Worker’s Comp Reforms, Portable Persistency Top West’s 2012 Headlines

Dec. 21, 2012 came and went and the apocalypse was so lackluster as to be forgotten among the year’s myriad headlines.

Now that we are all well and good, and past doomsday, here are Insurance Journal’s best headlines in the West for 2012:

December

Farmers Agents Sue Carrier Over Contracts, Taking Client Info
A group of Farmers Group Inc. agents filed a lawsuit in Los Angeles Superior Court alleging the Los Angeles, Calif.-based carrier has undercut them by sharing their data with a competing subsidiary and several contract violations.

The United Farmers Agents Association alleges in its suit that the U.S. subsidiary of Zurich Financial Services in 2009 “began orchestrating and engaging in a series of improper actions” at the expense of Farmers agents.

Those alleged actions include Farmers unilaterally changing the terms of the contracts with its agents, the company using client data gathered by Farmers agents to undercut them and terminating agents through a purposely rigorous new set of standards to take away their books of business and give them to agents making lower commissions.

Carriers ‘Uncertain’ About California Workers’ Comp Reform
Insurance carriers, along with the many stakeholders who are watching and waiting as California’s workers’ compensation reform law begins to take effect at the start of the new year, are hoping the new law achieves the savings it promises.

However “uncertainty” is a common word being used by carriers to describe their feelings about the law and whether it will contain costs in the state’s unwieldy workers’ comp system. Christopher Flatt, New York-based Marsh USA Inc.’s workers’ compensation center of excellence leader, said “uncertainty” is a word he hears from a number of carriers he works with, some of which have left California’s market or have reduced the amount of workers’ comp insurance they write in the state.

November

California Department Insurance: Streamlined Licensing
The California Department of Insurance announced a new process for professionals submitting insurance agent, broker, adjuster and bail agent license applications to CDI. The new process “enhances customer service and increases the operational efficiency of handling licensing applications statewide,” according to a CDI release.

This process requires people to pass the qualifying license examination before they submit the required application, meaning they pay the license application fee only if they pass the examination, which for most licenses is $128. Additionally the new process “streamlines the handling of license applications,” which eliminates applications that were in a pending status while the applicant underwent the examination.

Drugged Driving Bigger Problem Than Drunk Driving in California
A statewide survey shows there are more drugged drivers than drunken drivers on California roads during the weekend.

The California Office of Traffic Safety said that 14 percent of drivers surveyed tested positive for driving under the influence of illegal or prescription drugs.

A little more than 7 percent of drivers were driving with alcohol in their system. The Los Angeles Times reported that the federally funded impaired driving survey involved more than 1,300 drivers who voluntarily provided breath and-or saliva samples at roadside locations in nine California cities.

Samples were tested for alcohol, marijuana and illegal drugs as well as prescription and over-the-counter medications. Marijuana was most prevalent with 7.4 percent of drivers having it in their system.

Calif. Prop. 33 Defeated
The second automobile insurance persistency initiative put to Californians in the last two years was defeated.

California’s Proposition 33, the 2012 Automobile Insurance Discount Act, was defeated with 54.6 percent voting against it, while it got 45.4 “yes” votes. Proposition 17, a similar portable persistency discount initiative in 2010, lost by 2 percent.

Both propositions were backed largely by Mercury Insurance Chairman George Joseph, who said portable persistency would be good for consumers and create healthy competition among auto insurers. Joseph personally sunk more than $16 million into Prop. 33, and Prop. 17.

October

Social Media Friends Nabbed In Northern California Staged Auto Insurance Fraud
Susan Lee, 24, Angelique Jones, 20, and Angela Medeiros, 40, all of Sacramento, Calif. have been arrested on three felony counts each of insurance fraud.

The bail for the three ranges from $20,000 to $50,000. A fourth suspect, Krystelmaree Marquez, 23, also of Sacramento has an outstanding arrest warrant. Her bail is set at $25,000.

According to detectives, on Dec. 11, 2011, Marquez rented a U-Haul truck and added the extra insurance protection policy. The following day while driving the truck Marquez was involved in a traffic collision with a Toyota Yaris driven by Medeiros with Lee and Jones as passengers. As a result of the accident, Lee, Jones, Marquez, and Medeiros all claimed injuries. During recorded statements with the insurance companies, Marquez denied knowing the three suspects in the car, Medeiros, Jones, and Lee, according to detectives. Medeiros, Jones, and Lee also denied knowing Marquez.

It was discovered through records, including Facebook, that Lee, Jones, Marquez, and Medeiros did know each other and they are all alleged to be friends, investigators say. Detectives estimated the potential loss to the insurance company at roughly $37,359.

Former Southern California Auto Club Agent Sues Insurer for ‘Illegal Practice’
A former insurance agent has filed a class action lawsuit in Southern California against Auto Club over what she alleges is an “illegal commission scheme” that penalizes agents who sell policies to people who previously did not have insurance.

It is illegal under California’s Proposition 103 to discriminate against someone who previously has not had insurance, but according to the suit agents at an Automobile Club of Southern California call center in Costa Mesa were awarded points based on the type of insured to whom they sold. Selling a policy to a previously uninsured motorist was worth a $20 commission, while someone with a good driving record and insurance history could garner up to $500 for an agent, the suit states.

Representing the agent as a co-counsel in the suit is Harvey Rosenfield, founder of Santa Monica-based Consumer Watchdog and Prop. 103’s author.

Calif. State Fund Board: Drop Rates 7%
California’s State Compensation Insurance Fund’s board voted on Friday for a 7 percent decrease in its 2013 rates, a move that reflects State Fund’s anticipated savings from a workers’ compensation reform law set to take effect on Jan. 1, 2013.

The rate filing will apply to a rate filing that’s currently under review with the California Department of Insurance. This is State Fund’s first tiered rating plan.

State Fund’s estimate is that $543 million in immediate savings will be generated by Senate Bill 863, a workers’ comp reform package signed into law by Gov. Jerry Brown. The law has several regulations that need to be put in place before it takes effect on Jan. 1, 2013, and savings estimates range up to as much as $1 billion.

September

Calif. Governor Green Lights Driverless Cars
California took the fast lane to the future on Tuesday when Gov. Jerry Brown signed a law that lets self-driving cars onto public roads.

Brown rode to the signing ceremony at Google Inc. headquarters in the passenger seat of a vehicle that steered itself, a Prius modified by Google. Google co-founder Sergey Brin and State Sen. Alex Padilla, who sponsored the bill, were along for the ride. An engineer for the technology company, Chris Urmson, sat in the driver’s seat, but the car drove itself.

Consulting firm KPMG and the Center for Automotive Research in Michigan released a report in August about how close the industry is to rolling out self-driving cars. They see the first such vehicles hitting showrooms in 2019, with a more developed infrastructure by 2025.

Brown Signs Calif. Workers’ Comp Bill
California Gov. Jerry Brown on Tuesday signed a bill to increase disability benefits for injured workers while taking a bite out of the rising cost of workers’ compensation insurance premiums.

Lawmakers approved the bill, Senate Bill 863, which promises to increase benefits for injured workers by nearly $750 million a year, and reduced workers’ comp premiums for employers, on the last day of regular session after a personal appeal from Brown. The legislation signed by Brown had the support of labor and small group of large, self-insured businesses. Lawyers who represent injured workers opposed the bill, which will curb lawsuits over injury claims.

With other changes, the bill is estimated to save California businesses $1 billion next year while freeing up funds to boost payments to disabled workers.

Agents, Brokers to Deal with State Fund Wholesalers
California’s State Compensation Insurance Fund will now require most of the roughly 5,000 brokers and agents the entity deals with to go through one of two wholesalers. An estimated 3,500 agents and brokers will be impacted.

With the new deal, State Fund is setting “premium thresholds to qualify for a direct contract,” San Francisco-based State Fund announced on Tuesday. The change is effective Jan. 1, 2013.

Two authorized broker access partners were selected under the new model, called Access State Fund. The brokers are StateFund First, administered by Arthur J Gallagher & Co. Ins Brokers of California, Inc., and RIC Insurance General Agency, Inc. The change doesn’t apply to all agents or brokers. It applies to those with books business are $100,000 in premium or less.

August

Judges Tout Wikipedia in ‘Jet Ski’ Exclusion Ambiguity
Utah Court of Appeals ruled the term “jet ski” to be ambiguous as exclusion in a homeowners’ policy, and to back up its decision the court used as a reference the popular reference website Wikipedia, calling it a “great repository of contemporary wisdom.”

The court overturned decision that ruled against a pair of men allegedly injured on a watercraft who sued their homeowners insurer, Fire Insurance Exchange, which refused their claim because the policy excluded among other things injuries suffered while on a “jet ski.” The case was Fire Insruance Exchange vs. Robert Allen Oltmanns and Brady Blackner.

‘Hole-in-Won’ Golf Tourney Insurer Charged With Not Paying Up
A Connecticut businessman who specializes in insurance for golf tournament hole-in-one prizes has been charged in Washington with multiple felonies after repeatedly failing to pay up.

Kevin Kolenda, of Norwalk, Conn., was charged Wednesday in King County Superior Court, Wash. with five counts of transacting insurance without a license, a class B felony. His arraignment is slated for Sept. 5.

Workers’ Comp Deal in the Works for California
In a hush-hush environment over the last several months it appears that those who seek workers’ compensation reform have been given hope, despite the looming close to California’s legislative session.

And that hope may come in the form of a 300-page piece of legislation hammered out by labor and a few large, self-insured employers, according to those familiar but not involved with the negotiations.

A small group of labor unions and large employers have been meeting quietly since the spring to come up with a bill or bills that would cut costs system wide to help pay for an increase benefits for permanent disabilities. As with the workers’ comp reforms hammered out in 2003 and 2004, the insurance industry has not been invited to the talks.

July

Report: Calif. Head and Spine Injuries Cost $500M in 10 years
Head and spinal injuries cost California’s workers’ compensation insurers more than $500 million over 10 years, according to the California Workers’ Compensation Institute’s “Injury Score Card.”

The report issued on Wednesday reflects data on California work injury claims for head and spinal injuries without spinal cord involvement. Such cases represent only a small fraction of all workers’ comp cases, but a disproportionate share of the costs because they include catastrophic cases considered to be among the most expensive in the system, the report states.

Several statistics stand out in the score card, which uses data from open and closed claims from accident years 2001 through the middle of 2011, including notable changes in injuries by industry sector, as well as workers’ comp payments by county. Also notable is the ever increasing cost of workers’ comp in California.

Report: Insured Losses in Colorado Wildfires Nearly $450 Million
The two most destructive wildfires in Colorado’s history will cost insurers roughly $450 million, a regional insurance association said on Tuesday.

The massive figure for insured losses comes from the total 600 homes destroyed and other damages, according to the Rocky Mountain Insurance Information Association.

June

Colorado Fire Threatens Thousands of Residences
The Waldo Canyon Wildfire in Colorado in the state’s second most populous city has reportedly destroyed hundreds of homes – and that number may get much higher.

The fire, which forced the evacuation of more than 32,000 people, has consumed 18,500 acres and is only 5 percent contained.

According to officials roughly 20,000 residences and 160 commercial structures are threatened.

Colorado Wildfire Rages: 189 Homes Destroyed
Another eight structures burned in the High Park Fire in Colorado overnight, bringing the tally to 189 homes burned and making it the most destructive fire in the state’s history, officials said on Monday.

No estimates on insured losses have been made, but the cost of the fire to date is estimated at $12.6 million, according to a report from the Larimer County Sheriff’s office. Up to 2,500 residents have been evacuated at various stages of the fire.

“At this point our insurance adjusters don’t have safe access to the homes that were burned,” said Carole Walker, executive director of the Rocky Mountain Insurance Information Association. Insurers said last week this season is shaping up to be one worst wildfire seasons in recent memory.

May

Reno Air Race Organizers Get OK To Continue Event
Organizers of the Reno National Championship Air Races cleared a major hurdle in their bid to continue the annual event this fall, winning approval of a special one-year permit and moving closer to securing the necessary $100 million in insurance in the aftermath of last year’s tragic mass-casualty crash.

The future of the 48-year-old competition has been in question since a modified World War II-era plane crashed at the event in September, killing the pilot and 10 spectators, and injuring more than 70 others on the ground. Several lawsuits have been filed by spectators.

Woof! California Top Dog In Bites
California is the top dog in State Farm’s annual list of dog bite claims, and the state’s reported 527 dog bite claims and more than $20 million paid out in 2011 by the Bloomington, Ill.-based carrier represents an increase of more than 30 percent from last year.

This year’s figure represents an increase in bite claims. In 2010 State Farm reported 401 dog bite claims in California, according to company spokesman Eddie Martinez, who didn’t have a good explanation for the increase.

Nevada Issues First Autonomous Vehicle Test License to Google
The Nevada Department of Motor Vehicles has approved an application for a license by Google Inc. to test autonomous vehicles on Nevada public roads, DMV announced this week.

It is the first license issued in the United States, and by granting Google’s application is puts “Nevada at the forefront of autonomous vehicle development,” DMV said.

After drive test demonstrations along freeways, highways and neighborhoods in Carson City on the Las Vegas Strip, DMV’s Autonomous Review Committee reviewed Google’s safety plans, employee training, system functions and accident reporting mechanisms and approved the application. DMV is now creating the state’s first autonomous testing business license and license plates for the Mountain View, Calif.-based search giant. The license plates displayed on the test vehicle will have a red background and feature an infinity symbol on the left side.

C.M. Meiers Legal Battle Goes On, Allegations Heat Up
With a quote from former president Ronald Reagan, an emergency motion from a sex toy business and increasingly acerbic accusations, the legal battle between the new and old owners of bankrupt agency C.M. Meiers continues to wage as each side piles on allegations.

Opposing sides squared off again this week over a temporary restraining order filed with U.S. Bankruptcy Court in the Central District of California to decide whether the former owners of C.M. Meiers – a Chapter 11 insurance agency believed by its trustee and new owners to be out of trust by over $1 million – absconded with clientele and information that were to be sold off during an auction last month.

In an application filed with the court, Woodland Hills, Calif.-based Liberty Company Insurance Brokers Inc. charges the former agency owners and Affinity Global Insurance, a Woodland Hills agency with which the former C.M. Meiers owners are now under contract, with unfair competition, misappropriation of trade secrets and interference with contractual relations. During its finanical spiral into bankrputcy, Affinity stepped in for a brief period and managed the agency.

April

California Department of Insurance Wants to be ‘Liked’
Insurance Commissioner Dave Jones and the California Department of Insurance really want you to like them.

CDI now has a Facebook page. The page was launched on Thursday, and had about a dozen “Likes” as soon as the page was announced in the afternoon.

California State Fund Cancels Layoffs
California’s State Compensation Insurance Fund is cancelling plans to lay off hundreds of workers

State Fund President and CEO Tom Rowe issued a message to staff that stated 1,300 workers have left since the state’s largest workers’ compensation insurer announced last year it would axe up to 1,800 jobs, but the number of employees remaining is small enough for State Fund to cancel the layoff.

March

Washington Governor Signs Insurance Exchange Bill Into Law
Gov. Chris Gregoire on Friday signed into law a bill setting rules for insurers preparing for the state’s online insurance exchange.

Online insurance exchanges are key to the federal health care overhaul signed into law by President Barack Obama in 2010. The state exchanges for individual and small-group plans are set go live on January 1, 2014.

Lawyer Claims Highest Known Workers’ Comp Settlement in California History
Attorney Christopher Asvar believes he has secured the highest known workers’ compensation insurance settlement in California history, totaling $8.9 million on behalf of a Antonio Enriquez, who suffered a traumatic brain injury in 2004 at the age of 18 after falling from a scaffold.

Asvar said he’s talked to “structured settlement folks up and down the state,” and with those negotiating the settlement on behalf of California’s State Fund, and everyone he’s spoken with agrees this is the highest known workers’ comp settlement in California.

Workers’ comp settlements in California are not tracked by size, and what those involved with the case wouldn’t know about would be confidential settlements, or cases were the “usual players” were not involved, Asvar said.

February

Electronic Proof of Insurance Gaining Steam in Some States
A California legislator’s bill to enable auto insurance policyholders to issue proof of coverage verification via a mobile electronic device, such as a smartphone, is among several similar bills in at least a handful of states in various stages of passage.

Assembly Bill 1708, authored by Assemblyman Mike Gatto, D-Silver Lake, would enable a person required to provide evidence of financial responsibility to do so through the use of a mobile electronic device, according to the bill’s wording. Gatto introduced his bill earlier this week.

A similar bill in Idaho, Senate Bill 1319, passed out of the Senate Transportation Committee unanimously on Thursday, and Arizona, Maryland and Mississippi are among states with bills making their way through those respective legislatures that would enable motorists to display insurance information in electronic format.

Website Attacks Consumer Watchdog
A website attacking a consumer group that often does battle with the insurance industry was launched on Friday, setting off more sparks in a roiling battle between proponents of two competing measures that Californians may see go head-to-head on the November ballot.

Backers of one of the ballot measures, the 2012 Automobile Insurance Discount Act, immediately distanced themselves from the site, which takes on Santa Monica, Calif.-based Consumer Watchdog.

January

California Insurance Commissioner, Insurers Settle on Iran Investments
California Insurance Commissioner Dave Jones and a group of insurers have settled litigation over insurer investments in companies doing business in Iran, it was announced on Friday.

The terms of the settlement permit the Jones to “maintain a public list of businesses involved in volatile sectors of the Iranian economy,” according to a statement issued by Jones’ office. The settlement also prevents Jones from declaring the investments of insurers in question to be declared non-admitted.

The deal dates back to efforts in 2009 by the state’s previous insurance commissioner to police insurance companies who had investments in firms doing business in Iran, efforts that were challenged by a number of insurance trade associations under what they declared an “Iranian directive,” which was eventually ruled “underground regulation” by the California Office of Administrative Law.

Honda Owner Bypasses Class Action in California, Hopes Others Follow
A woman who expected her 2006 Honda Civic Hybrid to be her dream car wants Honda to pay for not delivering the high mileage it promised. But rather than joining other owners in a class-action lawsuit, she is going solo in small claims court, an unusual move that could offer a bigger payout if it doesn’t backfire.

She paid $75 to file a small claims action in Torrance, Calif., where American Honda Motor Co. has its West Coast headquarters.

Peters could win up to $10,000 in damages including the “hybrid premium” she paid over the sticker price, her increased costs of gas due to getting just 30 MPG and the reduced resale value of her car.

Heather Peters says her car never came close to getting the promised 50 miles per gallon, and as its battery deteriorated, it was getting only 30 mpg. She wants Honda to pay for her trouble and the extra money she spent on gas.

Peters, a former lawyer who long ago gave up her bar card, has devised a unique legal vehicle to drive Honda into court — a small claims suit that could cost the company up to $10,000 in her case and every other individual case filed in the same manner.

If other claimants follow her lead, she estimates Honda could be forced to pay $2 billion in damages. No high-priced lawyers are involved and the process is streamlined.

Topics Lawsuits California USA Carriers Auto Agencies Legislation Claims Workers' Compensation Wildfire Colorado Autonomous Vehicles