Tuesday, September 15, 2009

Consumer Reports Survey: Most Problems with Claims were with Farmer’s Insurance and Others

Many people don’t have reliable insurance for their home. That’s the finding of a Consumer Reports National Research Center survey on insuring your home. The problems included delayed payments, payouts that were smaller-than expected, and some claims that were denied entirely.

Those who reported the most problems with claims were with—Farmer’s Insurance, Allstate, and Traveler’s—all major insurance carriers.

And Consumer Reports finds many insurance companies are cutting back coverage. Some are imposing high deductibles for windstorm damage. You might not be covered any longer for mold or dog bites.

Most important is checking what coverage you’ll have if your house is destroyed. Consumer Reports says Insurers are cutting back here, too. “Guaranteed replacement cost coverage,“ which pays the total bill to rebuild regardless of the price, is very hard to get, and where it’s available it’s very expensive.

Consumer Reports recommends comparison shopping for insurance every five years. Some good sites—netquote.com and insweb.com.


And to be sure you’re protected in the future, check that the policy includes adjustments for inflation.

Consumer Reports says be aware that flood damage is never covered by private homeowners insurance. But you can get flood coverage through the federal government. For details, go to http://www.floodsmart.gov.

Source: tricities.com

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Friday, September 11, 2009

Republican Mike Duvall, the legislator caught boasting about his sexual escapades with his lobbyist mistresses is a Farmers Insurance Agent

SACRAMENTO, Calif. — A scandal involving a family-values legislator caught boasting about his sexual escapades with his lobbyist mistresses created an embarrassing distraction for lawmakers Thursday, further diverting attention from California's major policy issues in the crucial final days of their session.

Republican Mike Duvall resigned Wednesday after a videotape surfaced in which he described to a colleague in lurid detail his sexual conquests, including a spanking fetish, the skimpy underwear of one mistress and his carrying on two affairs simultaneously. He sought to deny the affairs on Thursday.

The fallout from the scandal began to emerge, with calls for an outside investigation in addition to the internal ethics probe to determine whether the alleged affairs might have influenced his votes.

California lawmakers, who face growing public distrust and few accomplishments for the year, were hoping for a flourish of activity on major issues such as water and prison reform as their regular session drew to a close this week.

But the scandal filled the Capitol with gossip and distracted many legislative staffers from the more important business at hand, while further tarnishing the image of an institution that is seen as increasingly ineffective.

"This is a real black eye," said Derek Cressman, regional director for the government watchdog group Common Cause. "I think it's imperative that the leadership of both parties take this very seriously and address it in a fast and strong way."

The videotape shows Duvall during a break from a July 8 committee hearing detailing his extramarital exploits to fellow Republican Assemblyman Jeff Miller of Corona. He is overheard on an open microphone bragging that he slept with an energy industry lobbyist who wore "eye-patch underwear" and that he enjoyed spanking her when they hooked up. He told Miller, a longtime friend, that he also was sleeping with another lobbyist.

"Oh, she is hot!" Duvall said about the second woman.


The 54-year-old married father of two issued a statement denying he had affairs and saying his only offense "was engaging in inappropriate storytelling."

The lobbyist Duvall refers to in his comments reportedly works for Sempra Energy, a San Diego-based energy services company. The allegation that Duvall slept with a lobbyist who does business before his chief committee prompted calls for an outside investigation and tougher rules of conduct for lobbyists.

Duvall was the vice chairman and ranking Republican member of the Assembly Utilities Committee. Duvall, a Farmers Insurance agent in Yorba Linda, also was a member of the Assembly Rules Committee, whose responsibilities include overseeing lawmaker ethics and ensuring sexual harassment laws are followed within the Legislature.

Assembly Speaker Karen Bass, D-Los Angeles, has ordered her chamber's ethics committee to investigate. On Thursday, she removed Miller from his seat on the ethics committee, saying it posed an obvious conflict for him to have a role in investigating the scandal.

Campaign finance records show only relatively small donations to Duvall from Sempra, including $1,500 to his re-election campaign in March and $1,300 to his officeholder account in 2007 and 2008. He appears to have authored only one bill on electricity rates, which never received a committee hearing.

California law requires lobbyists to register with the state, complete an ethics course and report the money and time they spend lobbying lawmakers. It does not require that they disclose how much they are paid or prohibit personal relationships with the people they are lobbying.

The liberal watchdog group Courage Campaign called on Attorney General Jerry Brown to investigate Duvall's behavior, saying an examination of a lawmaker's conduct should not be left to other lawmakers. Brown's spokesman, Scott Gerber, said the attorney general will wait for the ethics committee's conclusions before deciding whether to get involved.

While the videotape and subsequent resignation remained the talk of the Capitol, longtime observers of California's political culture were not surprised about the allegation of an affair between a lawmaker and a lobbyist. But rarely do affairs emerge in such public — and juicy — fashion and become broadcast to the world on YouTube.

"I hate to be the one to break the news, but relationships between lawmakers and lobbyists are neither uncommon nor unknown," Bill Cavala, a Democrat who worked in the Assembly speaker's office for more than 30 years, wrote in a blog Thursday. "The capitol community is like, in many ways, a combat fraternity. It is not surprising that the men and women involved in the political trenches together should be attracted on another level as well."

The scandal comes at a time of the year when politicians hop from fundraiser to fundraiser at restaurants and bars around the state Capitol, partying with lobbyists, staffers and other lawmakers. The timing of the fundraisers has raised questions in the past because it is at the end of the legislative session when lawmakers are voting on the most important bills, raising the specter of pay-to-play politics — or worse.

The public perception of a Legislature that operates like an insider's club and produces little in the way of meaningful change for California's 38 million residents has prompted several proposals for reform-oriented ballot initiatives for 2010.

Among them are measures to make the Legislature a part-time body, require that lawmakers actually understand the legislation they vote on and force lawmakers to undergo periodic drug and alcohol testing. Another movement seeks to call a constitutional convention to rewrite California's governing document.

With just one day to go in this year's session, lawmakers have left the most important parts of their agenda unfinished — on issues such as water, prisons and alternative energy.

Bass, the Assembly Speaker, tried to temper the scandal-fueled gossip and put a positive spin on the Legislature's final days in regular session.

"The Assembly has some very important policy work to complete in the next couple of days and we will not allow this situation to become a distraction," she said.

Copyright © 2009 The Associated Press. All rights reserved.

Source: google.com

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Thursday, September 10, 2009

Farmers Insurance and others may be shorting Texas homeowners

HOUSTON --Three new proposed class action lawsuits in Texas allege insurance companies are shorting their consumers. The lawsuits say as much as 20 percent is often missing from what their homeowners insurance should provide in a pay out.

The allegations center around the alleged non-payment of something the insurance industry refers to as “overhead and profit” to consumers, which is money insurance companies pay so consumers can afford to hire a professional general contractor when needed to oversee repairs. The money is supposed to provide enough funds to pay for a general contractor’s overhead expenses such as licensing and bonding fees, and also enough to allow the general contractor to make a living.

The Texas Department of Insurance has issued two separate bulletins informing insurance companies that not paying overhead and profit where a general contractor is needed would be “unfair to the insureds,” and could subject the insurance company to possible disciplinary action.

Cheryl Guerra says she’s one of the homeowners who got shorted on her Hurricane Ike claim by Travelers Insurance.

“It makes me very angry,” she asked. “Why aren’t we getting what we deserved?”

Guerra is suing Travelers now as a representative of the proposed class of consumers.

She alleges Ike caused roof damage, a downed fence, moisture damage in her walls, and other problems that needed repairs. She says Travelers Insurance did not pay her overhead and profit, leaving her without enough money to hire a general contractor.

“There really wasn't enough money to get everything done,” she said. “Trying to make up the difference to fix the damage is really impossible.”

Guerra says her family had no choice but to repair the roof over her family’s home on their own.

As a result, she says, her family of amateurs was forced to take on what she felt were dangerous repairs they were untrained to do, such as repairing their roof.

“We went and bought the material and did it ourselves,” she said. “My husband got up there.”

Guerra says she was petrified about the possible impact on her family, both physically and financially.

“What if my husband got hurt? He’d lose work.”

Alex Winslow of Texas Watch, a consumer and insurance watchdog group based in Austin, says insurance companies leave overhead and profit off claims far too often.

“Most customers don't even know their policy should be paying it,” he said. “It could be hundreds, (or even) thousands of dollars.”

Winslow says most consumers don’t know they are being shorted when it happens, which is why he says the number of complaints the Texas Department of Insurance has received on the issue should raise red flags.

KHOU discovered at least 60 overhead and profit related complaints made to the Department of Insurance, some dating back to 1997. However, after Ike struck, the number of complaints suddenly accelerated, with 26 of those 60 complaints coming during 2009 alone.

The Texas Department of Insurance felt the issue was important enough to issue a new bulletin in late 2008 about, reminding insurance companies to pay overhead and profit or face penalties. However, to date, department spokesman Jerry Hagins says they have yet to take any enforcement action on the issue.

“Unless an insurance company gets their cage rattled, they're going to continue to try to take advantage of consumers,” said Winslow.

State spokesman Hagins says the Department of Insurance has an open inquiry into many of the ways various insurance companies have been handling Ike-related claims. He says the overhead and profit issue is something they are examining as part of that wider inquiry.

Attorney Javier Delgado, who is filing suit in Texas against five insurance companies on this issue, says many Texans have been taken advantage of and probably have no idea.

“It's so systemic. It's so rampant,” he said. Delgado says insurance companies have good reason to leave overhead and profit off of many of their estimates to consumers.

“If you’re saving 2-thousand dollars on average per claim, that turns out to be a lot of money.”


He points to how a jury in Oklahoma issued a $130 million verdict against Farmers insurance for not paying overhead and profit to consumers in that state. The case was called Burgess Vs. Farmers and does not affect Texas consumers. Many Oklahoma homeowners will now be eligible to receive up to 20 percent more money than they had previously been paid on their claims. Delgado says his review of Farmers cases in Texas reveals what he alleges are some of the same problems here.

“Over 90 percent of the cases the clients we have that came to us, on the initial estimate Farmers did not pay overhead and profit.”


Delgado says Farmers has since paid the overhead and profit to many of those consumers, but only after he got involved as an attorney. Delgado says you shouldn’t have to hire an attorney to be treated fairly.


He also believes the problem with nonpayment of overhead and profit has accelerated in Texas after Ike struck, which is one of the costliest storms to insurance companies in American history.

“I was missing the overhead and profit, which comes to about two grand,” said homeowner Mike Barrera, who is suing Texas Windstorm for nonpayment of overhead and profit.

Barrera says he too was forced to fix his Ike-damaged house by himself, along with help from non-professionals he knew.

“Basically I had to solicit friends, family, we did the majority of it ourselves,” he said.

Barrera says he would have preferred to not put his friends and family at risk on the job, but says he could not hire a general contractor after Texas Windstorm didn’t include overhead and profit on his estimate.

“It's a rip off. Bottom line,” said Barrera. “I’m probably one of thousands of people.

We asked the top executive at Texas Windstorm, Jim Oliver, if and when Texas Windstorm pays overhead and profit to its consumers.

“We’re perfectly willing to pay profit and overhead if it's incurred, but we can't put it in the estimate,” he said.

KHOU showed Oliver dozens of examples where Texas Windstorm appears to have never included overhead and profit in estimates to consumers. Oliver says there is a way for those consumers, or others, to get paid overhead and profit from Texas Windstorm: they have to go out and hire a general contractor first, and then come back to Texas Windstorm and ask for the money later.

KHOU: I need to have the work completed and get a bill from my general contractor before I get overhead and profit from you?

Jim Oliver: Correct.

Texas Windstorm’s policy may have been affecting consumers for quite some time. Why? Nearly ten years ago, Texas Windstorm executive Reggie Warren wrote a memo describing similar policies as to what Oliver told KHOU about, saying: "Overhead and profit is considered if and when a contractor does the work and the expense is incurred."

KHOU showed Oliver that memo and asked him about it and its impact on current Texas Windstorm policy. “We're not gonna pay it, unless we understand a general contractor was used, as Mr. Warren has indicated here,” Oliver said.

The problem? A year before that memo, in 1998, the Texas Department of Insurance’s Commissioner issued an industry-wide bulletin specifically telling insurance companies that making consumers “incur” expenses first, is not proper and "would be contrary to purposes of the subject insurance policy."

The current insurance commissioner in Texas, Mike Geeslin, reinforced the point in December of 2008 by saying in a new bulletin "The Department's position has not changed."

The 2008 bulletin from Commissioner Geeslin concludes the Department of Insurance “will take appropriate enforcement action when evidence of unfair claim settlement practices is apparent.”

Oliver also told KHOU during the interview that if consumers hire a general contractor, it must be one who is “licensed” by the State of Texas. He also said a consumer could not be paid overhead and profit, if he or she acted as their own general contractor.

“A contractor needs to have a license to be paid overhead and profit,” he said.

Jim Oliver: The law says you have to have a license as a general contractor.

KHOU: To get overhead and profit?

Jim Oliver: Yes, because otherwise you’re not entitled to it.

KHOU informed Oliver we could locate no such law. We did find a federal court decision from Texas, Ghoman Vs. New Hampshire Insurance, which found under Texas insurance code a consumer who rebuilt his own house was still entitled to overhead and profit. The decision reads in part, in a decision not related to a Texas Windstorm claim:

“(The insurance company) points out that plaintiff did not actually incur some of these costs because he completed some of the repairs himself. While this may be true, it is legally irrelevant. See Gilderman, 649 A.2d at 945 (“All repair and replacement costs are, in theory, ‘contingent’ prior to being incurred.”) …His recovery is not tied to the repair or replacement of his property.”

Soon after KHOU’s on camera interview, we received the following note from Oliver:

“I checked on issues related to profit and overhead and found the following:

1. Reconfirmed that our claims people pay profit and overhead for all contractors whether licensed or not.

2. If a policyholder wants to be his/her own contractor TWIA will pay profit and overhead

3. When an independent adjusting firm fails to include the profit and overhead on an estimate, a sample of our files reviews that we pay profit and overhead.”

Homeowner Cheryl Guerra says it is important regulators protect consumers.

“Somebody has to take care of the people here,” she said, citing her fence that is still down, along with water spots inside her home, that she says are there because her insurance company never gave her enough money to pay for all her repairs.

“If they’re not going to take care of me, what am I paying my premiums for?”

Travelers Insurance did not make a statement on Guerra’s lawsuit after multiple attempts to reach a public relations representative.

We asked Farmers Insurance spokesman Jerry Davies about the jury verdict against Farmer’s in Oklahoma, as well as the new proposed class action lawsuit in Texas, spearheaded by a homeowner named Manuel Quezada.

"We are aware of the Quezada lawsuit which was recently filed, and we have filed an answer to the plaintiffs' complaint. Our general practice is not to comment publicly about pending litigation."

After our interview with Jim Oliver, he sent a follow-up written statement that seems to reverse at least one of his comments made during that meeting. In the written statement he says:

“Profit and Overhead is not shown as a line item on these estimates because we have included it in the "unit pricing" for each item to be repaired to be sure that adjusters did not omit it as part of the claim. By taking this approach, the policyholder can get Profit and Overhead or he/she can hire someone to supervise the repair work. As stated previously, we pay Profit and Overhead for the policyholder and both licensed and unlicensed contractors. We have had very few complaints about our unit pricing so we believe that our methodology is working as expected.”

Oliver also wrote a separate a note to KHOU management about a story we aired last week involving Texas Windstorm's alleged non-payment of claims related to wind-lifted shingles. Oliver called the story “unfair, inaccurate, incomplete, and deceptive” and gave a list of 17 “facts” he felt should have been included in the story. To read his points and the full letter, click here.

Recent lawsuit settlements in other states for non payment of overhead and profit by companies such as Nationwide Insurance have resulted in the agreement to pay consumers that money on claims where three or more “trades” were necessary for a general contractor to oversee. The settlement documents in that case describe a trade as “an occupation of a skilled craftsman, e.g., electrician, drywall installer, carpenter, etc.” A notice to Nationwide homeowners in that state says eligible consumers can now receive up to 20 percent of the amount previously paid to them to complete repairs.

Consumers in Texas who want to know if their claim included this money can look on their “proof of loss” statements and their estimates to see if there is a line included for overhead and profit. If you do not see it, and believe you had enough repair work to need a general contractor, you may file a complaint by contacting the Texas Department of Insurance here: http://www.tdi.state.tx.us/consumer/complfrm.html.

KHOU is collecting stories from consumers on this issue. If you have one to share you can email investigative reporter Mark Greenblatt at mgreenblatt@khou.com.

Source: khou.com

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Wednesday, September 02, 2009

Zurich Net Income Drops 53% As Recession Takes Toll

NU Online News Service, Sept. 2, 3:30 p.m. EDT

Zurich Financial Services Group reported a net income drop of 53 percent for the first half of the year as the recession continued to take a toll on the company’s earnings.

Despite the drop, James J. Schiro, Zurich’s chief executive officer, emphasized that the company still managed a profit even with the challenges it faced.

“We are effectively managing our way through this crisis,” Mr. Schiro said during an analyst’s discussion of the results today.

The Zurich-based insurer of property and casualty and life products reported net income dropped $1.43 billion to $1.24 billion for the first half of the year.

General insurance reported an operating profit of $1.7 billion, compared to $2.24 billion for the same period last year, a drop of 23 percent. The combined ratio for the segment remained flat at 96.2.

Mr. Schiro called the company’s results “outstanding” and said Zurich is in a position of strength to take advantage of the economic turnaround that lies ahead.

Such a turnaround, he noted, would not happen quickly, and the improvement in the investment markets has only brought the company’s investment portfolios back to “pre-crisis” levels.

He said many companies are struggling with the current recession, declaring it the “greatest economic dislocation in a generation.”

He said the insurer is taking a disciplined approach to risk, refusing to chase volume and pushing for increased rates, which have risen by 4 percent in the past quarter.

The company continues to push efficiency, he said, with $900 million in improvement under its Zurich Way plan and an additional $400 million in expense reductions.

He said Farmers’ Insurance, the insurance exchange the company does not own but manages, is well on its way to growth as it integrates its purchase of American International Group’s Personal Auto Group into its operations.

Zurich plans to make acquisitions, he said, so long as they make economic sense.

Zurich Chief Financial Officer Dieter Wemmer noted that despite the economic downturn, the company’s solvency was never threatened. During the conference, he displayed a graph illustrating the sharp downturn in profitability the company took between the second- and third quarter of 2008 and the steady increase in profitability it has seen since. Net income has increased from $154 million in the third quarter of 2008 to $892 million for the second quarter of this year.

“We stayed the course,” Mr. Schiro told analysts. “Let’s not lose site of the fact that we reported a profit when others reported losses.”

NU Online News Service, Sept. 2, 3:30 p.m. EDT

Zurich Financial Services Group reported a net income drop of 53 percent for the first half of the year as the recession continued to take a toll on the company’s earnings.

Despite the drop, James J. Schiro, Zurich’s chief executive officer, emphasized that the company still managed a profit even with the challenges it faced.

“We are effectively managing our way through this crisis,” Mr. Schiro said during an analyst’s discussion of the results today.

The Zurich-based insurer of property and casualty and life products reported net income dropped $1.43 billion to $1.24 billion for the first half of the year.

General insurance reported an operating profit of $1.7 billion, compared to $2.24 billion for the same period last year, a drop of 23 percent. The combined ratio for the segment remained flat at 96.2.

Mr. Schiro called the company’s results “outstanding” and said Zurich is in a position of strength to take advantage of the economic turnaround that lies ahead.

Such a turnaround, he noted, would not happen quickly, and the improvement in the investment markets has only brought the company’s investment portfolios back to “pre-crisis” levels.

He said many companies are struggling with the current recession, declaring it the “greatest economic dislocation in a generation.”

He said the insurer is taking a disciplined approach to risk, refusing to chase volume and pushing for increased rates, which have risen by 4 percent in the past quarter.

The company continues to push efficiency, he said, with $900 million in improvement under its Zurich Way plan and an additional $400 million in expense reductions.

He said Farmers’ Insurance, the insurance exchange the company does not own but manages, is well on its way to growth as it integrates its purchase of American International Group’s Personal Auto Group into its operations.

Zurich plans to make acquisitions, he said, so long as they make economic sense.

Zurich Chief Financial Officer Dieter Wemmer noted that despite the economic downturn, the company’s solvency was never threatened. During the conference, he displayed a graph illustrating the sharp downturn in profitability the company took between the second- and third quarter of 2008 and the steady increase in profitability it has seen since. Net income has increased from $154 million in the third quarter of 2008 to $892 million for the second quarter of this year.

“We stayed the course,” Mr. Schiro told analysts. “Let’s not lose site of the fact that we reported a profit when others reported losses.”

Source: property-casualty.com

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