Around the Nation, January 2012
A look at claims events from around the nation.
Southern California Braced for Wind, Insurers Brace for Claims
Strong winds cut through Sacramento and throughout California, wreaking havoc for homeowners and leaving behind damaged roofs, fencing, tree limbs, and power lines.
Recorded gusts reached 60 to 80 miles per hour, causing nearly 500,000 to be without power. The Insurance Information Network of California reported thousands of claims submitted, but many policyholders filing claims under these conditions face a dilemma due to deductibles and damage figures that are in close proximity.
Texas Suffers Record-Breaking Wildfire Losses in 2011
The Bastrop County Complex Wildfire was the costliest in Texas history, and 2011 was the costliest year for wildfires, with insured losses totaling $500 million.
Insured losses from the Bastrop wildfire alone are projected to tally $325 million from the destruction of 1,673 homes and thousands of acres of pine. The convergence of several record-breaking meteorological conditions produced an environment conducive to combustion, and the heat intensity caused some home foundations to burst. Damage was uneven as many homes were burned to the ground, while others in close proximity remained untouched. Insurance companies had checks to early victims within hours of their loss, and the majority of homeowner insurance claims have been settled.
Despite the record losses from the Labor Day weekend fire, the Texas Department of Insurance has received only 11 justified complaints with their insurance companies.
Failing Insurance Companies Rescued in Joplin Tornado Aftermath
The Missouri Farm Bureau is set to assume operations for three county mutuals rendered insolvent after paying claims for the May 22, 2011 Joplin tornado.
A Barton County judge approved a proposal by the Missouri Department of Insurance that includes merging the companies into one, restoring their surplus levels, increasing financial capacity, and securing adequate reinsurance. Premiums for the three insurance companies were $29 million in 2010, while Joplin-related claims were reported at $49 million.
On Dec. 1, the companies were placed into receivership under the management of the Department of Insurance. Once the proposed plan is enacted, department control will be lifted.
The three insolvent companies are Barton Mutual Insurance Co., Gateway Mutual Insurance Co., and Cape Mutual Insurance Co., which have about 41,000 policyholders with homeowners’ and fire policies. Both the Department of Insurance and the Farm Bureau called the proposed plan a win-win for all involved.
ATRA’s Judicial Hellholes Report Names Philly No. 1
For the second year in a row, Philadelphia courts top the American Tort Reform Association’s list of judicial hellholes, followed closely by California, West Virginia, and South Florida.
The ATRA annually documents abuses of the civil justice system in jurisdictions where it believes the law is applied in an unfair and unbalanced manner.
“Plaintiff-friendly law, expedited procedures, a reputation for a high plaintiff-win rate, and generous awards contribute to Philadelphia’s status as a venue of choice,” the report states.
On a positive note, success in addressing the flow of medical liability cases to Philadelphia and the legislature’s recent limiting of defendant liability to its share of fault provide some hope for a better outcome next year.
ATRA’s report also spotlights 50 positive tort reform laws in more than 20 states in its expanded “Points of Light” section.
Record Settlement in Upper Big Branch Mine Blast
The largest settlement ever in a federal investigation of a coal mine disaster hit the new owners of West Virginia’s Upper Big Branch Mine, where 29 men died in April 2010 in the deadliest U.S. coalfield accident in decades.
Alpha Natural Resources, which acquired the mine from Massey Energy Co. after the disaster, will pay $210 million in a deal with federal authorities that includes $46.5 million in criminal restitution to the miners’ families; $128 million to fund cutting-edge mine safety upgrades, research, and training; and $35 million in penalties for federal mine safety violations.
Most notably, the agreement does not prevent future criminal prosecution of individuals.
Chiropractor Adjusts to New Role as Convict
A Stamford chiropractor was arrested by undercover FBI agents in an insurance sting involving a lawyer, health professionals, and other individuals paid to pose as accident victims.
For his part in the alleged long-running insurance fraud ring, Marc Kirshner faces a sentence of four to five years in prison under an agreement with federal prosecutors. The conspirators, allegedly headed by the lawyer, would identify minor accident victims who would be provided unnecessary treatment, powerful drugs, and questionable diagnostics. Conspirators could be in deeper than expected since those victims on public assistance who participated in the scheme also are accused of circumventing state law that requires the state to receive half of any insurance settlement.
The U.S. Attorney’s office said more than 10 insurance carriers paid nearly $1.7 million in fraudulent claims involving Kirshner, and they expect the final tally could hit $12 million.