchwork of existing roadways -- and an interchange.

Officials envision the new thoroughfare as a way to relieve traffic in the Main Street area of Greenwood and as an economic development tool.

Greenwood Mayor Charles Henderson recently met with Indiana Department of Transportation Commissioner Michael W. Reed and other state transportation officials about the city's vision for the interchange and corridor.

Henderson said the project is expected to be placed on an INDOT priority list for new projects this summer.

"We're hoping that it's going to be on that list," Henderson said. "Where it will be on that list, who knows?"

However, projects on the list have no funding in place, Henderson said.

City officials are working with U.S. Rep. Steve Buyer, R-Ind., to find federal funding for the interchange. In April, Buyer announced that he has requested $10 million from the House Appropriations Committee to help fund the estimated $30 million project.

"In the meantime, I'm doing everything I can, turning over every rock, to find funding," Henderson said.

Engineering firm American Structurepoint, with funding from a federal grant, has plotted a preferred route for the thoroughfare project: From west to east, the corridor would travel on Ind. 144 in Morgan County to County Road 144 and Whiteland Road in Johnson County; north on Ind. 135; and east on Stones Crossing, Worthsville and Clark School roads into Shelby County, where it eventually could tie into I-74.

Worthsville could be a sticking point.

At Tuesday's Greenwood Redevelopment Commission meeting, members discussed the Worthsville widening as it relates to the proposed interchange.

Commission member Lee Money said federal requirements for an interchange could change the scope of the Worthsville widening, which currently calls for four lanes and a decorative median. That could be changed to five lanes.

"If the feds are going to require us to redesign it to a five-lane road, then that's going to change a number of things," Money said, noting the possibility of having to acquire more land.

"When it changes our footprint, it changes nearly everything else about the project."

Meanwhile, Henderson will wait to find out if the project appears on the state's list.

"In this business," he said, "it's one piece at a time."

Greenwood OKs $50,000 to appraise properties eyed for downtown revitalization

2009-06-26T19:38:00.000-07:00

Mayor Charles Henderson's vision to revitalize downtown Greenwood is coming into sharper focus.

The City Council this week approved using up to $50,000 from the city's rainy day fund to pay for appraisals of several properties along Main Street and Madison Avenue in Old Towne.
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Henderson sees the Main and Madison intersection as a crucial component in his plan to revive downtown.

The rainy day fund has a current balance of just more than $1.37 million.

Henderson's plan calls for a new city building and a City Court building, along with widening Main and Madison, at a cost of $11.72 million.

Whether a new city building, with an estimated cost of about $6.44 million, would be located at the busy intersection is yet to be determined.

Henderson's cost estimates include $500,000 to purchase five properties on Main, including the VanValer law office -- a cost that bothered Bruce Armstrong, who was the only council member to reject the request.

"I don't know where the money would come from to buy the VanValer law office," he said. "The problem there is that all the rest of (the properties) hinge on the VanValer property.

"Why do the appraisals when you don't have a good feeling you have enough money to take care of it first?"

Henderson's plan also calls for the purchase of two rights of way on Main Street and two on Madison Avenue.

In addition to Main and Madison, Henderson's vision includes redeveloping Old City Park with new restrooms, a splash park, new picnic shelter and a playground, with an estimated cost of just under $2 million.

After the appraisals are complete, "we can look at them and say, 'Are they or are they not reasonable?' " Henderson said at Monday's council meeting.

"If they're not reasonable, we can say scrap it and we can't do it."

PEKIN INSURANCE ANNOUNCES NEW ROADSIDE RESCUE SERVICE FOR POLICYHOLDERS

2009-05-26T14:03:00.001-07:00

American Business Insurance, Inc., your local Pekin Insurance agency in Greenwood, IN, can now provide policyholders with one-call-does-it-all Roadside Rescue coverage that is designed to handle emergency roadside service claims. There is no additional charge for this service if the policyholder already has towing coverage on their auto policy with Pekin Insurance.

“Our goal is to continually provide peace of mind to our policyholders,” said Vice President - Claims Curt Eeten. “Our new Roadside Rescue program will assist our policyholders in remaining untroubled about those things they simply cannot anticipate while they or other family members are on the road.”

With the Roadside Rescue coverage, a policyholder can make one easy phone call to the Company’s Claim Call Center, 24 hours a day and 7 days a week, when they are in need of roadside assistance. The types of services provided by the new emergency roadside coverage include towing; tire change for flat tire; out of gas/emergency fuel delivery; dead battery jump-starts; lock service (service provider will come to the vehicle location to unlock the door of the vehicle and provide assistance if the key is lost or broken); minor mechanical assistance (minor roadside repairs provided by a qualified Roadside Assistance representative); and concierge/one-call claim service (assistance in arranging alternative transportation, finding an ATM or hotel, or locating other necessary services in the event of a breakdown).

Pekin Insurance is a group name adopted to designate the combined operation of The Farmers
Automobile Insurance Association, Pekin Insurance Company, PAC, Inc., and Pekin Life Insurance Company.

Pekin Insurance has been in business since 1921 and offers multiple lines of insurance coverage in Illinois, Indiana, Iowa, Ohio, and Wisconsin. The Pekin Life Insurance Company offers individual and group life and health products; including level and return of premium term, universal life, major medical, medicare supplement, annuity, credit insurance, and pre-need coverages. The Pekin Insurance Group’s property/casualty operation offers the following products: automobile, homeowners, motorcycle, recreational vehicle, boatowners, commercial automobile, businessowners, commercial property and liability, workers compensation, and bonds.

American Business Insurance is a family owned independent agency. We have been serving the Central Indiana area for over 50 years! What this means to you is that you have an independent consultant, and I will work with you to determine what your insurance needs are. Unlike other agents, we are not beholden to any one insurance company, so we can work for you , and in the future if your needs change, you would not need to change agents to change companies. So with the choices, flexibility, knowledge and great prices it is obvious why we have been in business so long.

Information about Pekin Insurance can be obtained by visiting our Internet website at
www.pekininsurance.com. Information about American Business Insurance Insurance can be obtained by visiting our Internet website at www.myabi.com.

AIG CEO, Chairman Liddy Calls It Quits; Search On for 2 Replacements

2009-05-21T18:05:00.001-07:00

American International Group, Inc. (AIG) announced today that Chairman and Chief Executive Officer Edward M. Liddy intends to step down once the board finds replacements for him.

Liddy has recommended that the chairman and CEO roles be separated and, according to the company, the board of directors agrees with that strategy.

Earlier this week, the company that has been bailed out by the federal government announced the nomination of six new directors to stand for election at the company's annual shareholder meeting on June 30, 2009. This slate will reconfigure the board so that a majority of its members will be newly-elected independent directors.

According to the statement issued by AIG, Liddy believes that the company should install a more permanent leadership team and structure along with the new board.

The searches for two replacements -- a CEO and a chairman-- will be handled by both the reconstituted board and the trustees of the AIG Credit Facility Trust, which represents the government's 80 percent stake in the company.

"Much work remains to be done at AIG, but much has already been accomplished," Liddy said. "With the financial assistance of the Federal Reserve Bank of New York and the U.S. Department of the Treasury, we have made substantial progress in stabilizing AIG, reducing the systemic risk that led the government to rescue the company, protecting our policyholders and our businesses, and developing a plan to repay American taxpayers. I am proud that we are now implementing this repayment plan."

Under his leadership, the company has also begun the process of rebranding its insurance businesses as AIU Holdings to protect them from further negative fallout from the troubles caused by the AIG financial products unit.

Last September, Liddy, who formerly ran Allstate, came out of retirement to take over AIG amid turmoil at the giant firm and one of the nation's worst financial crises. His salary has been $1 a year.

Liddy "answered the call of his country and the needs of AIG without reservation amid one of the darkest periods of the current financial crisis," said Stephen A. Bollenbach, AIG's lead director, in honoring Liddy.

Liddy has been the target of public and congressional ire over the AIG collapse, bailout and retention bonuses on various occasions.

In a recent interview with Reuters, Liddy said he understood the anger because there is fear about the economy and many people are losing their jobs. But he also said he found it difficult to take personally.

"It is difficult to be the recipient of that kind of abuse when I am on the side of the taxpayer, brought in to help," he told Reuters.

Liddy, 63, joined the private equity firm of Clayton, Dubilier & Rice Inc. last year after serving as chairman of The Allstate Corp. since January 2007. Prior to that, he was Allstate chairman and CEO from 1999 until 2006 and president and chief operating officer from 1994 until 1998. He led the initial public offering and 1995 spin-off of Allstate from Sears, Roebuck and Co. At Sears, Liddy served as senior vice president and chief financial officer and as senior vice president-operating. Prior to that, Liddy was chief financial officer of G. D. Searle & Co.

At AIG, which was once the world's largest insurer, Liddy succeeded Robert B. Willumstad, who left after three months on the job, and after AIG -- once the world's largest insurer -- agreed to an $85 billion rescue plan from the U.S. Federal Reserve.

AIG has lost more than $100 billion over the last year and one-half, largely due to losses in its financial products unit. In the fourth quarter of 2008, AIG reported a loss of $61.7 billion, the largest quarterly loss in corporate history.

The federal government has propped up AIG three times, committing a total of about $180 billion.

AIG has been selling assets to try to repay the loans and has raised more than $4 billion.

The most recent first quarter loss was $4.35 billion, compared to a loss of $7.81 billion in the same quarter in 2008.

State Farm Reaches Settlement For Unpaid Storm Claims

2009-05-20T15:10:00.000-07:00

Press Release

Indianapolis, IN, May 20, 2009: In an Agreement adopted today by Indiana Department of Insurance (IDOI) Commissioner Jim Atterholt, State Farm agrees to reevaluate 7,000 closed-without-payment policyholder claims and to work with IDOI examiners on an additional 29,000 claims related to the hail storm of 2006. In addition, State Farm will pay $275,000 to the IDOI which will then be deposited into the State of Indiana’s General Fund. As a result of IDOI’s examination process, State Farm has already revisited and paid policyholders an additional $1,799,544.

On April 14, 2006 a hail storm hit the greater Indianapolis area. That hail storm proved to be the largest disaster in the country for that year. After receiving over 200 complaints from State Farm policyholders, the IDOI launched an examination of the company’s claims handling processes on March 6, 2007. To date, 425 State Farm policyholders have lodged a complaint with the Department.

The Agreement adopted by the Commissioner today includes the following: the continued review of the 35,000 total policyholder claim files, the monetary payment to the General Fund, a monitored remediation, a review of policies and procedures, as well as a toll free number for policyholder contact (Copy of Final Order and Agreement and attached for your reference).

“Those consumers insured by State Farm who have additional concerns should call 1-866-873-6952, a special toll free number made available as a result of the settlement. IDOI examiners will be monitoring how these calls are handled by State Farm. A settlement at this time brings to a close a long investigation process and allows for the best possible relief for consumers,” stated Commissioner Atterholt.

Chief Deputy Commissioner and Counsel of the Consumer Protection Unit of the Department of Insurance, Carol Mihalik stated that, “This agreement resolves our specific areas of concern as to claims handling. This included the use of independent adjusters, consistency of use of engineering reviews, the application of the appraisal provision within the insurance policies, and the need for multiple estimates and re-inspections prior to a final payment. Our examiners will be reviewing all of State Farm’s remedial efforts and reporting back to the IDOI in December of 2009.”

Source: Indiana Department of Insurance

New Website Up

2009-05-20T12:59:00.000-07:00

Get ready for the new myABI.com. Please stay tuned as we get everything working with our new facebook, twitter, linked-in and blog, of course you will still be able to get the online services you always wanted. Thanks!