News Briefs

ILLINOIS

Feds Subpoena CNA on Finite Reinsurance: Chicago-based commercial insurer CNA Financial Corp. has received a subpoena from New York federal prosecutor David Kelley relating to his investigation of finite reinsurance. Kelley, the U.S. Attorney for the Southern District of New York, has asked at least 10 companies to provide documents relating to the practice, according to Reuters. The U.S. Securities and Exchange Commission is also after CNA to produce documents related to its recent financial restatement, especially its relationship with Accord Re Ltd. The company said it would cooperate fully with both investigations.

Insurers Back Managed Care for Auto: The Insurance Institute of Michigan said it supports a legislative proposal that would allow policyholders to choose a managed care option for their medical coverage under the state’s no-fault auto insurance system at a reduced premium. The bill would allow an auto insurance company to offer a managed care option at a lower premium. IIM said a managed care system would allow insurance company representatives to monitor and supervise an injured person’s medical care and deliver care through a pre-approved provider network.

Michigan is the only state that requires insurance companies to provide unlimited, lifetime medical benefits to motorists injured in auto accidents. The managed care system would continue to provide for all allowable expenses for all reasonably necessary products, services and accommodations as required by the state’s auto insurance law. The rising cost of medical care has driven up the cost of auto insurance in recent years, according to IIM Executive Director Peter Kuhnmuench. For example, it now costs insurance companies an average of $24,531 for each personal injury protection claim, which includes medical expenses for those injured in auto accidents. This compares to $10,877 five years ago.

IIM represents more than 90 property/casualty insurance companies and related organizations operating in Michigan.

OHIO

AG Calls for Authority to Review Contracts: Too many state agencies continue to enter into state contracts without the state attorney general’s office reviewing them beforehand, a problem that can only be corrected by changing state law, Ohio Attorney General Jim Petro told state legislative leaders recently in a letter about investment problems at the state Bureau of Workers’ Compensation.

“Despite being the state’s chief legal officer, I cannot compel the state agencies to provide me with their proposed contracts,” Petro said in a letter to Ohio House Speaker Jon Husted and Senate President Bill Harris. “There is no law that requires the agencies to do so.

“Therefore, I propose that Chapter 109 of the Revised Code be amended to require the Attorney General to review and approve any state contract in which any state agency, institution or instrumentality is called upon to spend or invest more than $1 million of the agency’s, institution’s, or instrumentality’s funds,” Petro said.

Petro proposed a number of other state contracting reforms in his letter to Speaker Husted and President Harris.

Oversight Panel Nixes Comp Dividend: The Ohio Workers’ Compensation Oversight Commission has voted not to concur with the Ohio Bureau of Workers’ Compensation’s recommendation to grant a one-time 8-percent dividend on upcoming employer premium bills. Based on its projected $606 million surplus balance, BWC recommended an 8-percent dividend worth $70 million in savings to Ohio’s employers. Three of the four voting commission members voted no, with a fourth member abstaining, thus defeating the recommendation.

For bills covering the Jan. 1, 2005 through June 30, 2005 billing cycle, employers will be required to pay their full premium. In order to help employers manage these bills, BWC will reinstitute its 50-50 Payment Plan, which allows employers to pay half their bills by the end of August with the other half due in November.

Since 1995, employers have received over $10 billion in one-time dividends from BWC. For the previous billing cycle, employers received a 20-percent dividend. Dividends are never guaranteed and employers are always cautioned to budget for their full premium amounts. BWC determines dividend recommendations based on its latest surplus balances generated by investment returns. Over the last decade, investment returns have averaged 16.5 percent per year.

The State Insurance Fund remains fully funded with a surplus balance. The fund earned 8.5 percent during calendar year 2004 even with the recorded losses associated with the MDL investment. BWC will re-evaluate the surplus balance in November prior to making a recommendation to the commission for bills due for the next six-month reporting period.

Auto Thefts Down 2% for 2nd Straight Year: Auto thefts in Ohio appear to have declined more than 2 percent for the second consecutive year, according to estimates released by the Ohio Insurance Institute. Based on auto theft survey results of 17 major Ohio city police departments and data from the FBI’s Uniform Crime Reports, OII estimates that statewide auto thefts decreased 2.3 percent between 2003-2004.

This follows a decrease of 4.1 percent between 2002-2003, when US auto thefts actually increased 1.1 percent. Ohio realized a 1.3 percent increase between 2001-2002. Prior to 2000, national figures showed an eight-year period of auto theft decreases (1992-1999), followed by a 1.2 percent increase between 1999-2000, according to the FBI’s Uniform Crime Reports.

OII findings suggest Cleveland is where you’ll experience the greatest chance of becoming an auto theft statistic in the Buckeye state. There was one theft for every 56 registered vehicles in Cleveland, creating an even greater risk than its 2003 ratio of one in 63 vehicles. Auto theft-wise, Cleveland’s ratio is similar to Dayton’s-1 in 61-and Cincinnati’s-1 in 63. Dayton averaged one theft for every 62 registered vehicles in 2003; Cincinnati averaged one for every 52 vehicles-the worst in the state that year.

Between 2003-2004 auto theft activity in Ohio’s major cities ranged from a decrease of 23 percent in Springfield, to an increase of 56.2 percent in Euclid. Based on survey results, OII estimates statewide auto thefts were 40,039 in 2004. FBI’s Uniform Crime Reports shows statewide thefts were 40,996 in 2003 and 42,767 in 2002.

The FBI reports that the average value per vehicle stolen in 2003 was $6,797, up from the 2002 figure of $6,701.

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e-mail: koreilly@insurancejournal.com.