PEOPLE
Amwins Access Insurance Services recently announced the promotions of Darlene Marchand and Jennifer Hisaw. Marchand, a 32-year veteran in the insurance industry, was promoted to executive vice president/branch leader for the Baton Rouge office. She has been with Amwins since 2013. Marchand has her CPIA designation as well as her Louisiana resident P&C and surplus lines licenses. In addition she has a non-resident P&C and surplus lines license in Florida, California and Texas. Hisaw, a 24-year veteran in the insurance industry, was promoted to senior vice president/branch leader for the New Orleans office. A graduate of Northeast Louisiana University, she holds a bachelor’s degree in business administration with a major in insurance. Hisaw has been with Amwins for the past four years. She has her P&C producer’s license and is a past-president of the Insurance Professionals of Northeast Louisiana.
DIVIDENDS
LWCC’s board of directors approved a $102 million dividend for 2022 that will be payable to approximately 20,000 Louisiana businesses and impact more than 167,000 workers. LWCC announced the dividend April 4, saying the payments were to be mailed on or before April 13. Over the past 19 years, LWCC has declared $1.13 billion in dividends. “LWCC has been Louisiana loyal since opening our doors in 1992. As we commemorate our 30th year of operation, we are proud of the work we have done together with our agent partners to celebrate and elevate Louisiana through both our core business functions and innovative new initiatives,” said Kristin W. Wall, LWCC president and CEO. A study completed by Dr. James Richardson, alumni professor of economics and public administration at LSU, estimates that the dividend program has supported an estimated 17,840 jobs across Louisiana through 2021. The 2021 dividend alone is anticipated to support 1,683 jobs. As a mutual insurer, LWCC policyholders have access to benefits, including sharing in the financial success of the company through dividend distribution. In addition to dividends, average rates decreased by 62.9 percent since LWCC’s inception, driven by a focus on safety and a lower frequency of accidents and injuries in the workplace.
OSHA VIOLATIONS
The Occupational Safety and Health Administration on March 24 cited four employers with violations for lack of safe work practices after a flash fire and subsequent explosion harmed six workers on Sept. 27 at Westlake Chemicals in Sulphur, Louisiana, Business Insurance reported March 25. The fire and explosion occurred during preventive care and maintenance activities, documents state. Following an investigation, OSHA issued 11 serious violations which include confined space permit violations, confined space training, exposure to airborne concentrations of benzene, struck-by hazards, flash fire and explosions hazards, and not performing process equipment inspections. OSHA has proposed $139,427 in penalties to the four employers, which are Westlake Chemical Lake Charles South, Louisiana Wastewater Specialties LLC, Turn2 Specialty Companies LLC and Texas Leak Sealers Inc.
RATING
AM Best has downgraded the financial strength rating to A- (Excellent) from A (Excellent) of Louisiana Farm Bureau Mutual Insurance Company, Baton Rouge. In making the downgrade, AM Best said it assesses the company’s balance sheet strength as very strong, operating performance as adequate, and business profile as limited. The rating downgrade reflects the continued volatility in results over the past few years due primarily to severe weather-related events. The company experienced major catastrophe events in 2020 and 2021, which have driven deterioration in key profitability ratios and elevated underwriting losses, ultimately aligning the company’s performance with the adequate assessment. Despite the volatility, substantial efforts have been made related to exposure management, and re-underwriting, which coupled with sizable rate action, is expected to stabilize operating results in the near term. Louisiana Farm Bureau’s very strong balance sheet is supported by its risk-adjusted capitalization at the strongest level, conservative investment portfolio and comprehensive reinsurance program. The business profile assessment reflects the company’s concentration of personal property business in a hurricane-prone state. Company strategies are focused on the identification, mitigation and control of risk exposures, especially in the coastal areas of Louisiana.
FINANCIALS
The U.S. property/casualty industry recorded a $4.1 billion net underwriting loss in 2021 following a $6.7 billion gain in 2020, on increased losses and expenses; however, P/C insurers were still able to increase their net income year over year by 4.5 percent. These preliminary results are detailed in a new Best’s Special Report, titled First Look: 12 Month 2021 Property/Casualty Financial Results, and the data is derived from companies’ annual statutory statements received as of March 4, 2022, representing an estimated 96 percent of the total P/C industry’s net premiums written. According to the report, the underwriting loss came despite 7.4 percent growth in net earned premiums and a 45.4 percent decline in policyholder dividends, as these were offset by an 11.7 percent increase in incurred losses and loss adjustment expenses (LAE) and a 5.4 percent rise in underwriting expenses. The combined ratio for the P/C industry weakened by 1.2 percentage points from the prior year to 99.6 percent. A $7.2 billion rise in realized capital gains contributed to the industry’s net income of $63.6 billion, an increase from $60.9 billion in 2020. The P/C industry surplus also increased by 13.6 percent, from the end of 2020 to $1.0 trillion.
UNINTENDED TAX CONSEQUENCES
On Feb. 14, the Louisiana Department of Insurance advised health insurers and health maintenance organizations to notify insureds enrolled in high-deductible health plans (HDHPs) with a health savings account (HSA) that they may face unintended tax consequences from the use of certain third-party payments, such as pharmacy discount cards. Louisiana law mandates that the value of third-party payments, such as discounts, vouchers, financial assistance, pharmacy discount cards, or other out-of-pocket reduction payments used to purchase prescription drugs be applied toward satisfaction of an insured’s annual deductible. Under IRS rules, HDHPs are not allowed to provide benefits for any year until the insured’s minimum deductible for that year is met. However, applying the value of third-party payments deemed ineligible toward satisfaction of an individual’s HDHP annual deductible could render that individual ineligible to contribute to an HSA for that tax year. LDI advised consumers enrolled in HDHPs with HSAs to avoid using third-party payments.
NEW OPERATIONS
Old Republic International Corporation announced April 11 that it is forming a new company to provide commercial excess and surplus lines insurance. The new company, Old Republic Excess and Surplus Inc., will focus its operations on specialized E&S products sourced primarily through the wholesale distribution channel. The new venture will be led by Ralph Sabbagh as president. He is an industry veteran with 16 years of E&S experience. Capital requirements will be extended by Old Republic from internally available capital funds, and operating infrastructure will be provided by Old Republic General Insurance Group’s subsidiaries.
LAWSUIT
A LaPlace, Louisiana, church has filed a federal lawsuit claiming that its insurer failed to adequately cover millions of dollars in property damage resulting from two weather events last year, including Hurricane Ida. In the filing, attorneys with the New Orleans office of the Potts Law Firm LLP, representing the First Baptist Church of LaPlace, allege that Church Mutual Insurance Company of Merrill, Wisconsin, violated state law requiring insurers to pay claims within 30 days of proof of loss, according to a news release issued by the Potts Law Firm on April 5. The church was first damaged in an April 2021 windstorm, followed by the effects of Hurricane Ida in late August last year. Church Mutual adjustors verified the damages in both cases, but payment for the initial April damage was not received prior to Hurricane Ida. The lawsuit alleges that Church Mutual was fully aware of the critical damage but grossly underpaid the initial claim, refused to pay an adequate amount to remediate and repair the facility for losses sustained from Hurricane Ida, and incorrectly asserted that much of the damage sustained during Ida was from the April storm. In addition, the lawsuit seeks damages against the insurer for breach of contract and breach of duty.
HURRICANE DEATH RATES
A new study, published in the Journal of the American Medical Association, found that hurricanes and other tropical cyclones that have pummeled U.S. populations in recent decades were linked to up to 33 percent higher death rates from related illnesses in the months following the storms, The Hill reported March 8. According to researchers, some of the hidden climate-driven costs of hurricanes are the fatalities that resulted from related injuries, infectious and parasitic diseases, respiratory ailments, cardiovascular issues, and neuropsychiatric disorders. Researchers saw the greatest surge in injury-related death rates, 3.7 percent, one month after the event. As far as infectious and parasitic disease were concerned, the scientists saw the greatest increases in related death rates two months after hurricanes, 11.4 percent, and one month after cyclones, 1.8 percent. Increases in respiratory disease death rates peaked one month after hurricanes and one month after cyclones. Surges in cardiovascular disease death rates peaked during the month the hurricane occurred and one month after cyclones.
HURRICANE FORECAST
An above-normal level of tropical cyclone activity is projected for 2022 in the Atlantic basin, according to a forecast released April 7 by Colorado State University’s Department of Atmospheric Science. Led by research scientist Phil Klotzbach, Ph.D., also a non-resident scholar at the Insurance Information Institute, the CSU Tropical Meteorology Project team anticipates 19 named storms, nine hurricanes, and four major hurricanes during the 2022 season, which starts on June 1 and continues through Nov. 30. A typical season has 14 named storms, seven hurricanes, and three major hurricanes. Klotzbach said that the low probability of a significant El Niño in the Pacific, indicates another active Atlantic hurricane season is likely on the horizon, and there is an “above-average probability” for major hurricanes making landfall along the continental U.S. coastlines and in the Caribbean. CSU’s 2022 forecast calls for a 71 percent chance of a major hurricane making a mainland U.S. landfall, 47 percent for the U.S. East Coast including the Florida peninsula, and 46 percent for the Gulf Coast from the Florida peninsula westward to Brownsville, Texas.
MOTOR VEHICLE CRASHES
The Governors Highway Safety Association announced that in the first half of 2021, the number of pedestrians killed in motor-vehicle crashes rose 17 percent to 3,441, The Wall Street Journal reported April 7. This is more than the 2,934 pedestrians killed by motor-vehicles in the first half of 2020. Pedestrian deaths have been on the rise in recent years, even during the pandemic, when 6,516 pedestrians were killed in 2020, and fewer drivers were on the road. According to the National Highway Traffic Safety Administration, there were about 31,720 deaths in car crashes in the first nine months of 2021, which is the highest number of fatalities reported over the same period since 2006.
FEMA REINSURANCE
In an agreement with Hannover Re, the Federal Emergency Management Agency will pay $61.23 million in premiums to transfer $450 million in National Flood Insurance Program risk to the capital markets via a series of sponsored catastrophe bonds, the agency said in a news release earlier this year. This is the fifth time FEMA entered into a three-year reinsurance agreement with Hannover Re (Ireland) Designated Activity Company, having transferred $575 million in 2021 and $400 million in 2020. The new agreement will cover the following losses for any single flood event: 2.5 percent of losses between $6 billion and $7 billion, 5.0 percent of losses between $7 billion and $9 billion and 32.5 percent of losses between $9 billion and $10 billion. Combined with the other outstanding bonds and the January 2022 traditional reinsurance placement, FEMA has transferred $2.664 billion of the NFIP’s flood risk to the private sector ahead of the 2022 hurricane season.
FRAUD RING
Louisiana is not the only state in which accidents are staged by fraud rings. The South Carolina Department of Insurance and the South Carolina Law Enforcement Division have arrested several people for their roles in a large insurance fraud ring in Sumter. On March 24, agents assigned to SLED’s Insurance Fraud Unit obtained a total of 32 warrants for 18 people involved in five separate insurance claims. As of April 6, all but one of the defendants have been arrested. The warrants allege the group staged vehicle collisions and then made insurance claims for property damage and personal injuries, at times using false or altered medical and wage-loss documents. The suspected fraud took place between late August 2020 and October 2021, with a total exposure of $210,922.93 and a total payout of $93,774.28.
NAIC
A bipartisan group of state insurance regulators led by Insurance Commissioners Ricardo Lara of California and David Altmaier of Florida adopted a new standard for insurance companies to report their climate-related risks, in alignment with the international Task Force on Climate-Related Financial Disclosures. The TCFD standard is the international benchmark for climate risk disclosure and will help insurance regulators and the public better understand the climate-related risks to the U.S. insurance market, which is the largest in the world. This announcement was made April 8 during the National Association of Insurance Commissioners’ spring meeting in Kansas City, Missouri. Regulators from France, Switzerland, and the United Kingdom currently require TCFD-aligned reports. U.S. financial regulators, such as the U.S. Securities and Exchange Commission, are also taking steps toward requiring TCFD-aligned disclosures for other financial institutions. Under the new standard, insurance companies will need to comply with TCFD reporting by November 2022. Fifteen states, not including Louisiana, have committed to using the NAIC survey in 2022 for insurance companies licensed in their jurisdictions.
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