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PENNSYLVANIA REGULATOR KAISER RESIGNS POST TO JOIN RELIANCE
HARRISBURG, Pa.-Pennsylvania Insurance Commissioner Linda Kaiser has resigned to become senior vp, general counsel and corporate secretary of Reliance Insurance Co. in Philadelphia.
In an interview, Ms. Kaiser said that though she enjoyed working as commissioner, the offer from Reliance was an excellent opportunity that she couldn't pass up.
In accepting her resignation, Pennsylvania Gov. Tom Ridge cited her work in lowering the state's workers compensation insurance rates.
Ms. Kaiser said her major achievements as commissioner included reducing regulation of the insurance industry and automating the Insurance Department.
But Ms. Kaiser's tenure, which began in March of 1995, probably will be most remembered for her approval of the controversial reorganization of CIGNA Corp.
A state appellate court vacated her decision earlier this year and removed her from presiding over the trial-like hearings that were ordered to take place (BI, March 10).
Ms. Kaiser said her eventual successor will assume the commissioner's role of monitoring CIGNA's appeal of that decision.
Ms. Kaiser's resignation is effective June 27. Gov. Ridge has not named a successor.
Settlement to cut drug prices
CHICAGO-Retail pharmacies expect their drug prices to drop and make them more competitive with pharmacy benefit managers following a landmark settlement between druggists and drug manufacturers that finally appeared to clear its final hurdles last month.
A federal appeals court in Chicago, led by Chief Judge Richard Posner, permitted the druggists' antitrust settlement to be concluded after nearly a year in limbo. The settlement had been delayed by various challenges brought by about 240 pharmacists unhappy with the June 1996 accord (BI, Feb. 24, 1997).
Judge Posner, in dismissing all remaining objections to the settlement, cleared the way for about 30,000 pharmacists nationwide to share in the $351 million settlement.
Eleven large drug manufacturers, who stood accused of giving unfair pricing discounts to managed care organizations, PBMs, hospitals, and other large buyers, will foot the bill.
More important to the pharmacists, a federal district judge last June said the drug makers must offer pharmacies the same discounts they offer to managed care companies, assuming their effect on the market is similar.
The drug makers that settled have until the beginning of September to implement their respective plans on pharmacy discounts. Once the plans take effect, retail drug prices will decline at least 12%to 15% said John M. Rector, general counsel of the Alexandria, Va.-based National Community Pharmacists Assn.
David Melnick, a Milwaukee attorney who represents the pharmacists, said it probably would take about 60 days from the implementation of price changes before buyers would notice the gap with PBMs narrowing.
Malden Mills, insurer settle
LAWRENCE, Mass.-Malden Mills Industries Inc. has reached a settlement with a unit of American International Group Inc. that provided $300 million in combined property damage and business interruption limits for the fabric manufacturer's main plant, which was devastated by fire in 1995.
The terms of the settlement were not disclosed, but prior to the agreement the AIG unit, Commerce & Industry Insurance Co., already had paid $183 million in property damage and business interruption claims, said Ernst Weglein, general counsel at Malden Mills in Lawrence, Mass.
The bulk of the insurance claim was for business interruption losses, he said.
Several months after the Malden Mills fire, C&I stopped writing property insurance. C&I has since been reorganized as an environmental insurer and now is known as AIG Environmental.
Malden Mills lost three mill buildings in the December 1995 fire. The plant produced lightweight fleece linings for ski clothing and other outdoor clothing.
The manufacturer has since built a new facility at a cost of about $70 million, said Mr. Weglein.
Humana to buy two HMOs
LOUISVILLE, Ky.-Humana Inc. is adding 1.4 million members to its managed care rolls with the acquisition of health maintenance organizations in Florida and Ohio.
Humana last week announced it will buy Miami-based Physician Corp. of America for $400 million in cash and debt and ChoiceCare Corp. of Cincinnati for $250 million in cash.
The deals will give Louisville, Ky.-based Humana 6.2 million members and annual premiums of about $8.5 billion.
The moves are an effort to "advance our long-term business strategy and build value for our shareholders," Gregory H. Wolf, Humana's president and chief operating officer, said in a statement.
The PCA deal means subsidiary PCA Property & Casualty Insurance Co. of Longwood, Fla., no longer faces a takeover by state regulators. Humana agreed as part of the acquisition to fund the $160 million in claims owed by the inactive workers comp insurer and to purchase $230 million in reinsurance from Centre Reinsurance Co. of New York as part of a commitment to pay future PCA claims.
Park accident spurs inquiry
CONCORD, Calif.-The city of Concord, which owns the property where a student died and 32 others suffered injuries when a Waterworld amusement park slide broke last week, and the slide manufacturer, Whitewater West Industries Ltd. of Richmond, British Columbia, have sent engineers to assess the structure.
Students disobeying lifeguards and rushing onto the slide intended for use by one person at a time caused the accident, according to officials of Premier Parks, which owns Waterworld. A structural engineer hired by the company said that excessive weight caused the slide to break, causing the students to fall more than 30 feet.
Premier Parks has liability insurance underwritten by Chicago-based Coregis Group Inc., a unit of GE Capital Services, said sources who asked not to be named. The insurer and GE Capital declined comment.
Entertainment analysts for Smith Barney Inc. said Premier Parks is insured to $25 million per occurrence with a $50,000 deductible. The analysts said in a statement that they think the amount "is adequate to cover Premier's liability in this case."
Water park liability rates are not expected to rise significantly due to the accident.
"If you had a rash of them, then yes" said Ron Stone, senior vp and branch manager in San Francisco for Swett & Crawford Group. But several insurers underwrite the coverage and a number of specialty programs, he added. Swett & Crawford places coverage for amusement parks but not for Waterworld.
Water park liability rates have been extremely competitive in the past few years, said Philip Coulson, president of Hass & Wilkerson Inc. in Shawnee Mission, Kan.
FSA to insure bond issue
SAN FRANCISCO-A promise by financial guarantee insurer Financial Security Assurance Co. in New York to provide bond coverage may well have played a crucial role last week when voters narrowly approved two measures needed for a new football stadium for the San Francisco 49ers, an FSA official says.
FSA has agreed to guarantee $100 million of lease revenue bonds to be issued by the city and county of San Francisco for the 49ers Stadium Expansion Project, including $50 million to $100 million in interest. The total depends on how the bonds are structured and interest rates, said Suzanne Finnegan, FSA's chief municipal underwriting officer, who noted the policy will be issued simultaneously with the bonds.
FSA's involvement, which means that bond revenues will not have to be secured by San Francisco's general fund, received heavy publicity during the often heated public debate over the stadium.
Class denied in tobacco suit
PHILADELPHIA-Plaintiffs suing the tobacco industry in Pennsylvania cannot sue as a class because managing the litigation would pose significant problems, a federal judge has ruled.
The Pennsylvania suit attempted to certify as a class residents of the state who began smoking before age 19. The suit sought damages to be used for health monitoring and smoking-cessation programs.
In a 58-page decision issued last week, U.S. District Court Judge Clarence C. Newcomer in Philadelphia wrote: "The reality of this litigation is that there are simply too many individual issues and class members to try this case efficiently. The manageability problems which would be encountered in litigating and trying this case are staggering."
This ruling is consistent with others, such as last year's New Orleans federal court ruling in what is known as the Castano case that refused certification of all addicted smokers. Other suits, however, have been allowed to proceed as class actions.
The Pennsylvania suit sought to avoid a ruling like the one in the Castano case by narrowing the class.
Rowland maps Lloyd's future
LONDON-Lloyd's of London's future will be defined by several principles, according to Sir David Rowland.
Sir David addressed the issues he thought would outline the future of the market while speaking last week at the last annual general meeting he will chair before his retirement at the end of this year.
Although he said he will change his own underwriting strategy- from unlimited to limited liability-when he leaves his post as chairman of Lloyd's, Sir David still is looking forward to the market's future.
Foremost in Lloyd's thinking will be the needs of the policyholder, said Sir David. Additionally, Lloyd's will address its regulatory, cost and security issues, as well as maintaining the facets of the marketplace that have secured its individual characteristics over the last 309 years.
Lloyd's central management needs to keep control over the market, though without hindering the effect of market forces in the evolution of Lloyd's, he said. "Our vision of the future. . .must be rooted in serving our customers, not in nostalgia about our past or our success in dealing with our problems," said Sir David, referring to the establishment of reinsurer Equitas Ltd. last year.
Washington state Insurance Commissioner Deborah Senn filed an appeal June 2 with the 9th U.S. Circuit Court of Appeals seeking to reverse a lower court order that struck down the state's law requiring employer-sponsored health plans to provide access to all categories of health professionals including naturopaths, acupuncturists and chiropractors . . . .Xerox Corp. has completed the sale of Coregis Group Inc. to GE Capital Services for $375 million in cash and $75 million of debt assumption (BI, Jan. 27, 1997). Coregis specializes in public entity coverage, and in 1996 its gross written premiums were $423 million. . . . Sedgwick Group P.L.C., which trades on the London Stock Exchange, also began trading on the New York Stock Exchange June 2 at a share price of $10.375. . . . The U.S. Equal Employment Opportunity Commission filed a motion in St. Louis federal court to join a class action discrimination lawsuit against United Parcel Service of America Inc. A group of African-American managers sued the Atlanta-based company in 1994 alleging its pay and promotion policies discriminate against lower-level black managers. . . . Judge Jack B. Weinstein of the U.S. District Court in Brooklyn, N.Y., cut to $2 million a $3.5 million jury verdict reached last December for one of three plaintiffs in a keyboard injury case against Digital Equipment Corp.