October 2011 Alert

Greetings,

Welcome to the October 2011 edition of the FORC Alert.  I hope you find the information useful.  If you have any colleagues that may be interested in this publication, please forward it on.  There is a link below this message allowing them to opt-in so they can receive these FORC Alerts automatically.

Best Regards,

David K. Liggett

Editor, FORC Alert

October 2011 Alerts

Blurb

Category(s): Connecticut - 10/01/2011

Connecticut Establishes Legislative Task Force to Examine Life Insurance Policy and Annuity Conversions and the Provision of Certain Notifications by Life Insurance Companies

Through Special Act No. 11-13, effective July 13, 2011, the Connecticut legislature has established a task force, “to examine: (1) ways to allow an insured under a life insurance policy or a contract holder of an annuity to convert such policy or annuity to a long-term care policy; and (2) the implications of requiring life insurance companies to notify their policyholders of the option to enter into a life settlement contract as an alternative to the lapse or surrender of a life insurance policy.”  The task force is charged with submitting recommendations and a report on its findings to the Insurance and Real Estate Committee of the Connecticut General Assembly by January 1, 2012. 

The task force, which will terminate upon submission of its report and recommendations, will consist of individuals appointed by designated leaders of the Connecticut legislature as follows: (1) two appointed by the speaker of the House of Representatives; (2) two appointed by the president pro tempore of the Senate; (3) one appointed by the majority leader of the House of Representatives; (4) one appointed by the majority leader of the Senate; (5) one appointed by the minority leader of the House of Representatives; and (6) one appointed by the minority leader of the Senate.  Either the Connecticut Insurance Commissioner or his designee is to serve on the task force as well.  Appointments were to have been in place as of August 13th, but according to the Insurance and Real Estate Committee, appointments are still being finalized as of October 4, 2011.

Alan J. Levin, Esq. - LOCKE LORD LLP, (860) 541-7747 , alan.levin@lockelord.com

Category(s): Connecticut - 10/01/2011

Connecticut Insurance Department enters Cooperation Agreement with Swiss Regulators

On September 23, 2011, the head of the Connecticut Insurance Department (the "CID"), Commissioner Thomas Leonardi, announced the signing of a memorandum of understanding ("MoU") with the Swiss Financial Market Supervisory Authority ("FINMA"), the governmental body responsible for financial regulation in Switzerland.  Under the MoU, the CID and FINMA may request assistance from one another, including obtaining information on regulated companies and individuals.

In announcing the MoU, Commissioner Leonardi stated, "The insurance industry is an international one and continues to expand its global reach.  Regulating it cannot stop at the border and must be looked at in its totality.  This commitment will allow Connecticut and Swiss regulators to work effectively together and ensure market stability for consumer protection."  To view the press release, click here.

Commissioner Leonardi indicated that the CID is party to a similar cooperation agreement with Dutch regulators, that it has a similar agreement pending with German regulators, and that it has applied to be a signatory to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding on Cooperation and Information Exchange, which currently includes 17 non-U.S. jurisdictions.

Michael T. Griffin, Esq. - ACCEL LAW GROUP, (860) 761-8550 , mgriffin@accelcompliance.com

Category(s): Federal - 10/01/2011

Woodall Joins FSOC

In a late-night vote Monday, September 26, 2011, the United States Senate approved the President’s nomination of Roy Woodall by unanimous consent.  Woodall will commence a six-year term on the Financial Stability Oversight Council as its sole-voting insurance expert.  He joins Federal Insurance Director Mike McRaith and Missouri Insurance Director John Huff.  (Huff was appointed by the NAIC to a two-year term on FSOC.) The Council consists of ten voting members and five non-voting members.

Charles T. Richardson, Esq. - FAEGRE BAKER DANIELS LLP, (202) 312-7487 , crichardson@faegrebd.com

Category(s): Florida - 10/01/2011

Florida Commission on Hurricane Loss Projection Methodology Approves Florida Public Hurricane Loss Model

During a two-day meeting on August 17-18, 2011, the Florida Commission on Hurricane Loss Projection Methodology ("FCHLPM") approved a revised version of the Florida Public Hurricane Loss Model Version 4.1, agreeing that it met all of the FCHLPM's 2009 Standards to Determine Acceptability.  The Public Model’s initial submission had not been approved, inasmuch as it was riddled with typographical errors, including mislabeled tables, incorrect page numbers and miscalculations.  During the meeting, the FCHLPM also conducted a review of the six Standards, which include lengthy, technical and highly detailed requirements for evaluating hurricane models.  To view the complete meeting summary click here.

Fred E. Karlinsky, Esq. - GREENBERG TRAURIG LLP, (954) 768-8278 , karlinskyf@gtlaw.com

Category(s): Florida - 10/01/2011

Florida Office of Insurance Regulation Drastically Curtails Citizens Property Insurance Corporation's Post-SB 408 Sinkhole Rate Filing

In an order issued during the late evening hours of September 19, 2011,  Florida Insurance Commissioner Kevin McCarty drastically reduced triple digit sinkhole rate increases requested by Citizens Property Insurance Corporation from an overall 447 percent to 32.8 percent.  Citizens’ rate increase requests, which were not uniform, ranged from zero to 2,688 percent.  For some policyholders, this would have resulted in average sinkhole premium increases of up to $5,521.  In explaining his rationale for essentially denying the requested rates, McCarty said that Florida’s state-run insurer of last resort was not able to provide a study or credible evidence in its rate filing that supported the requested increases.   To access the order and the Florida Office of Insurance Regulation news release, click here.

Fred E. Karlinsky, Esq. - GREENBERG TRAURIG LLP, (954) 768-8278 , karlinskyf@gtlaw.com

Category(s): Florida - 10/01/2011

Florida Workers' Compensation Joint Underwriting Association Board of Governors Approves Overall Average Premium Level Decrease of 9.7 Percent For New and Renewal Business Effective January 1, 2012

The Florida Workers' Compensation Joint Underwriting Association Board of Governors met on September 27, 2011, during which it unanimously approved a 9.7 percent overall average premium decrease for new and renewal business.  The decrease, which will be effective January 1, 2012, will be adjusted to reflect any approved voluntary market rate level and class relativity changes that may become effective January 1.

Fred E. Karlinsky, Esq. - GREENBERG TRAURIG LLP, (954) 768-8278 , karlinskyf@gtlaw.com

Category(s): Florida - 10/01/2011

Miami-Dade Circuit Court Holds That Attendance at Examination Under Oath (EUO) is a Condition Precedent to Suit -

On July 13, 2011, the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County Florida, acting in its appellate capacity in the case of State Farm Fire and Casualty Company v. Suncare Physical Therapy, Inc., Case No. 08-648 AP, held that an insured's failure to attend a properly noticed Examination Under Oath ("EUO"), as required by the applicable policy of insurance, contractually barred suit by the insured's medical provider/assignee, as it was a failure of an express condition precedent.  The Suncare court discussed language in the recent Florida Supreme Court decision in Custer Med. Center v. United Auto. Ins. Co., 35 Fla. L. Weekly S640a (Fla. Nov. 4, 2010), indicating that insurance policy provisions requiring EUOs as a condition precedent to suit, or that are not expressly permitted by the PIP statute, are unenforceable.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 768-8286 , fideir@gtlaw.com

Category(s): Florida - 10/01/2011

Supreme Court of Florida Finds Automobile Policy Household Exclusion to be Unambiguous

In State Farm Mutual Automobile Ins. Co. v. Gilda Menendez, SC10-116 (August 25, 2011), the Supreme Court of Florida held in favor of State Farm Insurance Company on the question of "whether the household exclusion barring coverage for 'any bodily injury to' 'any insured or any member of an insured's family residing in the insured's household' unambiguously eliminates coverage for bodily injuries suffered by the members of the household of a permissive-driver insured." The opinion is a victory for the insurance industry, inasmuch as it adds stability to the interpretation of clearly defined policy terms and maintains the bounds of coverage agreed to by insureds.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 768-8286 , fideir@gtlaw.com

Category(s): Georgia - 10/01/2011

Data Call on Losses Related to Tropical Storm Lee

On September 6, 2011, the Georgia Department of Insurance issued Directive 11-EXAM-1 requiring insurers covering property risks in Georgia to provide weekly reports regarding claims and losses from Tropical Storm Lee. The reports are due once a week starting on September 13, 2011, and continuing until November 29, 2011, for a total of 12 weekly reports. Data is required to be submitted electronically via the Georgia Department's company portal.

Tony Roehl, Esq. - MORRIS, MANNING & MARTIN, LLP, (404) 495-8477 , troehl@mmmlaw.com

Category(s): Georgia - 10/01/2011

Georgia Commissioner of Insurance Issues Bulletin Regarding Impact of Nonadmitted and Reinsurance Reform Act of 2010.

On September 12, 2011, Georgia’s Commissioner of Insurance issued Insurance Bulletin 11-EX-3 (the “Bulletin”) in order to outline nationwide regulatory changes affecting the placement of nonadmitted insurance in Georgia, which was occasioned by the passage of the Nonadmitted and Reinsurance Reform Act of 2010 (the “NRRA”), which became effective on July 21, 2011. One of the purposes of the Bulletin was to make clear that the NRRA did not have any impact on the scope of the types of insurance products that an insurer may write on a nonadmitted basis in Georgia, which remain unchanged. The Bulletin also explains how an insured’s “home state’ is determined for purposes of premium tax allocation, the allocation methodology when a surplus lines insurance policy covers risks or exposures located or to be performed inside and outside of the state, changes to the diligent search requirements of a surplus lines insurance broker before procuring insurance on a surplus lines basis and the preemptive nature of the NRRA’s restrictions on the ability of states to place eligibility requirements on nonadmitted insurers.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
William M Osterbrock, Esq. - Locke, Lord, Bissell & Liddell, LLP, wosterbrock@lockelord.com

Category(s): Georgia - 10/01/2011

Georgia Issues Bulletin Regarding Implementation of the Nonadmitted and Reinsurance Reform Act (NRRA)

On September 12, 2011, the Georgia Department of Insurance issued Bulletin 11-EX-3 which clarifies Georgia’s response to the NRRA including how the Department will collect tax revenue related to multi-state risks.  For policies issued or renewed after July 21, 2011 and where Georgia is the home state of the risk, surplus lines brokers are required to remit all surplus lines taxes to Georgia by adding: (i) a four percent charge for the portion of the premiums allocated to risks in Georgia, plus (ii) an amount equal to the premiums allocated to other states times the tax rate in those states.  Georgia has not joined a multi-state compact but may do so in the future.

Tony Roehl, Esq. - MORRIS, MANNING & MARTIN, LLP, (404) 495-8477 , troehl@mmmlaw.com

Category(s): Georgia - 10/01/2011

Laun v. AXA Equitable Life Ins. Co., A11A0843 (Georgia Court of Appeals, September 13, 2011)

On September 13, 2011, the Georgia Court of Appeals affirmed the grant of summary judgment in favor of the defendant-insurance company in a lawsuit involving the classification of the plaintiff-insured’s injuries under a disability income insurance policy. In this case, the plaintiff sued the defendant when it refused to reclassify the plaintiff’s total disability from a “total disability due to illness” to “total due to accident,” which provided the plaintiff with a longer benefit period. In this case, the plaintiff, an orthopaedic and hand surgeon, filed a claim for total disability coverage after being diagnosed in 2003 with bilateral basal osteoarthritis of the thumbs and not being able to perform surgeries. While out on disability and recovering from multiple surgeries performed on his thumbs, the plaintiff slipped and fell in 2004, further damaging his right wrist and quashing his hopes to return to work. The plaintiff contacted the defendant, requesting that his disability be reclassified to total disability due on injury; however, after obtaining an independent medical exam which concluded that the plaintiff’s impairment was only 35% due to the wrist injury and 65% due to the prior thumb condition and subsequent surgical procedures, the defendant denied the plaintiff’s request. The Court of Appeals upheld the trial court’s decision to grant summary judgment to the insurance carrier, finding that the plain meaning of the policy which stated that “total disability caused or contributed to by sickness or disease will not be considered accident total disability” precluded the plaintiff’s claim that the defendant should have reclassified his injuries.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
William M Osterbrock, Esq. - Locke, Lord, Bissell & Liddell, LLP, wosterbrock@lockelord.com

Category(s): Georgia - 10/01/2011

Lawson v. Life of the South Insurance Company, No. 10-11651, 2011 U.S. App. LEXIS 16412 (August 10, 2011)

On August 10, 2011, the U.S. Court of Appeals for the 11th Circuit affirmed the decision of the U.S. District Court for the Middle District of Georgia, which held that the defendant insurance company could not enforce an arbitration clause in a loan agreement between the plaintiffs and the car dealership.  In this case, the plaintiffs had purchased a credit life insurance policy from the defendant insurer in connection with the purchase of a used automobile.  The purchase price for the automobile and the upfront one-time premium payment for the insurance policy were financed through a loan with the car dealership, which was subsequently assigned to Chase Manhattan Bank. The insurance policy contained a clause that allowed for the refund of unearned insurance premiums in the event the plaintiffs paid off the car loan agreement early. When the plaintiffs paid off the loan two and one-half years early and did not receive a refund of the unearned premiums under the policy, the plaintiffs filed a class action lawsuit against the defendant. The defendant responded to the litigation by attempting to compel arbitration based on an arbitration clause in the loan agreement between the plaintiffs and the car dealership, although the insurance policy did not contain an arbitration provision. The Court of Appeals denied the defendant’s motion, stating that the defendant had no right to enforce the arbitration clause since (a) the insurance company was a stranger to the contract, (b) the doctrine of equitable estoppel was inapplicable to compel arbitration and (c) Georgia law prohibits arbitration clauses in insurance contracts pursuant to O.C.G.A. § 9-9-2(c)(3).

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
William M Osterbrock, Esq. - Locke, Lord, Bissell & Liddell, LLP, wosterbrock@lockelord.com

Category(s): Louisiana - 10/01/2011

Court Refuses Injunction Against State Health Insurance Contracts

A Baton Rouge Judge has refused to issue an injunction to stop the State of Louisiana from entering into contracts with three private insurance companies to provide healthcare management services for Medicaid recipients, but a different judge has ordered that the proposals submitted by the companies bidding on the project must be made public.

The state contracts farm out the management of healthcare services for approximately 800,000 Medicaid recipients to the private companies. Aetna Better Health, Inc., filed a lawsuit against the state, alleging that there were errors in the state procurement process by which the contracts were bid. Aetna sought an injunction to block the execution of the contracts with the private companies, arguing that it would be irreparably harmed by the action.

Aetna, Coventry Health Care of Louisiana, AmeriGroup Louisiana, Inc., AmeriHealth Mercy of Louisiana, Inc., and Louisiana Healthcare Connections all submitted proposals for the various state contracts in the bid process and were all awarded contracts. Aetna and Coventry, however, were not chosen to participate with the other three private companies in one certain contract dealing with coordinated-care networks.

After the decision, the Jindal administration has indicated it plans to move forward with the state contracts and intends to start the new program early next year.

Van R. Mayhall, III, Esq. - BREAZEALE, SACHSE & WILSON, L.L.P., (225) 381-3169 , van.mayhall.iii@bswllp.com

Category(s): North Carolina - 10/01/2011

North Carolina Insurance Commissioner Orders Activation of Disaster Mediation Program

On September 2, 2011, North Carolina's Commissioner of Insurance, Wayne Goodwin, issued Bulletin 11-B-10 (the "Bulletin") activating the North Carolina Department of Insurance's ("NCDOI") Disaster Mediation Program (the "Program").  The Bulletin was issued following President Obama's disaster declaration for thirty five eastern North Carolina counties in the wake of Hurricane Irene.  The Program was established in 2006 to assist homeowners in resolving claims arising from disasters declared by the Governor or the President.  NCDOI has contracted with the American Arbitration Association to serve as Program administrator.  Homeowners must request mediation within sixty days of the denial of all or a portion of a claim.  The dispute must be over the insurance company's findings as to the cause or amount of the loss and the parties must be at least $1,500 apart as to the amount owed.

David K. Liggett, Esq. - RAGSDALE LIGGETT PLLC, (919) 881-2209 , dliggett@rl-law.com

Category(s): Nevada - 10/01/2011

Liquidation of Western Insurance Company

On September 13, 2011, the Third Judicial District Court of Salt Lake County, State of Utah, entered a liquidation order and declaration of insolvency against former Nevada domiciled insurer Western Insurance Company.  Western Insurance Company was formed and domiciled in Nevada in 1994 by former Nevada Insurance Commissioner Dick L. Rottman.  Former Nevada Insurance Commissioner Alice Molasky-Arman was an officer of the company but resigned just after the company was re-domiciled on December 1, 2010.

Vernon E. Leverty, Esq. - LEVERTY & ASSOCIATES LAW, (775) 322-6636 , Gene@levertylaw.com

Category(s): Nevada - 10/01/2011

Nevada Department of Commerce Commissioner

The Nevada Department of Commerce has interviewed five potential candidates for the vacant Commissioner position.  A decision regarding the appointment of a new commissioner is expected soon.

Vernon E. Leverty, Esq. - LEVERTY & ASSOCIATES LAW, (775) 322-6636 , Gene@levertylaw.com

Category(s): Nevada - 10/01/2011

Nevada Supreme Court Holding Regarding Earth Movement Exclusions

On August 24, 2011, the Nevada Supreme Court amended its prior holding in Powell v. Liberty Mutual Fire Ins. Co., 252 P.3d 668; 2011 Nev. LEXIS 15; 125 Nev. Adv. Rep. 14.  The Court maintained its prior holding that insurers who wish to limit coverage as to earth movement must specifically identify those actions for which no coverage exists, or provide a list of the kinds of earth movements for which no coverage exists, including both natural and man-made movement.

Vernon E. Leverty, Esq. - LEVERTY & ASSOCIATES LAW, (775) 322-6636 , Gene@levertylaw.com

Category(s): Tennessee - 10/01/2011

TDCI Schedules Rulemaking Hearing on Health Insurance Filings

The Department of Commerce and Insurance will hold a rulemaking hearing on October 26 at 10am to consider new Rules 92 and 93 (Chapters 0780-01-92 and 0780-01-93) that regulate form and rate filings for accident and health insurance coverages other than credit accident and health insurance.   Rule 92 is essentially a relocation of the Department's Rule 20 and applies to accident and health insurance coverages not subject to PPACA, while Rule 93, which applies only to health insurance coverages subject to PPACA, was implemented on an emergency basis and is currently in effect for form and rate filings made after September 1.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259 , rledyard@bassberry.com

Category(s): Tennessee - 10/01/2011

Tennessee Commissioner Names New Captive Director

Tennessee Commissioner of Commerce and Insurance Julie Mix McPeak has named former Morgan Keegan & Co. executive Michael Corbett as the Insurance Division's new Captive Director to coordinate with companies seeking to establish or redomesticate a captive under the recently enacted Revised Tennessee Captive Insurance Act.  Two new captives have already been licensed in Tennessee under the new law, which became fully effective on September 1.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259 , rledyard@bassberry.com

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