IRMI Update—Issue #15
An E-mail Newsletter for Risk and
Insurance Professionals
ISSN: 1530-7948
April 17, 2001
In This Issue
Colleague,
Prompted by the threat of federal intervention in insurance regulation
stemming from the Gramm-Leach-Bliley Financial Services Modernization
Act (GLBA), the National Association of Insurance Commissioners
(NAIC) is working hard to promote uniformity in insurance regulation
within the United States. The application of 50 different sets of
laws, regulations, and enforcement processes has built much costly
inefficiency into the U.S. insurance industry, and these new efforts
are intended to remedy it.
Great progress is being made in the areas of privacy, producer
licensing, and policy form-and-rate filings. NAIC has developed
a model privacy regulation for adoption by the states, a model producer
licensing act containing multi-state reciprocity provisions, and
a centralized Web-based system to automatically process appointments,
terminations, and nonresident license applications on behalf of
individual state insurance departments. Additionally, a process
for providing a single point for product filings for all participating
states, CARFRA, will be tested this year.
Our state regulators are to be commended for all the progress
they've made in the last few years. Many of their changes will reduce
insurance company and agent/broker costs and increase the speed
in which new product introductions can be implemented. Other changes
may also provide the insurance industry with more flexibility to
respond to the needs of large commercial insureds without all the
encumbrances of consumer protection regulations.
However, I worry that it will be impossible for the 50 states
to ever develop the uniformity and coordination that could be obtained
through regulation by a single regulatory system. The NAIC may generate
uniform model acts and regulations, but it is unlikely that any
state will adopt the acts or regulations without making at least
some changes to them. While much more similarity between the states
will result, important differences will still lead to inefficiency.
Thus, I'm not convinced that the system can be fixed, and I wonder
if we shouldn't just start over with a new centralized system that
is run by Uncle Sam.
What do you think? Will the NAIC's worthy efforts bring the efficiency
we need in insurance regulation? Or should we dump the entire system
and start over? Should we have one system for personal lines and
small commercial accounts and a different one for large commercial
accounts? [See reader comments].
Have a great day.
Jack
Jack P. Gibson
President
IRMI
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Environmental Risk Control Tactics.
These tactics can help contractors and many other types of businesses
control their environmental risks.
- Provide secondary containment for aboveground
storage tanks and drums containing liquid. In areas
where there is heavy vehicular traffic, protect
storage areas with impact barriers.
- Perform lead and asbestos analyses before demolishing
or repairing existing structures. Lead-based paint
was widely used as recently as 1977 in residential
homes and is still widely used for industrial applications.
Similarly, asbestos-containing materials (insulation,
floor tiles, and mastics) were also widely used,
in some materials, until 1990. Handling or altering
these materials may release dangerous levels of
airborne particles that can impact workers and the
public, or contaminate surrounding property.
- Equip field vehicles with spill kits to contain
spills. Have absorbent booms or granular absorbents
on-hand to stop a spill from spreading and reaching
a watercourse or a storm drain. Be certain that
your employees are trained in how to use spill kit
equipment and materials.
- Ensure that field crews are trained to recognize
hazards and dangerous conditions associated with
their work. Field laborers and equipment operators
are likely the ones who will cause an accident.
These individuals will also have the first opportunity
to react quickly to minimize the problem after it
has occurred.
Scott Lodge
Senior Consultant
ECS Risk Control (an XL Capital company)
E-mail:
Suggest a Risk Tip.
Future issues of IRMI Update will include more risk tips from our
readers. Send us a practical tip (less than 300 words) for identifying
and managing risks, buying insurance, managing claims, or filling
gaps in insurance coverages. We'll acknowledge your contribution
as we did for Scott.
We add new Expert Commentary to IRMI.com every week. There are
now 127 articles on IRMI.com, and many more are in production. Below
you'll find summaries of some recent additions with links to the
articles.
-
Insurance Agency E&O Risk Control: The Question
of Independent Contractors—There is an
increasing trend for agencies to classify producers
as independent contractors rather than employees.
State and federal laws do not look favorably on
these arrangements. This article explains the various
tests used to determine the difference.
-
Cut-Through Provisions in Reinsurance Agreements—A
cut-through provision allows a party not in privity
with the reinsurer to have rights against the reinsurer
under the reinsurance agreement. Learn how cut-through
endorsements are attached, triggered, and employed,
and how they may be unenforceable in some jurisdictions.
-
The Argentinean Insurance Market—Based
on area, continental Argentina is the eighth largest
country in the world, the second largest in Latin
America. Learn about its insurance market—its composition,
regulatory environment, and how various coverage
lines are handled.
Pollution
Coverage Issues. Need to know if gasoline is considered
a "pollutant" under the CGL exclusion in California? Whether the
owned property exclusion can be circumvented because of a threat
to third-party property in New Jersey? This powerful reference helps
you answer these and many more questions about pollution coverage
under a general liability policy. It gives you every published state
and federal appellate court decision forming the current judicial
interpretation of commonly litigated issues involving coverage of
pollution claims. The helpful charts group decisions according to
whether they favor the insurer or insured, and also according to
the rationales determining coverage and the fact situations out
of which pollution claims arise. Attorneys, insurance practitioners,
and risk management professionals will find it to be invaluable
when litigating or negotiating coverage disputes.
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