RECORDS OF MEETING
CLAIMS ADVISORY COMMITTEE
A meeting of the Claims Advisory Committee was held at the offices of Commonwealth Automobile Reinsurers, 100 Summer Street, Boston on
WEDNESDAY SEPTEMBER 13, 2000 AT 9:30a.m.
Members present -
Ms. Kathleen H. Devericks – Chairman
The Premier Insurance Company of Mass
Mr. Frank P. ArmentPlymouth Rock Assurance Corporation
Mr. Ray DeSantis The Commerce Insurance Company
Mr. James D. DohertyDoherty Insurance Agency
Mr. Josiah Hatch*H.R. Hatch Insurance
Mr. Robert J. KertonSafety Insurance Company
Mr. Dana C. MarchantCGU
Mr. James MutschlerLiberty Mutual Group
Mr. Joseph Pedi Metropolitan Property & Casualty Ins. Co.
Mr. Robert M. PuopoloAmica Mutual Insurance Company
Mr. Thomas J. RaherNational Grange Mutual Insurance Company
Ms. Joyce A. SmithCommonwealth Mutual Insurance Company
Mr. Steve Jacobs***Arbella Mutual Insurance Company
Mr. Max Wickemeyer**The Hanover Insurance Company
Mr. Robert D. Woods, Jr.CNA Personal Insurance
*Substitution for Ms. Nancy Z. BenderNancy Z. Bender Insurance Agency, Inc
**Substitution for Mr. Francis N. DelageThe Hanover Insurance Company
***Substitution for Ms. Sheela VenkatArbella Mutual Insurance Company
Records of Meeting-1-September 13, 2000
Claims Advisory Committee
CAR Staff present -
Ms. Valerie B. GedziunVice President – Claims
Mr. Robert BellClaims Manager
Mr. Paul CorsettiDirector of Communications
Ms. Susan BasilescoDirector of Financial Services
Ms. Natalie HubleySenior Manager of Actuarial and Statistical Services
Mr. Richard DaltonSenior Claims Examiner
Mr. Anthony KeeganClaims Examiner
Mr. John LaprimeSenior Claims Examiner
Ms. Suzanne RiddleClaims Analyst
Also present –
Mr. Thomas AmanPremier Insurance Company
Ms. Kausor BhattiEmpire Insurance Company
Mr. John DelanoPilgrim Insurance Company
Ms. Rose DiCoreletoLiberty Mutual Group
Mr. Paul GulkoMass. Insurers Insolvency Fund
Mr. Mark HollmenInsurance Times
Mr. Joseph HaswellNorfolk and Dedham
Mr. David KrupaSafety Insurance Company
Mr. Thomas LeonardPremier Insurance Company
Mr. James LynchQuincy Mutual Insurance Company
Mr. Joseph RogersLiberty Mutual Group
Ms. Andrea SpectorThe Standard
Mr. Josh StirlingPGR
Mr. Robert TibboHolyoke Mutual Insurance Company
Mr. James WinskowiczMass. Insurers Insolvency Fund
Mr. William ZukasQuincy Mutual Insurance Company
Claims Advisory Committee Chairman Ms. Kathleen H. Devericks called the meeting to order at
9:30 a.m.
CA
00. 01Records of Previous Meeting
A motion was made by Mr. Doherty and seconded by Mr. Raher to approve the Records of the Claims Advisory Committee meeting of June 7, 2000 as written. The motion passed unanimously.
CA
00.02Guaranty Fund Management Services
Ms. Devericks introduced Mr. Paul Gulko, President of Guaranty Fund Management Services, which administers the Massachusetts Insurers Insolvency Fund (“the Fund”) and Mr. James Winskowicz, Senior Vice President of Claims.
CA
00.02Guaranty Fund Management Services (Continued)
Mr. Gulko said the Fund has participated in numerous insolvencies over the years. He explained that it is the Fund's obligation to pay certain claims of insolvent insurers. The Fund does not pay if it is for the benefit of a solvent insurer. Thus, in the case of an auto insurance insolvency, a claimant has to exhaust his or her uninsured motorist coverage.
The Fund receives its money from assessing solvent insurers. Unlike other jurisdictions, in Massachusetts, there is one pool that is made of assessments from carriers writing automobile, workers compensation and all other lines. When an assessment is made due to an insolvency the amount is spread out among all of the property and casualty insurers in Massachusetts writing covered lines, regardless of the line of the insolvent insurer. The initial assessment is anticipated to be 30 to 40 million.
Mr. Gulko said initially the Fund inherited 13,000 claims and letters have gone out to all Trust claimants telling them to exhaust all other available coverages before attempting to collect from the Fund. A Bodily Injury claim that was to be made against a Trust policy now triggers the Uninsured Motorist coverage of a carrier's insured.
He said the Receiver went to court and got approval for claims and unearned premium obligations incurred by Trust for the time period of February 10th to August 1st of 2000 to be deemed to be administrative expenses to be paid directly by Trust. Since then, however, it has been determined that the Fund will also handle those claims. As a result, the Fund will be picking up those losses as well and the companies will have additional Uninsured Motorist claims to pay. They anticipate another five to six thousand claims. Currently approximately 50 people are working at the Fund.
Mr. Winskowicz reviewed the mechanics that have occurred since the insolvency was declared. The Fund has sent letters to individuals with claims against Trust informing them that all other available coverage must be exhausted. As of now this applies to claims between February 10th 2000 and August 1st 2000 as well. The Fund must make sure a claim is a covered claim, that no other insurance applies, and that the claim is paid properly. He explained that one of the benefits the Fund is currently receiving is that there is now a stay of proceedings in litigated cases that allows the Fund six months time to review the claims. Thus, it is important for companies participating in joint tort settlements or Uninsured Motorist claims to cooperate and put off the final settlement.
Addressing the issue of subrogation against Trust, Mr. Winskowicz said neither Trust nor the Fund can pay anything in subrogation as no payment can be made that is to the benefit of an insurer. In addition, before payment is made on P.I.P. claims the insureds must provide an affidavit that says there is no other P.I.P. in the household that applies and no health insurance is available.
Mr. Woods asked about payment of the insureds' deductible. Mr. Winskowicz said that no payment can be made to the benefit of an insurer. Thus, if the deductible has not been waived, the Fund will handle that portion of the claim because payment will not be to the benefit of an other insurer. He indicated some carriers will waive a deductible and absorb the cost as an accommodation to their insureds while others will not waive the deductible and try to recover what ever they can.
Mr. Mutschler asked if the company could file for the deductible on behalf of their customers without paying the deductible. Mr. Winskowicz said as long as the company has not made payment this could be done.
CA
00.02Guaranty Fund Management Services (Continued)
Mr. Woods inquired about claims against the Receiver. Mr. Gulko said companies will have the ability to file a Proof of Claim for losses they incur due to the insolvency. Proof of Claim Forms should be requested from the Receiver.
Mr. Winskowicz also said that when companies send in their subrogation to the Fund they will receive a formal letter from the Fund saying they cannot pay the subrogation. At this point it would be appropriate to file a claim with the Receiver by sending this to the Proof of Claim Department. These claims will be separated and a Proof of Claim will be sent out after a period of time. Presently there has been no date set for filing a claim against the receiver.
Ms. Devericks asked if the claims against the Receiver should be submitted in bulk or individually. Mr. Gulko said it may be better to generate a list and send it in one bulk shipment with the necessary information on a spreadsheet and ask for the Proof of Claims all at once.
Mr. Wickenmeyer asked about joint tortfeasors and third party liability situations when contributions are being sought. Mr. Winskowicz said what the injured party collects under Uninsured Motorist, offsets what is available from the Trust Policy. Mr. Mutschler then asked if negotiations concerning subrogation and liability apply when Trust is seeking subrogation or a contribution based on joint tortfeasor. Mr. Winskowicz said the same rules of liability apply for Trust insureds as for other insureds
CA
00.03Performance Standards
Ms. Gedziun reviewed the wording to the Standards involving the Insurance Claim Payment Intercept Program. Under the sections Fraud-Bodily Injury Claims and Fraud-Auto Physical Damage and Property Damage Claims, the Standard will read, "Prior to making any payment equal to or in excess of $500 to a third-party claimant the Company must comply with the requirements of the Insurance Claim Payment Intercept Program, M.G.L. Chapter 175, Section 24D. NOTE: Failure to comply with M.G.L. 175, Section 24D will subject the Company to penalties proscribed by the Department of Revenue. These penalties will be in lieu of those penalties imposed for non-compliance with the Performance Standards." Ms. Gedziun said any penalty will be at the discretion of the Department of Revenue and C.A.R.'s penalty program will not be applied.
Mr. Doherty made a motion that the Claims Advisory Committee accept the language of these Standards as written. Mr. Kerton seconded and the motion passed unanimously.
Ms. Gedziun reviewed the remainder of the changes with the Committee. Among the changes are:
(1)The addition of the use of expert software systems for fraud screening under Performance Standards III. Fraud-Auto Physical Damage and Property Damage Claims and IV. Fraud-Bodily Injury Claims.
(2) Performance Standard III. Fraud-Auto Physical Damage and Property Damage Claims, include the IFB as a referral when fraud has been detected. (3) To the appendicies, the addition of the statute pertaining to the Insurance Claims Payment Intercept Program. (4) Updating the Penalty Section to use the 1999 market share of the Servicing Carriers.
Mr. Doherty made a motion for the Claims Advisory Committee to approve all of the revisions and additions to the Performance Standards and to refer them to the Governing Committee for approval. Mr. Kerton seconded and the motion passed unanimously.
CA
00.04Automobile Damage Appraisers Licensing Board
Mr. Woods, Chairman of the Automobile Damage Appraisers Licensing Board Subcommittee, reported that the Board's final report on the safety of aftermarket parts is expected to be finalized at the Board's next meeting on September 26th. In addition to the main report there will be a minority report that will represent the dissenting opinions of the insurance industry representatives. Mr. Woods said aftermarket industry representatives have been preparing a rebuttal to 15 points raised in the main report and the rebuttal will be made available to the Commissioner if she would like to read it. The next meeting will be held in Marlboro on September 26, 2000 at 9:00 a.m.
The next meeting of the Claims Advisory Committee is scheduled for January 24, 2001 at 9:30 a.m.
There being no further business, a motion was made by Mr. Doherty and duly seconded by Mr. Marchant to adjourn the meeting.
The motion passed on a unanimous vote.
The meeting adjourned at 10:33 AM.
Robert W. Bell, CPCU
Claims Manager
Boston, Massachusetts
September 13, 2000
Note:These Records have not been approved. They will be considered for approval at the next Claims Advisory Committee meeting.