New York Insurers Breaching Duty to Defend May Not Assert Policy Exclusions

The New York Court of Appeals has reaffirmed the importance of the insurer’s duty to defend its insureds, holding that when an insurer breaches its duty to defend, it may not rely on exclusions in the policy to avoid coverage obligations, “even if the exclusions would otherwise have negated the duty to indemnify.” The decision sets forth a stark rule that deviates from the general rule previously followed in New York and supported by a majority of other jurisdictions.

In K2 Investment Group, LLC v. American Guarantee & Liability Ins. Co., 2013 NY Slip Op 4270, an attorney was sued for legal malpractice. He notified his malpractice insurer but the insurer refused to defend or indemnify the claim, stating that the claim was not based on “rendering or failing to render legal service for others” as required by the policy for coverage. When the plaintiffs offered to settle the case, the attorney sent the settlement demand to his insurer, but again the insurer rejected it. After a default judgment was entered against the attorney in the underlying case, the attorney assigned his rights against the insurer to the plaintiffs who promptly sued the insurer for breach of contract for failure to defend and indemnify the claim.

Insurers owe their insureds two distinct duties: the duty to defend claims made against the insured and the duty to indemnify the insured for covered losses. The duty to defend is broad and requires the insurer to “provide a defense whenever allegations of the complaint suggest a reasonable possibility of coverage.” The duty to indemnify is much narrower and is determined on the actual basis of the insured’s liability as it applies to the terms and conditions of the policy. Insurers must navigate these two duties as they address claims from their insureds.

Here, the trial court found, and the appellate court agreed, that the insurer breached its duty to defend the attorney. On appeal to the State’s highest court, the insurer did not contend the lower courts’ findings that it had breached its duty to defend but argued that it had no duty to indemnify the insured for the loss because of the exclusions in the policy. The court was faced with the question of whether an insurer that breaches its duty to defend may later escape its duty to indemnify by asserting policy exclusions.

While the lower appellate court analyzed the policy exclusions in light of the insurer’s breach of its duty to defend, the Court of Appeals determined that such an analysis was not necessary, and that the breach of the duty to defend alone decided the question. The court held that by breaching its duty to defend the insured, the insurer forfeited all rights to avoid coverage under the policy and was now obligated to pay for the insured’s loss. “By breaching its duty to defend… American Guarantee lost its right to rely on these exclusions in litigation over its indemnity obligation.”

In coming to its decision, the court relied on the ruling in Lang v. Hanover Ins. Co., 820 N.E.2d 855 (N.Y. 2004), which provided that if an insurer disclaims coverage and declines to defend the insured in the underlying lawsuit, then the insurer can later “litigate only the validity of its disclaimer and cannot challenge the liability or damages determination underlying the judgment.” Acknowledging that the rule in Lang did not dispose of the present case and involved a different situation, the court nevertheless extended the rule from Lang to address the current case.

Broadly applying the rule from Lang, the court held that, “If the disclaimer [of the duty to defend] is found bad, the insurance company must indemnify its insured for the resulting judgment, even if policy exclusions would otherwise have negated the duty to indemnify.” The court reasoned that this would give insurers an incentive to defend the cases they are bound by law to defend and ensure that policyholders receive the “full benefit of their bargain” with the insurer. According to the court, “It would be unfair to insureds… if an insurer, having wrongfully abandoned its insured’s defense, could then require the insured to litigate the effect of policy exclusions on the duty to indemnify….”  The only exception identified by the court would be in cases where forcing indemnification upon the insurer would violate public policy, such as where an insured seeks coverage for intentional wrongdoing.

Curiously, in its analysis, the court disregarded its previous ruling in Servidone Constr. Corp. v. Security Ins. Co., 477 N.E.2d 441 (N.Y. 1985), where it stated, “an insurer’s breach of duty to defend does not create coverage and … there can be no duty to indemnify unless there is first a covered loss.” The court in Servidone had identified the two distinct duties arising under the insurance policy—defense and indemnity—and found that a breach of the duty to defend does not alter the coverage terms so as to create a coverage obligation where none exists.

Other courts interpreting New York law have also supported this position, finding that, “It is impermissible for a court to enlarge the bargained-for coverage as a penalty for breach of the duty to defend.”  CGS Indus. v. Charter Oak Fire Ins. Co., 2013 U.S. App. LEXIS 11700 (2d Cir. June 11, 2013) citing Hotel des Artistes, Inc. v. General Accident Ins. Co. of America, 75 N.Y.S.2d 262 (N.Y. App. Div. 2004).

In addition, the majority of states hold that an insurer that breaches its duty to defend is not estopped from asserting coverage defenses. See e.g., Western Alliance Ins. Co. v. Northern Ins. Co. of N.Y., 176 F.3d 825 (5th Cir. 1999) (applying Texas law); Flannery v. Allstate Ins. Co., 49 F.Supp. 2d 1223 (D.Colo. 1999) (listing majority decisions); Johnson v. Studyvin, 839 F.Supp. 1490 (D.Kan. 1993); St. Paul Ins. Co. v. Bischoff, 389 N.W.2d 443 (Mich. Ct. App. 1986).

The court’s heavy-handed decision in K2 establishes a harsh rule for insurers. By extending the rule from Lang to preclude insurers that breach the duty to defend from asserting policy exclusions to avoid indemnification obligations, the court appears to have deviated from New York precedent and encroached on the rule that was articulated in Servidone. But by failing to address Servidone in its opinion, the court may have left opportunities to clarify, refine, and distinguish the rule, which litigants will likely explore in future cases. Nevertheless, the ruling stands as the law in New York and reinforces the importance of the insurer’s duty to defend. With the court’s decision in K2, insurers should approach the duty to defend carefully, seeking declaratory judgments and defending under a reservation of rights where necessary to preserve their rights.

Burke Coleman is Legal Counsel and Compliance Manager for Demotech, Inc. Burke can be contacted at bcoleman@demotech.com. This article is for informational purposes only, is not intended as legal advice, and is not a substitute for independent legal analysis and advice on a particular issue. More from Burke Coleman

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New York Insurers Breaching Duty to Defend May Not Assert Policy Exclusions

Employer Health Insurance Mandate Delayed Until 2015

The Obama administration will delay a crucial provision of its signature health care law, giving businesses an extra year to comply with a requirement that they provide their workers with insurance.

The government will postpone enforcement of the so-called employer mandate until 2015, after the congressional elections, the administration said yesterday. Under the provision, companies with 50 or more workers face a fine of as much as $3,000 per employee if they don’t offer affordable insurance.

It’s the latest setback for a health care law that has met resistance from Republicans, who have sought to make the plan a symbol of government overreach. Republican-controlled legislatures and governors in several states have refused funding to expand Medicaid coverage for the poor and declined to set up exchanges where individuals can buy insurance, leaving the job to the federal government.

The delay in the employer mandate addresses complaints from business groups to President Barack Obama’s administration about the burden of the law’s reporting requirements.

“The administration has finally recognized the obvious — employers need more time and clarification of the rules of the road before implementing the employer mandate,” Randy Johnson, a senior vice president at the U.S. Chamber of Commerce, the nation’s largest business lobby, said in an e-mail.

Valerie Jarrett, a senior Obama adviser, said in a blog post announcing the move that the administration decided on the delay so officials could simplify reporting requirements and give employers a chance to adjust their health care coverage.

The individual mandate, a linchpin of the law that requires most Americans to carry health insurance, remains in effect.

Ron Pollack, executive director of the consumer advocacy group Families USA, said the employer-mandate delay creates “a potential for some harm” to workers. Businesses that don’t offer coverage may now wait an additional year because there is no penalty, he said. And employers who provide “substandard” coverage that doesn’t meet the minimum requirements of the health law won’t be forced to improve it, he said.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said the delay confirms his party’s argument that “Obamacare costs too much and it isn’t working the way the administration promised.”

House Speaker John Boehner, an Ohio Republican, seized on the announcement to urge the White House to also delay the individual mandate.

“I hope the administration recognizes the need to release American families from the mandates of this law as well,” Boehner said in a statement. “This is a clear acknowledgment that the law is unworkable.”

The 2010 Patient Protection and Affordable Care Act allows the Obama administration to set the starting date for the information-reporting requirement that is key to enforcing the mandate that companies cover their workers. While the White House hadn’t yet announced a date, enforcement of the mandate had been widely expected to begin in 2014, an official said.

Congressional elections will take place in November of next year, and the delay potentially shields Democratic candidates from a backlash generated by the additional regulations on employers.

The White House had been in discussions with business groups over complaints about the reporting requirements and believes it can simplify the process, two officials said.

“As we implement this law, we have and will continue to make changes as needed,” Jarrett said in her blog post. “In our ongoing discussions with businesses we have heard that you need the time to get this right.”

The employer mandate imposes extensive reporting requirements on businesses including the months during which each employee and any of their dependents was covered by health insurance, the official said. The Business Roundtable said in a June 11, 2012, comment letter that reporting requirements would demand “substantial changes in administrative procedures and reprogramming of recordkeeping systems.”

According to a White House fact sheet, more than 96 percent of companies with at least 50 employees already offer health insurance to their employees.

The officials said the decision stemmed from a commitment in the administration to reduce regulatory red tape and drew parallels to a move earlier this year to cut the length of application forms for insurance provided through government- sponsored exchanges to three pages from 21.

Neil Trautwein, vice president and employee benefits counsel for the National Retail Federation, called the move “an unexpected but extraordinarily wise decision.”

It could lead companies to delay their own decisions on whether to offer coverage to all their workers, Trautwein said.

“The administration is certainly encouraging employers to continue and expand offerings,” he said. “We’ll see how that goes.”

Tim Taft, president and chief executive officer of Fiesta Restaurant Group Inc., reacted to news of the delay in a phone interview: “Hooray,” he said. “That’s so huge.”

“The delay affords us what is really needed, which is time to get our heads and minds around how this is going to work,” Taft said.

Obama has confronted opposition from Republicans at every turn of the law, which passed Congress with only Democratic votes and was later challenged before the U.S. Supreme Court.

Only 16 states have agreed to set up the new exchanges, or marketplaces to sell insurance to people who don’t get it at work. Twenty-four states have refused to expand Medicaid, as called for under the law, according to Kathleen Sebelius, Obama’s secretary of health and human services.

Congressional Republicans, who have vowed to try to repeal the law, have refused Obama’s requests for about $1 billion more to help enact the statute and ensure it runs smoothly. Instead, they’ve started multiple investigations into the implementation.

Nor is this the first time Obama has been forced to scale back the law’s features. In March, the administration said small businesses wouldn’t be able to give their workers a choice of health plans in exchanges set up just for them. In January, a plan to create new nonprofit insurers in states was curtailed after Congress capped funding for the companies.

With assistance from James Rowley in Washington. Editors: Mark McQuillan, Robin Meszoly

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Erie Insurance Offers Safety Tips for July 4th Outdoor Parties

Seven in 10 Americans who plan to celebrate the 4th of July this year will attend a barbecue, cookout or picnic, according to the National Retail Federation’s 2013 Independence Day survey. That amounts to 164 million people, a record number in that category.

To help people stay safe at parties this holiday weekend and all throughout the summer, Erie, Penn.-based Erie Insurance describes common outdoor party mishaps and simple ways to avoid them.

• Leave fireworks to the professionals. Approximately 9,600 fireworks-related injuries were treated in U.S. hospital emergency rooms in 2011, according to the most recent data published by the National Fire Protection Association (NFPA).

An estimated 17,800 fires were started by fireworks in 2011, causing $32 million in property damage, according to the data. NFPA’s data also show that fireworks cause two out of five reported fires on a typical Independence Day, more than any other cause of fire.

Erie Insurance said it has seen both personal injury and property damage claims caused by fireworks — including one in which a customer was shooting off fireworks in their yard and the sparks landed on a neighbor’s house, catching it on fire.

“Fireworks are wonderful way to celebrate our country’s birthday, but we recommend watching them at a community-sanctioned location, rather than setting them off yourself,” said Matt Myers, senior vice president of claims at Erie Insurance.

“There are just too many things that can go wrong, especially in a group of people and when children are nearby,” he said.

Myers added that if parents allow their children to play with sparklers, which NFPA says account for a quarter of all fireworks-related injuries, such sparklers should be extinguished completely in water to avoid having them unexpectedly reignite.

• Be careful when firing up the grill. More than eight out of 10 U.S. households owning a grill or smoker, according to a 2009 study conducted by the Hearth, Patio and Barbecue Association. Erie Insurance said it has seen fires caused by people putting their grills too close to the house.

“It’s not just the flames from the fire that can be a hazard,” said Myers, “but the radiant heat from the grill can melt vinyl siding, and can even catch a house on fire.”

The U.S. Consumer Product Safety Commission recommends grills be placed at least 10 feet away from any structure, and that they never be used in a garage, breezeway, carport or porch, or under any surface that can catch fire.

Erie Insurance also cautions against pouring lighter fluid over hot coals, which can cause a flash fire or explosion. If the homeowner dumps hot coals on the ground after the barbecue is done, the coals should be thoroughly doused with water to make sure they are completely out.

• Make the right kind of campfire memories. Gathering around a campfire roasting marshmallows and telling stories is a great way to spend time with family and friends — and more and more people are doing that with commercially manufactured fire pits designed for patios and back yards. But while fire pits can be a great addition to an outdoor space, it’s important to remember that anything that involves fire is inherently risky.

Erie Insurance recommends never putting a fire pit on a wooden deck. “We had a claim in which a customer thought the fire was out but the wind caught a spark, and that led to the deck catching on fire,” said Myers.

“We’ve also seen a situation where a customer started a fire in fire pit not realizing that the bottom had nearly rusted out, and the whole thing, burning embers and all, collapsed onto the wooden deck and started a fire,” he added.

• Tread carefully with pools, toys and games. Swimming pools, trampolines, playground equipment, volleyball nets — these and similar items can amp up the fun factor at an outdoor party, but homeowners should use common sense to keep guests safe.

“Even simple housekeeping, like storing toys and games out of areas where people can trip on them, can make your guests safer,” said Myers. “Using common sense, like not putting the volleyball net too close to the grill, can also make a huge difference.”

The insurer said swimming pools can be particularly hazardous, with the Centers for Disease Control and Prevention reporting drowning as the leading cause of injury and death for children between the ages of 1 and 4. The CDC offers several swimming pool safety tips including that children learn to swim and be closely supervised when near pools or spas.

Source: Erie Insurance

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Iowa’s Top Insurer Delays Exchange Participation

Iowa’s leading health insurer will wait a year before participating in the state’s new health exchange due to concerns about problems that could arise with its implementation in the early going, company’s CEO said.

Wellmark Blue Cross and Blue Shield CEO John Forsyth said the company’s decision to wait until 2015 to join the exchange wasn’t financially motivated, and that even though the company will miss out on new customers who buy policies through the online marketplace, the company wanted to ensure it can continue offering the quality of service that it currently does.

“The primary reason, we didn’t feel we were going to be able to guarantee the quality of experience they are accustomed to with us,” Forsyth said. “We didn’t think the first few months would be very smooth.”

Six other companies have applied to participate in Iowa’s exchange, including two – Coventry Health Care of Iowa Inc. and CoOportunity Health – that would offer coverage to individual buyers throughout the state, Iowa Insurance Commissioner Nick Gerhart said. The other four companies have applied to offer plans with regional limits or that apply only to group insurance. No premium details were released.

June 30 was the deadline for insurance carriers to apply to take part in the exchange. Under President Barack Obama’s health care overhaul, all states must have a health exchange, with enrollment starting Oct. 1 and coverage on Jan. 1. Iowa will be partnering with the federal government for the exchange, where customers will be able to shop for coverage and qualify for subsidies and benefits.

Gerhart said in a news release that the state Insurance Division will spend the next month reviewing the plan proposals and will submit recommendations to the federal government by July 31.

Congressman Dave Loebsack, an Iowa Democrat who has been an avid backer of the Affordable Care Act, said he was disappointed about Wellmark’s decision to wait.

“I’m concerned in a sense that, the more insurance companies who are willing to participate, the better. Wellmark of course is very large here in Iowa. I’m disappointed that they decided not to participate immediately, but if they will participate down the road, I think that’s very good news,” Loebsack said following a Monday news conference in Coralville.

Republican Gov. Terry Branstad said he encouraged Wellmark to participate, but understands its decision.

“They did indicate their intention to participate in the future. We understand they made a decision which they felt was in the best interests of their company and their mutual shareholders,” Branstad said in an emailed statement.

Wellmark is Iowa’s largest insurance company. It covers about 285,000 members in Iowa who purchase health insurance directly from the company, or who get their insurance through small businesses with less than 50 employees. Wellmark insures roughly 1.7 million customers overall in Iowa.

Associated Press writer Ryan Foley in Coralville contributed to this report.

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Wisconsin Governor Vetoes Health Insurance Tobacco Surcharge

Wisconsin Gov. Scott Walker has vetoed his own plan to charge state workers more for health insurance if they smoke.

Walker’s executive state budget would have required state workers who smoke to pay $50 more per month for health insurance. Walker’s administration said the extra charge was necessary because health care is more expensive for tobacco users.

But Walker used his partial veto powers to erase the plan from the final budget signed June 30.

Walker’s veto message says new federal guidance on tobacco surcharges was issued after he drew up the fee plan that would make the program too cumbersome. For example, Walker wrote, a smoker could avoid the fee by joining a cessation program.

A Walker spokeswoman had no immediate comment Monday afternoon, and could not be reached later for details.

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Zurich’s Broker Relationship Leader Moves to Berkshire Hathaway Specialty

Berkshire Hathaway Specialty Insurance — the new commercial P/C insurance unit of Berkshire Hathaway — appointed Lori Spoon Rafkin as senior vice president, customer and broker engagement. Spoon Rafkin was previously broker relationship leader, North America, at Zurich Insurance. She is based in New York.

Prior to her role at Zurich, Spoon Rafkin was executive vice president and chief administrative officer, commercial finance division, at CIT Group. Before that, she spent the entirety of her career in the commercial insurance industry, holding numerous senior level positions at Marsh Inc., including managing director and chief of staff of Marsh’s New York operations, as well as sales and industry practice leader with Marsh’s Global Services Group in New York. She began her career as an international underwriter with Chubb Insurance.

Berkshire Hathaway Specialty Insurance officially commenced operations on June 13. Underwriting on the paper of Berkshire Hathaway’s National Indemnity group of companies, Berkshire Hathaway Specialty provides commercial property, casualty, healthcare, executive and professional lines insurance and programs for customers across the U.S. Based in Boston, it has regional underwriting offices in Atlanta, Chicago, Los Angeles and New York.

West Virginia Secretary Fired Over Facebook Wants Case in State Court

A secretary who says she was fired over a Facebook posting made on her own time and at her home computer wants her wrongful discharge lawsuit sent back to Ohio County (West Virginia) Circuit Court.

Sonya Olako filed a motion to move the case out of U.S. District Court in Wheeling.

The Ohio County Commission and Sheriff Patrick Butler deny they wrongly fired Olako last year because she told people to avoid a restaurant owned by a friend of her boss.

Olako says her civil rights were violated, so the county moved to have the case heard in federal court.

But Olako argues her case relies on multiple violations of state law, so federal court lacks jurisdiction.

U.S. Judge John Preston Bailey hasn’t ruled yet.

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Vermont Quadriplegic Awarded $43.1M After Crash

A 51-year-old Vermont woman has been awarded a $43.1 million jury verdict against the manufacturer of a car seat that allegedly collapsed during a 2007 car accident, leaving her a paraplegic.

The award is believed to be the largest civil verdict in state court in Vermont history.

Dzemila Heco of Essex Junction was injured on Aug. 4, 2007, when the car she was driving was rear-ended.

Heco’s lawyers argued the car seat back collapsed, causing severe spinal-cord injuries. Heco was wearing a seat belt.

The jury returned the judgment last Friday against Johnson Controls, Inc., of Milwaukee after a two-week trial.

The Burlington Free Press reports Johnson Controls disagreed with the verdict. The company says the seat exceeded all government and industry standards. The company is considering an appeal.

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Southern California Painter Awarded $58M For Bar Beating

A 43-year-old house painter so badly brain damaged that he cannot speak has been awarded $58 million for a beating in a bar that left him with half his skull permanently bashed in.

Antonio Lopez Chaj (CHAI) appeared at a news conference Monday with lawyers who announced the award handed down against a security company by a jury in Torrance Superior Court on Friday.

They said it was among the largest damage awards ever given to one person in California.

Chaj was attacked at a mid-Wilshire bar after trying to intercede in an attack by a bartender on two relatives who were with him.

Lawyers said an unlicensed, untrained security guard beat him with a baton, kicked him in the head eight times and smashed his skull against pavement.

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Sites of 2 Deadly Louisiana Plant Explosions Still Closed

Plants that were the sites of two chemical explosions a day apart in south Louisiana remain closed, and it could be months before federal investigators determine the causes of the blasts that killed three workers and sent nearly 100 others to hospitals last month.

The Occupational Safety and Health Administration sent teams to both sites to investigate the explosions.

OSHA has six months to complete investigations, spokeswoman Diana Petterson said in an email.

“It’s difficult to say at this time how long the investigations will take,” she said.

The blast happened June 13 at Williams Olefins in Geismar and June 14 at CF Industries in Donaldsonville, both located in Ascension Parish, southeast of Baton Rouge. Two people remain hospitalized with injuries, one from each blast, according to company officials.

Plant officials say they don’t have damage estimates and are uncertain when operations will resume.

Both companies employ more than 300 full-time employees, and Williams Olefins has hundreds of contract workers as part of an expansion project that was underway at the time of the explosion. Company officials have said that Williams Olefins employees will continue to get paid while the plant is shut down.

The Williams Olefins plant, where one person was killed, produces ethylene and propylene, raw materials for common plastics used for such things as bottles, trash can liners and grocery store bags.

The Geismar plant explosion involved a distillation tower that left two people dead and sent 91 people to the hospital for treatment.

The U.S. Chemical Safety Board, an independent federal agency that investigates major chemical accidents, offered some insight into just how quickly danger developed at Williams Olefins, saying it took only seconds for a chemical vapor cloud to ignite into a towering inferno.

In recent testimony before a congressional committee, Chemical Safety Board chairman Rafael Moure-Eraso explained the early morning explosion started in the propylene fractionator area of the plant and involved a large distillation tower that processes propylene, propane and other highly flammable hydrocarbons.

The equipment was operating normally until 8:36 a.m., Moure-Eraso said.

“There was a sudden catastrophic failure involving a heat exchanger and associated piping attached to the distillation tower,” he told the committee. “The steel shell of the heat exchanger ripped open, and piping detached where it connected to the tower. The exact sequence and cause of these events remains to be determined.”

There was a “large-scale” release of propylene, propane and other hydrocarbons that formed a 200 feet high vapor cloud that ignited within four seconds, Moure-Eraso said. The fire burned for four hours.

Company officials have said there were 839 employees and contract workers at the plant at the time of the explosion as part of its expansion project.

Meanwhile, the blast at CF Industries happened in a section of the plant that was in “turn-around” mode, meaning the facility was shut down for scheduled maintenance, company spokeswoman Blythe Lamonica said.

The accident occurred in the evening, during a shift change. Lamonica said there were 25 to 30 employees on site at the time. It is unclear how many workers were in the immediate area of the explosion.

While that site is still closed, maintenance activity has resumed on a very limited basis, she said. The 10 other plants located on the complex are opened and are fully operational, Lamonica said.

The explosion happened when nitrogen was being pumped from an 18-wheeler truck via a hose attached to a nitrogen distribution header. For unknown reasons, the header ruptured or burst, killing one employee and sending seven others to the hospital for treatment. Authorities say there was no fire or off-site chemical release.

CF Industries manufactures ammonia and other nitrogen fertilizers at the Donaldsonville site for agricultural and industrial use.

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Prudential Will Appeal SIFI Designation; AIG, GE Will Not

Prudential Financial Inc., the No. 2 U.S. life insurer, is contesting a U.S. finding that it poses a potential risk to the financial system, becoming the first company to challenge the label that brings additional oversight.

Prudential requested a hearing to explain why it shouldn’t be considered a systemically important financial institution, or SIFI, the Newark, New Jersey-based company said yesterday in a regulatory filing.

“We will continue to work closely with regulators to demonstrate our belief that the company does not meet the requirements of the SIFI designation,” Scot Hoffman, a spokesman for the insurer, said in an e-mailed statement.

The Dodd-Frank act, designed to avoid a repeat of the 2008 bailouts, increased supervision of the largest U.S. lenders and allowed the Treasury Department’s Financial Stability Oversight Council to designate non-bank firms for extra oversight. The label could impose limits tied to capital and liquidity, the insurer said in the filing.

Companies that receive the risk label will be regulated by the Federal Reserve, which hasn’t yet written final rules for the oversight. Prudential has said it wants to avoid regulatory standards designed for banks. Suzanne Elio, a Treasury spokeswoman, said the council has a “robust process” for evaluating whether companies are systemically important.

The label “non-bank SIFI has the potential for being very disruptive to their business model, if they’re required to hold capital at a level that puts them at a disadvantage to other insurance companies,” said Ed Shields, an analyst at Sandler O’Neill & Partners LP.

Strangfeld’s Course

Chief Executive Officer John Strangfeld, 59, is pursuing a different course than the leaders of American International Group Inc. and Fairfield, Connecticut-based General Electric Co.’s finance unit, GE Capital Corp., which each said yesterday they won’t contest SIFI status. The three companies said June 3 they were identified by the council as potential risks to the economy. They were given until today to appeal.

Prudential has said that it doesn’t fit the quantitative standards to be labeled a SIFI, and that traditional insurance activities don’t pose systemic risk.

By requesting the review, Prudential may be able to get more insight into how it will be regulated and what parts of its business most concern federal regulators, said Ed Mills, a policy analyst at FBR Capital Markets in Arlington, Virginia. He said the company probably won’t be able to convince the council that it’s not systematically important.

“We have decided not to appeal or ask for a hearing,” Russell Wilkerson, a spokesman for GE Capital, said yesterday. “We have been and will be prepared to meet the requirements for SIFIs.”

During the financial crisis, AIG received a U.S. bailout that swelled to $182.3 billion, as bets on mortgages soured. The insurer repaid the U.S. rescue last year and has said it understands why it faces extra scrutiny.

“AIG welcomes supervision by the Federal Reserve, and is already working closely with the Federal Reserve Bank of New York as our regulator,” Jon Diat, a spokesman for the insurer, said in an e-mail.

The council has 30 days to schedule a hearing, Prudential said, citing U.S. regulations.

MetLife Inc., the largest U.S. life insurer, wasn’t included in this review because it was already under Fed regulation stemming from its ownership of a bank, which it has since sold. The New York-based insurer has said it shouldn’t be deemed systemically important.

While Prudential’s insurance units are well regulated, the company’s size, global reach and investments help make it systemically important, said Mayra Rodriguez Valladares, managing principal at MRV Associates.

“I look at the asset size, I look at the interconnectedness, I look at the international positions,” she said by phone. “And I’m struggling to think, why do you think you’re not a SIFI?”

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Personal Data Of 2.5M People Compromised In California

Data breaches put the personal information of 2.5 million people in the California at risk, according to a report released Monday.

State Attorney General Kamala Harris released the report showing 131 breaches of consumer information were reported in 2012.

The report found that the retail industry reported the most breaches, with financial institutions and insurance providers next on the list.

Harris said companies should use encryption and increase security to better safeguard consumer information.

“Data breaches are a serious threat to individuals’ privacy, finances and even personal security,” Harris said in a statement. “Companies and government agencies must do more to protect people by protecting data.”

The information of 1.5 million of the people on the list would have been protected had the companies involved encrypted the data when moving it or sending out of their networks.

The report comes after a bill passed in 2012 that requires companies to report information breaches of more than 500 consumers to the attorney general. Business and government agencies are required by law to notify consumers when a data breach may have put their personal information at risk.

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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PodMed: A Medical News Roundup from Johns Hopkins (with audio)

PodMed is a weekly podcast from Johns Hopkins Medicine. In it, Elizabeth Tracey, director of electronic media for Johns Hopkins Medicine, and Rick Lange, MD, professor of medicine at Johns Hopkins and vice chairman of medicine at the University of Texas Health Science Center at San Antonio, look at the top medical stories of the week.

This week's topics include music in the ICU, predicting acute exacerbations of COPD, keeping an eye on MERS, and sequelae of childhood cancer treatment.

Number of Poor State Bridges Dropping in Oklahoma

A new study shows Oklahoma ranks among the worst states in the nation for its total number of structurally deficient bridges, but Oklahoma transportation officials said that the number of such bridges on the state highway system has been dramatically reduced.

The study by the Washington, D.C.-based Transportation for America shows Oklahoma has the second-highest percentage of structurally deficient bridges – 22.6 percent – among the 50 states. The study, which uses 2012 Federal Highway Administration data, shows 5,382 of the state’s nearly 24,000 bridges are structurally deficient, a term that means the bridge has a major defect in either its deck or support structure.

Only Pennsylvania, with 24.5 percent of its bridges determined to be structurally deficient, ranked worse.

Transportation for America is a broad-based coalition with more than 500 partners, including individual cities and counties, as well as mayors, councilmembers and other elected officials. Its executive committee includes numerous environmental, transportation and housing groups.

But Oklahoma Department of Transportation Director Mike Patterson said the number of bridges in the study includes all the bridges in Oklahoma – state, county and city bridges. When it comes to state bridges only, the picture is dramatically better, he said.

“Here in Oklahoma, as we have been working through our deficient bridges on the highway system, we were at 17 percent back in 2005,” Patterson said. “This year, because our structurally deficient bridges are now down to 8 percent of the total number of bridges on the highway system, it’s the first time I can recall that we’re helping to pull the average down.”

The number of structurally deficient bridges on the state highway system has dropped from 1,168 in 2005 to 556 currently, and Patterson said transportation officials are working hard to continue reducing that number.

Patterson credited a decision by the Legislature in 2005 to dedicate a portion of the state’s income tax collections to pay for infrastructure improvements as a key reason for the reduction in the number of structurally deficient highway bridges.

Transportation for America’s Bridge Study: http://bit.ly/11XBml8

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Peliculas Online

NICB Report Ranks Vehicle Theft Rates in Northeast

The National Insurance Crime Bureau released its report last week on a per capita review of vehicle thefts from the nation’s Metropolitan Statistical Areas (MSA).

The report, based on 2012 data, shows that California continues to be a hotbed for vehicle thefts. Eight of the top 10 MSAs with highest theft rates are in California — with the remaining two from the state of Washington.

Among Northeast states, the Trenton, N.J. area had the highest per capita vehicle theft rate — with 915 thefts, for a rate of 248.44 per 100,000 population in 2012. The Trenton, N.J. area was ranked 91st in the country in NICB’s per capita vehicle theft ranking of 380 MSAs.

In terms of sheer numbers, the New York-Newark-Jersey City region had the highest overall number of vehicle thefts among Northeast MSAs, at 26,311 — for a rate of 132.67 per 100,000 population, which puts it 220th nationally in the report’s per capita ranking.

The NICB report said the Northeast region saw a 7.9 percent reduction in the number of vehicle thefts in 2012 compared to 2011. Nationally, however, preliminary figures showed a 1.3 percent year-over-year increase in vehicle thefts in 2012.

Here are MSAs with highest per capita vehicle theft rates in each Northeast state, according to the NICB report. The full report can be found at the NICB website.

• Connecticut: New Haven-Milford, CT Metropolitan Statistical Area, with 1,918 thefts, for a rate of 222.30 per 100,000 population. Ranked 105th nationally in NICB’s per capita vehicle theft ranking.

• Delaware: Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area, with 12,037 thefts, for a rate of 199.99 per 100,000 population. Ranked 125th nationally in NICB’s per capita vehicle theft ranking.

• Maine: Bangor Metropolitan Statistical Area, with 112 thefts, for a rate of 72.85 per 100,000 population. Ranked 331st nationally in NICB’s per capita vehicle theft ranking.

• Maryland: Baltimore-Columbia-Towson, MD Metropolitan Statistical Area, with 6,736 thefts, for a rate of 244.67 per 100,000 population. Ranked 93rd nationally in NICB’s per capita vehicle theft ranking.

• Massachusetts: Providence-Warwick, RI-MA Metropolitan Statistical Area, with 3,389 thefts, for a rate of 211.63 per 100,000 population. Ranked 113th nationally in NICB’s per capita vehicle theft ranking.

• New Hampshire: Boston-Cambridge-Newton, MA-NH Metropolitan Statistical Area, with 5,869 thefts, for a rate of 126.47 per 100,000 population. Ranked 232nd nationally.

• New Jersey: Trenton, NJ Metropolitan Statistical Area, with 915 thefts, for a rate of 248.44 per 100,000 population. Ranked 91st nationally.

• New York: Buffalo-Cheektowaga-Niagara Falls, NY Metropolitan Statistical Area, with 1,692 thefts, for a rate of 149.18 per 100,000 population. Ranked 196th nationally.

• Pennsylvania: Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area, with 12,037 thefts, for a rate of 199.99 per 100,000 population. Ranked 125th nationally.

• Rhode Island: Providence-Warwick, RI-MA Metropolitan Statistical Area, with 3,389 thefts, for a rate of 211.63 per 100,000 population. Ranked 113th nationally.

• Vermont: Burlington-South Burlington, VT Metropolitan Statistical Area, with 206 thefts, for a rate of 96.40 per 100,000 population. Ranked 286th nationally. (Only available MSA data for the state of Vermont)

• Virginia: Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area, with 11,599 thefts, for a rate of 197.92 per 100,000 population. Ranked 127th nationally.

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Peliculas Online

Cancer, Chemo May Lower Alzheimer's Risk, Study Suggests

If battling a deadly disease can be said to have a silver lining, this might be it: Many forms of cancer appear to lower the risk for developing Alzheimer's disease, new research suggests.

After sifting through the health records of nearly 3.5 million patients, investigators concluded that most kinds of cancer seem to confer some degree of protection against Alzheimer's, reducing risk of the age-related brain disorder by anywhere from 9 percent to 51 percent.

Bacteria Infection Risk May Be Higher for Pregnant Women With Diabetes

Pregnant women with diabetes are three times more likely to develop a potentially deadly hospital-acquired infection than those without diabetes, a new study finds.
Methicillin-resistant Staphylococcus aureus (MRSA) is a type of staph bacteria that is resistant to certain antibiotics and a significant cause of illness and sometimes death, especially among hospital patients.

The new study found that increased risk is associated with having diabetes before becoming pregnant, but not with diabetes that develops during pregnancy (gestational diabetes), according to the University of California, Los Angeles, researchers.

Where To Find Good Independent Affiliate Programs

Where To Find Good Independent Affiliate Programs

It seems that there are thousands of companies that have chosen to manage their own affiliate programs rather than using companies like Linkshare or Commission Junction.

In fact, our friends at Five Star Affiliate Programs tracked a posting on a UK affiliate forum where they are wondering if the networks deserve their 30% commission.

Diabetes Drug May Protect the Brain

The diabetes drug metformin may do more than help control blood sugar levels: New research suggests it may also reduce the risk of dementia.

Compared to people taking another class of diabetes medications called sulfonylureas, those taking metformin had a 20 percent reduced risk of developing dementia over the five-year study period.

"Metformin could have a possible neuroprotective effect in the brain," said study author Dr. Rachel Whitmer, an epidemiologist in the division of research at Kaiser Permanente in Oakland, Calif.

Why So Many People Fail In Affiliate Marketing

Why So Many People Fail In Affiliate Marketing

More and More people are lured into affiliate marketing and you might be one of them. Indeed, affiliate marketing is one of the most effective means of generating a full-time income through the Internet. It’s a fair deal between the merchandiser and his affiliates as both benefit from each sale materialized. Like in other kinds of business, a great deal of the profits in affiliate marketing depends on the affiliate’s advertising, promoting and selling strategies. Everyday, as affiliate marketing industry expands, competition heightens as well so an affiliate marketer must be creative enough to employ unique and effective ways to convince potential buyers to purchase or avail of the products and services offered.

Compared to traditional advertising practices, affiliate programs are more effective, risk-free and cost-efficient. But why do many people still fail in affiliate marketing?