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Heathrow fire losses covered, say airport authority insurers
LONDON -- Any losses from a fire Friday morning in London's Heathrow Airport should be adequately covered by insurance, according to insurers for the British Airports Authority P.L.C.
The fire at Terminal 1, which serves domestic and intra-European flights, began about 4: 30 a.m. and led to flight cancellations and delays at the country's busiest airport for several hours. Fire officials last week were investigating whether the fire started in duct systems in the ceilings.
A BAA spokeswoman said damage is confined to Terminal 1 and is restricted to the roof area and to some smoke and water damage. She said the rest of the terminal's structure is "virtually unaffected."
By Friday afternoon, airport officials were hopeful Terminal 1 would be operating near normal by the weekend, though they said flight delays could persist for several days.
Willis Corroon Group P.L.C. is the BAA's broker. A Willis Corroon spokesman said BAA is insured for property damage and business interruption risks, but he was unable to give details of the limits of coverage.
The lead insurer for the coverage is London-based Royal & Sun Alliance Insurance Group P.L.C. A spokesman for the insurer said Friday it was too early to report anything about the size of claims from the fire, but he emphasized that Royal & Sun Alliance is "adequately" reinsured in the London market.
The largest claim from the incident is likely to be property damage to Terminal 1, as airlines' business interruption policies usually have a deductible of seven to 14 days. Some flights had to be canceled, but schedules are expected to return to normal before business interruption coverage is triggered.
Heathrow is the BAA's largest facility.
Bill to limit Year 2000 liability
SACRAMENTO, Calif. -- A California lawmaker is preparing tort reform legislation that would limit software makers' liability for Year 2000 problems.
Under the so-called "millenium bug bill," damages resulting from a computer date failure would be limited to bodily injury and "costs reasonably incurred to reprogram or replace and internally test the relevant computer system, computer program or software, or internal hardware timer."
Some critics say the bill would eliminate the possibility of recovering "consequential damages," such as the cost of lost meat should a freezer turn off at midnight on Dec. 31, 1999.
However, John Sullivan, president of the California Assn. for Tort Reform, which is sponsoring the bill, said, "We don't want to see legislation that disrupts existing contracts" that might provide such relief.
"We support the concept of preventing these disputes from becoming tort litigation," he said.
The bill is expected to be introduced when the California Legislature reconvenes Jan. 5, according to a spokesman for Assemblyman Brooks Firestone, R-Los Olivos, the bill's author.
Meanwhile, the Securities and Exchange Commission plans to issue additional guidance on what public companies must disclose about their Year 2000 exposure. The SEC issued its initial guidance in a staff legal bulletin released in October.
Maryland fund offers dividend
BALTIMORE -- The Injured Workers Insurance Fund, a major workers compensation insurer in Maryland, will pay out $10 million in dividends to eligible policyholders.
The dividend is expected to average between 12% and 18% of a policyholder's annual premium.
"We are pleased to be able to pay this dividend to our policyholders," IWIF Chief Executive Officer Paul M. Rose said in a statement. "The dividend is a way to materially thank those policyholders who work in partnership with IWIF to prevent and limit the losses attributable to workplace injuries."
IWIF will pay the $10 million dividend to policyholders over the next two years. Individual policyholders' dividends will be calculated using a sliding scale based on the policyholder's premium and loss ratio.
Dividend amounts will be determined early next year after IWIF has calculated individual policyholders' loss experience during 1997.
IWIF writes about $100 million annually in workers comp premiums for Maryland employers.
Employer loses comp ruling
SPRINGFIELD, Ill. -- An Illinois trucking firm will have to pay additional workers compensation premiums after the state's high court declined to review an appellate ruling.
The Illinois Supreme Court's decision earlier this month not to review Wausau General Insurance Co. vs. Kim's Trucking Inc. lets stand an Illinois Appeals Court ruling earlier this year that the Palos Heights, Ill.- based hauling firm was required to provide workers comp coverage for outside haulers with which it contracted, unless those contractors could demonstrate proof of their own insurance.
The Lisle, Ill.-based insurer had claimed the trucking company owed it more than $33,000 in additional premiums for policies written for the 1991-92 and 1992-93 policy years. The case involved about 15 contracted employees.
The appeals court held that because Kim's Trucking, which hauls asphalt, sand, stone and excavated materials, is engaged in "carriage by land," it is involved in an extrahazardous pursuit requiring workers compensation insurance for its employees and contractors unless they can show they have the coverage. Earlier, a trial court had ruled for Wausau in a summary judgment.
Oxford to post 1997 loss
NORWALK, Conn. -- Oxford Health Plans Inc. said it will report a fourth-quarter net loss of $120 million and a net loss for the year following the ordered addition of $164 million to its New York subsidiaries' medical claims reserves.
The New York Insurance Department directed Oxford to make the $164 million addition. The company also said last week it intends to increase the medical claim reserves of its non-New York subsidiaries by a still undetermined amount.
Oxford, formerly a stock analysts' favorite, reported a $6.6 million net loss for the nine months ended Sept. 30, compared with $67.6 million in net income for the comparable period a year ago. The company blamed the performance on adjustments it made as receivable writeoffs because of late billing and termination of accounts, which were the result of computer problems (BI, Nov. 10).
The stock's price dropped after its Tuesday announcement, closing at $16.56 Thursday, which was about a 23% drop from its Monday closing price of $21.38. The stock had reached an all-time high of $89 in July.
Oxford Chairman Stephen F. Wiggins said in a statement: "We are cooperating fully with the New York State Insurance Department. In addition, we believe these steps will enhance our prospects for returning to profitability. We are now in the process of instilling greater discipline, hiring more seasoned management and refining our processes to eliminate the mistakes of our past."
Tobacco legal fee cap sought
WASHINGTON -- Congress should cap the hourly fees paid to attorneys who helped devise the proposed settlement between tobacco companies and 40 state attorneys general, says the author of a bill that would provide such a cap.
Rep. Scott McInnis, R-Colo., told members of the House Judiciary Committee's Court and Intellectual Property Subcommittee last week that private attorneys' fees in the case should be limited to $150 per hour. He said lawyers acting on behalf of some states in the proposed $368.5 billion settlement have contracts paying them as much 25% of any money recovered as fees. Rep. McInnis said the settlement would thus prove to be a "huge windfall for a few plaintiffs' lawyers."
Reps. McInnis, Chris Cox, R-Calif., and Paul McHale, D-Pa., introduced H.R. 2740, which would cap lawyers fees at $150 per hour plus expenses, shortly before Congress' year-end recess. The bill also calls upon attorneys to detail how they spent their billable time charged under the settlement.
Not all witnesses agreed with Rep. McInnis. For example, Alan Morrison, a staff attorney with Public Citizen Litigation Group, a consumer activist group founded by Ralph Nader, argued that such a cap would be unconstitutional.
The proposed settlement, unveiled in June, would require cigarette makers to pay $368.5 billion over 25 years to settle suits brought by the states in an effort to recover smoking-related Medicaid costs (BI, June 23). In return, the tobacco companies would receive immunity from most class-action suits. Any settlement must receive congressional and presidential approval.
The U.S. Supreme Court will review a 6th U.S. Circuit Court of Appeals decision that absolved parent companies from having to pay Superfund cleanup costs at sites used by their subsidiaries. The U.S. government sought review in U.S. vs. CPC International Inc., noting that other circuit courts have held that companies can be required to clean up subsidiaries' sites if the parent company controlled operations at the site. . . .The U.S. Chamber of Commerce plans to launch a major public relations and lobbying effort to counter the influence of the plaintiffs' bar next year. A spokesman for the Washington-based business group said that while the project is still in the planning stage, the chamber's new chief executive, Tom Donohue, has made dealing with the effect of the trial lawyer lobby on business one of his chief priorities. . . .Charles "Chip" Kahn, majority staff director of the House Ways and Means Health subcommittee, will join the Health Insurance Assn. of America next month as chief operating officer and will succeed current HIAA president Bill Gradison in January 1999. . . .A judicial panel on multi- district litigation has assigned the federal suits involving diet pills to U.S. District Judge Louis C. Bechtle in Philadelphia. Pill takers have filed numerous suits against the manufacturers of the pills this year since studies showed they caused heart-valve irregularities. . . .Protection Mutual Insurance Co. of Park Ridge, Ill., has acquired TSB Loss Control Consultants Inc. of Rome, Ga. TSB Loss Control specializes in industrial emergency response personnel training. . . .A Texas state court judge has reduced the jury award against Beverly Enterprises Inc. to $54 million from $83 million in the death of a resident of a Texas nursing home it formerly owned (BI, Dec. 1). Beverly still plans to appeal the case. . . .New York-based Financial Security Assurance Holdings Ltd., holding company for financial guarantee insurer Financial Security Assurance Inc., said it has purchased 1,187,500 of its own common shares for about $33.9 million. The repurchased shares will be held as treasury stock. . . .Home Holdings Inc. will not the pay the $11.6 million interest payment to bond holders due today on time. The company has a 30-day grace period from the due date before it is in default. In June 1997, Home also failed to pay the interest on time but made the payment before it was in default. . . .Chubb Corp. Executive Vp Robert P. Crawford Jr. and Senior Vp Edward Dunlop are retiring at the end of the year, the company announced. Mr. Crawford also was president of Chubb & Son Inc., while Mr. Dunlop was worldwide field operations manager of Chubb's property/casualty business. At the same time, Chubb elected Thomas F. Motamed and Michael O'Reilly executive vps and Glenn A. Montgomery and Andrew A. McElwee Jr. senior vps. Mr. Motamed also will fill the newly created position of chief operations officer of Chubb's property/casualty business.