October 2013 Alert

Greetings,

Welcome to the October 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

October 2013 Alerts

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Category(s): - 10/01/2013

Solvency II update

On 2 October 2013 the European Commission published legislative proposals to extend the date by which the Solvency II Directive is required to be transposed into national law to 31 January 2015 and its date of application to firms (as well as the repeal date of the existing insurance and reinsurance directives which the Solvency II Directive replaces) to 1 January 2016.  The legislative proposals are due to be considered by the European Parliament during its plenary session from 18 to 21 November 2013 and it is expected that these proposals will (finally) be adopted.

Richard Spiller, Esq. - HOLMAN FENWICK WILLAN LLP, (1144207) 264-8770 , richard.spiller@hfw.com

Category(s): - 10/01/2013

Successors to Financial Services Authority

On 1 April this year the UK Financial Services Authority was disbanded and replaced by three new regulators with new statutory objectives:

1. The Financial Policy Committee, a macro prudential regulator which is a committee within the Bank of England.

2. The Prudential Regulation Authority, the prudential regulator for systemically important firms, including banks, insurers and Lloyd's. The PRA is a subsidiary of the Bank of England.

3. The Financial Conduct Authority, the conduct regulator for all financial services firms and the prudential regulator of all non-PRA firms such as insurance brokers and MGAs.

Richard Spiller, Esq. - HOLMAN FENWICK WILLAN LLP, (1144207) 264-8770 , richard.spiller@hfw.com

Category(s): Federal - 10/01/2013

FACI Meeting

The Federal Advisory Committee on Insurance met on September 18. The committee’s charter was renewed. The bulk of the meeting focused on Terrorism Risk Insurance Act (TRIA), which is set to expire on December 31, 2014 without any further Congressional action. Brief reports on FIO’s involvement with international insurance initiatives were also given.

Charles T. Richardson, Esq. - FAEGRE BAKER DANIELS LLP, (202) 997-0681 , crichardson@faegrebd.com

Category(s): Federal - 10/01/2013

FSOC Designations

The Financial Stability Oversight Council, created by Dodd-Frank, issued its non-bank Systemically Important Financial Institution (SIFI) designations on July 8, 2013. The Council voted to designate AIG, General Electric Capital and Prudential Financial. Prudential appealed its designation and received an affirmed and finalized designation on September 19, 2013. The SIFI designation subjects the financial institutions to enhanced Prudential regulatory standards.

Charles T. Richardson, Esq. - FAEGRE BAKER DANIELS LLP, (202) 997-0681 , crichardson@faegrebd.com

Category(s): Florida - 10/01/2013

Appeal Court Reverses Prior Order Temporarily Enjoining Florida Office of Insurance Regulation From Enforcing 2012 Personal Injury Protection Reform

On October 23, 2013, Florida's First District Court of Appeal issued an opinion reversing a Leon County trial court's order temporarily enjoining the Florida Office of Insurance Regulation from enforcing 2012 amendments to the Florida No-Fault Law.  Among other changes, HB 119 eliminated reimbursement for massage therapy and acupuncture, limited PIP benefits to $2,500 for non-emergency services, and required insureds to seek treatment within 14 days for emergency services, for which up to $10,000 in coverage remains available.  To view a copy of the opinion, click here.  To view the order, click here.

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

Category(s): Florida - 10/01/2013

Citizens Property Insurance Moves Forward with Clearinghouse

Florida's residual property insurance market continues to work toward a January 1 implementation date for its new policy clearinghouse.  The goal of the clearinghouse is to provide interested insurers an opportunity to review policies coming into the residual market (or renewing in the residual market) in hopes that the insurers will write them instead.  The clearinghouse will use comparative rating software to match risks against insurers' predefined criteria, although the insurers will retain ultimate decision-making authority as to whether they want to write the risks.  The Citizens Property Insurance Corporation Board of Governors approved a contract with Bolt Solutions, Inc. to develop the matching software.

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

Category(s): Florida - 10/01/2013

Florida Auditor General Says Office of Insurance Regulation Documentation Insufficient on Property and Casualty Rate Filing Decisions

The Florida Auditor General published the results of its operational audit of the Florida Office of Insurance Regulation (“OIR”) on August 30, 2013.  Among other conclusions, the audit found that OIR policies and procedures should be enhanced to require that the reasoning and judgments supporting property and casualty rate filing decisions be sufficiently documented.  To access the complete audit, click here.

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

Category(s): Florida - 10/01/2013

Florida Court Reverses Prior Ruling in Workers' Compensation Temporary Disability Benefits Case

On September 23, 2013, Florida’s First District Court of Appeal, sitting en banc (the entire court), reversed its previous ruling in the Westphal v. City of St. Petersburg case that had heretofore extended temporary disability benefits in workers' compensation claims from 104 weeks to 260 weeks.  The prior decision had found recent legislative changes to be unconstitutional.  To view the complete ruling , click here.

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

Category(s): Florida - 10/01/2013

Florida Court Rules on the Definition of Structural Damage in Insurance Policies

On September 3, 2013, a Florida U.S. District Court granted an insurance carrier's motion for summary judgment on the interpretation of the term "structural damage" as contained within an insurance policy with a date of loss and policy inception pre-dating the enactment of amendments to section 627.706, Florida Statutes that went into effect on May 17, 2011.  To view a copy of the Order, click here.

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

Category(s): Florida - 10/01/2013

Florida First District Court of Appeal Reverses Prior Ruling in Secure Door Windstorm Mitigation Discounts Case

On October 11, 2013, the First District Court of Appeal reversed a previous ruling in the case of Office of Insurance Regulation v. Secure Enterprises, LLC, which addressed the validity of forms used to afford windstorm mitigation discounts to Florida homeowners' insurance policyholders.  Secure Enterprises, LLC, the Appellee, manufactures and distributes the Secure Door® residential garage door bracing system.  The Florida Office of Insurance Regulation argued that the administrative law judge erred in ruling that Secure Enterprises had standing to initiate a Rule challenge.  The First District Court agreed.  To see a copy of the ruling, click here.

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

Category(s): Florida - 10/01/2013

Florida Governor Rick Scott Signs Interstate Insurance Product Regulation Compact, Workers' Compensation Bills, Others into Law

Florida Governor Rick Scott signed various insurance-related bills into law in June 2013, including:

CS/HB 157 authorizes insurers to deliver insurance policies to policyholders by electronic transmission.
CS/HB 223 allows property and casualty insurance policies and endorsements to be posted on an insurer's Web site in lieu of mailing or delivery to an insured if the insurer complies with specific conditions. 
CS/HB 341 returns Florida's uninsured motorist coverage laws to their former status prior to a recent judicial decision by Florida's First District Court of Appeal. 
CS/CS/HB 383 enacts the Interstate Insurance Product Regulation Commission in Florida for the approval of life, annuity, disability income and long-term care products.
CS/CS/HB 553 amends various provisions relating to the administration of Florida's workers' compensation system.
CS/SB 662 changes provisions related to the amount of service fees that may be charged for repackaged drugs through Florida's workers' compensation laws.
CS/CS/SB 810 authorizes a wrap-up insurance policy for a nonpublic construction project to have a workers' compensation deductible of $100,000 or more if certain conditions are met.
CS/HB 1191 allows a captive insurance company to write workers' compensation and employer's liability insurance.
CS/CS/SB 166 incorporates the 2010 National Association of Insurance Commissioners model regulation on annuity protections, expanding the scope of its consumer protections to generally include all purchasers of annuity products.
CS/SB 648 deletes the requirement that health insurers and health maintenance organizations submit marketing communications for small employer health plans to the Florida Office of Insurance Regulation for review.

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

Category(s): Florida - 10/01/2013

Florida Law, Regulatory Action Allows Self-Certification of Certain Personal and Commercial Lines Property/Casualty Forms

After Florida Insurance Commissioner Kevin McCarty issued an Order on June 24, 2013, effectively extending until December 31, 2013 a process allowing for insurer self-certification of certain personal lines property and casualty insurance forms and exempting those forms from the requirements of Section 627.410, F.S., insurer self-certification of commercial lines forms was authorized under a new Florida law, SB 468.  Effective July 1, 2013, SB 468 does not apply to workers' compensation insurance.

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

Category(s): Florida - 10/01/2013

Florida Supreme Court Rules Against Geico Insurance In Personal Injury Protection Examination Under Oath Case

Responding to a question certified by the Eleventh Circuit Court of Appeal in the 2012 case of Nunez v. Geico, the Florida Supreme Court ruled on June 27, 2013 that insurers cannot require an insured to attend an examination under oath as a condition precedent to the recovery of Personal Injury Protection insurance benefits in cases arising prior to January 1, 2013.  To view the ruling, click here.

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

Category(s): Florida - 10/01/2013

Insurance Commissioner Responds to Reinsurance Cost Inquiry

Florida Chief Financial Officer Jeff Atwater recently wrote to Insurance Commissioner Kevin McCarty inquiring about the expected rate impact of more favorable open market reinsurance terms in 2013 as compared to prior years.  Commissioner McCarty responded by pointing out that insurers' reinsurance costs will be set forth in their annual rate filings.  He also pointed out that in periods of declining reinsurance costs, some insurers elect to purchase more reinsurance.  Some insurers also increase their reinsurance purchases to satisfy rating agency requirements.  The Commissioner noted that because many reinsurance programs in Florida renew June 1, the effects of reduced costs and increased availability of reinsurance won't be fully seen for several months as insurers develop and file their rate filings.

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

Category(s): Florida - 10/01/2013

Working Group Considers Claims Bill of Rights

A working group convened by Florida's Insurance Consumer Advocate has developed a report and related legislative recommendations on various aspects of the insurance claims process, including a policyholder claims bill of rights.  After a series of meetings and telephone conferences, the group released proposals addressing topics such as examinations under oath, insurers' right to require repairs to damaged property, and post-loss assignments of claims.

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

Category(s): Georgia - 10/01/2013

GEORGIA ADOPTS REGULATIONS FOR DISCLOSURES ON HEALTH INSURANCE POLICIES RELATED TO PPACA FEES AND EXPENSES

On September 26, 2013, the Georgia Department of Insurance promulgated regulations implementing statutes requiring specific disclosures to policyholders for fees and expenses attributable to PPACA.  Notices of any premium increase to policyholders are required to include the following statement:  “These increases are due to the federal Patient Protection and Affordable Care Act and not the enactment of any laws or regulations of the Governor of Georgia, the Georgia General Assembly or the Georgia Department of Insurance.”  Insurers are required to provide an estimate as to the amount of percentage of any premium increase which is attributable to PPACA.  When determining the estimates of premium increases, insurers must analyze the following factors:  (1) new taxes and fees imposed under PPACA; (2) policies being guaranteed issue with modified community rating; (3) the essential health benefits; (4) the age rating bands; (5) the effect of a 70% actuarial value; (6) the impact to the individual mandate on the risk pool; (7) the impact of subsidies on the risk pool; and (8) the impact of the risk adjustment and reinsurance mechanisms in PPACA.  Following is a link to the full regulation: http://1.usa.gov/1fQcCmL

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

Category(s): Georgia - 10/01/2013

Georgia Insurers Insolvency Pool v. Hulsey, S12G1470, Georgia Supreme Court (September 9, 2013)

The Georgia Insurance Insolvency Pool (GIIP) was created by the Georgia Legislature to pay the covered claims of insolvent insurance companies for the protection and benefit of the insurance companies’ insureds.  The Southeast United States Insurance Company (SEUS) became a member of GIIP in June 2006 after SEUS converted from being a captive insurer to a standard insurer.  SEUS’s insureds whose claims predated June 2006 were not covered by GIIP and consequently faced exposure when SEUS was liquidated in October 2009.  In 2007, the Georgia Legislature enacted O.C.G.A. §33-36-20, effective in 2010, for the purpose of expanding GIIP’s “covered claims” to include insureds who obtained insurance from a captive insurer that later became insolvent, thereby retroactively covering the previously excluded claims of SEUS’s insureds.  GIIP filed a declaratory judgment action against two insureds that purchased workers’ compensation insurance from SEUS, seeking a declaration that the 2010 amendment was unconstitutional because the extension of coverage would decrease GIIP’s reserves and increase the assessments levied on its member insurance companies.  The defendants filed a motion to dismiss, asserting that GIIP lacked standing to bring the lawsuit.  The trial court granted defendants’ motion to dismiss, and the Court of Appeals affirmed.  The Georgia Supreme Court later held that the Georgia Legislature gave GIIP the power to sue and be sued only for the purpose of enabling GIIP to bring and defend legal actions pertaining to GIIP’s statutory functions and duties.  GIIP was not given the power to challenge its own enabling legislation or subsequent amendments to it.  In finding that GIIP did not have standing to bring a challenge against the 2010 amendment, the Court found that GIIP was not “given the power to question the wisdom of statutes designed to accomplish [the GIIP’s] remedial purpose.

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

Category(s): Georgia - 10/01/2013

GEORGIA REQUIRES PPACA NAVIGATORS TO BE LICENSED

On September 25, 2013, the Georgia Department of Insurance issued Bulletin 13-EX-3 clarifying Georgia law and reminding navigators that they must obtain a license from the Georgia Department of Insurance prior to engaging in any activities designed to facilitate enrollment of individuals or groups into a health plan offered on the federally facilitated exchange.  As of the middle of October, no navigators had been licensed in Georgia to begin enrolling individuals in the exchange.  Following is a link to the bulletin:  http://1.usa.gov/H6juOt

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

Category(s): Georgia - 10/01/2013

Implementation of Electronic Premium Tax Return Filing in Georgia

On July 8, 2013, the Department issued Directive 13-EX-3 which requires, beginning on January 1, 2014, admitted insurers to file all quarterly and annual premium tax returns electronically.  Insurers may make the filings either by (1) utilizing the PREMIUM pro tax application available through TriTech Software or (2) logging on to the Department’s website and accessing the PREMIUM pro application (for Georgia premium taxes only).  No paper returns will be accepted on or after January 1, 2014.  The Department is currently developing an electronic payment system for remittance of the premium taxes.

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

Category(s): Georgia - 10/01/2013

McGraw v. IDS Property & Casualty Inc. Co., A13A0547, Georgia Court of Appeals (June 27, 2013)

In 2009, McGraw’s wife died as a result of her injuries from an automobile accident.  McGraw filed an action for damages against the driver of the other vehicle and served IDS as an unnamed uninsured/underinsured motorist (UM coverage) insurer.  IDS answered the complaint, becoming a party to the action, and filed a motion for summary judgment on the question of whether McGraw was entitled to the lesser UM coverage listed on the policy’s declarations page or a higher default UM coverage provided under O.C.G.A. § 33-7-11.  The relevant portion of O.C.G.A. § 33-7-11 provides that the amount of UM coverage shall be equal to the bodily injury limits coverage on the declarations page unless the insured selects a lesser amount of coverage.  The Appellate Court held that an insured must “affirmatively” elect lesser UM coverage limits, or, if the insured does not, then the default limits under O.C.G.A. § 33-7-11 automatically apply.  The Appellate Court concluded that IDS could not rely on a lack of written selection or McGraw’s failure to response to IDS’ letter announcing a change in Georgia UM coverage law to satisfy IDS’ burden of proof.  The Appellate Court reversed the trial court’s grant of summary judgment in favor of IDS, concluded that IDS failed to carry its burden of proof, and held that the higher, statutory default UM coverage limits under O.C.G.A. § 33-7-11 applied.

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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