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Florida comp insurer faces hearing
LONGWOOD, Fla.-PCA Property & Casualty Insurance Co., a Longwood, Fla.-based workers compensation insurer, is showing a deficit estimated at $128.3 million and faces a May 2 hearing in Leon County Circuit Court that will determine whether the company is placed in rehabilitation.
Already under administration by the Florida Department of Insurance, the subsidiary of Physician Corp. of America will continue to pay claims under supervision of the department. The company wrote mostly workers comp coverage, and its policyholders include 32,940 Florida employers.
Regulators say the company has about $350 million in cash and short-term investments that can be used to pay claims. The $128.3 million deficit was determined after independent actuaries found that $80 million would be needed to pay claims in addition to the $48.3 million shortfall PCA already has acknowledged.
A.M. Best Co. lowered its FPR-2 rating, or below average, on the company to an E rating, indicating the insurer is under supervision.
Allianz shuffles U.S. business
BURBANK, Calif.-Allianz Insurance Co. will renew about $90 million of Novato, Calif.-based Fireman's Fund Insurance Co.'s high excess layered property and energy business effective April 1.
The move is part of an effort by both companies' parent, Allianz A.G. of Munich, Germany, to restructure its North American operations, said Trevor E. Care, an Allianz Insurance senior vp.
In addition, Allianz Insurance will integrate its workers compensation division into Fireman's Fund for underwriting and servicing.
Mr. Care said the large risks that Allianz is assuming from Fireman's Fund better fit Allianz's strategy of focusing on large account, Fortune 1,000 business.
"The Fireman's Fund strategy is really the middle market type business," he said. Allianz hopes eventually to write working-layer coverage for this property and energy business, said Mr. Care.
Court limits coverage for Alcoa cleanup
SEATTLE-A Washington state court has rejected the Aluminum Co. of America's attempt in its long-running pollution coverage dispute to hold each insurer jointly and severally liable for all the cleanup costs.
Judge Kathleen Learned's allocation of damages, combined with the deductibles on the coverage, has reduced by 90% the amount Alcoa can collect from its insurers.
Two separate rulings resolved questions that were left unanswered from a jury's verdict rendered in October 1996 for three sites in the United States. The jury limited insurers' liability to $20 million but did not allocate that amount among various years (BI, Oct. 21, 1996). Judge Learned allocated the cleanup costs evenly over the years it occurred.
"The damage occurring in any particular year is covered by the insurance policies, if any, on the risk during that year, with the liabilities being divided amongst the insurance companies pursuant to their policy limits and/or 'other insurance' provisions," according to the decision. "Alcoa is responsible for damages occurring in years in which no coverage was purchased."
In addition, each policy contained a $250,000 per occurrence deductible that further lowered Alcoa's recovery. Alcoa's insurers are responsible for $2.01 million of the $20 million the jury awarded.
Attorneys for the primary insurer, Lexington Insurance Co., said they were pleased with the judge's rulings. "The decision supports our position that a first-party insurer is only responsible for the damages that occurred during their policy coverage," said Wayne Glaubinger, a partner with Mound, Cotton & Wollan in New York.
Mr. Glaubinger added that because an earlier ruling upheld notice of loss and suit limitation clauses in the policies, the damages will be further reduced to about $175,000. The Lexington attorneys said Judge Learned now has the option of allowing Alcoa to appeal or have a new jury resolve the remaining outstanding issues.
Suits over approximately 35 additional sites have yet to be tried.
Five Norplant cases dismissed in Texas
BEAUMONT, Texas-A federal judge has thrown out five lawsuits by women claiming injuries from the contraceptive Norplant and will determine whether to consolidate remaining claims into a class action.
Wyeth-Ayerst Laboratories, the St. Davids, Pa.-based manufacturer of Norplant and a subsidiary of American Home Products Corp., is facing product liability and other claims filed on behalf of more than 20,000 users of the contraceptive, which is implanted under the skin.
All the cases have been consolidated for trial before Judge Richard A. Schell in U.S. District Court in Beaumont, Texas.
The judge ruled earlier this month that plaintiffs in the five cases failed to prove their allegations that physicians who prescribed Norplant were not adequately warned by the manufacturer about health effects the women claim to have suffered from using the contraceptive.
Judge Schell has said he will decide whether enough similarities exist in claims from 10 other representative plaintiffs in two other suits to consolidate all claims into a single class action.
Virginia legislation sets RSI standards
RICHMOND, Va.-Gov. George Allen has signed into law a bill spelling out the requirements for carpal tunnel syndrome to be treated as an occupational disease covered by workers compensation.
The new law takes effect July 1. It requires that a "claimant must prove to an absolute degree of medical certainty that the disease arose out of and in the course of employment" (BI, Feb. 3).
Business and insurance interests support the law, which also lists the actions a physician must take to certify that a claimant's condition falls within the definition of an occupational disease under Virginia law.
Under the new law, claimants who receive benefits for carpal tunnel syndrome "may not receive workers compensation for any permanent partial and permanent total loss and disfigurement that occurs as a result of carpal tunnel syndrome."
Oklahoma OKs cut in comp rates
OKLAHOMA CITY-The Oklahoma State Board for Property and Casualty Rates has approved a 10.1% cut in Oklahoma's workers compensation loss-cost rates over the insurance commissioner's objections.
The rate cut, scheduled to take effect April 1, is the largest in 13 years and follows a 4.5% cut in loss-cost rates last year. The rate cut is smaller than the 12.9% decrease the Oklahoma attorney general's office sought. But, the National Council of Compensation Insurers sought a far more modest 3.4% reduction, and an independent actuarial firm retained by the Oklahoma Insurance Department suggested a 4% cut.
Insurance Commissioner John P. Crawford, who is a member of the rating board and cast the lone dissenting vote against the 10.1% rate decrease, said he is concerned that the rate cut will backfire on the 30% of Oklahoma employers that buy workers comp coverage from private insurers. He said it could drive private insurers from the state.
The state has enacted several workers comp reforms in recent years, but he said additional reforms are needed for rates to continue falling. A package of proposed reforms is moving through the Legislature.
Of the remaining Oklahoma employers, about 54% are self-insured. The rest buy coverage from the competitive State Insurance Fund. The fund has approved, on average, maximum rate reductions of 18.5% for renewal business and 13.5% for new business.
Hawaii auto reform would cost employers
HONOLULU-Legislation to reform Hawaii's no-fault automobile insurance system would shift medical costs onto employer-sponsored health plans.
"We don't like it at all," said Clyde Mark, risk manager for Outrigger Hotels Hawaii in Honolulu. "All (employers) are lobbying against it in force."
H.B. 100 was introduced as part of a package by several Democrats. It has already passed through the state's House of Representatives and Senate and now is in a conference committee. Trial attorneys back the bill, which is similar to one submitted by Gov. Benjamin Cayetano, who is expected to support the latest legislation.
The bill would move auto insurance closer to a tort-based system. One of its provisions would make an automobile accident victim's health care plan, rather than an automobile insurance plan, responsible for covering accident medical expenses above $3,000.
Health plan providers in the state estimate they would have to increase employer health premiums by 3% to 5%. But Mr. Mark said he believes the amount will be greater than that. It could also force many employers to reduce employee health-care coverage, he said.
A repeal of no-fault auto insurance in Hawaii likely would be used by trial attorneys in other states who would argue that its repeal reduces cost, said Dave Snyder, assistant general counsel for the American Insurance Assn. in Washington. "Our point is that the repeal of no-fault means that bills that had originally been paid under automobile insurance are shifted to employers," he said.
Contractor may still get MTA safety bonus
LOS ANGELES-The Los Angeles subway contractor that lost a worker in a fatal accident last month still is eligible to receive up to $500,000 in safety bonus pay, according to the Metropolitan Transportation Authority.
But it is unlikely that Los Angeles-based contractor Tutor-Saliba/Perini will receive the full bonus, because one fatal accident is the equivalent of five lost-time accidents for workers compensation reporting purposes, an MTA spokesman said.
"They'd have to run a near-perfect job the rest of the way," he said.
Under terms of the MTA's project safety incentive program, Tutor-Saliba's lost-time accident rate must average 3.8 per 200,000 man-hours worked to be eligible to receive the full $500,000 safety bonus, the spokesman explained. The bonus is the equivalent of 1% of the value of the contract.
But Tutor-Saliba still can receive at least a partial, pro-rated, bonus if its lost-time rate remains below 5.8 until its work is completed, scheduled for May 2000.
Conversely, if Tutor-Saliba's lost-time injury rate averages greater than 5.8, it must pay a penalty to the MTA. The penalty would be pro-rated in the same way as the bonus, with Tutor-Saliba's maximum exposure set at $500,000, the spokesman explained.
"It's an industry practice that provides a useful incentive to have a safer workplace," he said.
The MTA has not yet calculated Tutor-Saliba's lost-time injury rate since the Feb. 15 fatality. Before the accident, the contractor's lost-time rate was 2.2. The national average for similar work was 4.9 per 200,000 man-hours in 1996 (BI, Feb. 24).