A View From The Press Box

Republican presidential frontrunner Rudy Giuliani unveiled his own health care reform plan yesterday, while taking potshots at the "socialists" over in the Democratic party proposing universal insurance. Rudy got his sound bites in, but I don't believe his tax-credit-based program will win him many votes, and could in fact cost him the general election, if he makes it that far.

Admit it. All of you in the insurance industry who have had your lives turned upside down by probes into contingency fees or finite reinsurance by Eliot Spitzer when he was New York's attorney general, can't help but snicker about the "Choppergate" scandal that has sent the approval rates of Gov. Spitzer plummeting. But while the cocky crusader has been struggling to swallow a taste of his own medicine, there's no doubt he will bounce back soon--which is actually good news for the state's insurance market.

Louisiana insurers breathed a sigh of relief last week when the 5th U.S. Circuit Court of Appeals upheld their flood exclusions, ruling that just because damage in New Orleans following Hurricane Katrina might have been caused in part by a human failure to maintain adequate levees, that did not mean carriers were on the hook for coverage. The legal maneuver was clever, but it was clearly a stretch, and thankfully for carriers, common sense prevailed in court for a change.

It took me three-and-a-half hours to make my one-hour subway commute into work today, thanks to a rip-roaring thunderstorm at dawn that dumped three inches of rain in New York City (flooding many subway stations) and generating winds strong enough to blow down trees (one across my regular train track) while damaging homes, cars and businesses. Such storms are nothing unusual for many disaster-plagued areas of the country, but it made me wonder how in the world NYC would manage if anything close to a real natural disaster struck.

Marsh CEO Brian Storms dropped a bombshell today during an analyst conference call, announcing that the brokerage firm is moving to amend its agreement with New York officials to once again allow payment of contingency fees. While a shocker, such a request is not unreasonable given the state of the market.

Given all the controversy about wind versus flood coverage following Hurricane Katrina, I invited Bob Hunter, director of insurance at the Consumer Federation of America, to lay out his arguments for why he believes there is an inherent conflict of interest when insurers must settle both types of claims--one type they cover and one they do not. Mr. Hunter is well acquainted with the program, having dealt with the problem first hand as a former federal insurance administrator. Read what he has to say and let me know what you think of his suggested reforms.

I learned a lot about what it takes to run a successful safety and loss control program by screening entries to the inaugural “National Underwriter Award For Excellence In Workers’ Compensation Risk Management.” Hopefully, you will, too, by reading profiles of the three winners--Belk Department Stores, Kitty Hawk Cargo and Rolls-Royce North America. Read on for a summary of the secrets of their success, and let me know if you have any tips of your own to share with risk managers.

There's been a lot of talk in Washington by some angry members of Congress about stripping the industry of its sacred cow--the McCarran-Ferguson Act, which gives insurers the ability to sidestep federal antitrust laws so they can share data and set more accurate rates. (At least that is the theory.) NU Washington Editor Dave Postal, however, suggests that despite all the hub-bub about how horrible the industry is behaving, any change in the law is way off--if it ever comes to pass.

Insurers, eager to grasp at any straw that might pull them out of the harsh glare of regulatory, legislative and media scrutiny over their handling of Hurricane Katrina claims, were relieved that a Department of Homeland Security report uncovered “no evidence” private carriers had improperly shifted wind-damage claims to the federal flood insurance program. Unfortunately--for both the industry and Congress--the report is virtually worthless.

We have a new insurance blogger on the scene. It's my old friend Dennis Jay, executive director of the Coalition Against Insurance Fraud in Washington, who just spoke at NU's workers' comp conference in Orlando this week about prescription drug abuse within the comp system. Check out what he has to say by clicking here. Unfortunately, there is a lot to be said on the subject, and law enforcement does not always put a premium on insurance fraud. Dennis is always informative, and entertaining as well.

After nearly a year in the blogosphere, I am taking a week off the computer to recharge my intellectual batteries. I hope you all will forgive the interruption! However, while I steer clear of the Web for an entire five days, feel free to post here any suggestions on topics you would like to see me address in the coming months. Like any blogger, I thrive on the give and take with readers. You have been terrific in responding to my posts--even in the dog days of summer! I very much appreciate your feedback and participation.

Who in his right mind would write professional liability insurance for a CIA agent, especially one involved with interrogations of suspected terrorists? According to an article in "The New Yorker," at least one unnamed carrier is doing just that. How would such coverage even function in this outlaw world of renegade spies, facing little or no legal restraints when manhandling enemy combatants or eavesdropping on phone calls and e-mails? Read on and weigh in, if you dare!

We have become so litigious in this country that even liberal magazines such as "The New Yorker" are making fun of our propensity to sue at the drop of a hat. Some recent cartoons in the publication would be a riot if the truth behind them weren't so tragic--that we are litigating our economy into oblivion! Check out some of the recent punch lines (all of which are ultimately at the expense of insurers) and let me know what you think.

Anyone who thought the fallout from Hurricane Katrina would pass by now was sadly mistaken. Trial lawyers are still hammering away at carriers for leaving many policyholders with both wind- and water-related claims up the creek, and some fear a long-term impact on how catastrophic claims are litigated. I tend to agree with the pessimists. I always expect the worst when it comes to the industry's reputation, and I am rarely disappointed.

Due to an editing error in the Sept. 3 print edition of NU, Janice Ochenkowski--the new president of the Risk and Insurance Management Society--was mistakenly referred to as "Janet" in parts of our profile--in the caption accompanying her photo, in her first reference in our story, and in our infographic sidebar. The original draft by author Caroline McDonald had the name right, but we got it wrong after doing some editing. It really eats at me when we make a mistake like that, and I sincerely apologize to Janice, who has already made her mark at RIMS as a no-nonsense leader unafraid to speak her mind. To learn more about her search for excellence in risk management, read Caroline's profile (with the name corrected) by clicking here.