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.
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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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