Some Might Call It Frivolous

It is a case that offered Applied Underwriters (AUW), a kind of “proof of concept” as a U.S. District Court Judge, Eastern District, California, tossed out allegations in a suit that had argued that the company, a leading, national workers’ compensation insurer, acted to defraud clients who purchased workers’ comp coverage using the Company’s widely successful insuring format created for clients’ savings and enhanced worker safety. United States District Court Judge William B. Shubb dismissed RICO claims “without leave to amend,” that is, they cannot be refiled, holding that the plaintiffs failed to demonstrate intent to defraud on the Company’s part. The motion was denied in almost all other respects as well, leaving only a narrow recourse to a UCL claim, according to Jeffrey Silver, Esq., General Counsel for the AUW.  We interpret this decision to be a vindication for a company that has been the occasional target of over-reaching regulators, disgruntled companies with losses, and some in the business who simply do not understand the format. For AUW, the victory is “particularly meaningful,” demonstrating that the format used was clearly communicated to AUW clients and was understandable in all respects. According to Mr. Silver, it underlines the fact that AUW does not engage in unlawful practices, as alleged: “We are quite satisfied with United States District Court Judge Shubb’s Order dismissing the Plaintiffs’ RICO claims without leave to amend. Judge Shubb has previously ruled to dismiss certain of plaintiffs’ claims without even necessitating argument on the merits–itself a kind of comment on this and other such suits,” he stated. “We now have a clear standard that will be invoked should any such claims or class actions arise alleging that AUW either did not inform or misinformed clients concerning the RPA (Reinsurance Participation Agreement),” he noted, pointing to Judge Shubb’s conclusion: “Thus, because defendants shared information regarding the RPA, including that fact that it was not filed, both directly with plaintiffs and in a publicly available patent, they have been able to refute any inference of fraud.”  In fact, the Company has been called upon to defend claims of this sort that undermine its success and its clients well-being and threaten to damage a system of risk retention that substantially benefits insureds, their employees and even the court system itself–where such cases should not be allowed to cloy the system. AUW spends a lot to ensure worker safety and recovery; it pays claims with well-known care and speed. It is a shame that the Company needed to spend its time and treasure on this kind of almost frivolous litigation. In a sense, it was a big win, but the very fact of the case is a loss for every party to the insuring process. The lawsuit explosion against insurers is not over; let’s hope that judges “get it,” as did Judge Shubb.

The Hill, a leading political newspaper, has named Bob Rusbuldt, Big “I” president & CEO, and Charles Symington, Big “I” senior vice president of external, industry, and government affairs, among the top trade association lobbyists in Washington, D.C. The Hill piece noted the Big “I” was “a force to be reckoned with” as it battled for a wide array of flood insurance legislation in 2017, including a long-term extension of the National Flood Insurance Program. Congressional leaders do tap the Big “I” federal government affairs team for its political acumen, including sitting on congressional steering committees, raising campaign dollars, hosting political events, and strategizing to help members of Congress better serve their constituents and advance top issues. InsurPac, the Big “I” PAC routinely raises well over $2 million each election cycle and disburses it to U.S. Senate and House campaigns that are supportive of the independent agency system. Looks like it is working.

.Not to be lost in the breach, The National Association of Insurance Commissioners is moving closer to adopting an Insurance Data Security Model Law that closely follows New York’s cyber security regulation, which took effect in March. The model law, the sixth version of which was adopted by the Cybersecurity Working Group and Innovation and Technology task force, establishes industry standards for data security that will apply to a broad range of parties, including insurers, agents and brokers. Organizations will be required to have a written information security program for protecting sensitive data, including incident response and data recovery plans, to demonstrate their preparedness for cyber events. Companies will have to certify compliance annually to their state insurance commissioners and notify commissioners of data breaches within 72 hours of a cyber security event. The American Insurance Association was pleased. Kudos to New York’s regulators for this one.

The 103rd Annual Luncheon of IFNY honored leadership and entrepreneurship in the persons of its Free Enterprise and Public Policy Awardees, and in its amazing support of students interested in the insurance field. If you look at the long and distinguished list of IFNY honorees, you will see some very familiar names—one that might even be described as  “huge”—the list includes leaders and friends to US Commerce and to the betterment of insuring. Pleasure to see Free Enterprise honoree, Mr. Gregory Case, President and CEO of AON; Public Service Awardee, Mr. Michael McRaith, Fmr. Director, the FIO; and honored to see Cecilia Norat become Director Emerita of the Group for which she has done so much over the years. Featured Speaker was Hon. Maria Vullo, Supt. of the NYS DFS, who was genuinely taken with the students shepherded by IFNY through its support of wonderful Mary Lanning and her Boys Hope Girls Hope system. Past Honorees were present, each an acknowledged icon of the business: Don Kramer and Brian Dupperault. Several former heads of the NY State Insurance Department were on hand: Jim Wrynn, Jim Corcoran, and Sal Curiale. All in all, quite a gala led by IFNY President Nick Pearson and its Chairman, Lance Albright.

And now for some good news from HR: The insurance industry added 10,900 jobs last month, a large jump from the 1,700 jobs gained the month previous, according to preliminary numbers released by the U.S. Bureau of Labor Statistics’ Economic Situation report on Friday, October 6, 2017. “The insurance industry experienced decent growth last month despite losses to the total non-farm payroll employment,” said Jay Rollins, owner of the insurance employment website InsuranceJobs.com. “The economy lost jobs for the first time since September 2010.” The insurance carriers and related activities subsector, which includes claims adjusters, claims investigators, insurance sales agents and insurance underwriters, now sits at 2,642,300 employed persons with an unemployment rate of 2.1 percent. Since September 2016, insurance has added 48,600 jobs. Across all industries, the U.S. economy lost 33,000 jobs in September, while the unemployment rate declined 0.2 percentage points to 4.2 percent. “Since the beginning of the year, employers have added an average of 148,000 jobs a month, down from last year’s average of 187,000 jobs a month,” said Rollins. Losses were largely felt in food services and drinking places, which dropped 105,000 jobs due to hurricanes Irma and Harvey. SA