Recent Insurance Headlines from The Insurance Journal

News and commentary about developments affecting Workers' Compensation insurance, and the commercial insurance market.

by Edward J. Priz, CPCU, APA

President, Advanced Insurance Management LLC

Parent of Large PEO Filing for Bankruptcy

May 30, 2008--The parent company of what used to be one of the country's largest PEOs (Professional Employer Organization) --aka employee leasing--has filed for Chapter 11 bankruptcy protection.  Mirabilis Ventures, parent company of Presidion Solutions, lists significant debts to the IRS and to its Workers Compensation insurance carrier in its Chapter 11 filing. 

Before Presidion went out of business, they had reported almost 2000 client companies and nearly 30,000 workers, mostly in Florida.

Reportedly, there are also criminal charges pending against Presidion co-founder John Burcham, and forfeiture actions pending against Mirabilis principal Frank Amodeo.

Wall Street Journal Gets It Wrong on AIG

May 30, 2008--Earlier this month, in the Wall Street Journal editorial pages, Assistant Editor James Freeman wrote that AIG stockholders were pining away for exiled chief Hank Greenberg, and blasted former prosecutor (and former governor) Elliot Spitzer for "prosecutorial excess."

In the column, Freeman questioned the charges that Spitzer had brought against AIG for avoiding proper fees and assessments by mischaracterizing Workers Compensation premiums as being other kinds of liability insurance premiums.  Freeman noted that insurance regulators in Washington and North Dakota had questioned whether their states were entitled to part of the $343 million settlement that AIG had made over those charges.

What Mr. Freeman and the WSJ failed to report, in their zeal to rehabilitate Mr. Greenberg, was that the basis for Washington and North Dakota's reluctance was not any question about the wrongdoing by AIG, but rather that those two states were monopoly fund states for Workers Compensation.  That is, Washington and North Dakota did not allow private insurance for Workers Compensation, unlike most states, and thus AIG could not have harmed their states with its schemes. 

But this in no way changes what AIG did, it is merely a reflection of the fact that those two states may not be entitled to a share of the restitution provided by AIG.

Of course, Wall Street types loved Mr. Greenberg, because AIG under his stewardship always made money--lots of money.  Insurance regulators I've spoken with privately have not always held Mr. Greenberg's insurance company in that same high esteem.  But now that Elliot Spitzer has managed to destroy his political career with self-destructive sexual scandals, defenders of Mr. Greenberg are hoping that Spitzer's disgrace can somehow be used to restore Greenberg's reputation and standing.

That would be a mistake, in my view.  Mr. Spitzer's personal failings (and they were spectacular, to be sure) do not change the serious and systemic wrongdoings by AIG and Greenberg that were uncovered by the former New York Attorney General.

NCCI v. AIG: Now It Gets Interesting

02/22/08--The latest development in the legal battle between the National Council on Compensation Insurance and American International Group  is that AIG wants to find out if other major insurers also underreported premiums.

For those who came in late, NCCI has filed suit against AIG (for a billion dollars) alleging that AIG underreported Workers Comp premiums to avoid assessments for assigned risk plans administered by NCCI.  AIG has already paid a fine in excess of a billion dollars as settlement of similar charges brought by Elliot Spitzer a few years ago (while admitting no wrongdoing, naturally.)

The questions AIG wants to put to other major insurers are very, very interesting:

• Did you write Workers Comp using unfiled or unapproved rating plans?

• Did you fail to report to NCCI increased premiums that came in from loss sensitive plan adjustments?

• Did you pass through to voluntary market policyholders expenses for assigned risk business via non-regulated policies or side agreements?

The answers to all of those questions would be very, very interesting.  And potentially very, very embarrassing for those major insurers.

Insurers & The Credit Crunch

02/12/08--The next shoe in the ongoing financial crisis may be dropping.  Both AIG and CNA have been in the news in recent days, reporting dramatic problems related to the subprime/credit crunch debacles.  Historically, dramatic reversals in the larger financial environment have usually led to higher commercial insurance rates.  So these two major commercial insurers may be the proverbial canaries in the coal mine.  In other words, employers should probably start bracing for higher Workers Comp premiums on their next renewals.

New Hampshire Small Contractors Get Increase

10/22/07-- Small contractors in New Hampshire that utilize LLC status to reduce Workers Comp costs are getting a rude shock from a new law.  In the past, an LLC could exclude up to 3 members from WC coverage.  So many smaller construction firms would exclude their principals, and only cover subcontractors.  But a new law that went into effect in mid-September requires that everyone working at any construction site be covered for Workers' Comp.

The law apparently didn't register on the radar screens of many affected employers until it was too late, and now insurance producers in the Granite State are scrambling to let affected policyholders know about the significant premium increases they are facing.

New York Moving to Competitive Rating

09/12/07-- New York insurance commissioner Eric Dinallo has recommended that the state move to a form of competitive rating for Workers Compensation insurance.  Under Dinallo's proposal, the New York Compensation Rating Bureau would develop loss costs for the various classifications, and then insurers would add their own multipliers to add on their charges for expenses and profits.  Thus, different insurers could develop their own manual rates for WC, competing on price.  Many states have adopted some form of competitive rating in recent years, where insurers can develop their own set of manual rates, but some states have retained the older system of having set rates that are used by all insurers.   Under reforms enacted by Governor Elliott Spitzer, the current system of NYCRB setting uniform rates ends next February.

In a related development, NY insurance agents have called for NCCI to be used in the future to develop the loss costs for the state's competitive rating system, rather than the New York Compensation Rating Bureau.

New Mexico Regulator Charged

08/31/07-- Former Deputy Insurance Commissioner Joseph Ruiz has been charged in a federal indictment with offering lower fines against insurance companies in exchange for contributions to a non-profit health care organization operated by former New Mexico Insurance Commissioner Eric Serna.

The shakedowns allegedly occurred during a 30-month period that began in July 2002, and includes a telling instance where Ruiz allegedly pressured an insurer over an auto accident claim on behalf of a New Mexico state senator.

The insurer complained, and Ruiz is supposed to have told the official "it looked like he was understanding how politics works in New Mexico," according to the indictment.

Ruiz himself didn't personally profit from the scheme, according to the charges, but children's books he had authored were purchased by the non-profit with "donations" from the insurance companies.
 

Task Force Probing California Fund

07/26/07--The California Department of Insurance has announced that it has formed a task force (together with the Highway Patrol and the San Francisco County District Attorney) to investigate possible financial misconduct on the part of some former employees of the State Compensation Insurance Fund (SCIF).  SCIF is the California Workers' Compensation Fund, the largest writer of Workers' Compensation coverage in the state (it competes with private insurance companies).

The department says the misappropriated amounts could total as high as a billion dollars.

The Department of Insurance so far isn't giving out many details about this investigation, but it may be connected to the class action against SCIF that we recently reported on.  --more--

New Jersey WC Changes

07/26/07--There have been some recent changes that impact Workers Compensation coverage in New Jersey.  In response to recent court decisions, policy language has been changed so that insurance companies are not liable for bodily injury caused or aggravated by an intentional wrong committed by the employer.

Dispute Brewing Over PEO Experience Mods

06/25/07--  It looks like there may be a significant dispute on the horizon over how PEO (Professional Employer Organization, aka employee leasing) companies use experience modification factors to compute Workers' Compensation insurance charges for clients.

The National Council of Insurance Legislators (NCOIL) has released their latest version of a model law, which would require that employers that don't have their own experience mods could not use a modifier that had been calculated for a PEO.  This model law, if adopted by the various states, would close a loophole that allows PEOs to offer Workers' Compensation coverage to clients calculated with an experience mod lower than the client company is eligible for on their own. 

Currently, an employer that is too small to have an experience mod calculated can obtain a 'credit" modifier by contracting with a PEO.  In such a case, the small employer gets premiums adjusted by the mod calculated from past experience of the PEO.  Insurance producers have complained in the past that this gives PEO's unfair advantage in pricing Workers' Compensation coverage, and legislators have been concerned for along time that it's not right to allow companies to get the benefit of credit modifiers that aren't based on their own past experience.

Already, some states have enacted limitations on such PEO experience modifier disparities.  But this new model law would prohibit such disparities outright, and could be used as a model for many states' regulations.

NAPEO, the National Association of Professional
Employer Organizations, is fighting against this proposed model law. 

Class Action Suit Against California State Fund

06/15/07-- A class action lawsuit has been filed against California's State Compensation Insurance Fund (SCIF) which is that state's Workers' Compensation fund.  SCIF isn't a "monopoly" fund, so it competes against private insurance companies in the Workers' Comp insurance market, but SCIF is the largest writer of Workers' Compensation coverage in California.

The lawsuit alleges that that there was "self-dealing" by SCIF and some of its top executives, and seeks $25 million in compensatory damages and $50 million in punitive damages.  The suit charges that there were improper payments made to some safety groups operated by former board members of SCIF.

Lead plaintiff in the case is Acro Constructers, Inc. of Burbank, and the law firm involved is Pearson, Simon, Soter, Warshaw & Penny, LLP. in Sherman Oaks.  It is reported that potentially there could be 250,000 members of the class action among California employers.

NCCI Sues AIG for $1 Billion

May 24, 2007--The National Council On Compensation Insurance (NCCI) the Workers' Comp rating bureau used in most U.S. jurisdictions, has filed a federal lawsuit against American Insurance Group (AIG) alleging that the insurer defrauded other member insurance companies via a scheme to dodge AIG's fair share of Assigned Risk business by misrepresenting that significant numbers of Workers' Compensation insurance policies were other kinds of liability policies.  Insurance companies are assigned pro-rata share of the Assigned Risk pool based on how much Workers' Comp insurance they write on a voluntary basis.  Misrepresenting how much Workers' Comp insurance was actually written by AIG allowed the company, according to the NCCI lawsuit, to avoid their fair share of the Assigned Risk business, thus causing other insurers to shoulder an more than their appropriate share.  The lawsuit charges that the amount of the fraud could equal one billion dollars.

AIG had earlier reached a settlement with New York Attorney General Elliot Spitzer over such allegations, and AIG is now responding to the NCCI lawsuit by claiming that their settlement with Spitzer precludes further action on the subject.  NCCI clearly disagrees.

It really is highly unusual (perhaps unprecedented) for NCCI to file suit against one of its member companies, and for a billion dollars, no less.  After all, NCCI is essentially owned by insurance companies, including AIG.  But AIG appears to have really ticked off the other insurers that make up NCCI--to the tune of a billion dollars.

Of course, it's one thing to make accusations in a lawsuit, and another to actually prove them.  Only time will tell how much merit there actually is to NCCI's allegations.  Whatever the outcome, the case may end up shedding light on some murky aspects of Assigned Risk Workers' Compensation that affect many smaller employers.

Stay tuned for further developments.  AIG's already tarnished reputation may be about to take another significant hit.  And if NCCI gets its way, so will AIG's bank balance.

Workers' Comp Insurers Have Record Year

May 10, 2007--The National Council on Compensation Insurance has announced that the Workers' Compensation insurance industry has had its best year in 30 years during 2006.  NCCI announced at its Annual Issues Symposium that the combined ratio for 2006 was 96.5, meaning that losses and expenses were 96.5 percent of premiums.  This is the first overall underwriting profit reported by the industry since 1995.  (Keep in mind, though, that insurers make a fair bit of money from their investments, money that isn't reflected in the combined ratio.)

A large factor in this has been the dramatic turnaround in the California market, where recent reforms appear to have the desired effect of reducing the claims costs there.  Overall, this is probably good news for employers as well, as it means that insurers will be more inclined to keep rates and premiums from rising, and probably be more competitive for business.  Increased competition normally translates into lower premium costs for employers, although the market for Workers' Comp can and does vary considerably from state to state.

South Carolina Rate Increases Proposed Again

May 3, 2007--The National Council on Compensation Insurance (NCCI) is proposing to again increase the Workers' Comp manual rates for South Carolina, this time by 23.7%.  This is on top of a double-digit increase at the end of last year, so it's no wonder SC employers are feeling a bit stressed.

NCCI is an independent organization with close ties to insurance companies (it's essentially owned by insurers, although operationally it is independent.)  And NCCI and member insurers have been fighting for years to increase the rates used for Workers' Comp in South Carolina.

Interestingly, our company performed a very interesting study of one aspect of South Carolina's Workers' Comp pricing last year.  We reviewed how the savings from that state's second injury fund were reflected in the experience mods of small employers.  Our findings were that most small businesses received no rate credit for reimbursements to their insurers from the second injury fund.

The question that hasn't been answered (to my knowledge at least) is whether or not NCCI's rate making system reflects this windfall to insurers.  Interestingly, the insurance companies have been lobbying to eliminate the second injury fund, as they object to the cost of the assessments made on them to fund the second injury fund.  But that doesn't answer the question of whether or not NCCI's rate calculations fully reflect the effect of higher premiums for small employers who don't get any benefit from reimbursements paid by the fund.

The only thing certain is that the political fighting over Workers' Comp rates in SC are far, far from over.

Study Finds Many NY Employers Evading WC

February 7, 2007--A report from a Florida consulting firm concludes that more than a quarter of New York state employers aren't paying the Workers' Comp premiums for their workers.  The study compared unemployment coverage with Workers' Compensation coverage, and found significant discrepancies.  The report also alleges that many employers misclassify workers to get lower rates and premiums.

If accurate, this report is certainly disturbing.  I haven't had the chance to read the details of the report, so I'm naturally curious to see if the consultants made proper allowances for self-insured employers and those who aren't required to obtain Workers' Comp insurance.  More information about the report is available here.

MO Decision on WC Benefits Upsets Business

January 22, 2007--The Missouri Supreme Court has ruled that certain Workers' Comp benefits don't end with the death of the worker.  Instead, benefits payable when a worker is ruled permanently and totally disabled should continue to surviving dependents.

Some business groups have expressed dismay over the ruling, fearing that it will lead to significant increases in Workers' Comp insurance rates in Missouri.  Missouri had only recently enacted changes in their Workers' Comp benefits that had been credited with producing lower rates.

It's difficult to tell at this early stage how much truth there is in those fears, and how much may be mere rhetoric.  Sometimes the anticipated effects of such rulings are greater than what actually materializes.  Employers are understandably concerned about anything that increases the already considerable cost of their Workers' Compensation insurance (as we here at AIM know well.)  At the moment, employers in Missouri are wondering just how much of an impact on insurance rates the insurance industry will make out of this ruling.

January 17, 2007--I recently read an excellent book on how the Workers' Compensation system came to be in the United States.  It's entitled The Accidental Republic, by John Fabian Witt, and it's a fascinating examination of how the modern system of Workers' Compensation arose, in somewhat abrupt fashion, early in the 20th century.  Definitely recommended for anyone with an interest in the American system of Workers' Comp and how and why it came to be.

Interview with AIM Founder Ed Priz

January 15, 2007--I recently was interviewed for a Webinar on contractorselling.com.  The wide-ranging interview covered recent developments in Workers' Compensation that affect contractors and other employers and can be heard here.  Thanks to Joe Crisara of contractorselling.com for doing such a great job with the interview. 

AIM Competitor Appears to Be Out of Business

January 1, 2007--Information from the Better Business Bureau indicates that WCA Consultants of Plainville, MA is no longer in business, although their website is still up and running.  According to a BBB reliability report dated 10/31/2006 that was recently forwarded to AIM, mail sent to WCA was returned by USPS as "business no longer in operation".

WCA Consultants, according to their website, offered services similar to those offered by AIM--to review Workers' Compensation insurance charges for employers to find and recover overcharges.  According to other reports on the internet, WCA charged independent contractors an upfront fee to become an sales representative for WCA.  According to these reports, WCA may have left a number of such independent representatives high and dry, having taken the upfront money but not producing refunds for the cases sent in.

If this information is accurate, it underscores something we have been stressing for a long time: it is vital to select a Workers' Comp review firm with care.  Since there is no regulation or licensing of such firms, anyone can create a website and claim to be an expert in this field.

2007 is the 20th year of Advanced Insurance Management helping employers to find and recover Workers' Compensation premium overcharges, making us one of the oldest and most experienced firms in this field.  Unlike many others (such as the apparently defunct WCA) Advanced Insurance Management is a member of the Better Business Bureau.

If your company has been waiting for the results of a WCA review of your Workers' Compensation insurance charges, it appears that you are not likely to be receiving any good news in the foreseeable future about refunds being forthcoming.  If you still think that a review of Workers' Comp charges by a competent professional is a good idea (and it is) you might consider letting AIM review your documents to see what potential there is for a refund.

Idaho WC Rates to Decline

December 27, 2006--Workers' Comp rates are set to decline in idaho in 2007, as the Idaho Department of Insurance has accepted an NCCI recomendation to reduce rates by 5.7% overall.  Insurers who wish to deviate further from these recommended rates must obtain the approval of the Idaho Department of Insurance, and a number of carriers (including the Idaho State Fund) have already obtained approval for deviations greater than the NCCI recommendation.

Class Action Settlement Over Loss-Sensitive WC Policies

November 11, 2006--A court in Georgia has approved a settlement in a class action lawsuit initiated years ago over certain Loss-Sensitive Workers' Compensation insurance policies written by a number of insurers from January 1, 1984 through December 31, 2003.  A settlement fund of $16 million has been approved, and any employer who had coverage from one of these policies can make claim for a portion of the money.

Details can be found at :

AIG to Refund $13.6 Million in Florida

October 2, 2006--American International Group is going to refund $13.6 million in Workers' Comp premium charges to Florida policyholders as part of a settlement with that state's insurance regulators.  The disputed charges were for Terrorism Risk Insurance Act coverage.  More than twenty states questioned the particular rate structure AIG used for this coverage, but only Florida was threatening to hold hearings on the subject.

Of course, if major insurers like AIG and Liberty Mutual get their way and are allowed the option of being federally chartered (as is being proposed in Congress) then they could get away from all this pesky state oversight of insurance rates.  And they've got their pet experts ready to swear that state oversight of insurance is inefficient (which it is, although they're working to reduce this) and harms consumers (which is a different argument altogether).  Inefficient it may be, but state oversight also provides invaluable limitations on the abilities of major insurers to overcharge policyholders--something that might well be sadly lacking in whatever federal oversight gets approved by the best national legislature money can buy.  And the insurance industry has plenty of money to spread around the halls of Congress for something as big as freeing them from state insurance regulations.

Welcome To The Jungle, 21st Century Style

September 15, 2006--Remember Upton Sinclair's book, The Jungle?  A lot of us read this famous muck-raking expose in school, as an example of the kind of workplace abuses that led to the creation of much of our modern regulatory apparatus to watchdog industrial food production.  And as we shuddered over the gruesome industrial landscape depicted in the book, we could at least take solace in the knowledge that nowadays such rank workplace malfeasance and abuse couldn't take place.  But it looks like we were wrong.

Sad to say, greed and indifference to human suffering have not been banished from our workplaces, in spite of all the regulations and lawsuits that have occurred since the days of The Jungle.  For proof, consider the sobering stories recounted in recent weeks in such publications as the Chicago Tribune and the McClatchy Washington Bureau,  about how employers hire undocumented immigrant workers to perform hazardous work, and how these workers are later unable to obtain  Workers' Compensation benefits when they are injured on the job. Sometimes the workers themselves are afraid to make the claims, sometimes insurance companies fight to deny them benefits on the grounds that their undocumented status means they are not eligible.

Thus the economic interests of unscrupulous employers and short-sighted insurance company practices combine to treat human beings as disposable, dispensable non-entities.  The anti-cruelty laws of most states would preclude treating animals in such a manner, but undocumented workers apparently have no such protections.  In the name of saving money, human beings are left crippled, maimed, burned, or dead, and the employers and insurance companies who are supposed to at least make compensation for such injuries laugh all the way to the bank.

Employers are certainly right to be concerned about the costs of Workers' Compensation insurance.  And insurance companies need to be vigilant against fraudulent claims.  But neither of those legitimate interests can be accepted as a license to exploit vulnerable people and leave them mangled and suffering, without recourse to the very Workers' Compensation system we have created to ease that suffering.  Clearly, we need to change our laws and our insurance regulatory system to end these practices, and we need to do it now.

South Carolina to Issue WC Refunds After All

August 26, 2006--The South Carolina Department of Insurance has reversed their earlier decision and has ordered insurers to make refunds to employers of premium overcharges that occurred due to ratemaking errors by NCCI.

Previously, the SC Department of Insurance had decided to allow insurers to make up for the overcharges by making adjustments to future rates.  But criticism from business groups in the state has led regulators to change their minds and mandate refunds to employers in the state.

Regular readers of this page may remember that AIM has been active in spotlighting the errors by NCCI over several past years that caused rates for some classifications in a number of states to have been miscalculated.  Originally, NCCI and the National Association of Insurance Commissioners had attempted to keep these ratemaking errors by NCCI low-profile.

For more information about this story, scroll down and take a look at earlier entries on this subject in CompWatch.  For more information on the South Carolina story, check here. 

New York Says 'No' to WC Rate Hikes

July 19, 2006--New York Insurance Superintendent Howard Mills has denied insurers' request for a 7.5% rate increase, an increase that the New York Compensation Insurance Rating Board had calculated was warranted based on reported claims data.  Mills has stated that he feels the insurance industry's anti-fraud efforts in New York have been "anemic", and that the requested rate hike was not justified.

New York has been experiencing overall rate increases for the past several years, and so pressure has been building as the various players in the Workers' Comp tug-of-war (labor, business, medical providers, and insurers) struggle to resolve their competing interests.

Balancing those interests is usually not easy.  If insurers feel that rates are inadequate, they always have the option to reduce their underwriting of voluntary market business in a particular state, putting pressure on assigned risk programs or, in the case of New York, the State Fund.  And that can have unpleasant consequences for employers that are just as painful as rate increases.

Buffett (Warren, not Jimmy) Buys 2 Workers' Comp Companies

July 19, 2006--Warren Buffet's Berkshire Hathaway operation has announced it is acquiring a pair of California Workers' Compensation companies: American All-Risk Insurance Services (AARIS) and American Commercial Claim Administrators (ACCA).  These two companies had been part of Acacia Pacific Holdings, which will continue to operate separately.

This purchase is being hailed in the press as evidence that Mr. Buffett (AKA the Wizard of Omaha for his investing acumen) is betting that California Workers' Comp will be a profitable line of business now that significant reforms have been enacted to hold down claims costs.

The press releases note that AARIS and ACCA will continue to be managed by Rob Darby, who has run them since 2005.  But if Mr. Buffett wants to maintain his reputation as a straight-shooter, he might want to take a closer look at how AARIS operates, at least in some aspects of its business.  We here at AIM have had recent dealings with AARIS, and found one aspect of their way of doing business to be troubling and questionable.

When we contacted AARIS to point out some errors in the Workers' Compensation audit for a client, AARIS personnel refused to let us talk to the audit manager--refused to even divulge his or her name.  They repeatedly insisted we would have to talk to the agent about any audit questions.  Worse, they gave the same brush-off to the policyholder, when he contacted AARIS.  Imagine, a Workers' Comp carrier who refuses to let the policyholder talk to the audit manager about how audited premiums were calculated!  It's unheard of, and in our view utterly improper and unethical.  AARIS gave the policyholder the same line of B.S. they had given A.I.M.--that they would have to bring any questions about the audit to the agent who had written the policy.

The problem with that is that agents don't have any authority to do anything about an audit.  And when we got the agent to agree that she could do nothing about the audit, we returned to AARIS, threatening to take the matter to the California Department of Insurance.  Only then were we able to even talk to the audit manager. 

Refusing to allow policyholders access to company personnel to discuss how an audit was performed is not common industry practice.  It deprives policyholders of the ability to work out problems with audits with the company personnel who have authority to actually correct any mistakes in the audit.  In our view, it is the ultimate in insurance company disrespect for their customer. 

Mr. Buffett has earned a legendary status as an investor and, more recently, as a philanthropist.  But he might want to have a little talk with the people over at AARIS about how they handle customers who need to discuss their Workers' Comp audits.  The current company policy of giving policyholders the silent treatment simply isn't good business.

More States Announce WC Refunds Over NCCI Rate Miscalculation

June 30, 2006--Virginia has just announced that employers in that state will receive over $1,000,000 in refunds of Workers' Compensation premium overcharges that resulted from the National Council on Compensation Insurance (NCCI) having miscalculated Workers' Comp rates for the past few years.  A computer error on the part of NCCI caused payroll information for a number of classifications to not be counted when NCCI made rate calculations.  It appears that this computer error has affected rates in every state where NCCI provides rates (36 states currently.)

A few weeks ago, AIM helped bring this story to light, when we reported that several states had announced retroactive rate reductions, going back to 2003.  Further investigation revealed that the problem was widespread, with some states requiring retroactive refunds, while other states had opted to adjust future rates to make up for the NCCI error.

This story has become an area of contention in South Carolina in particular, where NCCI and the state's insurance department have been pushing for significant rate increases that are opposed by some business and consumer groups.  It turns out that in an April hearing, NCCI and South Carolina insurance regulators had told a judge that there was no reason to question NCCI's ratemaking methodology or expertise, even though this major error by NCCI was known at that time.  Opponents of the rate increase are now requesting that rate hearings be reopened in light of this new information.  South Carolina is one of the states that opted to not require retroactive refunds to correct for the NCCI errors, and that decision is also now coming under fire by business groups and South Carolina's Department of Consumer Affairs.

What's Good For The Goose--or, Why No Prosecutions of Insurance Executives for Fraud?

June 21, 2006---There's a very interesting news item in yesterday's online edition of The National Underwriter,  where Senator Arlen Spector raises a question that's been on my mind lately: why were there no criminal prosecutions of insurance company executives who for years cheated states out of legally required assessments by reporting Workers' Compensation premiums as other kinds of insurance.  In recent years, the insurance industry has successfully pushed for increased criminal prosecutions of employers who (in the view of insurers) deliberately and fraudulently lowered Workers' Comp premiums by giving false information about payrolls or working conditions.  But when insurance companies engage in massive fraud of their own (as was apparently done over the misreporting of WC premium as other insurance) the insurance companies just pay some fines and expect everyone to forgive and forget.

Senator Spector reportedly argues that if the states aren't going to pursue criminal prosecutions in such cases, then the feds should step in.  And he's proposing that the federal government enact legislation to enable them to do just that.

Although it was AIG that reached a very large and very public settlement with New York Attorney General Elliot Spitzer over this misreporting of WC premiums, AIG was far from the only insurer to engage in this fraud.  But because many states' regulation of insurance companies is hobbled by (intentional) lack of funding and manpower, the insurance industry has gotten accustomed to being able to get away with the very kinds of misbehavior it decries in claimants and policyholders.

Perhaps the situation has finally gotten so rank, so abusive, that the federal authorities will have no choice but to step in.  The lackluster regulation currently being performed by many state regulators may leave them little choice.

NCCI Adjusting Some Rates Retroactively

June 15, 2006--The National Council on Compensation Insurance (NCCI) does the behind-the-scenes actuarial work that goes into Workers' Comp rates used in many (but not all) states.  In an unusual move, NCCI has been retroactively revising the rates used for a number of classifications in some states. 

Last June, Maine announced that a number of classifications were having their NCCI-calculated rates retroactively revised downwards, effective back to 2003.  Now Illinois and Missouri have made similar announcements, although affecting different classification codes.  And it appears that these retroactive rate reductions will not be happening in just Illinois, Missouri, and Maine, but that similar revisions are in the works for other states as well.

At the moment, details about this are a little hard to come by.  Insurance regulators and NCCI seem to be playing this matter close to their respective vests.  We'll update information on this developing story as we can unearth it.

WC Market Finally Softening

June 14, 2006--A recent survey of the national market for Workers' Compensation insurance has found that conditions are finally softening, after years of hard market conditions.  Market conditions for other lines of commercial insurance had softened earlier, but it was only in the last quarter of 2005 that Workers' Comp renewals appear to have softened generally.  Of course, this comes after very large premium increases experienced by many employers since late 2001 and early 2002, so any softening of prices only represents a ratcheting down by insurers from premiums that were at historic highs.  Still, any relief has to be good news to employers, many of whom have been pushed to the brink in recent years by the skyrocketing cost of their Workers' Comp coverage. 

It's not only market conditions that are contributing to this reversal, it's also that a number of states have enacted changes in their benefits structures that have yielded decreases in manual rates (California is a notable example.)

Ohio Comp Official Pleads Guilty

June 2, 2006--It hasn't been a good week for Terence Gasper, the former head of Ohio's monopoly state fund for Workers' Compensation coverage.  In fact, the past couple of months have probably been pretty crappy.  He's just pled guilty to state fraud charges over his mismanagement of the fund  (he's the genius who directed the fund to invest in a "rare coins" fund operated by Republican fellow-traveler Tom Noe (who has also been convicted in the scheme).  It turns out that Mr. Gasper was up for sale, at least according to published reports of his plea deal, accepting all kinds of bribes in return for investing the fund's money in various and sundry places.

Other published reports indicate that the Feds plan to press charges against Mr. Gasper next week over his management of the Ohio fund.

In spite of all the various drawbacks and problems with private insurance for Workers' Compensation insurance, this scandal makes insurance companies look like saints in comparison (and that's not easy to do.)  This case makes a powerful argument that mixing politics with Workers' Compensation coverage is a recipe for disaster.  It makes one wonder of Ohio's long history of relying on a monopoly state fund might finally be seriously reconsidered.

California Insurer Lowering WC Rates

June 2, 2006--A day after California's Insurance Commissioner called for insurers to reduce Workers' Comp rates by just over 16%, the largest WC insurer, State Compensation Insurance Fund (SCIF) announced rate reductions of 10%.  This should certainly be welcomed by California employers--at least those who haven't closed their doors or fled the state over the skyrocketing costs of California Workers' Comp in recent years.

SCIF and other carriers have indeed been ratcheting rates downwards in recent years, but only after employers saw their premiums explode (and their choice of insurers implode) after a poorly-executed deregulation of WC insurance a decade ago.

California to Require Workers' Comp For All Roofers

May 26, 2006--California Governor Arnold Schwarzenegger has signed new legislation requiring all roofers in the state of California to carry Workers' Compensation insurance.  Previously many roofers claimed exemption from the requirement to carry Workers' Comp, because California (like many states) exempted sole proprietors and partners from the requirement of carrying Workers' Compensation insurance.  Critics have long claimed that many contractors improperly claimed such exemptions, avoiding premiums that were legitimately owed.  The new legislation requires that all roofers in California be able to prove valid Workers' Compensation coverage, or else have their roofing licenses revoked.

Sponsors of the new law claim that abuses of the old exemptions were widespread, placing roofers who followed the rules at a competitive disadvantage and placing workers at risk.

Spitzer Now Taking Aim at Liberty Mutual

May 8, 2006--New York state Attorney General Elliott Spitzer is now filing complaints against Liberty Mutual, the largest writer of Workers' Compensation insurance in the U.S.  Spitzer has already successfully obtained significant settlements from such insurance luminaries as Marsh & Mclennan, AIG, Zurich Insurance, and ACE, over allegations of bid-rigging and other improprieties.  But Liberty says they are going to fight rather than settle with Mr. Spitzer.

The New York AG charges that Liberty provided deliberately poor quotes to Marsh in order to help Marsh steer business to other insurers that paid so-called "contingent commissions" to Marsh.

Insurance Company Says Cash Paid to Worker Not "Wages"

May 2, 2006--Just when I thought I had heard it all, along comes a news report that seems to document an insurance company living down to the worst expectations of industry critics.  According to a news item in the St. Petersburg Times, St. Paul Travelers insurance is paying medical benefits but not indemnity for lost wages for Alfonso Escobar, because Escobar was paid cash by his employer.  Escobar survived a three-story fall while installing drywall in Florida, but is now discovering that while St. Paul Travelers is one of the largest insurance companies in the world, it isn't above trying to weasel out of its obligations to an injured worker.

Now, when it comes time to counting "remuneration" for calculating premiums, you can bet your life that St. Paul Travelers counts cash payments to workers.  But when it comes to paying out benefits to some guy who's foolish enough to actually work for a living (as opposed to being an insurance company executive) there apparently is no argument too low, too unseemly, too hypocritical, for St. Paul Travelers to resist in order to save a little money.

Former Rhode Island State Fund Hit by Scandal

April 14, 2006--Beacon Mutual is an insurance company that was formed out of the former Rhode Island State Compensation Insurance Fund, a Workers' Comp state fund that competed with insurers.  It got morphed into a private insurance company back in the mid-1990's.  Now R.I. Governor Carcieri is demanding the resignation of Beacon's president and vice president for underwriting, as well as the resignation of all board members serving since the company's inception.  It's being reported that Beacon gave illegal price breaks to some employers (including one owned by a former board chairman) at the expense of other insureds.

The governor is also demanding that Beacon cooperate with a forensic audit by regulators.

Beacon Mutual is currently the largest writer of Workers' Compensation insurance in the state of Rhode island.

NCCI & Insurers Sneak One Past Everyone

March 1, 2006--AIM has learned that the National Council on Compensation Insurance (NCCI) and the Workers' Compensation insurance industry managed to sneak one past everyone a few years ago, in a subtle but important change in the language of the experience rating manual that governs calculation of experience modification factors in most states.

Experience modification factors are supposed to be calculated based, in part,  on prior years' audited payroll and classifications.  And so if a classification code is changed from one policy to the next, the new policy's experience modifier is supposed to be revised so that the modifier uses the same classification as is used on the policy to compute manual premium.  In other words, there has always been a reciprocal relationship between the classification used on the policy and the experience modifier.

A more expensive classification will usually produce a lower modifier (all other things being equal).  That's because the modifier uses Expected Loss Ratio (ELR) factors that vary from class to class, just like the rates on the policy do.  A more expensive class also has a higher ELR, and this makes the modifier lower.  (See our explanation of experience rating for more detail.)

But a few years ago, NCCI introduced a subtle change in the language of their Experience Rating Manual.  Where once the manual said that modifiers "shall" be revised when classifications are changed, the manual now reads that modifiers "may" be revised when the classification is changed.

And recently, NCCI has begun revealing the importance of that word change. 

AIM has just learned that NCCI is now interpreting the new manual rule so that a policyholder has to get the written permission from their insurance company before NCCI will revise a modifier to be consistent with a change in classification.  In effect, this gives the insurance company a veto over a policyholder getting the modifier revised.

In the past, this author has occasionally been criticized by some folks at NCCI for being (in their view) overly critical of NCCI.  And certainly there are many fine, ethical, and expert people working at NCCI.  I've been privileged to know some of them over the years, and I can personally attest to their integrity and fairness.  But this latest change in experience mod rules exemplifies the institutional mindset that makes NCCI so problematic in the eyes of outsiders: there appears to be bias in favor of insurance companies over policyholders inherent in their rulemaking.

NCCI manual rules are subject to the review and approval of the insurance regulators in each state.  Concerned employers should express their views on this change in NCCI rules to the insurance regulators in their particular states.  We list a directory of state insurance regulators here, for those inclined to express themselves.  In the meantime, AIM is also communicating with insurance regulators and business organizations that may have an interest in this development.

West Virginia Looking for $1.89 Million from Employers

February 28, 2006--According to a report in the Insurance Journal, West Virginia's new private insurer, Brickstreet Mutual, has more than $1,890,000 in outstanding Workers' Comp premium charges it is seeking to collect from employers.  West Virginia has just transitioned away from a monopoly state fund for Workers' Compensation, transforming the former state fund into Brickstreet Mutual.  That insurer is still the only source for Workers' Comp in the state, as insurance competition isn't scheduled to be introduced until some time in the future.  But at the moment, it appears that some 1,794 WV employers have some unpleasant bills in the mail.

As always, we would suggest that employers review those bills carefully,  Whenever Workers' Comp insurers are pushing to get money in the door, mistakes sometimes get made in the details.  Some of that $1,890,000 in additional premium that's being sought might be based on errors in classification, experience rating, or payroll audits.  That's been our experience, anyway, through more than twenty years of reviewing audit bills from insurers.  As Ronald Reagan once said, "Trust, but verify."

California Unveils New Website to Fight WC Fraud

February 2, 2006--California's Department of Insurance has announced a new feature of their website that highlights recent convictions for Workers' Compensation fraud.  This is in response to recent legislation in California.  The site lists information about those recently convicted in California for Workers' Compensation fraud.  This is an area of prosecution that is being increasingly targeted by many states, not just California.  Employers generally support such efforts, as fraudulent claim activity is a particularly galling source of increased Workers' Comp costs for employers.  But the recent increase in law enforcement attention to this area doesn't just focus on workers---many employers are also being accused of fraudulently decreasing their Workers' Comp premiums, or of not having Workers' Comp at all when they are actually required to have it.  So more than ever, employers have to make sure they are not trying reducing their Workers' Comp costs in a manner that could open them up to charges of fraud.

This can be a tricky area for employers, as there is always considerable pressure to try to hold down the cost of Workers' Compensation coverage.  Helping employers reduce such costs legitimately is one of the primary services that Advanced Insurance Management provides, through our CompControlSM review. 

A Brave New World for West Virginia

December 30, 2005--Employers in West Virginia are about to enter what is, for them, a brave new world: private insurance for Workers' Compensation.  For as long as this writer has been involved with Workers' Compensation (almost thirty years now) West Virginia was part of the litany that insurance people memorized regarding the six states that maintained "monopoly" state funds for Workers' Comp.  Nevada left the clan a year or two ago, and now West Virginia is following suit.

With the New Year, West Virginia's former Workers' Compensation Commission (their state fund) will morph into BrickStreet Mutual Insurance company, an employer owned mutual insurance company that will initially continue to have a monopoly on writing Workers' Comp in the state.  Then in 2008, full competition will be allowed, with other insurers being allowed to write Workers' Compensation insurance.

Employers have high hopes that these changes will resolve longstanding problems with West Virginia's Workers' Comp system.  The new monopoly insurer (for the next two years, at any rate) has information available about the new system at www.brickstreet.com.

Bankruptcy & Workers' Comp Premiums

December 2, 2005--There's a dispute going on in the federal courts over whether or not unpaid Workers' Compensation insurance premiums should be given priority in bankruptcy proceedings as "contributions to an employee benefit plan."  The U.S. Supreme Court has now agreed to decide whether or not unpaid Workers' Comp insurance premiums constitute contributions to an employee benefit plan, and thus should be given priority or not.  In the past, unpaid WC premiums were not held to be such contributions, but  recent appeals court rulings have held otherwise, and so now the issue will be decided by the Supremes.

It seems to this observer that the earlier court rulings made more sense--that payments to a Workers' Compensation insurer aren't really contributions to an employee benefit plan, as that term is generally understood.  Granting this new status to unpaid Workers' Comp premiums doesn't really benefit employees, the way that contributions to health and pension plans do.  Instead, this new interpretation really only directly benefits insurance companies, who are responsible for paying claims under a policy whether or not all the premium has been paid to them. More detailed information can be found here.

The Supreme Court should be resolving the issue sometime in the first part of 2006. 

Missouri WC 'Reforms' Challenged

December 1, 2005--Missouri's new Worker's Compensation law is being challenged in court by labor groups as going too far in limiting workers' rights to compensation for workplace injury.  The new law took effect August 28 of this year, and makes a number of changes related to what constitutes compensable workplace injury.  The goal was to reduce Missouri's Workers' Compensation costs for employers, but a number of groups representing workers claim that the new law goes too far in limiting the right of a worker to be compensated for workplace injury.  The new law makes it more difficult to establish than an injury or illness is work related, and also reduces the compensation payable to workers who fail to wear safety equipment or follow safety guidelines.  More details about the dispute can be found here.

Workers Comp is always a bit of a political football, with competing interests pushing their agendas thru state legislatures.  The entire concept of Workers' Compensation is a compromise intended to make sure injured workers are taken care of while limiting liabilities of employers to manageable levels.  Finding the right balance isn't always easy--but getting a decent and workable balance is critical.  Only time (and the courts) will tell if this new Missouri effort has gone too far in one direction and lost that crucial balance.

Major South Carolina Work Comp Insurer To Stop Writing New Policies

November 21, 2005--Companion Property and Casualty has announced that it plans to stop writing new Workers' Compensation policies in South Carolina in the next month.  Companion is one of the largest writers of Workers' Comp insurance in South Carolina, and this decision will likely produce some significant difficulties for employers there.  According to the South Carolina Small Business Chamber of Commerce, the insurer is seeking higher rates in the state, along with changes in the state's insurance laws.

Something curious seems to be brewing down in SC.  Earlier this month, the South Carolina Department of Insurance fired a long-time employee who was considered a rate expert, after he criticized the latest proposal for higher Workers' Comp rates.  Employers there might want to watch the situation very closely, as it sounds as if powerful pressure is being applied to increase Workers' Compensation rates in their state.

South Carolina Insurance Regulators Fire Expert Who Criticized NCCI

November 10, 2005--According to a report on the AP, the South Carolina Department of Insurance has fired their own in-house expert on rates and risks after he was critical of how NCCI (The National Council on Compensation Insurance, an insurance industry rating bureau) developed rating information used to set Workers' Comp insurance rates in South Carolina.

I'm sure employers in South Carolina are relieved that NCCI has been protected from criticism over their ratemaking expertise.  After all, one can't have the department of insurance getting too independent, can one? 

Oregon Woman Fights Farmers Insurance & Wins

October 20, 2005--Ethel Adams has finally gotten Farmers Insurance to pay for injuries she suffered in a terrible auto accident.  And it only took newspaper articles, outraged citizens contacting regulators and legislators, and an order from the Insurance Commissioner to get Farmers to reconsider their earlier denial of coverage.

You see, Ethel Adams was severely injured when an angry driver rammed his pickup truck into his girlfriend's car, which then rammed Ms. Adams' vehicle.  Until all the publicity, Farmers had denied coverage by claiming that because the action by the angry boyfriend was deliberate, the incident couldn't be considered an accident, and thus Farmers' didn't have to pay.

Ms. Adams didn't file a complaint with her state's insurance commissioner, but lot of other people did, once they read about the story.  Lots of people also let Farmers' know they would be moving their own coverage away from Farmers', as they didn't want to do business with such an insurer.  And ultimately, insurance commissioner Mike Kreidler ordered Farmers' to pay up.

This story not only illustrates how wrong-headed insurance companies can sometimes be, it also demonstrates how important it is to have effective insurance regulation.  A point that appears to be lost on Illinois Governor Rod Blagojevich, who is in the process of dismantling insurance regulation in Illinois (see story of September 29, further below).

Ms. Adams can be grateful, I suppose, that she lived in Oregon and not Illinois.

Cleanup of Kentucky Workers Comp Mess Proposed

October 6, 2005--The Kentucky Office of Insurance reports than an agreement has been reached to bail out the AIK workers compensation fund.  This was a group self insurance fund that was widely marketed to Kentucky employers as an alternative to traditional insurance policies, an alternative that offered lower rates and premiums.  Many employers who participated, however, are only now learning to their regret just how high the ultimate cost of this program truly was.

Like many group self-insurance programs, the rates charged participating employers were unrealistically low, and the program ultimately couldn't pay all the claims of participating employers.  The fund is now no longer taking on new employers, and is struggling to pay off the claims it's already responsible for.

As many employers elsewhere have also learned about these group self-insurance programs, participants can be held liable for the overall deficit of the group.  Employers in Kentucky who participated in the AIK program are now being asked to pay large assessments to cover the costs of winding down the program.

Group self-insurance programs seemed like a viable alternative to traditional Workers' Compensation insurance, but so many of them have met fates like that of the AIK program that one has to wonder if the rate reductions offered are ever worth the risks inherent in these programs.  So many of these group self insurance programs have failed and left participants with costly assessments that any employer would be well advised to think long and hard before jumping at the lower rates and premiums offered by such programs.  The history of these funds is that  many of them have been poorly run and regulated.  Worse, they were often marketed to unsophisticated employers as being the same as "regular" Workers' Compensation insurance coverage, without having the potential pitfalls adequately explained.  Only in the wake of failed self-insurance programs have many employers learned of the risk they were taking by participating.

Spitzer Strikes Again

September 29, 2005--New York Attorney General Elliott Spitzer has now broadened his investigation of St. Paul Travelers insurance.  Reportedly, Mr. Spitzer has issued additional subpoenas, seeking information about the reporting of Workers' Compensation premiums.  This is after earlier reports that AIG deliberately misreported millions of dollars of Workers' Compensation insurance premiums as being for other kinds of insurance, to avoid paying assessments to various states that are levied on Workers' Compensation insurance premiums.

Apparently, Mr. Spitzer suspects this devious practice was not confined solely to AIG.

Even before this latest change, Illinois insurance regulators had seen their regulatory efforts curtailed by budget cuts and staff reductions.  Now a bad situation is about to get even worse.  It makes one wonder just how much did the insurance industry have to contribute to Mr. Blagojevich's campaign coffers to get this 'reform' governor to reform insurance regulation out of existence in Illinois.  Whatever the cost, it would appear they're getting their money's worth.

Scandal After Scandal at AIG

August 2, 2005--There has been an astonishing string of scandals associated with American International Group, better known as AIG Insurance.  The latest: a group of 18 reinsurers has sued AIG, claiming that there was a scheme on the part of AIG to collect some $73 million in "grossly inflated" workers compensation claims and other reinsured claims.

And there is the devastating article in the current Fortune magazine, detailing how AIG allegedly defrauded states of millions of dollars by mischaracterizing Workers' Compensation premiums as other lines of insurance.  The article further states that former AIG chief Maurice "Hank" Greenberg knew of this scheme and allowed it to take place.  The article says that AIG's general counsel resigned after only eight months on the job when Greenberg declined to take action after the matter was formally brought to his attention. 

And of course, AIG has been in the thick of the recent scandal over "finite reinsurance", and has had to restate earnings for the past five years to the tune of $3.9 billion.  AIG was also involved in the earlier "contingent commissions" scandal unearthed by New York attorney general Elliot Spitzer.  And years before Mr. Spitzer came along, AIG had been involved in a major scandal involving improper reinsurance arrangements with a Bermuda reinsurance company set up and controlled by AIG, but never acknowledged or reported to be an affiliated company.  The Fortune article alleges that Mr. Greenberg sent out private investigators to talk to neighbors of some of the insurance regulators who had dared to dig into this improper arrangement, in an apparent attempt at intimidation. 

By many accounts, Greenberg was an imperious and arrogant tycoon, who encouraged the view that it was his "genius" that enabled AIG to outperform other insurers during the decades of his control.  It would now appear that there was something at work here in addition to Greenberg's  obvious business talent.

Greenberg could be an overbearing tyrant to work for, according to many accounts, but also could exhibit intense loyalty to employees above and beyond the call of duty.  He reportedly spent $1,000,000 to save an AIG executive from an Iranian prison after Khomeini's regime had taken over.  A veteran of D-Day, Greenberg brought a similar toughness and ruthlessness to his management of AIG, overwhelming state insurance regulators with the Byzantine complexity of his empire.

Many years ago, this writer had occasion to work at an insurance brokerage where the principal refused to place business with AIG.  It was his personal opinion that AIG couldn't be relied upon as a trustworthy partner, and he refused to place business there.  I've never had any personal experience with anything improper done by AIG, but I always respected the wisdom and acumen of that individual I worked for.  It would appear, based on the past year's news reports about AIG's inner workings, that his reservations about AIG were not completely unfounded.

The lesson to be gleaned from this and other insurance scandals, for those not in denial about the insurance industry, is that much more vigilant oversight and regulation is obviously needed.  Whether that oversight is provided by state or federal regulators, or some partnership of the two, it seems clear to this writer that the current system has allowed some large insurers and brokers to take unfair and improper advantage of policyholders.  It should be clear by now that these are not isolated incidents, but symptoms of a systemic problem.

Ohio Workers' Comp Fund Scandal Still Growing

June 27, 2005--It looks like the folks who run Ohio's monopolistic state fund for Workers Compensation have even more explaining to do than earlier thought.  Not only did they invest money in some cockamamie "rare coin fund" run by some political crony, (and who now cannot even find all the coins Ohio had purchased with their money) but they also made apparently injudicious investments in hedge funds and venture capital funds, and have lost money in the process.

Keep in mind, the Ohio Workers Comp fund is playing with the money that is supposed to pay injured and disabled workers.  Also keep in mind that in Ohio, employers can't choose between competing private insurers but instead are obligated to get their coverage from the fund operated by the state of Ohio.

Private insurers, for all their faults and follies, would not have been able to make such speculative investments, as they are subject to regulatory oversight.  The oversight of Ohio's Workers' Comp fund has been, in contrast, apparently less than vigilant.

The good news for employers out of all this mess is that it might be the final straw that ends the monopoly status of the Ohio Workers Compensation fund.   Only time will tell, of course, but the abuses being reported in the Ohio press are pretty alarming, and the combined pressure from political opponents and outraged employers and workers might just be enough to force some changes in the Buckeye State.

Feds Pushing Hard to Take Over Insurance Regulation

State insurance regulators need to do a better job in many cases--that's been clearly demonstrated by recent scandals in the insurance industry.  But federal regulation just might result in insurers being more free to charge "what the market will bear" than ever, and that prospect has to be chilling to any employer.  Bad as the "hard market" has been, it could be much, much worse if insurers get to avoid existing state regulations.

Maine Announces Retroactive Rate Reductions for Some Classifications

June 1, 2005--the state of Maine has announced that rates for 29 Workers' Compensation classifications are being retroactively reduced.  An error by NCCI in calculating rates for these classifications resulted in rates higher than they should have been for the years 2003 through 2005.  A list of the affected classifications is available here.

Spitzer a "Corporate Terrorist", Says Insurance Lobbyist

June 1, 2005--Ernie Csiszar, president and chief executive officer of the Property Casualty Insurers Association of America, has compared crusading New York Attorney General Elliot Spitzer to both Eugene McCarthy and to terrorists.  Csizar has called Spitzer a "corporate terrorist" who uses McCarthy-like tactics against the insurance industry.

While acknowledging that Spitzer has found practices in the insurance industry that are "despicable", Csiszar feels that Spitzer has his own conflicts of interest, due to Spitzer's announced candidacy for governor of New York.

Let's see--if Spitzer is a corporate terrorist, does that make the insurance industry a corporate mafia?  Or maybe corporate Nazis?  Here's a modest proposal--how about we try to avoid violent metaphors to decry business behavior we don't like?  Terrorists murder innocent men, women, and children.  They fly airplanes full of terrified people into buildings full of other innocent people.  Mr. Csiszar may not like the efforts of Mr. Spitzer to clean up the insurance industry, or Mr. Spitzer's methods, but calling him a "corporate terrorist" is an obscene blurring of important distinctions.

There's a bumper sticker that Mr. Csiszar might want to keep in mind before making any more public pronouncements: "Engage brain before operating mouth".