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Insurance Matters October 2008
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October 2008 |
Vol 12, Issue 10 | |
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Owned by Members Governed by Members Service to Members
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SPECIALTY LINES |
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As I write this column, we are a couple days into the failure of two investment banks and the financial troubles impacting AIG, the world's largest insurance company. The federal loan provided to AIG does give us a sense where the matter is going, but just as importantly the news brings a few risk management issues to the forefront.
First, I want to assure members of CCAP's insurance programs that there is no major impact on PCoRP, PComp, PELICAN, PRO or any of our sponsored programs from the AIG situation. The only connection we have to AIG is that it reinsures CRL (County Reinsurance Limited) which reinsures part of PCoRP's liability coverage. CRL has kept in very close touch to this matter and I am confident there will be no major problems related to CRL.
Second, as I mentioned last month in my article about insurance pricing estimates for 2009, the lack of investment income is going to have an impact. While we have been in the middle of a soft insurance market, with prices pretty competitive and coverage fairly broad, it is only a matter of time until this changes. Like your county pension plan, insurance companies are not earning much on their investments right now. Couple this with the AIG announcement and the cost of recovering from Hurricane Ike, and you can bet insurance companies are going to take a hard look at their pricing, and it is not going to go down.
Third, AIG's financial troubles highlight for me just how many companies AIG owns. I would bet there are many insureds who do not even realize they are insured by a company owned by AIG. At the end of this column I've included a partial list of insurance companies owned by AIG.
If you are insured by one of the AIG companies, it may be a good idea to check with your broker or local insurance producer to see what is happening with the company. I suspect AIG will need to sell off some assets to raise money.
Lastly, a personal opinion. I find the federal loan to AIG a necessary thing. The company has so many connections to companies and other entities in the US and is truly a major worldwide insurer. The government could not afford to let it go under. I am pleased the feds have changed management and taken a large ownership in the company, as this ensures the feds will have a greater chance of getting the loan money back. I hope that AIG will be able to raise money (probably by selling off some of the insurance companies and other entities it owns) and that when the federal loan is repaid, the federal government will walk away from AIG. It should be interesting to see how this all shakes out in the next couple of months. As a student of government, I am also intrigued with the regulatory implications. The states regulate insurance, not the federal government. But now the federal government essentially owns one of the largest insurers in the world! Should be interesting.
Make sure you call us when you need help with something,
John Sallade
Partial Listing of AIG Owned
Insurance Companies
AIG Edison Life Insurance Company
American General Life and Accident
Insurance Company
American Home Assurance Company
American International Assurance Company
American Life Insurance Company
Audubon Insurance Company
Granite State Insurance Company
Hartford Steam Boiler Inspection and Insurance Company
Illinois National Insurance Company
Insurance Company of the State of
Pennsylvania
Landmark Insurance Company
Lexington Insurance Company
National Union Fire Insurance Company
New Hampshire Insurance Company
SunAmerica Life Assurance Company
Variable Annuity Life Insurance Company
(VALIC) | |
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AMSR-ANNUAL MEMBER SERVICE REPORT, 2008 |
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This fall, all counties and county-related entities will be receiving CCAP's annual report about the insurance programs in which they participate. We are currently in the process of gathering information and preparing 'Annual Member Service Reports' which will give each county and county related entity a 'snapshot' of how well they're doing in each program as well as some information on programs that may be of interest. The AMSR is grouped by the insurance programs in which you participate and is designed to give the member pertinent information regarding insurance costs, claims experience and loss control activities.
The reports will be sent to each member in CD format and can be viewed as a PowerPoint slide show. It is best if the report is viewed on a computer which is connected to the internet as there are links to various CCAP web pages and appropriate staff emails.
Should you have any questions or concerns please don't hesitate to use the contact information located throughout the report. We trust you'll find this information useful and we welcome any feedback you may have.
CCAP Insurance Programs, more than 'just insurance'!
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OFFICE FIRE SAFETY HAZARDS |
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Don't Let Your Historic Building Become a Historic Ruin
By Gary Nicholson, CHSP, Senior Loss Control Specialist
Fire Prevention Week is observed each October. Fire Prevention Week was established to commemorate the Great Chicago Fire, the tragic 1871 conflagration that killed more than 250 people, left 100,000 homeless, destroyed more than 17,400 structures and burned more than 2,000 acres. The fire began on October 8, but continued into and did most of its damage on October 9, 1871. Each year in October fire safety advocates, through fire safety programs, raise public awareness regarding fire safety in the home and at work. As a fire safety advocate, I would like to raise your awareness about office fire safety.
The historic courthouses and county buildings throughout Pennsylvania are some of our country's most prized architectural landmarks. But at the same time some county buildings may be overcrowded, and some may potentially contain fire hazards. The county building you work in should be a safe haven. Is your office regularly checked for fire hazards? If not, there is the potential for danger. Below is a list of potential office fire hazards that could exist, and recommended corrective actions.
SPACE HEATERS
Old, historic buildings often translate in winter to cold, drafty workspaces. If space heaters are allowed in your building, be sure the one you are using is safe. Space heaters in the workplace must be approved for commercial use by a recognized safety testing laboratory such as Underwriters Laboratories, and they must have a mechanism that automatically turns off the heater if it tips over. Unplug your space heater when it's not in use, keep it at least 3 feet from any flammable materials - including that mountain of paperwork on the floor - and never plug it into an extension cord.
EXTENSION CORDS
Extension cords may have become a way of life in century-old buildings retrofitted for modern conveniences, but they are still one of the leading causes of office fires. Extension cords are meant to be used as temporary fixes, not as permanent wiring. Light-weight, residential brown and white extension cords are not made to handle the electric current from copiers, printers, coffee makers, and many others. If you do have to use an extension cord make sure it's been approved by a safety testing laboratory, and don't plug more than one device into it at a time.
DAISY CHAINS
One of the most common safety hazards found are "Daisy Chains," a series of extension cords and power strips plugged into one another. Quite often, a power strip can be a safe substitute for a series of extension cords. For a better long-term solution consider requesting that more outlets or modular furniture with wired outlets be installed in your office.
POWER CORDS
Power cords that have been used for years and passed from office to office inevitably show wear after a while. Damaged and ungrounded cords are a serious fire hazard and violate safety codes. To prevent the cord under your desk from setting your office on fire, inspect the cords in your workspace regularly and replace a power cord if you discover any damaged or exposed wires.
SPRINKLER HEADS
In county buildings that have sprinkler systems, properly functioning sprinkler heads are especially important. Sprinklers are meant to detect and suppress fires, but they can't do their job effectively if they're blocked by stacks of boxes or other storage materials. Regardless of how cramped the office, items should never be placed higher than 18 inches below a sprinkler. Just clearing items from the area immediately surrounding the sprinkler head is not sufficient, as nothing in the room should be more than 18 inches from the ceiling in order for sprinklers to work effectively.
OPEN FLAMES
Candles and burning incense from a safety point of view are inappropriate for the workplace under nearly all conditions. Even if your building and office allow an open flame-for example, when used in a sterno cup to keep food warm on a serving line--be sure to extinguish it when no one is around.
COMBUSTIBLE MATERIALS
Pieces of paper, files, folders, take-out containers, even rugs and upholstered furniture, are all combustible materials. Good housekeeping in office workspaces should be the norm. Keep your personal workspace as clean as possible and periodically perform a little extra housecleaning to guard against accumulating combustibles, as this is a potential fire hazard.
FIRE DOORS
Fire doors both slow the spread of toxic gasses and smoke during a fire, and compartmentalize space to prevent flames from spreading. Holding fire doors open or blocking them with furniture or other items creates a significant fire hazard. Fire doors may be held open through the use of a mechanic device if they are set up to automatically close when a fire alarm sounds. Otherwise, they must be properly closed and easily accessible.
EXIT SIGNAGE
Regardless of how many precautions are taken, a fire may still start in your building, which is why signs that point the way to safety are so important. All "Exit" signs must be large enough and clear enough to be read, and must be illuminated in some way. Similarly, areas that look like exits but are not must be clearly marked with a "No Exit" sign.
TAKE ACTION
If you suspect that your workspace poses any of these fire hazards, notify the responsible party immediately. This may be a department head, the maintenance department or another county official who is responsible for repairs and upkeep.
You may also contact a member of the CCAP Insurance Programs Loss Control Staff to request assistance with an inspection or for other loss control services. Contact us at 800-895-9039; or email us at:
Bruce Mitchell, Loss Control Services Manager;
Gary Nicholson, Senior Loss Control Specialist;
Greg Cunningham, Loss Control Specialist;
Bob Lauzonis, Loss Control Specialist
For more information on this topic contact Gary Nicholson, Senior Loss Control Specialist at (800) 895-9039, extension 3369.
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PELICAN SEXUAL ABUSE AND/OR MOLESTATION COVERAGE EXPLAINED |
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By Stephen A. McDermott, CPCU, CCAP Captive Programs Director
PELICAN Insurance, RRG, provides liability coverage to nursing homes in Pennsylvania. We receive many questions about the sexual abuse/ molestation coverage within our policy and in comparison to the typical commercial policy available to nursing homes, we find they offer no more than ours, which is defense only. Afterall, it is generally believed that it is against public policy to insure a criminal act such as sexual abuse/molestation.
Sexual Abuse and/or Molestation coverage provided under the PELICAN General Liability coverage part is found in Section III. Exclusions, item 10. This exclusion reads as follows:
10. Sexual Abuse and/or Molestation
Any sexual abuse or molestation committed by or at the direction of an insured. However, this exclusion shall not apply to the Named Insured or any other insured who did not commit or give direction to commit the sexual abuse or molestation. We will defend claims alleging such acts until final adjudication, such defense expenses limited to $50,000 each occurrence and $100,000 annual aggregate per nursing home facility.
Essentially, the sexual abuse and/or molestation coverage under the PELICAN policy is providing defense coverage to our insured home, but not to the alleged perpetrator of the abuse/molestation. Our defense coverage for these claims is limited to $50,000 each occurrence and $100,000 annual aggregate per nursing home facility.
On a number of occasions, potential members have chosen another carrier solely because they are being told that another carrier is providing sexual abuse coverage that is more comprehensive than PELICAN's coverage form. Generally, the "coverage" is provided under an endorsement titled, "Sexual Abuse/Molestation Coverage". We have reviewed many of these insurance policies. A close reading of the "coverage" form reveals that, while the endorsement form has the heading "coverage", the coverage is withdrawn within the text of the endorsement, with the net result being the equivalent of PELICAN's coverage, which is defense only coverage.
The lesson here is that coverage can only be determined by a thorough reading of the policy language, not by a quick reading of the endorsement heading.
Note that this explanation is not intended as legal advice. Please consult your insurance professional or legal advisor for an accurate interpretation of your specific insurance policy.
For more information, or questions about PELICAN, including requests for applications, email Steve McDermott, CPCU, Captive Programs Director, CCAP, P.O. Box 60769, Harrisburg, PA, 17106-0769. Phone: (717) 800-9039. Fax: 717-526-1020.
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9TH ANNUAL COMCARE DELEGATES' MEETING |
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By Eric Mallon, Captive Programs Unit Administrative Assistant
COMCARE members are invited to attend the Ninth Annual Delegates' Meeting, Tuesday, November 25th at the Hotel Hershey. Held at the end of the CCAP Fall Conference, the meeting is scheduled for noon to 2 p.m. The meeting will include election of officers. In addition, the COMCARE PRO Subscribers' meeting will be held immediately following the Delegates' meeting.
Members are asked to RSVP by completing the online registration linked here, or follow the link provided in the recent mailing. For more information please contact Christie Ward, Captive Programs Manager or Eric Mallon, Administrative Assistant or call (800) 895-9039.
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WASTING YOUR MONEY |
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By John Sallade, Managing Director, CCAP Insurance Programs
We have seen an upswing in the number of no-shows at CCAP Insurance Programs workshops and seminars. The Spring workshops had a 13% no show rate - the highest in the last several years. This translates to about 25 people who registered for an event and never showed up. This also means they did not cancel, nor did they send a replacement attendee. Of course, we had meals and breaks arranged for them, and incurred costs, which come from the premiums and contributions your county or entity makes to PCoRP, PComp, the UC Trust or PELICAN.
It is essential we get this rate of no shows down. First and foremost, if something happens and you cannot attend, please let us know! Second, try to get someone else from your county or entity to attend in your place.
Over the years we have considered some sort of penalty fee when this happens, or a flat charge for all events which is refunded when the person shows up to attend. We would like to avoid this extra work. Please help us keep costs under control! Thanks!
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PUBLIC FINANCE CHECKLIST |
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By Brian Sanker, Consultant, PFM Asset Management LLC
With the recent volatility in the markets, it is a great time for public finance personnel to conduct a review of a number of items as they relate to your county's financial well-being. The items listed below are important, and most certainly should be monitored on a continuing basis. These 10 recommendations offer officials a great way to start the year off with a "hands on" approach to educating themselves on relevant financial information while conducting prudent due diligence.
- Review governing state statutes.
- Review Investment Policy to ensure consistent or narrower parameters than state statute.
- Review cash flows for bond projects and operating funds. Re-evaluate liquidity needs based on cash flow projections.
- Review current portfolio and accounts, as well as asset allocation and any concentration limits.
- Confirm that any investments and associated credit ratings are permissible under your County's Investment Policy.
- Review authorized signatories and access persons on accounts. Update as necessary.
- Sign up for electronic statements and account access. Update passwords as needed.
- Investigate use of ACH (Automated Clearing House) as a cost effective alternative to wire transactions. Arrange for direct deposit of state subsidies if not currently receiving state subsidies by direct deposit.
- Review prospectus and information statements for all mutual funds and local government investment pools where assets are invested.
- Check out your service providers.
- Review ADV of any investment advisor's used by your county at www.sec.gov
- Review FINRA BrokerCheck Report for any broker-dealer used by your county at www.finra.org
- Review information for any banks used by your county at www.fdic.gov
- Contact your financial service providers to discuss your current portfolio, cash flow and other information. Investigate new products and new investment opportunities that may better suit your County's needs.
Obviously this list could be much longer, and many of these items should be monitored on a continuing basis. We hope this list provides a starting point to a year filled with responsible, critical and creative financial management.
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COMCARE RETREAT HAS AUTISM FOCUS |
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By Christie Ward, Captive Programs Manager
COMCARE, The County Managed Care Resource, held its bi-annual HealthChoices Retreat September 15th with a focus on Autism.
Nina Wall-Cote, Director of the Bureau of Autism Services spoke to the group of county HealthChoices, MH/MR, D&A, and Children & Youth staff. In addition to her presentation she provided a number of handouts on autism awareness, the autism waiver, autism prevalence by county and more.
COMCARE members interested in a set of the handouts along with a copy of the presentation, can contact Christie Ward or Eric Mallon at (800) 895-9039.
The 2nd Annual Pennsylvania Autism Training Conference will be held May 27-29, 2009 tentatively planned for Lancaster,PA. For details on the conference, watch their Web site www.autisminpa.org.
For more information on COMCARE, visit our Web site at www.ccapcomcare.org.
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NOTICE TO NRS PLAN SPONSERS RE: LEHMAN BROTHERS, NEUBERGER BERMAN AND BLACKROCK |
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Article provide by Nationwide Retirement Solutions, a CCAP Endorsed Program
With news earlier this week of Lehman Brothers' bankruptcy filing and the takeover of Merrill Lynch by Bank of America, you may have many questions regarding retirement plan investments managed by these firms, including Lehman Brothers, Neuberger Berman (a subsidiary of Lehman) and BlackRock Funds.
Most importantly for plan sponsors and participants, it's business as usual for the investment management of these funds. All investor assets in these funds continue to be managed to their objectives by the existing portfolio teams. But as these transactions go forward, you should keep the following points in mind:
LEHMAN BROTHERS & NEUBERGER BERMAN FUNDS
· Neuberger Berman and Lehman Brothers Asset Management are not subject to the bankruptcy proceedings of their parent, Lehman Brothers Holdings, Inc.
· Lehman Brothers and Neuberger Berman do not own the assets of any mutual funds they manage. All mutual fund assets are segregated from other assets managed by these firms and held in custody for the benefit of the investors.
· An investment in a mutual fund managed by Lehman Brothers or Neuberger Berman is not the same as investing in Lehman Brothers' stock or bonds. This is an important distinction that plan sponsors and participants should understand.
BLACKROCK FUNDS & THE MERRILL/BANK OF AMERICA TRANSACTION
· Merrill Lynch is a large stakeholder in BlackRock but this transaction should have no impact on the mutual funds managed by BlackRock in our retirement plan products.
· BlackRock is an independent company and their Board of Directors has a majority of independent directors.
· In this transaction, Bank of America will become a large shareholder in BlackRock and will become a party to shareholder and global distribution agreements with BlackRock.
· Similar to the Lehman and Neuberger Berman Funds, assets inside BlackRock Funds are owned by the fund shareholders, not BlackRock, Merrill Lynch or Bank of America.
In times of volatility and industry consolidation like this, it's important for investment professionals to counsel participants to take a long-term view with regard to their investments. Also, investors should seek to understand what's happening with their investments before taking action.
We will share more information with you as it becomes available. In the meantime, feel free to contact Nationwide at 1-877-677-3678 with questions you may have. Information provided by Retirement Specialists is for educational purposes only and is not intended as investment advice.
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KEYS WORKSHOP OPPORTUNITY |
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By Linda Rosito, Insurance Training Director
This fall we are offering as one of our KEYS (Keep Educating Your Staff) series: Reasonable Suspicion Drug and Alcohol Testing. Bill Grant from DrugFree Pennsylvania will be our presenter.
We hope you can join us at one of the four locations nearest you!
If you have any questions, please feel free to contact a member of the Insurance Training Staff.
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TRAINING OPPORTUNITIES... REGISTER NOW! |
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By Linda Rosito, Insurance Training Director
The Fall 2008 workshop season is well underway. The Excellent Supervisor Seminar Series was a huge success with great participation in all three locations.
October will bring 10 workshop opportunities to you. We hope you will take advantage of them.
UPCOMING WORKSHOPS
· Wednesday, Oct. 1 - Effectively Dealing with Incivility in the Workplace, Hilton Garden Inn, Erie
· Thursday, Oct. 2 - Defensive Driving, Penn Stater, State College
· Tuesday, Oct. 7 - KEYS: Thriving and Surviving in the Sea of Change, CCAP North Office, Harrisburg
· Thursday, Oct. 9 - Effectively Dealing with Incivility in the Workplace, Best Western/Country Cupboard, Lewisburg
· Thursday, Oct. 16 - KEYS: Reasonable Suspicion Drug and Alcohol Testing, Regional Learning Alliance, Cranberry Twp.
· Tuesday, Oct. 21 - Effectively Dealing with Incivility in the Workplace, Scranton Hilton, Scranton
· Thursday, Oct. 23 - Annual Producers Meeting, Penn Stater, State College
· Friday, Oct. 24 - Safety Workshop, Penn Stater, State College
· Wednesday, Oct 29 - KEYS: Reasonable Suspicion Drug and Alcohol Testing, Scranton Hilton, Scranton
· Thursday, Oct. 30 - KEYS: Reasonable Suspicion Drug and Alcohol Testing, CCAP North Office, Harrisburg
Visit Glimpse Online to view the details and to register. Please keep in mind that workshops can fill quickly so be sure to register early to reserve your seat!
We look forward to seeing you this fall. If you have any questions, please feel free to contact a member of the Insurance Training Staff.
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PELICAN INSURANCE HOLDS ANNUAL VERMONT SUBSCRIBER ADVISORY COMMITTEE MEETING |
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By Stephen A. McDermott, CPCU, CCAP Captive Programs Director
The PELICAN Subscriber's Advisory Committee (SAC), the governing board for the PELICAN liability insurance program, met August 19th, 2008, in Burlington, Vermont. The SAC is required to meet annually in Vermont as part of the captive insurance regulations of the Vermont Insurance Department.
The SAC officers for the coming year are:
· President: Mike Wilt, PACAH Executive Director
· Vice President: Joe Giles, Erie County Council member
· Treasurer: John Sallade, Managing Director, CCAP Insurance Programs
· Secretary: John Sallade, Managing Director, CCAP Insurance Programs
During the Vermont meetings, PELICAN's financial auditors, Johnson and Lambert, reviewed PELICAN's audited financials for year ending December 31, 2007. Assets at the end of the year were $14,989,953, and liabilities were $6,201,611 leaving Subscriber's surplus of $8,788,342. Total revenue for 2007 was $3,618,238, and expenses were $2,335,465 leaving income before taxes of $1,282,773. Comprehensive income for the year was $1,203,689.
The PELICAN liability insurance program provides primary nursing home professional liability and general liability insurance on a claims-made basis. PELICAN Insurance is a Vermont domiciled Reciprocal Risk Retention Group (RRG) formed under federal law and is owned by the participating nursing facilities.
Membership is open to current PACAH Full Voting Member and Associate Member non-profit nursing homes. This program is not open to for-profit facilities.
If you would like additional information regarding the PELICAN Insurance program, email Steve McDermott, Captive Programs Director, or call (800) 895-9039 ext. 3324.
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QUOTE OF THE MONTH
"Challenges in life do not have the courtesy to show up when we are ready for them."
- Mike Rayburn
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CCAP Insurance Programs
2789 Old Post Road, Harrisburg, PA 17110
Phone (800) 895-9039 - FAX (717) 526-1020
Claims Fax (888) 692-2368
Click here to go the Insurance Section of the CCAP Website.
email:jsallade@pacounties.org
Insurance Matters is published monthly by CCAP Insurance Programs for the use of members of CCAP's UC Trust, PCoRP, PComp, PIMCC, COMCARE, COMCARE PRO, BEST Flex, PELICAN and other insurance programs, and insurance producers of these members.
Advice contained in this publication is not legal advice and members are encouraged to seek the opinion of their solicitor.
The information provided in this publication is not intended to take the place of professional advice. Readers are encouraged to consult with competent legal, financial, or other appropriate professionals. Statements of facts and opinions expressed in this publication, by authors other than Association staff and officers, are the sole responsibility of the authors and do not necessarily represent an opinion or philosophy of the officers, members and staff of the County Commissioners Association of Pennsylvania (CCAP). No endorsement of advertised products or services is implied by CCAP unless those products or services are expressly endorsed, or are owned or managed by the Association programs, or our affiliates. This publication may not be reproduced, modified, distributed, or displayed in part or in whole, by any means, without advance written permission of CCAP. Please direct your requests to John Sallade, Managing Director, CCAP Insurance Programs, jsallade@pacounties.org.
Note: As part of its copyright agreement the CCAP grants the author the right to place the final version of his/her manuscript on the author's homepage, subject to CCAP's standards, or in a public digital repository, provided there is a link to the CCAP website. | | |
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