Sullivan Appointed as Texas Insurance Commissioner

Texas has a new insurance commissioner.
Texas Gov. Greg Abbott has named Kent Sullivan to serve as insurance commissioner and head of the Texas Department of Insurance. His term expires Feb. 1, 2019.
The post has been vacant following the death of David Mattax in April. Since then, a delegation order has been in place allowing decisions to be made at the deputy commissioner level, according to Jerry Hagen, a spokesman for TDI. Mattax, who passed away on April 13, 2017, after a battle with cancer, was appointed insurance commissioner in 2015.
Sullivan is a partner at Jackson Walker LLP. He previously served as a justice on the Fourteenth Court of Appeals, first assistant attorney general for the Texas Office of the Attorney General and a state district court judge. He is a member of the State Bar of Texas, Houston Bar Association and the Austin Bar Association and a life fellow of the Texas Bar Foundation.
Kent Sullivan

Additionally, he is a member of the Federal Judicial Evaluation Committee and Texas Supreme Court Advisory Committee and previously served on the Texas Pattern Jury Charge Committee, State Bar of Texas Board of Directors and the Texas Center for the Judiciary Board of Directors.
ICT Executive Director Albert Betts, executive director of the Insurance Council of Texas, said in a statement that ICT looks “forward to working with Commissioner Sullivan, and are happy to have someone with his experience and background in this critical position for the Texas economy and insurance marketplace.”
Similarly, Norma Essary, CEO of the Surplus Lines Stamping Office of Texas, said her organization is “looking forward to working closely with Mr. Sullivan and his team at the Texas Department of Insurance. His expertise and background will greatly benefit the insurance industry and Texas as a whole.”
Sullivan joined Jackson Walker in 2015 and has served as co-chair of the firm’s appellate practice group. He also has served as co-chair of the government and internal investigations group, and represented clients in complex civil litigation, government relations and investigations, according to an announcement released by the law firm.
“Kent brought a new dimension to Jackson Walker’s litigation and appellate groups,” said firm-wide managing partner Wade Cooper in the announcement. “We wish him all the best in his new position and know that his deep experience will bring him much continued success in this substantial role.”

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SEC Hacking Latest in Series of Government Agency Cyber Breaches

A major computer hack at America’s top stock market regulator is the latest sign that data stored in the highest reaches of the U.S. government remains vulnerable to cyber attacks, despite efforts across multiple presidencies to limit high-profile breaches that are so frequent many consider them routine.
In recent years, nation-state and criminal hackers, as well as rogue employees, have stolen data from the Internal Revenue Service, the State Department and intelligence agencies, including millions of government employee files allegedly exfiltrated by the Chinese military, U.S. officials say.
The Securities and Exchange Commission (SEC), America’s chief stock market regulator, said on Wednesday that cyber criminals may have used data stolen last year to make money in the stock market, making it the latest federal agency to grab headlines for losing control of its data.
At the same time, being only the latest major breach is not special, said Dan Guido, chief executive of Trail of Bits, which does cyber security consulting for the U.S. government.
“It simply reflects the status quo of our digital security,” said Guido, who is a former member of the cyber security team at the Federal Reserve, America’s central bank.
Central bank officials have detected dozens of cases of cyber breaches, including several in 2012 that were described internally as “espionage.”
The U.S. federal government has sharply increased funding dedicated to protecting its own digital systems over the last several years, attempting to counter what is widely viewed as a worsening national security liability.
But as one of the world’s largest collectors of sensitive information, America’s federal government is a major target for hackers from both the private sector and foreign governments.
“When you have one central repository for all this information – man, that’s a target,” said Republican Representative Bill Huizenga, chairman of the House subcommittee on Capital Markets, Securities, and Investment, which oversees the SEC.
Last year, U.S. federal, state and local government agencies ranked in last place in cyber security when compared against 17 major private industries, including transportation, retail and healthcare, according to benchmarking firm SecurityScorecard.
An update of the rankings in August showed the U.S. government had improved to third worst, ahead of only telecommunications and education.
“We also must recognize – in both the public and private sectors, including the SEC – that there will be intrusions, and that a key component of cyber risk management is resilience and recovery,” said SEC Chairman Jay Clayton.
The federal government audits cyber security measures every year at top agencies, producing reports that routinely expose shortfalls and sometimes major breaches. The Federal Bureau of Investigation also looks for hacking attempts and helped spot an alleged intrusion by Chinese military-backed hackers into a major banking regulator between 2010 and 2013.
Weekly scans of government systems by the Department of Homeland Security showed in January that the SEC had critical cyber security weaknesses but that vulnerabilities were worse at three agencies, including the Environmental Protection Agency, the Department of Health and Human Services and the General Services Administration.
Some agencies said they had improved their cyber security posture since that report.
A GSA spokeswoman said the agency has not had any critical vulnerabilities in the past six months, and that the ones identified in January were patched in under 10 days.
A Department of Labor spokesman said all identified vulnerabilities had been fixed and that its systems were not compromised by the identified flaws.
But, he added, “addressing vulnerabilities associated with legacy systems can be challenging.”
(Reporting by Dustin Volz in Washington and Jason Lange in New York; additional reporting by Jonathan Spicer in New York and Sarah N. Lynch in Washington; editing by Andrea Ricci and Cynthia Osterman)
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New Bridge Design Tested by Nevada Quake Lab Following Mexico Quake

Scientists at a Nevada earthquake lab this week tested new bridge designs with connectors they say are innovative and created to better withstand violent temblors and speed reconstruction efforts after major quake damage.
University of Nevada, Reno engineers performed the experiments on a giant “shake table” to simulate violent motions of an earthquake to rattle a 100-ton, 70 foot bridge model to determine how well it would hold up.
The tests, conducted a day after a big quake struck Mexico, shook large concrete columns and beams back and forth for about 30 seconds at a time, displacing some nearly a foot before returning largely to their original spot.
Graduate students measured and marked indications of tiny fractures but no major structural damage was observed in the initial review of the experiments.
“The bridge has done better than we expected,” said Saiid Saiidi, a professor of civil and environmental engineering who served as the project leader. He’s done related research for more than 30 years.
Bridges are already designed not to collapse in earthquakes but often are unsafe for travel after big quakes. He said the designs that were tested employed special types of connectors to link prefabricated bridge parts, including ultra-high performance concrete.
“Earthquakes by themselves don’t kill people, it’s the structures,” Saiidi said.
The elements have been tested on their own but never before combined in a bridge model subjected to realistic earthquake motions, like the 1994 Northridge, California quake. Wednesday’s test inside the University of Nevada’s Earthquake Engineering Laboratory simulated activity of a quake as large as magnitude 7.5.
Some design work by the engineers has been incorporated into a highway off-ramp under construction in Seattle. It’s the first bridge in the world that uses flexible columns and reinforcement bars made out of a metal alloy with titanium that bends and then springs back into shape when quakes hit.
Among other things, the innovative connectors allow for prefabricated concrete and other materials to be attached to an existing bridge foundation so as to speed repair and reconstruction
Part of the research centers on a so-called “pipe pin” connection developed by the California Department of Transportation’s bridge designers for use in connecting certain beam interfaces in bridge construction.
The pin consists of a steel pipe that is anchored in the column and extended into a steel can embedded in the beam. A gap between the steel pipe and the can enables the extended segment to freely rotate inside the steel can and prevents bending of the protruded segment inside the can.
The University of Nevada’s Earthquake Engineering Lab is the largest of its kind in the United States.
The latest project is funded by the California Department of Transportation, which currently is developing plans for 10 pilot projects based on the developing bridge connector technology.
“This study today is going to allow them to make observations of those designs,” Saiidi said.
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Mexico quake losses could reach $2 billion: AIR

After a 7.1 earthquake, Mexico City inhabitants went to the streets to help to rescue those persons caught in the collapsed buildings./ Sara_Escobar / Shutterstock.com

Insured losses from the magnitude 7.1 earthquake that struck central Mexico Sept. 19 will be between 13 billion and 36.7 billion Mexican pesos ($726.7 million and $2.05 billion), according to catastrophe modeling firm AIR Worldwide.
The figures include damage from ground shaking and are based on assumptions about take-up rates in Mexico, about which there is “considerable uncertainty,” the Boston-based catastrophe modeler said in its statement late Friday, adding that total economic losses are expected to be much higher than industry insured loss estimates. 
The quake occurred in central Mexico about 75 miles southeast of Mexico City, where major damage and hundreds of fatalities have been reported, AIR said in its statement.
Although this quake occurred only 11 days after the magnitude 8.1 earthquake that occurred 404 miles to the southeast, it occurred too far north along the subduction zone to be an aftershock, according to the U.S. Geological Survey.
Power was restored to 4.63 million households and business on the night of Sept. 21, representing 95% of those that had lost power after the quake, according to the Federal Electricity Commission, AIR said.
The majority of residential buildings in Mexico are of masonry construction, of which one type, unreinforced masonry, is the construction type most vulnerable to shake damage, AIR said. Commercial buildings in Mexico are primarily of engineered masonry or concrete construction and are better able to withstand ground motion.

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Maria losses in Caribbean likely to top $1 billion

Insured losses in the Caribbean from Hurricane Maria will likely top $1 billion, and economic losses could be much more severe, according to Impact Forecasting’s “Weekly Cat Report September 22, 2017,” issued by the Aon Benfield unit early Friday.
This even as much of the storm’s damage remains to be discovered.
“With Hurricane Maria still an active system that is impacting multiple territories, it remains too early to provide any specific economic or insured loss estimate,” Impact said Friday. “The catastrophic scope of damage caused by the storm is going to simply take time to be fully assessed,” as communications channels remain badly compromised.
The report went on to say, however, that the “combined economic cost of damage and direct business interruption throughout the Caribbean is expected to well exceed $1.0 billion.”
Indications suggest much of the damage may be thinly insured.
“With insurance penetration levels remaining low on many impacted islands, it is expected that a large portion of the economic damage will not be covered,” the report said.
The deadly earthquake that struck Mexico Sept. 19 will also likely exceed $1 billion in insured loss, Impact said, citing figures from the United States Geological Survey.
“The USGS Pager system, which rapidly assesses earthquake impacts by comparing the population exposed to each level of shaking intensity with models of economic losses based on past events in the relevant country or region, estimated that there was at least a 49% chance that economic losses due to the September 19 temblor will exceed $1.0 billion,” the Impact report said.
Figures also showed a 14% likelihood of economic losses in the range of $10 billion to $100 billion and a 46% chance of losses being less than $1.0 billion, the report said.
Typhoons Doksuri (Sept. 9) and Tallam (Sept. 6) caused hundreds and tens of millions in economic losses in Asia, respectively, but the report did not provide insured loss estimates.

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Texas governor appoints insurance commissioner

Texas Gov. Greg Abbott has appointed Kent Sullivan as Insurance Commissioner for a term set to expire Feb. 1, 2019.
Mr. Sullivan is a partner at Jackson Walker L.L.P. based in Austin, Texas, and previously served as a justice on the state’s 14th Court of Appeals, first assistant attorney general for the Texas Office of the Attorney General and a state district court judge, according to a statement released by the governor’s office Thursday.  
Mr. Sullivan replaces Commissioner David Mattax, who died in April following a battle with cancer.

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Medical providers suspended from comp system for fraud

The California Division of Workers’ Compensation announced Thursday that it has suspended six medical providers from participating in California’s workers compensation system, bringing the total number of suspended providers this year to 38. 
State law requires the division’s administrative director to suspend any medical provider, physician, or practitioner from participating in the workers comp system in cases where the provider has been convicted of a felony or misdemeanor involving fraud or abuse of government medical programs or the comp system, fraud or abuse of a patient, or related types of misconduct; the provider has been suspended due to fraud or abuse from government medical programs; or the provider’s license or certificate to provide health care has been surrendered or revoked.
Per a press statement, the division’s acting Administrative Director George Parisotto issued orders of suspension against the following providers:
· Jeffrey Campau and Landen Mirallegro of Yorba Linda, California, co-founders of the medical equipment company Aspen Medical Resources, MRI diagnostic facility Elite Mgmt. L.L.C. doing business as Elite Diagnostics, and an MRI services company, Regional Medical Services L.L.C. Both men pleaded guilty in Orange County Superior Court on May 5 to medical insurance fraud for their involvement in an overbilling scheme in which they defrauded insurance companies of more than $70 million. Mr. Campau and Mr. Mirallegro agreed to pay over $8 million in restitution to several insurers and self-insured employers, and to voluntarily dismiss liens of nearly $140 million, in the case involving Aspen Medical Resources.
Simon Hong of Brea, California, a medical clinic operator who on Oct. 19, 2016, was found guilty by a federal jury in Orange County, California, of 19 counts of health care fraud, illegal kickbacks and identity theft involving the Medicare program. 
Chi Hong Yang of San Gabriel, California, pleaded guilty in Kern County Superior Court in California on Aug. 2 to conspiracy to commit insurance fraud, a scheme involving billing and obtaining payment for services not provided. Mr. Yang surrendered his physician’s and surgeon’s certificate earlier this year.
Rafael U. Chavez of Rancho Cucamonga, California, had his certification as a physician assistant revoked by the Physician Assistant Board of California on June 19, 2014.
Wendell Wenneker of Napa, California, had his physician and surgeon certification revoked on June 2 by the Medical Board of California.

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Business Insurance names EMEA Women to Watch honorees

Business Insurance on Friday announced the honorees for its first international version of Women to Watch, recognizing honorees from Europe, the Middle East and Africa.
Business Insurance started the Women to Watch awards program in 2006 to recognize women leaders doing outstanding work in risk management and commercial insurance. Business Insurance readers nominated candidates for Women to Watch, and a panel of Business Insurance editors selected the honorees based on those nominations.
The 2017 EMEA honorees are:
Amy Barnes, Marsh Ltd. 
Gillian Barnes, Ironshore Inc.
Heather Batchelor, Travelers Co. Inc.
Catherine Bourland, Aon Benfield
Rachel Cope, FM Global
Andrea Fregona, Crawford & Co.
Simona Fumagalli, XL Catlin
Janice Hamilton, Amtrust International
Tracy Harrington Cloud, Axis Capital Holdings Ltd.
Patty Karuiahe-Martin, Namibia Reinsurance Corp.
Mary O’Connor, Willis Towers Watson P.L.C.
Romaney O’Malley, American International Group Inc.
Julie Page, Aon Risk Solutions
Kerry Rainer, Xchanging P.L.C.
Carol Richmond, Arthur J. Gallagher
Profiles of the 2017 honorees will be published in the December edition of Business Insurance.
The honorees will be recognized at a Women to Watch leadership conference and gala awards luncheon Nov. 16-17 in London. 
For more information on attending the event, please contact Katie Kett at kkett@businessinsurance.com.
The honorees for the United States and other non-EMEA countries will be announced next week.

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US, EU to sign covered agreement on insurer equivalency

The United States and the European Union on Friday will sign a covered agreement to address the U.S. lack of equivalency related to the bloc’s Solvency II directive for the insurance industry.
The bilateral agreement between the jurisdictions was reached in the waning days of the Obama administration  and has been under review by the Trump administration, which was being lobbied by the National Association of Insurance Commissioners  and some federal legislators to revisit certain provisions of the agreement.
“The agreement represents a major step forward in U.S.-EU cooperation on insurance and reinsurance, conveying benefits to EU and U.S. insurers and reinsurers operating across the Atlantic, by offering them enhanced regulatory certainty, while maintaining robust consumer protections,” the jurisdictions said in a joint statement on Friday.
The covered agreement addresses three areas of prudential insurance oversight: reinsurance, group supervision and the exchange of insurance information between supervisors.
From a reinsurance perspective, the agreement will lead to the elimination of collateral and local presence requirements for EU and U.S. reinsurers operating in each other’s markets, according to the statement.
From a group supervision perspective, U.S. and EU insurers operating in the other’s markets will only be subject to worldwide prudential insurance group oversight by supervisors in their home jurisdictions, according to the statement.
The agreement also encourages insurance supervisory authorities in the U.S. and the EU to continue to exchange supervisory information on insurers and reinsurers that operate in the U.S. and EU markets and includes model information sharing memorandum of understanding provisions.
Without a signed agreement, U.S. companies would have been unable to renew or write new business  in the European Union without first establishing a local presence in each EU member state in which they intended to write business.
The U.S. and EU will now move toward implementation, including through a joint committee established by the agreement. The European Union will also follow the necessary steps, involving the Council and the European Parliament, to formally conclude the agreement.
Stef Zielezienski, the American Insurance Association’s senior vice president and general counsel in Washington, applauded the agreement signing in a statement on Friday.
“When negotiations began, U.S. insurance and reinsurance groups were facing growing obstacles to their ability to do business in Europe, but this agreement removes those barriers — affirming not only each other’s regulatory systems, but also their commitments to nondiscriminatory treatment and open, reciprocal, competitive insurance markets,” he said.
“The agreement recognizes the soundness of the U.S. state-based insurance regulatory system and allows U.S.-supervised insurers to compete in Europe on the same basis as European insurers,” Evan G. Greenberg, chairman and chief executive officer of Chubb, said in a statement on Friday. “The agreement also reflects U.S. recognition of the soundness of the EU regulatory environment and will allow EU-based reinsurers to operate under the same conditions as U.S. companies. We applaud the spirit and intent of this agreement, which is a de facto acknowledgment by the European regulatory community that there is indeed more than one way to regulate the insurance industry.”

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