August 2012 Alert

Greetings,

Welcome to the August 2012 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

August 2012 Alerts

Blurb

Category(s): Arizona - 08/01/2012

Changes in Top Positions at Arizona DOI

The past two months have seen changes in the top positions at the Arizona Department of Insurance. Germaine (Gerrie) Marks, the former Deputy Director, was named as Acting Director replacing Christina Urias. Kurt Regner, the longtime Chief Analyst, was appointed to succeed Steve Ferguson as the Assistant Director of the Financial Affairs Division.

J. Michael Low, Esq. - KUTAK ROCK LLP, (480) 429-4874 , Michael.Low@kutakrock.com

Category(s): Federal - 08/01/2012

Federal Advisory Committee on Insurance 8/6/12 Meeting.

As the world awaits the issuance of the Federal Insurance Office’s report on regulatory modernization, mandated by the Dodd-Frank Act, we know that FIO has a lot of other balls up in the air that may be equally as important.  We got a glimpse of that on August 6 when FIO Director Michael McRaith’s Federal Advisory Committee on Insurance met at Treasury.   The meeting focused on the internationalization of insurance markets and the existing subcommittee charges given at the last FACI meeting in March.  The consulting group McKinsey & Company gave a report on trends in the international and US Markets, followed by reports by the two subcommittees.  Director McRaith reported on his office's work in the international arena and posed specific questions to the subcommittees and to a new third subcommittee looking at international regulations, specifically ComFrame.

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

Category(s): Federal - 08/01/2012

Louisiana Department of Insurance Agrees to Share Information with FinCEN

In April, Louisiana became the first state to agree to share information with the federal Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury Department.  Louisiana Department of Insurance Commissioner Jim Donelon signed a Memorandum of Understanding with FinCEN Director James H. Freis, Jr., that will allow the LDOI and FinCEN to "share important information enabling both parties to better protect the industry and consumers from criminal activity and fraud," according to an LDOI press release.

Director Freis pointed out that Commissioner Donelon's "influential role as president-elect of the National Association of Insurance Commissioners will help set the standard for other states to follow" Donelon's lead in partnering with FinCEN to share information. Commissioner Donelon, for his part, indicated that the partnership with FinCEN was "a significant tool" that should enhance the LDOI's efforts to better protect Louisiana consumers from fraud and other criminal activity.

Details on what types of information will be shared under the agreement remains unclear; whether individuals and companies regulated by the Louisiana Department of Insurance will have any notice or opportunity to object before information is shared with FinCEN remains to be seen.

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

Category(s): Florida - 08/01/2012

A Florida Appellate Court Rules Public Adjusters Can Attend Insured's Examination Under Oath

In Nawaz v. Universal Property & Cas. Ins. Co., No. 4D10-4288 (Fla. 4th DCA, June 13, 2012), an appellate court has finally addressed the issue of whether an insured's public adjuster may attend an Examination Under Oath.  To view a copy of the court’s opinion, click here.

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

Category(s): Florida - 08/01/2012

Fifth District Court of Appeal Rules Insurer Need Not Pay Future Bills From Provider That Knowingly Submitted Fraudulent Bills for the Same Claimant and Accident

On June 29, 2012, in the case of Chiropractic One v. State Farm, 2012 WL 2465012, (Fla. 5th DCA June, 29, 2012) the Fifth District Court of Appeal affirmed a trial court's grant of summary judgment in favor of State Farm Mutual Automobile Insurance Company, thereby favorably interpreting portions of the fraud-fighting provisions of the 2003 Personal Injury Protection statutory changes.  To access the complete case summary, click here.  To access a copy of the court’s opinion, click here.

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

Category(s): Florida - 08/01/2012

Finally, Definitive Answers from the Florida Supreme Court on Bad Faith and the Effect of Non-Compliant Notice Provisions in Policies

In QBE Ins. Corp. v. Chalfonte Condominium Apartment Ass'n., Inc., the Florida Supreme Court issued its long-awaited decision on May 31, 2012 in response to questions certified from the United States Court of Appeals for the Eleventh Circuit as being determinative of a case pending in that court for which there was no controlling Florida precedent.  The case arises from a Hurricane Wilma insurance claim by a condominium association against its insurer, QBE.  The condo association was dissatisfied with QBE's investigation and processing of its claim and filed suit alleging various claims for breach of contract, declaratory relief, statutory policy violations and breach of implied warranty of good faith and fair dealing.  A jury ultimately found QBE liable on all claims and the trial court entered a multi-million dollar judgment against QBE.  To access the complete opinion, click here.

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

Category(s): Florida - 08/01/2012

Florida Office of Insurance Regulation Establishes Speed-to-Market Property Casualty Personal Lines Form Filings Review

On June 25, 2012, the Florida Office of Insurance Regulation issued an Executive Order establishing "speed-to-market" review of all property and casualty personal lines forms except workers' compensation.  The certification process will be identical to the system established for commercial form filings earlier in 2012.  To access a copy of the Order, click here.

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

Category(s): Florida - 08/01/2012

Florida Scrutinizing Force-Placed Insurance

The Florida Office of Insurance Regulation and Commissioner Kevin McCarty continue to take a close look at the force-placed insurance market.  McCarty, the current NAIC president, has pursued hearings at the NAIC relating to this segment of the insurance industry.  In Florida, the OIR recently held a public hearing on a proposed 2.2% average rate reduction filed by a force-placed insurer.  The OIR subsequently issued a notice of intent to disapprove the rate filing, asserting that the rate reduction should have been about 35%.

Travis L. Miller, Esq. - RADEY LAW FIRM, (850) 425-6654 , tmiller@radeylaw.com

Category(s): Florida - 08/01/2012

Florida Supreme Court: 48-Hour Post-Disaster Ban on Public Insurance Adjuster Solicitations is Unconstitutional

On July 5, 2012, the Florida Supreme Court issued an opinion in the case of Atwater v. Kortum, in which it found that part of a 2008 Florida law restricting post-disaster solicitations by public insurance adjusters is unconstitutional.  To access a copy of the opinion, click here.

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

Category(s): Florida - 08/01/2012

OIR Proposes Repeal of Penalty Rule

The Florida Office of Insurance Regulation is proposing to repeal a longstanding rule that provides guidelines to be considered when penalizing insurers for violations of the insurance code.  The OIR proposes the repeal because the legislature has changed the applicable fines in many instances in the years since the rule initially was adopted.  However, the proposed repeal concerns some insurers because it will eliminate other provisions that are beneficial to the regulatory process, such as a policy statement that the OIR will not penalize insurers when they discover errors and implement corrective measures before those errors come to the attention of the OIR.

Travis L. Miller, Esq. - RADEY LAW FIRM, (850) 425-6654 , tmiller@radeylaw.com

Category(s): Florida - 08/01/2012

OIR Urges Caution in Reviewing PIP Savings Report

In response to requests under Florida's public records law, the Office of Insurance Regulation released a preliminary draft of the actuarial report it commissioned to study the anticipated savings due to the 2012 Personal Injury Protection reforms in Florida.  The OIR was required by the new law to obtain the actuarial analysis.  Although the draft report suggests potential savings of 12-20%, the OIR issued several cautionary notes.  Due to competitive considerations, some insurers have not been requesting their fully indicated rates and therefore cannot be expected to reduce rates by the indicated amount of savings.  In addition, the savings apply only to the PIP portion of the premium so the percentage savings will be smaller if stated in relation to the total policy premium.

Travis L. Miller, Esq. - RADEY LAW FIRM, (850) 425-6654 , tmiller@radeylaw.com

Category(s): Georgia - 08/01/2012

Byrd v. United Servs. Auto. Ass’n, A12A0001, Georgia Court of Appeals (July 6, 2012)

On July 6, 2012, the Georgia Court of Appeals reversed the trial court’s grant of summary judgment to United Services Automobile Association (“USAA”) arising out of USAA’s denial of coverage for a theft claim by the policyholder.  The plaintiff owned a 2005 Lamborghini that was covered by USAA.  On March 4, 2008, he parked the vehicle at car dealership belonging to David Jordan, with whom he had on previous occasions sold vehicles.  On those previous occasions, Mr. Jordan would tell Mr. Byrd if there were interested buyers and then establish an agreeable price.  Afterward Mr. Byrd would sign the title to the vehicle over to Mr. Jordan.  In the instant matter Mr. Jordan’s brother, also an employee of the dealership and a man with whom Mr. Byrd had not previously dealt, sold the vehicle without contacting Mr. Byrd.  Mr. Byrd discovered this only by visiting the dealership, finding that the vehicle was gone.  On May 24, 2008, Mr. Jordan called Mr. Byrd and informed him that the vehicle had been sold and that the purchase price was $225,000 and that he had received only partial payment.  Mr. Byrd agreed to the purchase with the expectation that the buyer would pay, through Mr. Jordan, the full $225,000 sales price within 30-days.  Mr. Jordan cancelled his USAA insurance policy the same day.  Although the dealership took possession of the vehicle, its title was never signed over by Mr. Byrd.  Ultimately, the vehicle’s purchase price was not paid and the dealership closed on June 30th.  In defending the theft claim filed by Mr. Byrd, USAA asserted that the theft was of the proceeds of sale and not the vehicle because Mr. Byrd had ratified the sale of the vehicle on May 24.  The trial court agreed with USAA and found that the taking of the vehicle did not involve felonious intent on the part of the taker; i.e., theft by conversion.  In reversing the grant of summary judgment, the Appellate Court ruled that there were facts that could support the claim of felonious intent by the taker of the vehicle (a covered claim) because there was evidence of several misrepresentations including that the $225,000 sales price had actually been paid by the purchaser on May 24, the vehicle was sold without the prior consent of Mr. Byrd, and by the end of June neither of the Jordan brothers could be found and the dealership had ceased doing business.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Trey Sivley, Esq. - LOCKE LORD LLP, (404) 870-4657 , tsivley@lockelord.com

Category(s): Georgia - 08/01/2012

Gates v. Glass, S12G0133 Georgia Supreme Court (July 2, 2012).

On July 2, 2012, the Georgia Supreme Court affirmed the Appellate Court’s reversal of summary judgment in favor of Troup County and county employee Donrell Gates on the basis of sovereign immunity.  The case involved the wrongful death of Mr. Glass from the operation of a county tractor and bush hog.  The question that the Supreme Court considered was “whether the definition of ‘any motor vehicle’ in O.C.G.A. § 33-24-51(a) continues to be the broader definition of the term provided for in prior case law, notwithstanding the 2002 passage of O.C.G.A. § 36-92-1,” which provides a definition of motor vehicle that is more narrow than prior case law.  In affirming the Appellate Court’s reversal of summary judgment, the Supreme Court ruled that the narrower definition of “motor vehicle” in O.C.G.A. § 36-92-1(6) did not apply because that definition was relevant only to that chapter of the Code, concluding that if the legislature had intended to narrow the definition of “any motor vehicle” in the context of O.C.G.A. § 33-24-51 it would have done so expressly.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Trey Sivley, Esq. - LOCKE LORD LLP, (404) 870-4657 , tsivley@lockelord.com

Category(s): North Carolina - 08/01/2012

North Carolina Allows Public Comment On All Property Insurance Rate Filings

North Carolina Senate Bill 836, signed into law by Governor Beverly Purdue on July 12, 2012, puts in place a mechanism for the public to comment on all property insurance rate filings in the state.  At least 30 days before the notice of hearing issues for property insurance rate filings, the North Carolina Department of Insurance will receive comments from the public regarding the filing.  The comments may be provided by email, mail or in person.  The bill also allows the North Carolina Commissioner of Insurance to specify the appropriate rate level or levels between the then current rate and the Rate Bureau filed rate upon a finding that the rate filed is excessive.

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

Category(s): Pennsylvania - 08/01/2012

Pennsylvania Enacts Changes to Insurance Holding Company & Credit for Reinsurance Laws

On July 5, 2012, Governor Tom Corbett signed into law Act 136 of 2012 making a number of significant changes to Pennsylvania's Insurance Holding Company Act (HCA) as well as revising the credit for reinsurance law to allow for certified reinsurers.  The certified reinsurer provision was effective immediately; however, since Act 136 did not include any provisions/processes for reinsurers to become certified, Pennsylvania domestic insurers will have to wait until regulations are promulgated (expected Fall 2012) before being able to take advantage of this new provision. All HCA revisions become effective September 3, 2012, with the exception of the requirement to file a Form F Enterprise Risk Report (provision effective January 1, 2013, with the first Form F due by March 31, 2014).  All HCA revisions, but one, follow generally the NAIC Model HCA provisions:  Act 136 includes additional supervisory college provisions authorizing the Pennsylvania Insurance Department to act as the group-wide supervisor for an international insurance group where the group’s ultimate controlling person (UCP) is domiciled in Pennsylvania, or where the UCP is domiciled outside Pennsylvania, but the group has substantial operations concentrated in Pennsylvania.  As with the new credit for reinsurance provision, implementing regulations for the HCA provisions are expected to be promulgated in Fall 2012.

Frances R. Roggenbaum, Esq. - SAUL EWING ARNSTEIN & LEHR LLP, (717) 257-7526 , fran.roggenbaum@saul.com

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