Florida Arrests Alleged Citizens Property Scammer

Florida Chief Financial Officer Alex Sink today announced the arrest of Aylin Hernandez, 23, of Miami, for fraudulently diverting mail and stealing payments intended for Citizens Property Insurance Corporation.

Hernandez was arrested this morning and booked into the Turner Guilford Knight Correctional Center in Miami-Dade County on charges of organized fraud and grand theft. The arrest results from an investigation by the Division of Insurance Fraud, with assistance by Citizens Property Insurance Corporations' Special Investigations Unit. If convicted, Hernandez faces up to 45 years behind bars.

"This fraudster is getting exactly what she deserves—serious jail time," said Sink, in a statement. "I am grateful for the work of my investigators and Citizens' Special Investigations Unit for working together to put her behind bars. Would-be scammers out there need to know that this kind of action will not be tolerated."

Working with investigators from Citizens Property Insurance Corporation, the Division of Insurance Fraud established that Hernandez created her own corporation named Citizens Property Insurance, Inc., and opened an account under that name at Check Cashing USA.

Using information she obtained while working as a clerk in several local insurance agencies, Hernandez sent invoices to various law offices and title companies, which were handling homeowners insurance escrow and service payments. The victims, believing their payments were going to the legitimate Citizens Property Insurance Corporation, sent eight checks totaling over $12,000, which were then cashed by Hernandez.

Departure of Insurer from Florida Points Up Fraud Problem

With a letter sent out a few weeks ago, Explorer Insurance announced that it will no longer write private automobile policies in Florida because there is too much fraud.

"The company is taking this action in light of poor ongoing business results in Florida, particularly in the area of private passenger automobile no-fault coverage, in which loss fraud has been rampant with no signs of abatement," Explorer vice president, Steve Frisina, said in the letter to Florida's Office of Insurance Regulation.

The letter said Explorer intends to send termination notices to agents who sell its coverage within a week of the Office's acceptance of its plan. Policy holders will begin receiving non-renewal notices also within one week. And, by January 2012, no Explorer policies will remain in effect.

The Office has deferred accepting Explorer's plan for the time being present, until the company can fix some of the details of its exit.

In the meantime, however, Explorer has severely restricted the number of policies its agents are allowed to write and has told agents it is no longer paying commissions as of this week, according to a Tampa agent.

"They were going to be over $100,000 in premiums for us this year," said John Guthrie, of the John Guthrie Agency, Tampa. He has had severe restrictions on the number of policies he can write for Explorer since May.

Guthrie said that fraud is a big problem that is chasing many auto insurance carriers out of the market. Last year at this time, his agency represented 16 or 17 carriers, he said. Now the agency is down to three.

"The companies are all just pulling out or they are making underwriting so restrictive that you can't get the people through the approval," he said.

In May, the National Insurance Crime Bureau released a report that said that Florida has led the nation in suspected staged auto accidents the last three years in a row. According to the report, Florida had 3,006 suspicious claims from 2007 to 2009, and that was almost twice as many as the two states with the next most suspicious claims, New York and California.

The worst place in Florida was Tampa, the report said. Previously the worst place had been Miami and South Florida. But, in 2009, there were 487 questionable claims related to staged accidents in Tampa, while there were only 258 such claims in Miami.

Guthrie said he and some of his fellow agents in Tampa's Hillsborough County have gotten so frustrated by the situation, and by the lack of government action to crack down, that they have begun collecting petition signatures from new policy and renewal clients and forwarding that petition on to the Department of Financial Services, which houses the Division of Insurance Fraud.

"They need to do something about this fraud," he said.

Jack McDermott, a spokesperson from the Office of Insurance Regulation, said that fraud was not the responsibility of his agency so they do not know much about it. But "We have heard, anecdotally, from other companies that they have been having trouble with fraud," he said.

Explorer, which is based in Santa Clarita, Calif., is a member company of the ICW Group, San Diego. Until now, it has sold automobile policies only in California and Florida.

As of the end of July, the company had 16,576, in-force policies in the private passenger automobile insurance line in Florida, with direct written premiums of $16.1 million and a loss ratio of 124.2.

Eileen Beaudette, an agent in Naples who has been an Explorer representative, said that in her area fraud and staged crashes are not a big problem and she has not had carriers stop writing. But she has been aware that it is a big problem in Tampa and on the east coast of the state.

"We've been lucky," said Beaudette, of A Auto Buyers Insurance. "We still have a lot of carriers writing."

Beaudette said that Explorer was never a very big part of her agency's business because their rates were not very good.

AIG Settlement Covers $60 Million of Ex-CEO, Ex-CFO Costs

Former longtime AIG chief Maurice ''Hank'' Greenberg and another former executive will get $60 million from the company's insurers to cover legal and other costs as part of a proposed settlement of investor lawsuits, court papers show.

The payouts to Greenberg and former Chief Financial Officer Howard Smith are in addition to $90 million that American International Group Inc.'s insurers, as previously reported, will pay directly to the company as part of the proposed settlement.

The $150 million of payouts were revealed in an Aug. 25 agreement filed in Delaware Chancery Court, and obtained Friday by Reuters.

They stem from litigation in which investors accused more than 20 onetime AIG executives and directors of poor oversight and allowing improper bonuses. The Delaware lawsuit was filed by investors on behalf of AIG.

Greenberg left AIG in March 2005 after nearly four decades at the helm.

AIG in November 2009 said it had resolved all litigation with Greenberg, and agreed to reimburse him and Smith for as much as $150 million of legal fees and expenses, according to an agreement filed with U.S. regulators.

The $60 million payout by insurers is separate from that agreement, and Greenberg and Smith represented in the earlier agreement that no one else other than the insurers was obligated to indemnify them for the relevant costs.

AIG had $200 million of insurance for directors and officers, the Delaware agreement shows. None of the sums being paid go to investors, and Greenberg and Smith are also not responsible to pay out money in connection with the agreement.

In emailed statements, AIG said it was pleased the matter has been resolved, as did Lee Wolosky, a partner at Boies, Schiller & Flexner LLP who represents Greenberg.

A lawyer who signed the Aug. 25 agreement on behalf of Smith did not immediately return a call seeking comment.

The Delaware agreement requires approval of Vice Chancellor Leo Strine of the Delaware court. A settlement will be made final upon the dismissal of similar litigation in Manhattan federal court, the agreement shows.

Based in New York, AIG in September 2008 narrowly averted collapse after becoming overexposed to risky debt. It accepted a federal bailout that grew to $182.3 billion and left taxpayers owning a nearly 80 percent stake.

Six weeks ago, AIG agreed to pay $725 million to settle a shareholder class-action lawsuit led by Ohio Attorney General Richard Cordray, who accused it of accounting fraud and trying to manipulate its stock price.

AIG still faces shareholder class-action litigation in Manhattan federal court. Greenberg has sought to dismiss a civil fraud lawsuit by New York Attorney General Andrew Cuomo over a sham reinsurance transaction.

The case is In re: American International Group Inc Derivative Litigation, Delaware Chancery Court, No. CA 769.

Stanford Execs Deny Key Role in Alleged Fraud Cited by Lloyd's

Lawyers for Texas financier Allen Stanford and two accounting executives who worked for him sought to distance their clients Friday from the alleged financial wrongdoing insurer Lloyd's of London cites as a reason to void a policy covering their defense fees.

"Mr. Stanford was not really a hands-on guy,'' Robert Bennett, Stanford's attorney, said during closing arguments after four days of hearings in federal court. "Mr. Stanford was not at the center of anything illegal or wrong.''

The nondisclosure of a nearly $2 billion unsecured loan to Stanford, misrepresentations to investors and phony accounting are all grounds to stop paying claims under a directors and officers policy, the British insurer said.

Stanford, accounting executives Mark Kuhrt and Gilbert Lopez and Chief Investment Officer Laura Holt have sued Lloyd's of London over payment of the fees. But that policy has a money laundering exclusion, so Lloyd's must prove to U.S. District Judge Nancy Atlas in Houston that the plaintiffs committed that act.

Holt struck a deal with the insurer before the start of the hearings last Tuesday. She and the three other plaintiffs in this case are accused of participating in an alleged $7 billion Ponzi scheme centered around fraudulent certificates of deposit (CDs) issued by Stanford's offshore bank in Antigua.

"It is clear that the money collected for the CDs was criminal property as defined by the policy,'' said Barry Chasnoff, an attorney for Lloyd's. "There was no evidence offered to the contrary.''

BLAME DAVIS

Lawyers for Stanford and the accounting executives have placed a lot of the blame on James Davis, the former chief financial officer of Stanford International Bank Ltd. (SIB) who pleaded guilty last August to three felony counts related to the scheme.

Davis had the final sign-off on numerous financial documents from SIB, the institution the government claims is at the center of the alleged scheme, lawyers and witnesses said.

"I believe that Mr. Kuhrt and Mr. Lopez were middle-level accounting managers and it was Mr. Davis' responsibility to deal with the auditors on these issues,'' Alan Westheimer, an accountant hired by Kuhrt and Lopez as an expert witness, testified.

Stanford also relied on Davis -- his former No. 2 man at the company and former classmate from Baylor University -- as well as on the professional advice of accountants and lawyers, Bennett told the hearing.

Still, Atlas told the hearing it was clear to her that Lopez and Kuhrt "were close to the top,'' and were close to Davis.

She said she had a suspicion that Lloyd's would not be fronting legal fees to the men after the hearings.

Lloyd's has advanced as much at $6 million to pay for Stanford's attorneys, many of whom have left the case or been fired by their client.

Stanford, who is 60 and is in jail awaiting a January trial, faces one count of conspiracy to commit money laundering as part of a 21-count June 2009 indictment.

The hearings were seen as a preview of Stanford's criminal case. Many people involved in the case, including Stanford and Lopez, invoked their Fifth Amendment right and did not testify, so much evidence centered on documents that are part of the government's civil and criminal case.

The case is Laura Pendergest-Holt, R. Allen Stanford, Gilbert Lopez and Mark Kuhrt v Certain Underwriters at Lloyd's of London and Arch Specialty Insurance Co, U.S. District Court, Southern District of Texas, No. 09-3712.

Earl Now Major Hurricane, Headed Toward East Coast

Hurricane Earl has strengthened into a major Category 3 storm Monday and could arrive off the East Coast of the U.S. by the end of this week.

It is currently rocking the Caribbean's Northern Leeward Islands.

The National Hurricane Center said Earl is now the second major hurricane of the 2010 Atlantic season, with winds up to 120 miles per hour .

Hurricane warnings are in effect for Antigua, Barbuda, Montserrat, St. Kitts & Nevis, Anguilla, St. Martin and St. Barthelemy, St. Maarten, Saba and St. Eustatius, the British and the U.S. Virgin islands.

A hurricane watch is also in effect for Puerto Rico.

Hurricane Danielle has moved into the North Atlantic and is now more of a threat to Iceland than the U.S.

Florida Orders Halt to Sale of Warranty Products

Florida Insurance Commissioner Kevin McCarty today announced the Office of Insurance Regulation (Office) has issued an order to Auto Repair Warranty Inc. (ARW), Auto Repair Group LLC (ARG) and Michael R. Petruziello to Cease and Desist selling unauthorized motor vehicle service agreements in Florida.

Office investigators concluded that the aforementioned companies sold unauthorized and unlicensed motor vehicle service agreements through its website www.autorepairwarranty.com and through agreements sold by ARW. In addition, investigators concluded that the companies engaged in unfair methods of competition and unfair or deceptive acts.

Both companies are based in Ohio. Office records indicate ARW and ARG have never been authorized to sell warranty products in the State of Florida.

"Companies selling insurance products of any kind must adhere to Florida's stringent licensing process," said Insurance Commissioner Kevin McCarty. "Floridians should always verify the products they purchase are being offered by companies licensed in our state."

Obama Opposes Adding Wind Coverage to Federal Flood Insurance

The Obama Administration is again opposing a move to add wind insurance to the federal flood insurance program, as has been pushed by Rep. Gene Taylor, D.-Miss.

A statement from the Office of Management and Budget says Taylor's bill, HR 1264, would unnecessarily expand the government's role into an insurance area already served by private insurers.

"Although the Administration believes in strengthening the National Flood Insurance Program (NFIP) for the benefit of policyholders and taxpayers, the central rationale for the program – the difficulty of obtaining flood insurance through either the private market or state programs – simply does not apply to windstorm insurance in most markets," the OMB said.

OMB also said that because the legislation requires that a federal wind insurance program be actuarially sound, the insurance offered through a federal program may not be any less expensive, and could be more expensive, than what is currently offered by private insurers or by states.

"As a result, expanding NFIP to cover windstorm insurance would unnecessarily duplicate available insurance products and could 'crowd out" such products where they are offered, while offering little to no savings to the American public. At a time when the NFIP is already facing serious challenges, the Administration cannot support such an expansion."

The Obama Administration has opposed the wind insurance bill in the past as have various taxpayer, environmental and insurance groups. The measure is being reconsidered this week in Congress.

Private Firm WSI Cuts U.S. Hurricane Forecast to 19 Named Storms

Private weather forecaster WSI Corp cut its forecast for named storms in the 2010 Atlantic hurricane season on Tuesday, but still sees an active season with water temperatures and wind conditions conducive to violent storms.

In its latest tropical storm update, WSI called for 19 named storms, down from 20 in its June forecast, but maintained its outlook for 11 hurricanes and 5 intense hurricanes of category three or higher.

The 2010 forecast is well above the 1950-2009 averages of 10 named storms, 6 hurricanes, and 2 intense hurricanes.

"Record warm tropical Atlantic Ocean temperatures and an enabling wind shear environment should result in a very active tropical season this year,'' said Dr. Todd Crawford, WSI's chief meteorologist.

The disappearance of the El Nino event and a decrease in vertical wind shear both point to the potential for more Atlantic storms, WSI said.

A slow start to the hurricane season led to the downward revision in named storms. A pocket of dry air in the Atlantic is likely to limit development in the near term, WSI said, while August to October is expected to be a very active period.

WSI's models also indicate that the area from the Outer Banks of North Carolina northward to Maine is twice as likely as normal to experience a hurricane this year.

"Our model suggests that the threat to the Northeast coast this season is on a par with that in Florida and the Gulf coastal states,'' WSI said.

The Atlantic hurricane season runs from June 1 to Nov. 30.

In 2005, Hurricane Katrina was responsible for the deaths of around 1,500 people on the U.S. Gulf Coast and caused more than $115 billion in damages.

Katrina and Rita, which hit the same year, shut some oil refineries for months resulting in about 142 million barrels of oil product loss.

Offshore drilling in the U.S. Gulf of Mexico is responsible for roughly 30 percent of total domestic oil production and 11 percent of natural gas production, according to 2009 government figures.

Investor Face Uphill Battle with Liability Lawsuits Against BP

Shareholders angry about BP Plc's battered stock price are heading to the courthouse in hopes of reclaiming some of their losses, but they face an uphill battle.

Since the Deepwater Horizon oil rig exploded in April, several BP shareholders have filed lawsuits accusing the company of breaking securities laws and hiding the risks of its drilling operations. The stakes are potentially huge, with the BP's market value down as much as $100 billion since the disaster.

Some of the largest U.S. pension funds could join the battle. Already, the $132.6 billion New York State Common Retirement Fund has said it wants to be named lead plaintiff so it can direct the investor litigation.

"BP was telling the world that they are really a safe company,'' said Houston-based plaintiffs' lawyer Mark Lanier. ''What was being told to the public -- including the shareholders -- was a fraudulent facade.''

Lanier said he might get involved as an attorney for plaintiffs in the proposed shareholder class-action litigation. He said he already was preparing to file a lawsuit on behalf of former BP workers who hold company stock in their retirement plans.

But experts say investors will probably have a tough road ahead in court, since it could be hard for them to unearth any evidence about the company's disclosures on its safety procedures that rises to the level of securities fraud.

"It's entirely possible that (BP) made statements and honestly believed them and they were dead wrong,'' said James Cox, a professor at Duke University Law School. "That's not a basis for liability under securities law.''

A spokeswoman said BP does not comment on legal actions.

SMOKING GUN
Securities litigation represents only a small segment of the more than 300 total lawsuits brought against BP so far. A federal judicial panel is scheduled to meet on July 29 in Boise, Idaho, to consider how to consolidate the various cases.

Shareholder lawsuits must be certified as class-actions by a court before investors can sue collectively. Typically, about one-third of shareholder lawsuits are thrown out, and two-thirds settle. They rarely go to trial.

Cox said shareholders would be lucky to get a settlement of $10 million to $20 million, which would be a pittance divided among the large number of affected investors.

That would be a far cry from the biggest recoveries in class-action litigation, the $6 billion to $7 billion awarded in the cases of WorldCom Inc. and Enron Corp.

Those cases differed from BP in that they stemmed from financial fraud, such as claiming phantom profits, rather than potential misrepresentations about safety. Enron and WorldCom also sold lots of securities in the period covered by the case, and plaintiffs were able to target third parties such as banks and underwriters.

BP investors do have a potentially powerful ally: the U.S. government. U.S. investigations could do the heavy lifting for plaintiffs, possibly using broad subpoena powers to turn up damning evidence.

The U.S. Departments of the Interior and Homeland Security are jointly investigating the rig disaster, and congressional committees are as well. The U.S. Department of Justice has also said it would open civil and criminal probes.

"You want a smoking gun,'' said Adam Savett, director of securities class actions at the Claims Compensation Bureau in Conshohocken, Pennsylvania. "A document that goes to the board room and says: 'We're not living up to industry standards, and we're not safe, and on and on.'''

But even that type of evidence might not be enough to prove securities fraud, said Jill Fisch, a professor at the University of Pennsylvania Law School in Philadelphia.

Shareholders may have little recourse unless documents show that top management knew, for example, that the company was violating specific safety regulations while publicly stating it was exceeding them and that those rules were critical to their business.

BP has already scored one victory. The U.S. Supreme Court's recent ruling in an unrelated case involving National Australia Bank essentially limited BP's liability in the United States to losses suffered by U.S. shareholders.

By excluding foreign holders of BP shares, the universe of potential plaintiffs could be cut by as much as 80 percent, said University of Michigan Law School professor Adam Pritchard.

For BP, whose spill-related legal woes are expected to drag on for years, the stockholder lawsuits may end up being a relatively minor problem, said Savett, of the Claims Compensation Bureau.

"They have a public relations nightmare,'' he said, "but I don't think they have a securities litigation nightmare.''

AIG to Pay $725M to Settle Securities Fraud Lawsuit

American International Group Inc. agreed to pay $725 million to settle a long-running securities fraud lawsuit led by three Ohio public pension funds, in one of the largest class action settlements in U.S. history.

AIG, which is nearly 80 percent owned by the U.S. government, would pay $175 million within 10 days of preliminary court approval of the settlement with a class of AIG shareholders.

The company may fund the remaining $550 million through a stock offering or other means, including cash, when it decides it is commercially reasonable to make such an offering.

The litigation, which began in October 2004, involved allegations that AIG engaged in accounting fraud, bid-rigging and stock price manipulation, said Ohio Attorney General Richard Cordray, who represented the Ohio funds.

The settlement resolves allegations of AIG's wide-ranging fraud from October 1999 to April 2005 and brings the expected recovery for AIG shareholders to about $1 billion, Cordray said.

AIG, which was bailed out in September 2008 from near-collapse with a $182.3 billion taxpayer-funded rescue package, said it was "pleased to have resolved this matter."

"This settlement ends a long-standing lawsuit, allowing AIG to continue to focus its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders," spokesman Mark Herr said.

The class action suit in Manhattan federal court was led by the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio and the Ohio Police and Fire Pension Fund.

As part of the overall case, the Ohio funds previously announced a $72 million settlement with General Reinsurance Corp, a $97.5 million settlement with PricewaterhouseCoopers LLP and a $115 million settlement with former AIG Chief Executive Maurice "Hank" Greenberg, other AIG executives and related corporate entities.

Cordray said together this was the tenth-largest securities class action settlement in U.S. history.

It comes a day after the U.S. Securities and Exchange Commission reached a $550 million settlement in a case against Goldman Sachs Group Inc.

That case stemmed from Goldman's marketing and packaging of a collateralized debt obligation that turned toxic during the financial crisis

LWCC Reducing Overall Rates by 4.1%

Louisiana Workers' Compensation Corporation (LWCC) announced tthat it will implement an overall rate reduction of 4.1 percent beginning Oct. 1, 2010.

This marks the sixth consecutive year that LWCC has reduced overall rates, and it comes on the heels of returning a $15 million dividend to qualifying policyholders for 2009. Once this year's rate decrease takes effect, LWCC will have reduced overall rates by more than 55 percent since its first year of operation in 1992.

The most significant reduction this year will be for policyholders in LWCC's Small Accounts Program tier that pay an annual premium of $5,000 and under. These policyholders will receive an overall 15.3 percent rate decrease, reflecting LWCC's ongoing commitment to lowering rates for small businesses through increased automation and other efficiencies achieved over the past two years.

The 15.3 percent reduction is an average for policyholders participating in the Small Accounts Program, so not all policyholders in this category will experience a decrease of that size.

More than 9,000 policyholders participate in the Small Accounts Program, according to LWCC President and CEO Kristin W. Wall.

Including its $15 million dividend returned to policyholders for 2009, LWCC has paid $136 million in dividends to policyholders over the past seven years.

Obama Administration Asks Health Insurers to Embrace Reforms Now

U.S. Health Secretary Kathleen Sebelius, who has bashed insurers over rate increases, is seeking their help in making medical coverage accessible for more patients in the years before major reforms take effect.

Sebelius, in an interview with Reuters, said she is pushing companies to help people gain insurance in the gap between now and 2014. That is when the healthcare law President Barack Obama signed in March mandates extensive changes.

Sebelius struck a cooperative tone after publicly chastising insurers for high rate hikes and after repeatedly calling them to the White House for highly publicized talks.

A more congenial relationship with insurers could help keep the major overhaul of the healthcare system on track and loosen strained relations between Democrats and big business ahead of the November midterm elections.

The goal in the next few years is to "stabilize the private sector to not only encourage those who have insurance today to keep it, but to hopefully bring additional folks back into the market,'' Sebelius said earlier this week. She talked with Reuters after speaking at a discussion on drug development.

Health insurers, which include WellPoint Inc., UnitedHealth Group Inc., Cigna Corp. and Aetna Inc., fought the healthcare law, which hits the industry with tighter regulation, higher taxes and caps on profits.

Now, the Obama administration is promising to keep a close eye on rates but also seeking to work with insurers to make the law successful.

Sebelius, a former insurance commissioner and governor of Kansas, said her approach is gaining traction.

She said one insurer recently reached out to small businesses and signed up 500 new customers from companies that had not been aware they were eligible for tax credits.

"That's exactly the kind of strategy I'm hoping will take hold,'' she said.

Sebelius said she has argued to insurers in recent weeks that practices that shut out patients or businesses with high rates are harmful to consumers as well as the companies.

"Some of those strategies I think are not particularly good business models. If they lose more and more market share as we move toward 2014, it's not really good for them,'' she said.

Roughly 46 million people in the United States lacked health insurance in 2008, according to the U.S. Census Bureau. Experts say many have lost coverage since then in the economic recession.

The new healthcare law includes measures aimed at "stopping the erosion of the private market'' before 2014, Sebelius said.

Employers can get financial help to keep early retirees covered, and small businesses can receive tax credits to defray insurance costs, she said. People denied coverage for serious medical problems can enroll in high-risk insurance pools set up as a temporary option.

Broader changes in 2014 are expected to extend coverage to more than 30 million Americans.

In past months Sebelius attacked big premium increases, and Obama warned companies not to impose unjustifiable rate hikes, adding to friction between the administration and industry.

Sebelius said she now hopes insurers will work with the administration. "I'm optimistic there is a real potential to do some important work over the next couple years in a collaborative fashion,'' she said.

Insurers said despite past opposition they are now committed to making the healthcare law successful.

"We are totally focused on implementation and making the legislation work,'' Karen Ignagni, head of the industry group America's Health Insurance Plans, told reporters.

Companies are aiming to boost coverage during the transition period but are pressing for more efforts to control rising medical costs that push premiums higher, said Robert Zirkelbach, a spokesman for the industry group.

State insurance commissioners also are advocating a gradual shift to a requirement that companies spend more of each dollar in premiums for the benefit of patients, he said. Otherwise, they worry insurers will leave the individual market.

"It's important that new requirements be structured in a way that doesn't cause significant disruption for people purchasing coverage on their own, particularly in the years leading up to 2014,'' Zirkelbach said.

Hurricane Alex Weakens to Tropical Storm

Hurricane Alex weakened to a tropical storm Thursday as it moved further inland over northeastern Mexico, dumping heavy rains that flooded cities but sparing U.S. oil facilities near its path.

Rain from the first named storm of the 2010 Atlantic season flooded about 80 percent of the port city of Matamoros, sent uprooted trees crashing down on parked cars and forced thousands to flee low-lying fishing villages. Inland in the industrial city of Monterrey, at least two people were killed by Alex's rains, which washed away cars, bridges and some houses and turned dry desert beds into turbulent rivers.

"The damage is enormous, a river burst its banks and we have people trapped on the roofs of their houses,'' said mayor Martin Zamarripa of the town of Hualahuises outside Monterrey.

Alex made landfall as a Category 2 Hurricane on the Tamaulipas coast around 9 p.m. Wednesday . U.S. oil installations have not been hit by the storm, which formed near the Yucatan peninsula Saturday, but some companies cut back production and evacuated staff.

As of Wednesday, oil companies had shut down production of more than 421,000 barrels per day, about a quarter of the Gulf's output, as a precaution.

They have also shut 919 million cubic feet per day of gas output, some 14 percent of the Gulf's total.

BP Plc said Thursday its Gulf oil and gas output was back to normal, although the passage of Alex slowed oil clean-up and containment efforts at its leaking deep-sea well off the Louisiana coast.

The Louisiana Offshore Oil Port, the nation's only deepwater oil supertanker unloading terminal, hopes to resume operations by late Thursday, a spokeswoman said.

Alex, which is expected to dissipate over Mexico's central mountain ranges over night, had maximum sustained winds of 50 mph and was located about 150 miles east of Zacatecas in central Mexico.

Across the border in Brownsville, Texas, at least three tornadoes swept through the area, tossing over tractor-trailers although no major damage was reported. "Isolated tornadoes are possible over portions of extreme southern Texas today,'' the U.S. National Hurricane Center said. Alex was the first and strongest Category 2 hurricane to occur in June since 1966.

Mexican marines evacuated thousands of people from fishing communities along the Gulf coast and into shelters, but some refused to leave their homes even as water ran in under doors.

However, local authorities will remain on high alert in case of rainfall as high as 20 inches. Alex killed a dozen people in Central America over the weekend.

Goodyear Tire, Mississippi Families Settle Over 2000 Accident

Goodyear Tire and Rubber Co. and the families of three men involved in a 2000 accident in which one of them died have settled a lawsuit.

The Mississippi Supreme Court last week dismissed the lawsuit. The court noted its order that both sides sought the dismissal because a settlement had been reached.

The young men's families -- and a Copiah County jury -- blamed the accident on a faulty tire on the Chevrolet Camaro rather than excessive speed and the beer the men had been drinking.

The state Court of Appeals agreed last April and upheld a $2.1 million verdict against Goodyear and Big 10 Tire Co.

Goodyear and Big 10 appealed.

Supreme Court Strikes Down Sarbanes-Oxley Accounting Board

The Supreme Court Monday struck down part of a 2002 law that created a national board that polices auditors of public companies, ruling that it violated the constitutional requirement on the separation of powers among the branches of government.

The high court's ruling on the Public Company Accounting Oversight Board (PCAOB) could put pressure on Congress to revisit the Sarbanes-Oxley corporate reform law, opening it up for potential changes in the reporting duties of companies.

The court's mixed ruling held that the board violated the the U.S. Constitution's separation of powers principle, but also held that the law does not violate the Constitution's appointments clause.

At stake in the case was how corporate America is audited and a key provision of the Sarbanes-Oxley corporate reform law adopted in response to the Enron and WorldCom accounting scandals early in the decade.

The ruling was a victory for the Free Enterprise Fund and a small Nevada accounting firm, which argued that the law unconstitutionally stripped the president of power to appoint or remove board members or to supervise their activities.

Board members are appointed by the U.S. Securities and Exchange Commission and can only be removed by the SEC for cause. The board, set up as a quasi-private agency, has the power to impose rules and to inspect and fine accounting firms.

The board is funded through fees it collects from public companies. It inspects thousands of auditors, including the Big Four accounting firms: Ernst & Young LLP, KPMG , PricewaterhouseCoopers and Deloitte & Touche LLP.

The Free Enterprise Fund and the accounting firm sued in 2006. A federal judge and a U.S. appeals court rejected the challenge.

The Supreme Court's majority opinion said the limits on the removal of board members violated the separation of powers requirement.

But the court also held that the unconstitutional provisions can be separated from the rest of the law.

After Profitable 2009, Reinsurers Face Pricing Pressure from Primary Insurers

A softening casualty market, strong company earnings, and a quiet catastrophe season resulted in the reinsurance industry enjoying, in 2009, one of its most profitable underwriting years in nearly a decade.

Today, reinsurers must continue to push-back on multi-year deals and reject raw coverage despite pricing pressure by primary insurers, according to a panel of senior reinsurance executives who spoke before the Casualty Actuarial Society (CAS) Seminar on Reinsurance.

George Venuto, executive vice president, Willis Reinsurance, noted that there is a distinct difference in how primary business and excess casualty business is being viewed. "Trying to please primary casualty insurers is probably the most difficult thing to do right now," he said. "On the property side, we are continuing to see rate pressure. The model changes have created a visual downward pressure on pricing," he said, adding, "It is not the best pricing environment on the insurance and reinsurance side."

Venuto said that terms and conditions were softening somewhat and there was an increase in loss trends. "Capacity is available for all lines, in particular property and casualty. You can get it placed."

Damien Magarelli, director, Standard & Poor's, said that his firm has not seen a change in terms and conditions. "Multi-year policies are very few and far between, and there have not been a lot of changes in profit commissions," he said. "After Hurricane Katrina, there were 30 to 40 percent price increases for some property lines; renewal rates in 2010 have exhibited declines from 0 to 10 percent. Additional capacity has contributed to declining prices," he said.

Magarelli noted that 2010 has so far been active with disasters. "The Chilean earthquake was a large event but much smaller than Northridge, with losses expected in the $8 to $10 billion range," he said. "But that won't be a catalyst to drive rate increases globally. Floods and storms in the northeast will not change the pricing cycle. If you have a regional carrier, their earnings will be affected, but not dramatic enough of an impact for a new pricing cycle."

According to Magarelli, the Gulf oil spill is about a $1.5 billion insured property loss and while there may be litigation in terms of the debris cleanup, this is "not expected to be a significant insurance industry event, in our view."

Venuto agreed and said he didn't see that any of these events had enough impact to suck capacity out of the market because it is an overcapitalized industry. "I don't see these events being enough to change anything dramatically."

Magarelli said that these catastrophe events have reduced the margin reinsurers had going into hurricane season, but it's not outside the normal budget. "At this point in time, cat losses were low last year, but there were losses in the Midwest, which impacted a different group of regional companies. This year it is affecting more Northeast regional companies."

"It's not so much where we are, but where we are going," said Magarelli regarding where the industry is in the cycle. "Frequency has been declining for a number of lines for many years. That has propelled earnings to a greater degree," he said.

"Severity is increasing; we see frequency now turning flat; buying habits have changed," he said. "You may see a larger pick up of loss costs trends. It's an issue for us," he said. "If there is an acceleration of loss cost trends, then you may see a dramatic increase in losses and reduced earnings."

Venuto thought that the industry may have a loss ratio environment similar to that of 1995. "We are getting close to where there's not much rate left to give back," he said. "Frequency has been flattish. The impact of the economy on what's happening, chasing fewer exposure dollars, will have a dampening affect."

Venuto said that there are more fail-safes today than in the late1990s. "It's not just actuaries looking at it; now everybody gives you a price monitor. We really see where trends have been. Terms and conditions have held and that was the monster under the bed in the late '90s. We'll come out of this soft market better than the last one mainly because actuaries are more involved than they were in the past."

"The difference between the late '90s versus now is the reinsurance appetite for risk," added Magarelli. "Most direct reinsurance companies in the '90s opened up a lot of capacity that companies were allowed to write against. There's more discipline now, better tools. Also a fundamental change -- reinsurance companies are more restrictive in terms of capacity. We're still going to have cycles, but we may not have as many peaks and valleys as we did in the past."

"Clearly there have been external influences that have reinforced the focus and improved the testing of setting reserves," said Magarelli. "Some companies still think there are rate declines that can be had; others think rates should go up. Our view is that reserves are adequate, but we still think companies are living off the 2002-2005 accident years."

Venuto said that the rules have changed to some extent and that there is more discipline. "Claims are settling quicker. There is definitely a movement on the claims side of best practices, driven by actuaries, underwriters and claims adjusters. Reserving and claims practices have improved dramatically."

Venuto said that pricing actuaries are the "gatekeepers to get something placed in this business." He advised actuaries to be more visible with clients. "The way you're going to outperform your peers is to know how a company works. Get out there with your underwriters; get to know your clients and how they view risk," he said.

Federal Judge Approves $72M Insurance Settlement with The Hartford

A federal judge has given preliminary approval to a settlement under which The Hartford Financial Services Group Inc. will pay $72.5 million to more than 21,000 people nationwide who alleged the insurer engaged in fraud in settling their injury claims.

U.S. District Court Judge Janet C. Hall approved the agreement last week in Bridgeport to resolve the class action lawsuit. It was announced Monday by attorneys for those who sued.

The plaintiffs alleged The Hartford engaged in fraudulent settlement practices by deducting up to 15 percent of the value of their settlements in undisclosed annuity costs.

"It's a great settlement because people who have been victimized by corporate fraud are getting reimbursed,'' said David Golub, one of the attorneys for the plaintiffs.

The Hartford said the claimants received the promised amounts they were due. It said the company settled to avoid the uncertainty and cost of continued litigation.

The company did not admit to fraud as part of the settlement. Company officials said it disclosed the settlement in its first quarter earnings report.

Its shares rose 91 cents, or 3.8 percent, to $24.92 in midday trading.

The 21,000 people were due payments for claims dating to 1997 involving car accidents, workers compensation and other injuries. They are expected to receive an average of about $3,300 each as a result of the settlement.

At issue were structured settlements in which payments are made over time rather than in a lump sum paid at the time of settlement. Such settlement payments are typically funded with annuities.

The lawsuit alleged The Hartford developed a scheme in which its property and casualty companies purchased the annuities from its life insurance subsidiary, which then paid a kickback to the property and casualty companies. The lawsuit accused the company of violating a racketeering law.

The Hartford retained about 15 percent of the value of the structured settlements to cover profits, taxes and costs, according to the lawsuit.

The settlement, expected to receive final approval in September, came after extensive mediation and five years of litigation in which Hall certified a nationwide class action and an appeals court rejected the company's challenge to class certification last year. The trial was scheduled to start in September.

Lawyer for Alleged Ponzi Schemer Stanford Accused of Insurance Fraud

The judge handling the criminal case against accused Ponzi schemer Allen Stanford is allowing parties to review documents related to allegations that the Texas financier's lawyers engaged in insurance fraud.

An order released Monday by U.S. District Judge David Hittner in Houston adds a twist to a case in which Stanford has cycled through many lawyers, prompting three co-defendants to ask that their trials be severed because the case has become a ''circus.''

Stanford was arrested in June 2009 and accused of running a $7 billion Ponzi scheme focused on his Stanford Financial Group's fraudulent sale of certificates of deposit issued by his Antigua bank. A January 2011 trial is expected.

Hittner's order relates to a separate insurance coverage dispute that Stanford and underwriters at Lloyd's of London and Arch Specialty Insurance Co. are litigating in the same court. The order lets the underwriters review documents filed under seal.

According to court papers, the underwriters learned that Michael Essmyer, who is Stanford's co-counsel in the criminal case, alleged that lead counsel Robert Bennett and his Bennett-Nguyen Joint Venture "may have engaged in insurance fraud'' in submitting a fee application.

Bennett denied engaging in insurance fraud, according to the papers, which were signed by him, Essmyer and a lawyer for the insurers.

It follows the June 9 request by Laura Pendergest-Holt, a former Stanford Financial chief investment officer, to sever her trial.

She said the "egregious and circus-like conduct'' by Stanford and his lawyers jeopardizes her right to a fair trial.

Former Stanford accounting executives Mark Kuhrt and Gilbert Lopez joined her motion, which uses the word "circus'' nine times and said the potential prejudice created by Stanford could prove "toxic.''

Bennett Monday declined to comment.

Earlier this month, Hittner rejected Essmyer's attempt to withdraw from the case after Stanford had fired him, and amid ''irreconcilable differences'' with Bennett over litigation strategy, but directed that Bennett serve as lead counsel.

Bennett is a Houston-based lawyer, not the prominent Washington, D.C., lawyer with the same name.

The case is U.S. v. Stanford, U.S. District Court, Southern District of Texas, No. 09-cr-00342.

24 South Florida firms closed for lack of workers' compensation

A two-day sting has led to the closure of 70 Florida businesses -- including 24 in South Florida -- because of violations of the state's workers' compensation laws.

Random site visits by the state Department of Financial Services found the companies failed to provide workers' compensation insurance for their employees.

State law says construction-related companies must have workers' compensation coverage if they have one or more employee, including the owner. Other businesses must have the coverage if they employ four or more employees, excluding business owners.

More than 360 liens have been filed against delinquent employers since late 2009, totaling $13.7 million.

The companies caught without the right coverage or coverage violations were issued stop-work orders, which require businesses to shut down until proper coverage is obtained and a penalty is paid.

The South Florida firms include:

In Broward, BP Paving Inc., D&D Construction Group, Ideal Roofing Systems.

In Miami-Dade, Aldo's Pool, Americans Builders and Construction, Dianza Commercial Dry Wall System, Authentic Construction, Professional Carpentry USA, GA Stone, No Drip Plumbing, JJJ Finishing Master, Built Top Building Services, Superior Wood Floor, Unlimited Ceiling Corp., Reinolds H. Castro Inc., Laura's Management, J.R.F. Florida Painting Corp., ABC Seamless Rain Gutters, Jose Ber Tile, Zepol, Allen R. Greenwald, Mercado Enterprise, Articpolo Inc., Enloe Carpentry.

And the Best, Worst States for Tort Liability Costs Are...

Alaska, Hawaii and North Carolina get thumbs up while New Jersey, New York and Florida get thumbs down for their tort liability costs in the latest ranking by a free-market think tank.

The states with the worst performance had the highest monetary tort losses and tort litigation risks, meaning they had more costly and riskier business climates due to larger plaintiff awards, larger plaintiff settlements, more lawsuits, or some combination of the three, according to the researchers.

The Pacific Research Institute (PRI), a non-profit free-market organization based in San Francisco, and the Manufacturers Alliance (MAPI), a public policy and economic research organization for manufacturers based in Arlington, Va., today released their 201o U.S. Tort Liability Index, a measure of which states impose the highest and lowest tort costs and risks.

States were also ranked according to their tort rules and reforms on the books to reduce lawsuit abuse and contain tort costs and risks, such as award caps, venue reforms to stop "litigation tourism," or judicial-selection reforms to hinder the types of abuses engaged in by the likes of now imprisoned "Kings of Tort" Dickie Scruggs and Paul Minor. The Index found that, in the wake of its comprehensive lawsuit reforms enacted in 2009, Oklahoma now has the best tort rules on the books, followed by its neighboring state of Texas.

The Index, now in its third edition, was authored by Lawrence J. McQuillan, Ph.D., director of Business and Economic Studies, and Hovannes Abramyan, M.A., adjunct public policy fellow.

"Direct tort costs account for almost 2 percent of GDP in the United States—that's the highest in the world," said McQuillan. "These high costs impact American businesses when firms have to divert revenue to fight lawsuits. But all of us ultimately shoulder the burden through higher prices and insurance premiums, lower wages, restricted access to health care, less innovation, and higher taxes to pay for court costs."

"If lawmakers want to put people back to work, without costing taxpayers another penny for so-called 'stimulus', they should enact needed lawsuit reform," added Abramyan. "Job growth was 57 percent greater in the 10 states with the best tort climates than in the 10 states with the worst tort climates."

The Best and Worst Tort Climates

The Best

1.Alaska
2.Hawaii
3.North Carolina
4.South Dakota
5.North Dakota
6.Maine
7.Idaho
8.Virginia
9.Wisconsin
10.Iowa

The Worst

1.New Jersey
2.New York
3.Florida
4.Illinois
5.Pennsylvania
6.Missouri
7.Montana
8.Michigan
9.Connecticut
10. California

Saints, Sinners, Suckers, and Salvageables

The Index sorts states into four groups based on their ranking for outputs (tort costs and tort litigation risks) and inputs (tort rules and reforms on the books).

Saints: States that have relatively low tort costs and/or low tort litigation risks and relatively strong tort rules on the books.

Sinners: States that have relatively high tort costs and/or high tort litigation risks and relatively weak tort rules on the books.

Suckers: States that have weak tort rules on the books because they currently have relatively low tort costs and/or low tort litigation risks.

Salvageables: States that have moderate to high relative tort costs and/or tort litigation risks, yet have moderate to strong tort rules, usually as a result of recent reforms.

"Only five states made 'Saint' status, whereas 20 states were labeled 'Sinners'," said McQuillan. "This signals a dire need for further reform in many states. The goals of our tort system are to efficiently deter harmful events and fully compensate true victims, not to line the pockets of system abusers."

Bank of America U.S. Workers Sue for Overtime

Workers for Bank of America Corp, one of the nation's largest employers, have sued the company for allegedly failing to pay overtime and other wages.

The lawsuit filed Friday in federal court in Kansas City, Kansas, consolidates 12 lawsuits filed on behalf of employees in California, Florida, Kansas, Texas and Washington.

It seeks nationwide class-action status on behalf of employees at Bank of America retail branches and call centers over the past three years.

George Hanson, a lawyer for the plaintiffs, said the case could eventually cover more than 180,000 workers, based on information provided by the bank. That could lead to a recovery in the "hundreds of millions: of dollars, assuming a typical employee was deprived of $1,000 to $2,000 in pay, he said.

According to the 44-page complaint, the largest U.S. bank by assets requires employees to work in excess of eight hours a day or 40 hours a week, yet fails to pay them both for overtime and for all straight time worked.

The complaint also accuses Bank of America of requiring employees to work during unpaid breaks, failing to provide meal and rest breaks, and failing to timely pay terminated employees for earned wages and accrued vacation time.

"Bank of America enjoys millions of dollars in ill-gained profits at the expense of its hourly employees," violating either the federal Fair Labor Standards Act or various state labor laws, the complaint said.

Shirley Norton, a Bank of America spokeswoman, said the Charlotte, North Carolina-based bank would defend against the lawsuit, and had comprehensive policies and training to ensure compliance with all federal and state wage and hour laws.

Bank of America as of March 31 employed 283,914 people worldwide, and operated 5,939 U.S. branches.

The federal Judicial Panel on Multidistrict Litigation in April had directed that the 12 original cases be combined.

The lawsuit seeks class-action status, a halt to the alleged illegal conduct, compensatory and punitive damages and other remedies.

The case is In re: Bank of America Wage and Hour Employment Practices Litigation, U.S. District Court, District of Kansas, No. 10-md-2138.

Top 10 Hurricane Year Possible, AccuWeather Forecaster Says

This year could be a top 10 hurricane year, according to Joe Bastardi, AccuWeather.com’s chief meteorologist and hurricane forecaster.

Last week, the National Oceanic and Atmospheric Administration issued its annual hurricane forecast.

AccuWeather compared Mr. Bastadi’s hurricane prediction to NOAA’s and noted while there are similarities, Mr. Bastadi’s prediction gives a narrower range than NOAA’s.

NOAA forecasts an “active to extremely active” year, while Mr. Bastardi said 2010 could be a “top 10 year” in terms of storm frequency and strength, adding that the Atlantic basin looks “textbook” for a major season.

“2010 will be above average,” said Mr. Bastardi in a statement. “And worst case scenario, it may be in the top 5 to 10 percent as far as impact to land areas in the western hemisphere.”

NOAA predicted a 70 percent chance of 14-23 named storms.

Mr. Bastardi narrowed the range to a projected a total of 16-18 named storms, with 15 reaching the western Atlantic, and at least six storms impacting the United States coastline, with a worst-case scenario of up to 10.

He said he believes more storms will threaten the land areas of North America and adjacent islands.

NOAA predicted there will between 8-12 storms that reach hurricane status, while Mr. Bastardi sees 10-11 storms becoming hurricanes this season.

As for major hurricanes—Category 3 and higher—NOAA forecasts between three and seven.

Mr. Bastardi said he expects five.

The Gulf of Mexico and the Caribbean will be of special concern this hurricane season, as both the Gulf oil spill area and Haiti will be vulnerable to storm impact, Mr. Bastardi said.

He added that in the heart of the season, there will be a “congregation of tracks,” or a concentrated area where many of the storm tracks will pass through. This area is centered near Puerto Rico to near the Southeast U.S. coastline.

The peak time for hurricane season, which runs from June 1 to Nov. 30, is considered to be September

Citizens Says Losses Rose 34 Percent Over Previous Year

May 28--Citizens Property Insurance Corp. reported that losses rose 34 percent over a year ago, due largely to sinkhole claims from both residential and commercial policyholders. The state-run insurer of last resort posted net income of $191.3 million for the year ended March 31, down 41 percent. Citizens saw a 1 percent rise in the number of policyholders last year, to 1,051,373, but expects that number to grow with the recent liquidation of two private insurers, Magnolia and Northern Capital Insurance.

Future Trend: Fighting Fraud and Abuse with "Transparency"

The following article is from Elizabeth Hogue, Esq,(ElizabethHogue@ElizabethHogue.net) an attorney who specializes in Medicare/Medicaid/Home Care. In any case, the issue of public disclosure of gifts is always a hot button for agencies and the article below goes into some detail on what is/is not allowable.

Physicians routinely expect or perhaps demand gifts from home health agencies, private duty agencies, home medical equipment (HME) companies, and hospices to which they make referrals.

Generally, the rules governing such gifts are as follows:

- No cash

- No cash equivalents, including gift cards and gift certificates

- Non-cash items of nominal value are permitted, so long as the value of such items does not exceed approximately $350.00 per calendar year.

- Non-cash items of nominal value given cannot induce referrals.

The stakes are high if providers were to violate these rules. Providers on “both sides of the fence” may be suspended or excluded from participation in federal and state health care programs. They may be required to pay large civil money penalties or fines. Providers may also lose their licenses or go to jail. Many providers, however, have heard stories about their competitors who do not comply with these rules.

Regulators are now adding something new to their “arsenals:” providers and physicians may be required to publicly disclose all of the gifts they give and receive. The rationale behind this requirement is that “transparency” may discourage providers and physicians from violating the law. Regulators expect that public disclosures will make criminal behavior more difficult to conduct and easier to detect. They also anticipate that disclosures may serve as deterrents for violators.

As part of settlements of alleged violations of the above rules, for example, regulators require a growing number of providers and manufacturers to post publicly all of the payments they have made to doctors. Corporate Integrity Agreements (CIA’s) entered into between alleged violators and the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services may also require such disclosures.

In Gardiner Harris’ article entitled Prosecutors Plan Crackdown on Doctors Who Accept Kickbacks, which appeared in the New York Times on March 4, 2009, Dr. David Rothman, President of the Institute on Medicine at Columbia University was quoted as saying: “The rules of the game have changed…You’ve got to presume that anything you take from a …company is going to be on a Web Site. Your colleagues will know; your patients will know. That’s going to stop a lot of doctors from pocketing their gifts and funds.” Doctors whose financial arrangements have already been made public are horrified.

For example, the above article describes Dr. Richard Grimm, a physician in Minnesota engaged in substantial amounts of research, who served on a government-sponsored panel that creates guidelines about when to prescribe medication for blood pressure. State records revealed that Dr. Grimm received payments of approximately $800,000 from drug companies over a period of eight years. Invitations to serve on such panels then dried up.

Undoubtedly, providers who are “bad actors” will continue to flout the rules. The proverbial handwriting, however, is on the wall. The game has changed and will continue to do so.

Flood Insurance Program to Expire Again May 31

For the fourth time in the past year, the nation's flood insurance program will lapse because Congress has not voted to reauthorize it.

That's the latest on Capitol Hill, according to property/casualty lobbyists and other sources.

As a result, the National Flood Insurance Program will lapse at 12:01 a.m., June 1, the first day of the hurricane season.

According to the American Insurance Association, the House of Representatives was expected to strip the flood insurance provision from a larger bill dealing with unemployment benefits, Medicare payments to doctors and tax breaks that has been stalled by partisan fighting. The plan was to then conduct votes on extensions for the NFIP and other programs prior to adjourning for the Memorial Day recess.

However, according to AIA, Senate Majority Leader Harry Reid, D-Nev., announced last night that the Senate will not consider the legislation to extend the insurance and other programs until the week of June 7.

Dow Jones Newswire and The Washington blog, The Hill, reported that Democrats might make an offer to extend the NFIP and other programs for 14 days but that Republicans would only go along if stimulus finds were used to pay for it, something Democrats have opposed in the past and are expected to again.

The stalemate means the Senate will adjourn for the Memorial Day recess without taking action needed to extend the NFIP.

"This is now the fourth time Congress will have let this program lapse and it's beginning to feel like Groundhog's Day. The country has seen record flooding this spring. Congress needs to pass a long-term extension because homeowners living in flood prone regions of the country don't have anywhere to turn should another major flood occur during this Congressional recess," said Blain Rethmeier, spokesman for the American Insurance Association.

NFIP has previously issued a memo with guidelines for operations during a hiatus. During its suspension, agents will not be able to issue any new or renewal flood insurance policies or increase limits on any existing policies. The hiatus will not affect claims paying. The program insures more than 5 million properties

Congress has been working on longer-term legislation to authorize NFIP for up to five years, which would be welcomed by the insurance industry

Threat of Active Atlantic Hurricane Season Growing, Says U.S. Forecaster

The threat of an above-average 2010 Atlantic hurricane season has heightened over the past month and it now promises to be "a hell of a year,'' a leading U.S. forecaster said Wednesday.

William Gray, the hurricane forecast pioneer who founded Colorado State University's respected storm research team, said CSU would ramp up its predictions for the 2010 season in a report due out on June 2.

"The numbers are going to go up quite high,'' Gray said. ''This looks like a hell of a year.''
A higher forecast raises the prospect the vulnerable U.S. Gulf Coast may see a repeat of the 2005 season when a record 28 storms formed, which killed nearly 4,000 people and caused an estimated $130 billion in total damages.

The list included hurricanes Katrina, which devastated New Orleans, Rita which plowed into southern Louisiana, and Wilma, the most intense storm recorded in the Atlantic basin with peak winds of 185 miles per hour (295 kph).

Gray, who spoke on the sidelines of a regional hurricane conference, declined to specify the number of storms CSU will forecast in its outlook next week.

In its previous forecast, released on April 7, CSU had projected the season would produce an above-average eight hurricanes, four of which could be major.

In 2005, there were seven major hurricanes.

In its April 7 forecast, CSU also said the six-month season beginning on June 1 would likely produce 15 named tropical storms. An average Atlantic season has about 10 tropical storms, of which six become hurricanes.

Major hurricanes pack powerful sustained winds of at least 111 miles per hour .

Gray and Phil Klotzbach, lead forecaster with the Colorado State team, both told Reuters that forecast models showing a recent shift in wind patterns and warm tropical Atlantic waters had reinforced the likelihood that a busy hurricane season was on its way.

They referred specifically to reduced wind shear probabilities due to the dissipation of the El Nino weather phenomenon over the Pacific Ocean.

"El Nino died pretty quickly over the past couple of months,'' Klotzbach said.

An El Nino would normally allow wind sheer to seep into the Atlantic, disrupting storm formation and pushing embryonic hurricanes out to sea far from the oil-rig rich Gulf and the U.S. mainland.

Wind shear -- caused by a clash between prevailing upper-levels winds out of the west and lower-level easterly winds out of Africa -- can tear apart hurricanes or break up their circulation.

"Everything is setting up as a very active season,'' Gray said.

STORMS MAY PUSH OIL FROM SPILL INLAND

Both Gray and Klotzbach said there were too many uncertainties about the Gulf of Mexico oil spill to make any predictions about how it might come into play in the upcoming storm season.

But they were dismissive of claims the oil slick could keep storms from gathering strength and said a powerful cyclone, particularly if it comes out of the western portion of the Gulf, could propel large quantities of oil ashore in the northern Gulf.

"The counter-clockwise circulation could push oil inland, into the inland waterways, and cause a lot of problems,'' Klotzbach said.

Federal Emergency Management Agency director Craig Fugate, who spoke at the same hurricane conference in Fort Lauderdale on Wednesday, seemed exasperated by public attention to the oil spill as another potentially deadly hurricane season looms over the Caribbean and the U.S. Atlantic seaboard.

"It concerns me that we're talking about the oil spill and we're not talking about hurricane season,'' Fugate told reporters.

"Given the vulnerability of many of our coastal communities to a major landfalling hurricane, a failure to prepare for that will negate any of the work that's been done to deal with the impacts of the oil spill,'' he said.

"Yes there's an oil spill, yes it's devastating, and yes it has significant impacts to our coastline, to our tourism and to the environment. But do not confuse that with the deadly power of a major hurricane.'' he said.

Thieves Grab $1 Million in Sunglasses from Florida Factory

Sunglasses with a retail value of up to $1 million were reported stolen from a Daytona Beach factory.

Police say employees discovered the break-in Monday. The thieves apparently disabled telephones, security cameras, the alarm and computer systems of Costa Sunglasses Co. sometime Sunday night. The suspects loaded 12 pallets of merchandise on a semitrailer.

The merchandise was worth $100,000 to $250,000, with a retail value of $500,000 to $1 million.

Besides the sunglasses, burglars also took a computer monitor and hard drive.

Police are still investigating. No arrests have been made.

Lloyds, Other Insurers Sue to Block BP Claim Against Transocean

Lloyd's of London has asked a U.S. court to block a claim filed by oil major BP seeking damages against driller Transocean, which drilled the well which is currently gushing crude into the Gulf of Mexico.

Lloyds underwriting syndicates and other insurers who provided $700 million of cover to Transocean lodged a case with a federal court in Houston, arguing that the policies provided to Transocean preclude claims related to environmental damage caused by leaks from the well.

According to court documents, the insurers argue that Transocean's contract with BP only makes it liable for environmental damage caused by any spills from its rig, which exploded and sank, causing the pipe running from the rig to the well to snap. The well is leaking oil.

BP said it had lodged a claim against the insurers but declined to comment further. No one was available for comment at Transocean.

Even if BP were awarded the full $700 million of cover the insurers provided to Swiss-based Transocean, it would be only a small fraction of the total bill for the cleanup operation and compensating people who suffered losses due to the spill. Analysts at UBS put the likely cost of this at $12 billion, in a report issued on Tuesday.

MGAs Called Critical to Florida's Property Insurance Market

Several of Florida's insurers with affiliated managing general agencies (MGAs) have come in for criticism recently but there is no widespread problem with the MGA model, regulators and insurance industry executives agree.

In a new Insurance Journal video interview, they also agree that insurance company-MGA relationships are critical for the future of Florida's property insurance market, as they represent one of the few ways the hurricane-prone state is able to attract insurance capital.

The issue of Florida insurers diverting profits into management and reinsurance companies they own was the subject of a Sarasota HeraldTribune special report.

Earlier this year, the Office of Insurance Regulation questioned the deals two insurers had with their MGAs. OIR told Southern Oak Insurance Co. to reduce the payment it was sending to its MGA. A director and part owner of Hillcrest Insurance Co. in Gainesville was ordered to return $600,000 in policyholders' money. Another company's payment to its own reinsurance arm was questioned. A few of the companies that have failed are among those suspected of questionable deals with affiliated companies.

But there have not been a lot of cases of internally-owned MGAs profiting while the insurance company loses money.

"It's definitely a problem. The extent to which it is a problem is a little bit more of a debate. There have been some companies, some of those who have failed that did bad things. They basically, loaded up the back-door and took a lot of the surplus out of the company and left it dry when it came time to pay the claims or to honor its obligations," says Jeff Grady, president of the Florida Association of Insurance Agents, in the interview with Insurance Journal's Andy Simpson from the FAIA office in Tallahassee.

Insurance Commissioner Kevin McCarty thinks the problem is manageable and does not involve a lot of companies.

"I do not think it's a widespread problem," McCarty told Insurance Journal. "I can assure you those that are gaming the system, they'll be found and that's just, and that will be rectified.

"What we're talking about is really a handful of people who are gaming the system, where they're using the holding company and the affiliated parties to move money out of the insurance company into the MGA and some of those have been unsigned deals, some of them have been through overestimating the profitability of the company, and what we're here to ensure is that we have no problem with engaging services of an MGA or engaging the services of an affiliated as long as it's an arms length deal and the money is not going outside the company to the detriment of the policy holders," McCarty says in his interview.

The state appeasr to have good reason to keep the problem in perspective.

"Because of the situation we have in Florida, it is really the only mechanism that attracts capital to Florida, this internally-owned MGA," says Grady. "So when you paint them all with the same brush, and you make them all out to be bad guys, you kill the only thing that we have left which is the manner in which we bring capital to our state. And there are a lot of good actors there. And we can't afford to do that."

James Graganella, president/CEO, Southern Fidelity and Capitol Preferred, says the state would be in even more trouble than it is now with property insurance if it were to discourage MGAs.

"We need the MGAs to be profitable and the insurance companies, too, because that's what attracts capital to Florida. Let's face it, we are in a high catastrophe prone area and after '04 and '05 if we didn't have that provision in our statute I can promise you we wouldn't have been able to attract capital to Florida," Gragaenlla says. "We have to do that. If we don't have the ability to attract capital to Florida then Florida's insurance market will not survive. So that's very important, but it's also not fair for investors to make a profit while the insurance companies are losing money."

According to Jay Newman, chairman, Sawgrass Mutual, MGAs were responsible for a lot of new capital in the 1990s and then again after the big storms of 2004 and 2005.

"It just shows you that this is a model that can be used to bring capital to the state of Florida. In fact, it's probably the only workable model for bringing capital into the insurance market in Florida that we know about," Newman says.

McCarty agrees with the industry that MGAs are critical to the marketplace—and not just because of their capital-raising potential.

"[M]anaging general agents play a major role in our marketplace and are very important from issuing the policies to negotiating reinsurance and there are some very, very good ones and we're glad to have them because they bring some enormous expertise and talent into the business," McCarty says.

The OIR has not had the authority to inspect upstream transactions by insurers and now only finds out about them after they happen. But that could soon change.

Recently passed omnibus property insurance legislation, SB2044, includes a provision giving OIR access to more financial information on transactions between insurers and their affiliates. The final bill requires insurers, if requested by OIR, to submit information on any affiliated managing general agencies or other affiliated companies to which they have made payments. "The acts of the managing general agent are considered to be the acts of the insurer on whose behalf it is acting. A managing general agent may be examined as if it were the insurer," states the bill. Current law exempted MGAs solely representing a single domestic insurer from scrutiny.

"I'd like to be able to sign that," Gov. Charlie Crist told McCarty at a Cabinet meeting after he said he was working with lawmakers on the bill.

But the MGA provision is part of the omnibus measure, SB2044, which contains multiple parts and some provisions Crist may not like. He has not yet indicated if he will sign SB2044, although McCarty, Grady and others have urged him to do so.

S&P Expects Re/Insurance Losses from Gulf Oil Spill to Be Minimal

Based on what are so far only preliminary estimates, Standard & Poor's Ratings Services said it expects insured losses from the oil spill in the Gulf of Mexico "to be significantly less and be spread among multiple markets and re/insurers."

The report, published on S&P's RatingsDirect, is entitled "Despite Significant Environmental Damage, The Gulf Oil Spill Losses to Re/Insurers Are Expected to Be Limited." S&P indicated that "preliminary net loss estimates by some re/insurance companies indicate that losses could be contained within second-quarter 2010 results."

Nonetheless, S&P stressed that the "Deepwater Horizon oil rig explosion in the Gulf of Mexico in April is likely to become one of the largest oil spills of all time, and the cost will be significant because the contamination area continues to spread. The early economic damage estimate from this man-made disaster has already reached a few billion dollars."

The report notes that "some of the early disclosures include only the property losses, as the liability portion is difficult to estimate at this point."

However, S&P said it expects "losses from this event--with the possible exception of a few outliers--to affect earnings rather than capital. Based on these early estimates alone, we do not expect to change any ratings at this time as a result of the oil spill," S&P concluded.

Florida Hurricane Fund Has $17 Billion in Cash for Claims

The Florida Hurricane Catastrophe Fund is as healthy as ever heading into the 2010 storm season.

An advisory council to the fund reported Tuesday that it has enough cash and bonding ability to pay off more than $25 billion in losses if necessary. A financial adviser to the fund said Florida could withstand $17 billion in storm losses without having to seek additional bonding.

Advisers said the state has $6 billion in cash reserves, $3.5 billion in pre-event bonding and $7.1 billion in required private insurer contributions.

Bonds that are issued by the fund, which was created after Hurricane Andrew to help keep down the cost of insurance, are paid back by assessing insurance policyholders in Florida.

The insurance industry has been warning about the fund's finances for years.

Key Facts, Common Myths About Protecting Homes from Hurricanes

With weather forecasters calling for a worse-than-average 2010 Atlantic basin hurricane season, the Institute for Business & Home Safety (IBHS) is advising property owners on the most effective ways to protect their homes and businesses from hurricane damage.

IBHS is also trying to dispel some common myths about hurricane preparedness.

Forecasters predict 15 named storms to form in the Atlantic basin between June 1 and November 30, with eight expected to be hurricanes and four developing into major hurricanes (Saffir/Simpson category 3-4-5) with sustained winds of 111 mph or greater. The prediction is based on the premise that El Nino conditions will dissipate by this summer and that anomalously warm tropical Atlantic sea surface temperatures will persist.

IBHS is a nonprofit scientific and educational organization supported by the property insurance industry. Here's what IBHS wants property owners to know:

Facts:

1. A new, well-installed roof is one of the best forms of protection available

If your shingle roof cover needs to be replaced, do it now, while there is still enough time for the shingles to heat up and seal properly before a storm threatens. Be sure to remove older material down to the roof sheathing and have the deck re-nailed. Spend a little extra to provide a secondary water barrier (in some areas, insurance discount may be available if you re-nail and/or install an approved secondary water barrier so check with your insurance company) and have a high wind-rated roof cover installed. IBHS has detailed guidance available to help you specify a quality installation.

2. Protecting all openings in exterior walls will greatly improve a building's chances for surviving a hurricane

One of the most important things you can do to improve the chances your home or business will survive a hurricane is to protect all windows and doors. The range of products on the market today, such as storm shutters or impact-resistant windows, means it's easier to find protection that fits your budget. Whatever you choose, make sure the product has the proper product approvals for wind pressure and large-missile impact. If it is not a permanent product, place permanent fasteners ahead of time so installation is easier when storms threaten. Gable end vents can be shuttered as if they were a window. Garage door companies have bracing systems available for about $400 that should work for most door styles.

3. Securing loose roof shingles is critical

Keeping shingles attached is critical. If the edge shingles are not well fastened or extend beyond the drip edge more than a 1/4", high wind can lift them off and create a peeling process or domino effect. If they come up without much effort (older shingles become brittle and may crack when bent too much), secure them with three one-inch dabs of roofing cement under each tab.

4. Sealing openings, cracks and holes will help prevent water damage

Water can invade homes in a number of ways, especially when it's being blown horizontally. The problem is compounded if there is a loss of power and air conditioners or dehumidifiers are unable to dry things out. Fill holes where wires, cables and pipes enter and exit the house and seal around electrical boxes and circuit breaker panels. Seal cracks around wall outlets, dryer vents, bathroom and kitchen vents, and wall lights.

5. Strengthening soffits (the material covering the underside of your roof overhang) also helps prevent water damage

Keeping soffits in place can help keep water out of your house. Some vinyl and aluminum soffit covers have wood supports, but the soffit material is not adequately fastened to the wood, or there is no wood backing and the vinyl or aluminum channels are stapled or nailed to the wall. If there are wood supports, secure soffit material with sharp-pointed stainless steel screws. If the channels are just nailed to the wall, you can use polyurethane caulk to seal the channel to the wall and tie the parts together.

6. Limiting potential flying debris helps protect your building

Limiting possible sources of wind-borne debris by surveying your building's surroundings before a storm will help protect your home or business and those around you. Replace gravel/rock landscaping materials with shredded bark. Limit yard objects. Keep trees and shrubbery trimmed. Cut weak branches.

Myths:

1. Open the windows on the leeward side of the house so the air pressure doesn't explode the building

It is almost impossible to know ahead of time which wall will be the leeward wall – and wind directions frequently change as a storm passes. Trying to open and close windows during the storm puts you next to glass that can break, causing injury. Also, as wind direction changes, open windows could allow wind-driven rain to stream into your house or business and ruin belongings. The normal leakage of air around windows and doors will tend to keep the pressure in your building slightly lower than the atmospheric pressure caused by the storm outside. The greatest danger comes when a large window or door fails on a wall facing the wind. The key is keeping all wind and water out with proper opening protection.

2. You only need to protect the openings facing the ocean or gulf

Because hurricanes are a moving, rotating storm, winds can come from any direction, which can change rapidly if you are near the eye. Your best bet is to protect windows and doors on all sides of your building.

3. Tape windows with a big "X"

Taping glass does nothing to address the main point of protection – keeping the glass in its frame and securely attached to the building.

4. Leaning or pushing against a window or door that is being blown inward by wind pressure can help keep the window or door from breaking or opening.

This clearly puts you in harm's way and increases the likelihood that you will be cut or injured. No matter what kind of glass you have, stay away from all windows during a severe storm. Before a storm threatens, review the anchorage of your doors. On entry doors, you can install extra latches and make sure that hinges are well-anchored with long screws that extend into the wall framing. Take protective action ahead of time so that you won't be tempted to try and keep doors closed by pushing on them. Put as many walls as you can between you and the windward side of your home.

Florida Governor Signs Bill Regulating Use of Traffic Cameras Statewide

Governor Charlie Crist today signed legislation that creates statewide standards for the use of cameras as traffic enforcement devices.

House Bill 325, the Mark Wandall Traffic Safety Act, requires cameras to be tested regularly and to comply with specifications established by the Florida Department of Transportation.

The bill also requires that a notification of violation must be issued before a formal traffic citation and that points cannot be assessed toward a person's driver license.

A portion of the funds from traffic fines will go to the Brain and Spinal Cord Injury Trust Fund, which supports the Miami Project to Cure Paralysis. Earlier today, the Governor held a signing ceremony in Bradenton where he was joined by Melissa Wandall, wife of Mark Wandall, the legislation's namesake who was killed by a red-light runner in 2003.

In addition to the Brain and Spinal Cord Injury Trust Fund, a portion of the funds from traffic violations will also go to the Department of Health Administrative Trust Fund, which supports trauma centers, as well as general revenue and the county or municipality in which the violation occurred.

In 2008, there were 76 fatalities and more than 5,600 motor vehicle-related injuries caused by drivers who disregarded a traffic signal in Florida, according to the Department of Highway Safety and Motor Vehicle. Traffic signal violations were the sixth highest cause of traffic-related fatalities and the third highest cause of traffic-related injuries in 2008.

Chinese Drywall Maker Settles With Homebuilder Beazer; Terms Undisclosed

A Chinese drywall maker announced that it settled a case brought against it by U.S. homebuilder, Beazer Homes, for an undisclosed dollar amount.

Knauf Plasterboard Tianjin (KPT), through its legal representative, Don Hayden, a principal for Baker & McKenzie in Miami, said the settlement was reached in an attempt to put the issue behind them while assisting with Chinese drywall repair efforts.

“KPT has been in discussions with builders in recent weeks seeking a reasonable solution to repair homes built with KPT drywall,” said Mr. Hayden in a statement.

He confirmed in an e-mail to NU Online News Service that the settlement between Knauf Plasterboard Tianjin Co. Ltd. and Beazer Homes relates to impacted properties in the two Florida Beazer properties where affected Chinese drywall has been uncovered.

“The settlement is a settlement for present and future property claims in those two communities in addition to 54 other properties that Beazer has inspected outside the two developments,” he wrote.

He did not respond to a request to reveal the dollar-amount of the settlement before this article went to press.

The company said its drywall was imported into the United States within a 10-month period in 2006 and that KPT drywall accounts for 20 percent of all drywall imported from China during that period.

“KPT has developed a reasonable settlement offer to extend to homebuilders that will meet residents’ expectations to live comfortably in their houses,” the company said in today’s statement.

“This settlement is further proof of KPT’s commitment to cooperate with homebuilders, federal courts, regulators and official organizations,” Mr. Hayden said in the statement. “We will continue to work with these parties to ensure concerns pertaining to KPT drywall are addressed and properly fixed.”

In the same statement, Kevin Buster, partner at King & Spalding, who represents Beazer Homes, said: “We appreciate KPT’s efforts to resolve this issue.”

“As part of Beazer’s customer service commitment, it has investigated many homes nationwide, and has aggressively reached out to its homeowners in its two affected communities in southwest Florida,” he said.

“To date, Beazer has identified fewer than 50 homes with Chinese drywall, all located in those two communities.”

“Beazer has proactively developed and implemented a comprehensive repair protocol, has offered that protocol to each of its homeowners where Chinese drywall has been found, and has been repairing the affected homes for some time now.”

NU Online news Service, May 18, 4:05 p.m. EDT
A Chinese drywall maker announced that it settled a case brought against it by U.S. homebuilder, Beazer Homes, for an undisclosed dollar amount.

Knauf Plasterboard Tianjin (KPT), through its legal representative, Don Hayden, a principal for Baker & McKenzie in Miami, said the settlement was reached in an attempt to put the issue behind them while assisting with Chinese drywall repair efforts.

“KPT has been in discussions with builders in recent weeks seeking a reasonable solution to repair homes built with KPT drywall,” said Mr. Hayden in a statement.

He confirmed in an e-mail to NU Online News Service that the settlement between Knauf Plasterboard Tianjin Co. Ltd. and Beazer Homes relates to impacted properties in the two Florida Beazer properties where affected Chinese drywall has been uncovered.

“The settlement is a settlement for present and future property claims in those two communities in addition to 54 other properties that Beazer has inspected outside the two developments,” he wrote.

He did not respond to a request to reveal the dollar-amount of the settlement before this article went to press.

The company said its drywall was imported into the United States within a 10-month period in 2006 and that KPT drywall accounts for 20 percent of all drywall imported from China during that period.

“KPT has developed a reasonable settlement offer to extend to homebuilders that will meet residents’ expectations to live comfortably in their houses,” the company said in today’s statement.

“This settlement is further proof of KPT’s commitment to cooperate with homebuilders, federal courts, regulators and official organizations,” Mr. Hayden said in the statement. “We will continue to work with these parties to ensure concerns pertaining to KPT drywall are addressed and properly fixed.”

In the same statement, Kevin Buster, partner at King & Spalding, who represents Beazer Homes, said: “We appreciate KPT’s efforts to resolve this issue.”

“As part of Beazer’s customer service commitment, it has investigated many homes nationwide, and has aggressively reached out to its homeowners in its two affected communities in southwest Florida,” he said.

“To date, Beazer has identified fewer than 50 homes with Chinese drywall, all located in those two communities.”

“Beazer has proactively developed and implemented a comprehensive repair protocol, has offered that protocol to each of its homeowners where Chinese drywall has been found, and has been repairing the affected homes for some time now.”

Florida Leaders See Omnibus Bill Stabilizing Home Insurance Market

Florida insurance leaders belive that recently passed legislation (SB2044) is a step towards stabilizing the state's property insurance market that has had been rocked by politics, premiums assessments, company failures, reopened hurricane claims and a credit mitigation program that got out of hand.

At the same time, they warn that the legislation that they all hope Gov. Charlie Crist will sign will not solve all of the market's problems and it will not mean big savings for consumers.

In a new exclusive video, Insurance Journal's Andy Simpson interviews Jeff Grady, president/CEO, Florida Association of Insurance Agents; Kevin McCarty, insurance commissioner; James Graganella, president/CEO, Southern Fidelity and Capitol Preferred; and Jay Newman, chairman, one-year old Sawgrass Mutual on SB2044 and on what the Florida market might look like a year from now.

The bill under consideration by Crist, SB2044, addresses a number of costs in the system. It reduces the time a homeowner has to file a claim after a hurricane from three to five years and more closely regulates public adjusters, some of whom are blamed for an explosion of reopened claims from Hurricane Wilma five years ago. It allows an insurance company to withhold a portion of payment on a replacement cost claim to make sure that the money is being used to actually repair the property. It raises surplus requirements for carriers. It also streamlines the process for insurers to get state approval for reinsurance costs in rates and tries to bring premium credits for mitigation efforts under control.

Insurance agents believe the most important thing the bill does is give carriers a chance to get back on firmer financial footing so they are better able to pay claims in the future.

"This bill is meant to help restore solvency. I'm not suggesting that it does because just as it took a while to get to this point, it is going to take a while to get out of it, and let's keep our fingers crossed that there is no storms. But… there are some things in there that I think do good things for the companies, maybe do some good things for agents, but more importantly do great things for consumers which try to make sure that carriers can deliver on their promise," says Jeff Grady, president, Florida Association of Insurance Agents.

While all hope that the bill will help stabilize the market, consumers should not get their hopes up for huge premium savings, according to Insurance Commissioner Kevin McCarty.

"It's always dangerous to speculate about future rates. We will say, though, that the trajectory was for a very negative impact on companies. And what we're seeing hopefully is that the combination of the attributes of this bill will stabilize the market. At this point, we would be happy just stabilizing the market. I anticipate that there will be cost increases that are associated with doing insurance business in Florida, but we're hoping to see it return to profitability in the next fiscal year," he tells Insurance Journal in the interview in Tallahassee.

From the carriers' perspective, SB2044 represents a good first step toward a stronger market that will benefit them and consumers.

"It's not a game changer. It doesn't solve all the problems but it's a step forward just like the bill last year was a step forward," says Jay Newman, chairman, Sawgrass Mutual.

James Graganella, president and CEO, Southern Fidelity and Capitol Preferred, agrees.

"I think it's a step in the right direction. I think this is a bill that's very consumer friendly in the long haul," he said.

In the video interview, the leaders also address how they hope the Florida marketplace looks a year from now assuming Crist signs SB2044.

"No hurricanes - that's what I would hope for over the next six months - and that some of these good measures that were really a restoration of what we have lost are starting to have a positive impact on these carriers. They find their foundation and they start to grow surplus rather than lose it. And we are not having all this churning of business that is going on now; that we have some stability in the marketplace that agents feel comfortable in advising consumers to go with that company. That would be a much better day than where we are now," says FAIA's Grady.

Coming Hurricane Season Could Complicate Gulf Oil Spill Disaster

BP's oil spill could make for one of the highest-stakes U.S. Gulf hurricane seasons on record.

Storms may scuttle clean-up efforts, force containment vessels to retreat, or propel spilled crude and tar balls over vast expanses of sea and beach, scientists said.

Meteorologists say that climate conditions are ripe for an unusually destructive hurricane season, the storm-prone period that runs from June 1 to the end of November in the Gulf. Oceanographers say that could hurt the clean-up.

"If a storm comes into this situation it could vastly complicate everything,'' said Florida State University oceanography professor Ian MacDonald.

"All efforts on the shoreline and at sea, the booms and structures and rigs involved in clean-up and containment, could stop working.''

As thousands of spill responders gird for a clean-up that could last for months or years after the leaking well is capped, weather and ocean currents are emerging as major unknowns, raising anxiety levels, economic and environmental stakes in the Gulf as storm season nears.

Compounding the uncertainty is how little research has been done on how storms affect oil spills. Some believe storm surges may help disperse the oil off shore or break down the slick. Other research suggests the oil slick itself could keep storms from gathering strength.

Recent Atlantic Basin readings showed water temperatures up to 0.8 degrees Celsius above normal, and near a record high for the season. El Nino, which creates wind shear that can prevent Gulf hurricanes from forming, has recently subsided. The factors could spur major storms in the Gulf this year.

"It only takes one storm to wreak havoc,'' said Chris Shabbot, a meteorologist at Sempra in Connecticut. "The consensus forecast is for above average storm activity as the El Nino (event) decays and the Atlantic is as warm or warmer than 2005.''

Colorado State University's renowned team of forecasters is calling for an above-average hurricane season that may bring 15 named storms this year, eight of hurricane strength.

Accuweather's Joe Bastardi also fears a destructive season.

"I hate to say it since the oil spill is already affecting people, but I think this hurricane season is going to be big,'' he said in an interview.

The next official hurricane season outlook from the government's National Oceanic and Atmospheric Administration is due on May 20.

STORMS AND CURRENTS

Miles and miles of booms have been placed offshore along the Gulf Coast to help stop the slick from making landfall.

Amid the menacing forecasts, oceanographers and spill-responders are considering how storms and deep ocean currents would affect the movement of spilled oil, which authorities say could soon hit land in Louisiana, Mississippi, Alabama or Florida.

The U.S. coast of the Gulf of Mexico spans some 1,680 miles (2,700 km). The spill, gushing an estimated 5,000 barrels a day from a subsea oil well 50 miles south of Louisiana, has formed a thin oil slick that covered more than 1,200 square miles in late April, according to Louisiana State University researchers. The slick has been harder to define this month, and may be shrinking, LSU professor Nan Walker said.

Lurking under the sea surface, viscous tar balls are forming, facilitated by wave activity, as the heavier hydrocarbon molecules gradually sink towards the sea-floor, a process that can take months, scientists said.

Experts are having trouble modeling how the oil will react in water since BP hasn't disclosed exactly what kind of crude is spilling. Lighter oil evaporates quicker and is more easily dispersed by chemicals. Heavier crude can be more damaging to marine or bird life, but it could sink faster or be easier to contain.

As many as 520 vessels are already responding to the spill throughout the Gulf, according to U.S. authorities. Efforts to stop the spill involve drilling relief wells from a seaborne rig, which BP says could take three months. The company is also trying to cap the leak with a metal funnel on the sea-floor, to gather oil into a giant hose connected to a storage ship above.

Both of those efforts could be disrupted by tropical storms, which can force evacuation of oil and gas rigs throughout the Gulf.

Peter Niiler, an oceanographer at the Scripps Institution in San Diego, has researched how even winds caused by a low pressure cycle can displace floating scientific buoys from waters near Florida to Texas in less than a week.

"Anything on the ocean surface, including oil, can move very fast and just about anywhere that wind or currents push it,'' Niiler said.

The oil slick might even reach waters and shores abroad, scientists and foreign authorities warned this week.

Mexican officials say if the spill persists into the fall it could reach Mexican beaches along the country's Gulf Coast, the site of famed tourist destinations like Cancun.

Some of the spilled crude should make its way into the LOOP current, a deep ocean stream that transfers heat from the tropics to higher latitudes and becomes the Gulf Stream.

"If you look at it, the LOOP current could lead that oil right to Havana, Cuba,'' said Florida State's MacDonald.

After sweeping near Havana, the LOOP current continues towards the Florida Keys and the Gulf Stream heads up the U.S. Eastern Seaboard.

Some researchers said a wider dispersion of the spill may be good, and storms could help that process along. Researchers at NOAA, in a report last week, said the oil slick may also help to impede storm formation by preventing heat transfer from sea to air.

"There are two important issues here: the effect of hurricanes on the spill, and the effect of the spill on hurricanes,'' said Doron Nof, professor of oceanography at Florida State University.

"I think what a hurricane would do is break up the oil spill, making it even harder to clean up,'' he said.