Lloyd Kaufman, Chairman of the IFTA Board and founder of Troma, addresses the IFTA
members on Media Consolidation and how it affects independent producers and distributors. Not only is Chairman Kaufman’s message dead on- its very entertaining!
December 12, 2008
A Message From Lloyd Kaufman, IFTA Board President and Indie Producer
November 26, 2008
Property and Casualty Insurers are Kept Safe by Conservative Investment
State insurance regulators place restrictive guidelines on property and casualty insurers. These restrictions, in turn, help to keep them financially sound. For example, at year end 2007, 65.2% of the industry’s total invested assets of approximately 1.3 trillion USD was invested in long term bonds (A.M. Best), and 7.5% was in cash and short-term investments. Conversly, only 14.5% was held in common and preferred stock.
In today’s volatile environment, it is also important to be aware of the fact that these insurers do not have any exposure to mortgage-linked securities in their portfolios.
The top companies by asset distribution are Berkshire Hathaway, State Farm, and Travelers Group. The entire United States Property and Casualty industry had 1.55 trillion USD in admitted assets at the end of the 2007 calendar year.
October 19, 2008
Governor signs AB 2956
California Governor Schwarzenegger recently signed AB 2956 into law. The bill clarifies the differences between a broker and an agent. Brokers are supposed to act on behalf of the consumer while an agent acts on behalf of the insurance company. As such, this bill establishes four situations in which the broker presumption is rebutted:
1. When the insurance company has appointed the licensee as its agent and filed a notice of the appointment with the California Department of Insurance
2. When the insurer confers binding authority
3. When the insurance company allows the licensee to appoint other licensees as agents
4. When the insurer confers the authority to pay claims on behalf of the consumer
Additionally, the bill requires that all brokers disclose their fees in a written agreement signed the consumer and/or insured party.
October 3, 2008
Production Insurance Sub-sellers Busted by DOI
Recently, cease and desist order was issued by the California Department of Insurance against a sub-seller of insurance. In so doing, the California Department of Insurance has set a precedent that sub-selling insurance is not permisable.
What is a sub-selling scam and how does it works?
First-off, a production company is established with the intent of co-producing films with first-time or up-and-coming filmmakers, who are financially susceptible. The production company then purchases an annual insurance policy, or DICE package. Next, this policy is then sub-sold to the filmmaker under the guise of a co-production arrangement. The agreement between the production company, who is now established as the sub-seller, and the filmmaker may appear to be a legitimate co-production. However, the arrangement in reality is nothing more than a scheme to disguise fees charged by the sub-seller for “riding” on his insurance policy. The problem is that the production company (sub-seller) is not licensed to sell insurance, so the project of the filmmaker is never declared to the insurance company. Even worse, the premium collected by the production company (sub-seller) is kept, and the entity of the filmmaker that was sub-sold the policy is given no insurable interest. In other words, funds are paid for no protection whatsoever.
The obvious problems that arise from these illicit sub-selling schemes include, but are not limited to, the following:
a) Insurance is being sold by an entity that is not licensed by the Department of Insurance.
b) The sub-sellers illegitimately act as underwriters (without authority), determining which risks they will “cover”.
d)Claims may be denied by the carriers due to no insurable interest. This places both the end purchaser of this phony coverage and the general public at risk.
Every year, thousands of risks that would otherwise go to the legitimate market are lost to sub-sellers, leaving the insureds without coverage if something goes wrong, while undercutting the legitimate market. In fact, prior to the cease and desist order, one sub-seller alone boasted of having provided services to over 4,000 productions in the preceding 6 years within the state of California.
So, if you come across other entities that you suspect are engaged in such sub-selling activities, file a complaint with the Department of Insurance. And, importantly, check to see that those you buy insurance from are licensed by the state you reside in.
September 27, 2008
Westrec Vs. Marina Mgmt- What Constitutes a Prior Claim?
The state of California recently ruled that there was no coverage for a lawsuit that was filed during the corresponding policy period. The problem was that it was related to a demand letter that was received by the insured during the prior policy period which the insured had failed to report to the insurer under that policy period. The insurance company, Westrec, had issued consecutive one year policies that provided coverage for claims first made and reported during the policy period.
The insurance company denied coverage because they felt that the demand letter and the subsequent letter constituted a single claim, and that the claim, therefore, was not reported in a timely manner. The employer, Marina Management, responded by suing the insurer Westrec.
In their lawsuit, Marina maintained that the prior letter did not constitute a claim, and that even if it did, the lawsuit was a seperate claim. The court rejected this argument based upon the grounds that the demand letter did not have to request a specific dollar amount and that the threat of litigation was enough within the claim definition. The court decided that since the insured did not report the letter within the required claim reporting period they were not entitled to coverage.
What can we learn from this? First, it highlights the importance of reporting ALL possible claims in a timely fashion. Secondly, the definition of what constitutes a claim can be broad, so it is imperative to discuss all important communications with your broker. Receiving assistance from your broker can help you identify potential claims.
