The CAFA would take most class-action suits out of state courts and put them in the federal system, essentially limiting insurers' exposure on big judgments. Obstacles to passage have largely disappeared after Republicans made significant concessions to Democrats in order to get bipartisan support for the measure in the Senate. The House easily passed the bill last summer by a vote of 253 to 170.

The CAFA would put a stop to venue shopping by attorneys who want to hold trials in jurisdictions historically sympathetic to injured parties. The measure would move class actions lawsuits that seek more than $5 million and affect plaintiffs in multiple states from state courts to the federal judiciary.

The bill would also prohibit settlements in which class members actually lose money after paying attorneys' fees.

Catastrophe modeling now part of doing business
15 years ago when catastrophe modeling tools were first developed, only a handful of insurers used them as benchmarks for forecasting maximum losses. That was before the first multi-billion dollar catastrophic loss. Today catastrophic modelers are vital tools for the industry to forecast casualty exposures and help companies make business decisions.

The terrorist attacks have ushered in a new wave of modeling tools though they are not used as commonly as those models that focus on natural catastrophes.

When the models were first introduced in the 1980s, they focused on earthquakes and hurricanes in a geographic area. Now they incorporate winter storms, tornadoes, floods, fires and other perils as well as made-made catastrophes. A large commercial insurance or reinsurance company with worldwide operations and multiple perils can now have a handle on its aggregate risk around the globe.

Another factor leading to the growth of modeling is the quality of data collected by insurers. With the tidalwave of data available, insurers can use models to predict exposures by zip codes and make price and underwriting decisions on individual accounts.

Industry observers say the new terrorism models are less well accepted for a good reason: it's much harder to build a model based on the likely activities of irrational humans than it is to predict occurrences of nature.

Insurers warned to avoid price war
Frank J. Coyne Insurers warned to avoid price war Industry observers believe that the hard market for insurance may be coming to an end and they caution insurers not to "sow the seeds of their own destruction" by engaging in a competitive price war to increase business. That was the phrase used by the Insurance Services Office CEO Frank Coyne in a conference address late last year.

Rate increases of the past two years strengthened the industry and improved combined ratios. But for slower premium growth and the return of a soft market worry Coyne. He pointed to the mid-1980s when the industry made a strong recovery by setting premiums based on sound underwriting principles, ushering a period of sustained profitability.

"With each improvement in profitability, the property/casualty industry has a history of reverting to hyper competition for market share…and slips into a soft market," he cautioned.

ISO data indicates that insurer insolvencies are increasing. Since 2000, an average of 33 property/casualty insurers filed each year compared with 12 per year in the 1970s and 27 per year in the 1980s and 1990s.

FCRA extended indefinitely
The Fair Credit Reporting Act, which was set to expire in 2003, has been permanently renewed by Congress on a 379-49 vote. The FCRA regulates The act regulates the use of consumer credit information and affects every American consumer and business.

The National Association of Independent Insurers (NAII) praised the act as a key tool in allowing the financial services and insurance industries fight identity theft. An NAII spokesman called the FCRA the "beginning of a process" for the insurance industry which is seeking standards for credit scoring.