Security risk

Boston and Bothell, Wash. - SC-integrity and Lexington Insurance Co., a member of American International Group Inc. (AIG), are working together to encourage motor carriers and shippers to reinforce their risk management activities to concentrate on the issue of cargo theft.SC-integrity, a Web-based technology and data solutions company, and Lexington believe a significant reduction in theft losses can be achieved through a combination of security driven loss prevention techniques and a new cargo theft protection device. Called SC-tracker, the state-of-the-art tracking and monitoring technology is a rechargeable, portable tracking unit that is buried within the cargo and not installed on the trailer, which allowis the cargo to be tracked from point of origin to point of destination remotely over the Web. While in transit, the tracking unit reports its location every 30 seconds for over a week. The monitoring system will immediately notify security personnel if the cargo is being stolen.

Boston - As the congressional battle to extend the Terrorism Risk Insurance Act (TRIA) gets into full swing before the law's December 31, 2005, expiration, a new Web site launched by Liberty Mutual is designed to helps commercial insurance policyholders take an active role in securing an extension for this critical federal insurance backstop.Risk managers can use the site to encourage their federal legislators to support TRIA's extension, they can distribute the site's link to help their company's senior management push for the extension, and they can use the site to involve employees at all levels.

Brookfield, Wis. - Fiserv, Inc. has acquired Xcipio, Inc., a Web-based insurance rating and automation solution provider. The acquisition will allow the Brookfield, Wis., company to provide Web-based comparative insurance rates directly from insurance carriers to producers in real time. Details of the transaction, which closed November 1, were not disclosed.

Just when insurance companies were feeling better equipped to solve the puzzle of requirements presented in the Sarbanes-Oxley Act (SOX), the United Kingdom and the 24 other member states in the European Union (EU) are now commenting on the EU Commission's proposed regulations on solvency that could be finalized as early as 2008. Called the Solvency II proposal, the regulations are not unlike the Sarbanes-Oxley Act, and could add more layers of regulatory reporting for insurers.American carriers and reinsurers need to get up to speed on Solvency II, say analysts, because down the road, the regulations could impact U.S. accounting and insurance standards.

Since the promise of further USA PATRIOT Act promulgation by the U.S. Treasury Department fell away in June, life insurance and annuity companies have been holding their breath, waiting for an imminent vote by the 109th Congress that could add even more regulatory compliance requirements for carriers.And while the final version of Section 352 of the USA PATRIOT Act may be looming, what it will mean for the life insurance industry is still in question.

Des Plaines, Ill. - Ernie Csiszar, president and chief executive officer (CEO) of the Property Casualty Insurers Association of America (PCI) is calling on insurers to re-think their approach to regulatory reform, saying that the issue will be a top priority for PCI in 2006. Csiszar made his remarks during the opening ceremony of the association's Annual Meeting in Chicago today."Because of our inability to make meaningful changes to the regulatory system, perhaps it's time to reassess our tactics and try an entirely new approach," said Csiszar. "All of us have been pointing out the flaws in the regulatory system for the past decade. It's disjointed, inefficient, stifles competition, expensive and antiquated. Most importantly, it is untenable in the long term and must change."

Hartford, Conn. - On Oct. 22, The Hartford Financial Services Group Inc. will unveil Select Customized Pricing, a predictive underwriting model designed to bring agents a highly refined policy price at the beginning of the submission process for its Spectrum business owners' policy, commercial auto, and workers' compensation insurance."We've turned a multi-step process into a single step for agents by pulling in several unique business characteristics upfront and using the results to differentiate one business customer from another," says Jim Ruel, senior vice president of Small Commercial business at The Hartford.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) has formally approved enhanced disclosure requirements for insurers that utilize reinsurance with limited risk transfer features, also known as finite reinsurance.

New York - The Insurance and Actuarial Advisory Services (IAAS) practice of Ernst & Young LLP has released its quarterly outlook identifying the need to take risk management beyond legislative and regulatory compliance to the next level.Enterprise risk management (ERM) is beginning to move to the top of the "CFO to-do list" as companies become increasingly sensitized to the heightened need for enhanced risk governance, management and measurement, according to Ernst & Young. This includes an acknowledgment that there needs to be a more disciplined approach to risk measurement and risk management.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) today announced that the Market Analysis Review System (MARS) is now available for use by all state market analysts. This technological enhancement, which reflects regulators' focus on market regulation, is designed to automate the market analysis of companies, including a state's Level 1 analysis review.

New York - Complying with the PATRIOT Act is a top concern for boards of financial services firms, according to a survey of 210 board members conducted by PricewaterhouseCoopers at its 2005 Financial Services Audit Committee Forum, held last week in New York. Sixty-five percent of those surveyed were audit committee members or chairs, who serve a crucial governance role in corporate oversight of compliance in today's post-Sarbanes-Oxley world.The PATRIOT Act, passed after the 9/11 terrorist attacks, requires financial services companies to enhance customer identification capabilities, monitoring systems, and suspicious activity reporting (SAR). The expanded obligations required by the Act, increasing scrutiny by regulators, stiff penalties paid by many institutions for non-compliance, and the increase in Suspicious Activity Report (SAR) filings, has made audit committee members particularly concerned about how their organizations manage compliance with the law.

Early in his career, Gary Kaplan spent a decade in loss control engineering, Then he moved into the underwriting arena and found that all the effort he and his colleagues had put into their engineering was arbitrarily applied to underwriting decisions."When I went into underwriting in 1988, I was appalled at how loose it was-the lack of structure and the lack of guidelines," says Kaplan, who is now senior vice president and chief underwriting officer at Zurich. "There was no consistency. The way business was priced was very disappointing to me after 10 years in engineering. I said, 'This is how all my work got translated into a price?'"

A new study that purports to pinpoint the economic losses stemming from state-by-state regulation of the life insurance industry finally provides the smoking gun that advocates of optional federal regulation say they need to bolster their case before Congress.Commissioned by the American Council of Life Insurers (ACLI), the study contends that life insurers could save more than $600 million annually, or $6 billion over 10 years, if a federal regulatory charter option were enacted.

For better or worse, the reinsurance industry is in the middle of its 15 minutes of fame. With regulators shining a spotlight-some might call it a blinding one-on the industry, insurance companies are being forced to take a hard look at their reinsurance practices.Regardless of the overall impact the attention will have on the reinsurance market-specifically on finite reinsurance (see "Regulators Focus on Finite Reinsurance" ), it's a safe bet to say that insurance carriers will start to more closely examine their reinsurance automation needs, according to Donald Light, senior analyst at Celent Communications Inc., a Boston-based financial services research and consulting firm.

In spite of centuries of sales experience, most insurers rely heavily on price for acquiring and retaining customers. The reality is that customers base insurance purchasing decisions on many factors. While this does not mean that we can ignore pricing, it does mean that alternatives exist for insurers to remain competitive.For some companies, the frustrating cycle of hard and soft markets will not exist. By relying on the power of data mining, they can maintain the consistency and accuracy of their underwriting decisions; they can significantly reduce the impact of fraudulent claims; and they can have a better understanding of their customers' wants and needs.

Boston - Will Katrina change the insurance industry in fundamental ways? Have loss patterns changed from "small and frequent" and "large and infrequent" to "very large and not infrequent?"In a new report, "After Katrina: What Now for the Insurance Industry?" Celent Communications Inc. examines the immediate and long-term implications of Katrina and describes best-case and worse-case scenarios of its impact on the insurance industry and select insurance providers.

Jersey City, N.J. - ISO's guide on state insurance laws and regulations, the State Filing Handbook, is now available in a new Web-based format designed to make it easy for insurers to access the information they need when they need it. The State Filing Handbook is available through ISOnet, ISO's secure Internet platform for delivering information to property/casualty insurers.The online State Filing Handbook features multi-state reports on a broad range of filing topics. Insurers can select a single topic, a type of filing and a number of states -- or choose all states -- and the handbook will generate a table summarizing the requirements for those states. A keyword search feature includes regulations, bulletins and forms to make it easier to locate the exact topic or section.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) has redesigned its Web site to be more user friendly to both NAIC members and first-time visitors. Work on the new site began in May after an internal audit was conducted to focus on potential areas of improvement and enhancement, with the goal in mind to create an easier, more accessible online resource for all audiences."Improvements made to our Web site should make finding information much easier for anyone who is seeking insurance information," says Catherine J. Weatherford, NAIC executive vice president and CEO. "We've grouped information into categories that should simplify searches for specific topics."

Acton, Mass. - CCH Insurance Services, a part of Wolters Kluwer Corporate & Financial Services division, has launched a new micro site summarizing regulatory compliance information for insurers responding to catastrophe in the wake of Hurricane Katrina. The web site, located at www.insurance.cch.com/katrina is free of charge as a public service to insurers."Affected states are now issuing requirements and other directives specifically related to this catastrophe," says Joe Bieniek, compliance manager for CCH Insurance Services. "We want to provide insurers with a resource that will help them easily determine what is required in Alabama, Florida, Louisiana, and Mississippi so they can respond to claims quickly, avoid confusion, and maintain compliance."

Nearly a year has passed since New York Attorney General Eliot Spitzer charged insurance brokerage firm Marsh & McLennan with rigging bids to maximize its commissions with insurance carriers.Allegations against Aon, AIG, ACE and other brokers and insurers followed-and within weeks, the country's largest insurance brokers-Marsh, Aon and Arthur J. Gallagher-as well as AIG and ACE had ceased the practice of accepting (or paying) contingent commissions.