Tuesday, 15 July 2008
Mr. Plumeri believes that transparency is a competitive advantage for Willis and would like to see these fees abolished for all brokers.
In the UK, risk management association AIRMIC took one of its strongest positions on the subject (story here) calling for automatic disclosure. Currently if asked brokers must disclose, but AIRMIC is calling for disclosure even when not asked by clients.
The issue has been addressed by the FSA, the regulator for financial services including the insurance industry, but the latest position seems to indicate that the market should decide. The association of brokers (BIBA) has unsurprisingly agreed that regulation is not required.
If AIRMIC didn't stand up to take this position and raise awareness to the FSA, nobody would.
Thursday, 10 July 2008
First was Advisen Senior Legal Analyst Anne Wallace's summary of an update to one of the nearly 9,000 cases in Advisen's large loss database of litigation which talks of the closure or final settlements stemming from the Spitzer investigation:
On July 3, 2008, attorneys for Marsh filed a Settlement Agreement and Brief in support of settlement of the Multidistrict Litigation entitled “In Re Insurance Brokerage Antitrust Litigation” filed in 2004.
This action alleged that insurance companies and insurance brokerage firms worked with one another to allocate customers and markets resulting in charging and collecting inflated premiums from policyholders.
The district court dismissed plaintiffs’ federal antitrust and RICO claims in the commercial case. Plaintiffs’ third attempted appeal has been withdrawn in favor of this settlement.
This Settlement is funded by the undistributed remainder of the earlier NYAG settlement, which totals about $69 million. $62 million will form the Litigation Settlement Fund; $5 million of this fund will be to resolve state claims. The remaining $7 million will be available to Marsh to settle the remaining “tag along” cases.
All parties have agreed with this settlement and set a final fairness hearing date of August 8, 2008.
When settlement is approved, this will bring to a close a large chapter in this 4 year saga for the insurance industry.
The class for this settlement does not include any valid “opt-out” plaintiffs or any party that has benefited from any prior “actual or threatened or other proceeding…concerning their purchase of Insurance, including but not limited to any Participating Policyholders in the NYAG Settlement Agreement”.
The class plaintiffs have previously settled with both the Zurich and Gallagher Defendants for $121.8 and $28 million respectively.
Second was the story by Liam Pleven of the Wall Street Journal (story here) which talks about how authorities in NY are reconsidering the settlements and opening the door to potential reinstatement of contingent commissions in some form. Liam's articles states how Marsh has a lot riding on this.
So is it closure? With European brokers reinstating these fees at 2.5% of premium and the EU to review this and potentially New York reconsidering, could we see these come back? I know our friends at AIRMIC and RIMS will have a lot to say about this, or should.
To subscribe to our alerts on this and similar litigation e-mail me or call +1.212.897.4820.
Wednesday, 9 July 2008
Advisen published a briefing written by Research Analyst Johanny Cruz (contact) which details the scope of the commercial market for this emerging technology, the potential risks involved, the research underway to measure the potential exposures, and how the insurance industry is handling the potential liability.
A quick look at Advisen's Policy Form Repository and Clause Comparison Tool would show that the industry is likely to exclude this liability until products can be developed.
Recent press coverage on the report include Bermuda's Royal Gazette (story here) and Strategic Risk (here). Excerpting from the report (which can be purchased by calling +1.212.897.4800):
Lines of insurance potentially impacted by nanotechnology include:
- Workers compensation insurance: coverage for employees involved in developing,synthesizing and processing engineered materials, as well as workers using engineered nanomaterials in their jobs.
- General and products liability insurance: exposure to loss from users of products containing or releasing nanomaterials.
- Product recalls insurance: the cost of recalling a nanotechnology product with unacceptable claim experience or safety defects.
- Environmental liability insurance: damage caused to the environment from engineered nanomaterials released intentionally or accidentally.
- Property insurance: the fine particle size of engineered nanomaterials could cause ignitable dust to form.
- Medical malpractice insurance: physicians and hospitals using nanoengineered medical products face potential liability for errors and unforeseen negative outcomes.
While nanotechnology holds enormous promise, the risks associated with these new processes and materials are still largely unknown. The insurance industry is only now beginning to assess the liability issues ... and a lack of insurance availability could stifle innovation and slow the introduction of valuable new products.
The current exposure to manufactured nanoparticles is mainly concentrated in workers in nanotechnology research and in nanotechnology companies. The US national nanotechnology initiative has estimated that around 20,000 researchers are working in the field of nanotechnology.
However, according to a report released by the International Council on Nanotechnology, only about one in three manufacturers of nanotechnology conducted monitoring for exposure to substances.
Wednesday, 2 July 2008
It includes the obligatory play on Budweiser advertising:
"Shareholders are mad because the board has just said 'no' and pulled up the drawbridge and said, 'This Bud isn't for anybody but us,' "