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The California Department of Insurance announced a settlement with Zurich American Insurance Co. and Zurich American Insurance Co. of Illinois over what CDI alleged was improper use of workers' compensation insurance agreements.

Zurich's agreements forced California employers to arbitrate commercial disputes in Chicago, where Zurich is headquartered and also required the application of New York law, but under the settlement California employers can choose to arbitrate disputes in California under California law, according to CDI.

"Zurich's practices required California employers to resolve disputes in Zurich's backyard, under unfavorable law and circumstances and at added expense to employers," California Insurance Commissioner Dave Jones said in a statement.  "This settlement gives California employers the opportunity to level the playing field by arbitrating disputes in California, under California law."

The department filed an order to show cause against Zurich in 2012, asserting Zurich failed to file workers' comp large deductible agreement forms with the department as required by the California Insurance Code.

Zurich never filed its large deductible agreements for review, even after the department advised all insurers in 2011 that filing was required, according to CDI, which stated that Zurich's agreements were generally offered on a "take it or leave it basis" to employers.

The May storms in Oklahoma that produced two EF-5 tornadoes, destroyed thousands of houses, resulted in 46 deaths and sent damage estimates above the $5 billion mark, were extreme examples of a years-long pattern of storms that has the insurance industry wondering what's next.

Dave Ramsey, CEO of the Independent Insurance Agents of Oklahoma, said the past five years have been very difficult ones for insurance companies that write policies in Oklahoma.

"The thing is, the lesson is still being learned," Ramsey said. "This is the fifth year in a row that portions of Oklahoma have been devastated. It's a disturbing trend."  It's also expensive.

Data from the state insurance commissioner's office shows that more than 36,000 claims for both businesses and residences were filed following both tornadoes. And those numbers, Ramsey said, are hammering the industry.

Ramsey pointed to loss rations over the past five years as evidence of the difficulty faced by insurance companies who do business in the Sooner State. "Since 2007, the loss ratios for homeowner's insurance in Oklahoma are at 133 percent," he said.

In 2010 that figure was 163.3 percent. And those figures don't include the hailstorms of 2012, he said.

"It's a picture that is disturbing," Ramsey said. "When you're paying out 14 cents more than every dollar collected, that's a problem. Insurance companies can't survive that way."

He said the problem has become so bad that at least three insurance companies announced they would no longer write policies in Oklahoma due to high losses.  

Insurance claims resulting from hail storm damage increased 84 percent in 2012 from their 2010 level, according to the National Insurance Crime Bureau.

In 2010, there were 467,602 hail damage claims filed. That number increased to 689,267 in 2011 and to 861,597 in 2012-an overall increase of 84 percent from 2010 to 2012.

The nation has experienced severe storms (wind, tornado, hail) that are occurring with more intensity and affecting more areas of the country.

The property damage can be as minimal as a few broken shingles to total destruction of buildings. The report focuses just on insurance claims resulting from hail damage.

Over two million hail damage claims were processed from January 1, 2010 to December 31, 2012. During this period, the top five states generating hail damage claims were Texas (320,823), Missouri (138,857), Kansas (126,490), Colorado (118,118) and Oklahoma (114,168).

The claims activity follows the hail storm activity as posted on the National Weather Service's Storm Prediction Center. In 2010, 2011 and 2012, Texas was the state with the most hail storm events with 557, 741 and 795, respectively.

The NICB is using the report to educate homeowners about possible contractor fraud following a hail storm.

Zurich Among Insurers Said to Be Probed in Expanded N.Y. Inquiry July 24, 2013

Former Oklahoma Insurance Agent Sentenced for Wire Fraud July 16, 2013

A former Bixby, Okla., insurance agent has been sentenced to ten months home confinement after pleading guilty to wire fraud that allowed him to illegally take commissions earned by other insurance agents, the Oklahoma Insurance Department's (OID) announced.

The conviction comes after an investigation by the OID's Anti-Fraud Unit. Christopher M. Bland, 36, was indicted on 14 counts of wire fraud, 12 counts of making false statements to a financial institution and six counts of aggravated identity theft. As part of a plea agreement, he pleaded guilty to one count of wire fraud.

Bland, who owned and managed Business Consultants of South Tulsa, admitted to a scheme to defraud Colonial Life & Accident Insurance Co. and various insurance agents in his offices. He admitted opening bank accounts for agents without their permission, forging their signatures then taking their commissions.

Bland was also sentenced to five years of probation and ordered to pay $15,197 in restitution and a $5,000 fine. Bland is also expected to perform 80 hours of community service. Source: Oklahoma Insurance Department.  

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