October 2012 Alert

Greetings,

Welcome to the October 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

October 2012 Alerts

Blurb

Category(s): Florida - 10/01/2012

Florida Office of Insurance Regulation Approves Homeowners' and Dwelling Fire Rate Increases for Citizens Property Insurance

The Florida Office of Insurance Regulation ("OIR") issued an October 2, 2012 Order establishing homeowners' and dwelling fire rate increases for Citizens Property Insurance Corporation ("Citizens"). These rates will be effective January 1, 2013 for new and renewal multi-peril business, and February 1, 2013 for new and renewal wind-only business. To view the OIR news release detailing the rates, click here.

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

Category(s): Florida - 10/01/2012

Florida Office of Insurance Regulation Approves Takeout of 210,000 Policies from Citizens Property Insurance Corporation

The Florida Office of Insurance Regulation ("OIR") has approved the removal of 210,000 policies from Citizens Property Insurance Corporation ("Citizens") by five private-sector insurance companies:

Florida Peninsula Insurance Company - 45,000 policies
Homeowners Choice P&C Insurance Company - 75,000 policies
Southern Fidelity P&C, Inc. - 30,000 policies
Southern Oak Insurance Company - 10,000 policies
American Integrity Insurance Company of Florida - 50,000 policies

The takeout begins November 6, and adds to the 84,339 policies already removed from Citizens in 2012. More details on the takeouts are available by clicking here.

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

Category(s): Florida - 10/01/2012

Florida Office of Insurance Regulation Establishes Rates for Citizens Mobile Home Filings; Orders Citizens Mobile Home Business Study

Following a 45-day deliberative review process that included a September 20, 2012 public hearing, the Florida Office of Insurance Regulation ("OIR") issued an October 8, 2012 Order establishing mobile home rates for Citizens Property Insurance Corporation ("Citizens").   In the Order, the OIR requires Citizens to conduct a study of its mobile home business, including the following factors: age of home, actual cash value of home, estimated replacement cost of home, policy value and the amount of premium paid for these policies. A review of these factors must be completed prior to a subsequent rate filing. To view the Order, click here.

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

Category(s): Florida - 10/01/2012

Florida Office of Insurance Regulation Issues Updated Underwriting Profit and Contingency Factors

In an August 30, 2012 Order to all property and casualty insurance carriers from Florida Insurance Commissioner Kevin McCarty, the Florida Office of Insurance Regulation updated underwriting profit and contingency factors that insurers may use in rate filings. These factors will remain in effect until a future Order supersedes them. To view the order, click here.

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

Category(s): Florida - 10/01/2012

Fourth District Court of Appeal: Appraisal Award can Satisfy the “Favorable Resolution” Prerequisite for Filing a Bad Faith Action

Before an insured may bring an action against an insurer for bad faith in Florida, the insured must obtain a favorable resolution of the underlying breach of contract claim. Historically, this meant that the insured needed to obtain a judgment or decree holding the insurer liable for breach of the insurance contact. Under the "confession of judgment" doctrine, courts have held that a bad faith action may proceed when an insurer pays a disputed claim after an action for breach of contract is filed, even when no judgment or decree has been entered. However, in Trafalgar at Greenacres, Ltd. v. Zurich American Ins Co, the Fourth DCA held that an appraisal award may constitute a "favorable resolution," allowing the insured to file a claim for bad faith. Until this decision, Florida courts had not extended the confession of judgment doctrine to situations where an insurer invokes the appraisal clause of its policy, and pays for a loss according to the appraisal award.

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

Category(s): Georgia - 10/01/2012

New Proposed Regulation for Vehicle Service Contracts

The Georgia Department of Insurance recently held a hearing on new rules and regulations for vehicle service contracts.  The proposed regulation is in response to a new Georgia statute that exempts vehicle service agreements or extended warranties offered for sale by motor vehicle dealers from the Georgia Insurance Code.  Under the statute, vehicle service agreements and extended warranties are not considered to be insurance, provided that the seller meets certain requirements.  Under the proposed regulation the vehicle service agreement or extended warranty must be backstopped by an insurance policy provided by an insurer authorized to do business in Georgia or a registered surplus lines insurer.  Further, the rates for the reimbursement insurance policy must conform to the requirements of Georgia’s Rating Chapter.  It is presumed that this requirement will not apply to surplus lines insurers since they are not required to comply with that portion of Georgia law.  In addition, the draft regulations require disclosures to the service contract holder and prohibit certain unfair trade activities.

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

Category(s): Louisiana - 10/01/2012

LDI Emergency Rule 26

In response to Hurricane Isaac, Commissioner Donelon issued Emergency Rule 26 which suspended until 12:01 a.m. on September 25, 2012 any statutory or regulatory provision, or any policy provision that imposed upon the insured a time limit to perform any act or transmit any information or funds when such act was to have been performed on or after 12:01 a.m. on August 26, 2012.  Effective 12:01 a.m. on September 8, 2012 the Emergency Rule was amended to limit its application to insureds who resided in certain enumerated parishes and who provided written notice to their insurer that they were impacted by Hurricane Isaac in a manner including, but not limited to, evacuation, displacement, temporary relocation, or loss of power.

Ronnie L. Johnson, Esq. - McGLINCHEY STAFFORD, PLLC, (225) 382-3620 , rjohnson@mcglinchey.com

Category(s): North Carolina - 10/01/2012

North Carolina Rate Bureau Seeks Increase For Property Insurers

The North Carolina Rate Bureau has filed with the North Carolina Department of Insurance ("DOI") a request to raise property insurance premiums by an average of just under 18% across the state.  The last property rate increase in the state, an increase of 4.09%, was in 2009 and was a settled increase in response to a Rate Bureau request for an increase of 20.9%.  In 2009, North Carolina Insurance Commissioner, Wayne Goodwin, instituted public comment sessions in order for citizens to respond to proposed rate increases.  The deadline for citizens to submit comments to the DOI in response to the proposed rate increase is October 19, 2012.  As of October 18, the DOI had received nearly 4,000 comments.  Many of the strongest opponents of the increase live in the coastal counties of the state, some of whom are facing proposed rate increases of 30%.  The Rate Bureau points to increased claims (both frequency and cost), higher expenses and reinsurance costs and potential coastal losses from storms underpinning the need to increase rates.  The rate filing will be considered by the DOI to determine whether an increase is warranted.  If the Rate Bureau and the DOI cannot reach an agreement on rates, the matter will be decided at an administrative hearing.

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

Category(s): Pennsylvania - 10/01/2012

Pennsylvania Modernizes Credit for Reinsurance Regulations

On September 1, 2012, the Pennsylvania Insurance Department published proposed amendments to the regulations applicable to reinsurers.  These amendments seek to modernize Pennsylvania’s regulations regarding collateral for foreign reinsurers necessary for statutory credit and bring the state’s regulatory regime into compliance with NAIC white paper proposals and accreditation requirements.  The proposed regulations also bring Pennsylvania current with the regulations of states such as Florida and New York.  The amendments allow reinsurers to become “certified” by the Commissioner and change the regulatory focus from traditional collateral requirements to the financial stability of the reinsurer as measured by available surplus and credit rating.  The new regulations also require that the jurisdiction supervising the foreign reinsurer meet certain requirements regarding financial reporting and prompt enforcement of United States judgments.  The proposed regulations require that a reinsurer maintain a minimum surplus of $250 million, that the jurisdiction from which it is domiciled is a “qualified jurisdiction” (which requires at a minimum that the jurisdiction “promptly” enforces judgments from the United States), and that the need for collateral will be determined by the financial ratings of the foreign reinsurer.  Foreign reinsurers meeting the other requirements of the new regulations with credit ratings of better than AA+ (S&P) or Aa1 (Moody’s) will not be required to post collateral.  As the credit ratings deteriorate, the collateral requirements increase on a sliding scale from 10% to 100%.  The new regulations will become final after thirty days from the final form publication in the Pennsylvania Bulletin.  For any further questions regarding the new proposed regulations, please contact the undersigned.

James S. Gkonos, Esq. - SAUL EWING ARNSTEIN & LEHR LLP, (215) 972-8667 , jgkonos@saul.com

Category(s): Tennessee - 10/01/2012

Commissioner McPeak Names New General Counsel

Commissioner Julie Mix McPeak has named Nancy Jones as General Counsel of the Tennessee Department of Commerce and Insurance effective October 1st.   A former federal prosecutor and litigation partner at Bass, Berry & Sims, Ms. Jones most recently served as Chief Disciplinary Counsel of the Tennessee Board of Professional Responsibility.

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 - 10/01/2012

TDCI Holds Rulemaking Hearing on Captives

The Department of Commerce and Insurance held a rulemaking hearing on October 4 to consider new Rule 41 (Chapter 0780-01-41) that implements provisions of the Revised Tennessee Captive Insurance Act (Tenn. Code Ann. § 56-13-101 et seq.) adopted by the Tennessee General Assembly in 2011.  Rule 41, which sets forth annual reporting requirements and audit requirements for captives domiciled in the state, will become effective during the first quarter of 2013.

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 - 10/01/2012

Tennessee Department of Commerce and Insurance Welcomes New Chief Examiner

On October 1, the Tennessee Department of Commerce and Insurance welcomed back Jimmy York as the new Chief Examiner.  Mr. York, who holds an MBA and CFI, CISA and AES designations, first worked with the Examinations Division in the 1990s, having thereafter worked as an examiner with the KY and UT Departments and also with York Consulting and INS Regulatory Services.

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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