December 2013 Alert

Greetings,

Welcome to the December 2013 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

December 2013 Alerts

Blurb

Category(s): Florida - 12/01/2013

Citizens Property Insurance Corporation Clearinghouse Program Delayed

Citizens Property Insurance Corporation ("Citizens") CEO, Barry Gilway, has reported that the debut of the insurer’s clearinghouse has been pushed back to January 27, 2014.  The delay will allow more companies to participate in the clearinghouse.  Originally, the clearinghouse was set to include four companies and debut on January 1, 2014, as required by Florida Senate Bill 1770.  Mr. Gilway said the delay would allow seven companies to participate as well as provide more time to ensure the clearinghouse works properly.   Further, the Florida Cabinet has selected Bruce Meeks as the new (and first) inspector general for Citizens.  Meeks is the former inspector general for the State Board of Administration.

Gary Sumner - MANG & SANTURRI, P.A., (850) 222-7710 , gsumner@manglaw.com

Category(s): Florida - 12/01/2013

Citizens Property Insurance Corporation Clearinghouse to Begin in January

The Citizens Property Insurance Corporation ("Citizens") Clearinghouse Program begins January 1, 2014.  The Clearinghouse program is expected to reduce the number of homeowners' policies in Citizens by as much as 250,000, and will provide insurance agents with additional private markets.  So far eighteen carriers are signed up to participate in the Clearinghouse, although only four thus far (Florida Peninsula Insurance Company, Heritage, United Property & Casualty and Safe Harbor) are expected to be approved by the kickoff date.  New applications will be processed through the Clearinghouse beginning January 1, while renewals will be included in the Clearinghouse beginning in the spring.  The Clearinghouse is expecting a return response from each of the carriers in an automated manner in a 30-second time frame.

Gary Sumner - MANG & SANTURRI, P.A., (850) 222-7710 , gsumner@manglaw.com

Category(s): Florida - 12/01/2013

Florida Office of Insurance Regulation Issues Informational Memo to Insurers Exploring Writing Primary Flood Insurance

The Florida Office of Insurance Regulation ("OIR") issued Informational Memorandum OIR-13-03M on October 28, 2013, to insurers exploring the feasibility of writing primary flood insurance in the state.  The Memorandum, not intended to be comprehensive in scope, contains information and suggestions for insurers considering entering the Florida market on required demonstration of financial capacity and options for developing rates and forms for primary flood coverage.  It reflects the OIR's initial review of federal and state legal requirements that might apply to the issuance of private flood coverage.  To view the Memorandum, click here.

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

Category(s): Florida - 12/01/2013

Florida Office of Insurance Regulation: Universal Property and Casualty Insurance To Revise Business Practices, Pay Administrative Fine

In an October 7, 2013 news release, Florida Insurance Commissioner Kevin McCarty announced that Universal Property & Casualty Insurance Company has agreed to implement corrective action to its business practices, including changes to its claims and underwriting practices that were the subject of a Prior Order issued by the Florida Office of Insurance Regulation on May 30, 2013.

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

Category(s): Florida - 12/01/2013

Florida's Citizens Property Insurance Sinkhole Claims Settlement Offer Letter Draws Praise, Critics

In a December 12, 2013 news release, Florida's Citizens Property Insurance Corporation Chairman Chris Gardner noted the State-run insurer's efforts to settle pending sinkhole claims by providing incentives for homeowners to have recommended repair work completed in accordance with an original engineer's recommendations and offers an alternative resolution process for cases in which engineering opinions differ.  Some predict the new policy will be costly to the State-run insurer.  To read more, click here.

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

Category(s): Florida - 12/01/2013

Florida's Workers' Compensation Attorneys' Fees Law Upheld, But Florida Supreme Court Asked to Address Constitutionality

In a decidedly reluctant opinion filed on October 23, 2013, Florida's First District Court of Appeal upheld a Judge of Compensation Claims' prior award of attorneys' fees of only $164.54 for 107.2 hours of legal work in the workers' compensation-related case of Marvin Castellanos v. Next Door Company/Amerisure Insurance Co., but asked the Florida Supreme Court to consider the constitutional adequacy of the governing statute.  To view the complete opinion, click here.

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

Category(s): Georgia - 12/01/2013

Twin City Fire Insurance Co. v. Hartman, Simons & Wood LLP, 1:13-CV-1608-MHS, United States District Court for the Northern District of Georgia

Twin City Fire Insurance Company (“Twin City”) issued two professional liability insurance policies insuring Hartman, Simons & Wood, LLP (“Hartman Simons” or the “Firm”), covering the years 2009 and 2010, providing for $10 million of coverage in the aggregate (the “Policy Limit”).  In 2009, the Bank of North Georgia (the “Bank”) hired Hartman Simons to represent the Bank with a real estate transaction.  In 2010, the Bank sued Hartman Simons and some of its attorneys (the “Malpractice Lawsuit”), claiming that Hartman Simons’ phrasing of a loan guaranty lease agreement (the “Guaranty Agreement”) wrongly applied to all financial obligations between the Bank and some of its clients and not just to the intended transaction, costing the Bank $60 million.  Hartman Simons belatedly notified Twin City of the Malpractice Lawsuit thirty (30) days after the Malpractice Lawsuit was filed.  In April 2013, after the Bank lost a summary judgment motion in a separate case against its clients over the Guaranty Agreement, the Bank gave Hartman Simons thirty (30) days to settle the Malpractice Lawsuit for the $10 million Policy Limit, and the Bank asked Twin City to settle accordingly.  Initially, Twin City disputed that it had any coverage obligations because Hartman Simons failed to provide Twin City with required notice under the terms of the policies.  On May 9, 2013, Twin City notified Hartman Simons that it was accepting the Bank’s Malpractice Lawsuit settlement demand under a full reservation of rights regarding the coverage dispute.  The next day, Twin City filed a declaratory judgment action and then funded the Malpractice Lawsuit settlement with the Bank.  In its declaratory judgment action, Twin City claimed that it had no obligation to cover the Malpractice Lawsuit settlement because Hartman Simon had failed to provide timely notice to Twin City under the policies.  However, the federal district court found that Twin City did not have standing to file for declaratory judgment, holding that Twin City had failed to show a likelihood of future injury because “Twin City ha[d] already paid out [the Policy Limits] to the [B]ank, and “Twin City [was] seeking a declaration as to past event . . . and past injuries.”  The court also denied Twin City’s claim that it was entitled to some recoupment of the Malpractice Lawsuit settlement because the Malpractice Lawsuit included noncovered parties. According to the court, Georgia law requires insurers who want to reserve their rights for recoupment to seek immediate declaratory relief, including a stay of the underlying case.  However, Twin City waited until “the very day the settlement demand was to expire, and after [Twin City] had already decided to pay the demand, [before] Twin City for the first time sought to reserve its claimed right to seek allocation and recoupment.”  The court found that the “last-minute” reservation of rights came too late.

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638 , bcasey@lockelord.com
Larry D Davie, Esq. - LOCKE LORD LLP, (404) 870-4658 , ldavie@lockelord.com

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