July 2016 Alerts Edition

Greetings,

Welcome to the July 2016 edition of the FORC Alert. 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.

Regards,

Ryan Smart 
FORC Alert Editor

July 2016 Alerts

Blurb

Category(s): Florida - 07/01/2016

Citizens Board Approves 6.8% Statewide Increases for Personal Lines Policyholders

The Citizens Property Insurance Corporation’s (Citizens) Board of Governors recently approved a 6.8% statewide increase in personal lines rates due to rising non-weather water losses and increased litigation because of assignment of benefit abuses. The recommended rate increase was unanimously approved at their June 22, 2016 meeting and will be reviewed for approval by the Florida Office of Insurance Regulation. Under the proposed rates, inland homeowners with multi-peril policies would see an average increase of 6.3 percent and homeowners along the coast would experience an average rate hike of 8.6 percent. Citizens warn that there will be future rate hikes to meet their statutory obligations unless stakeholders make a collective effort to develop a solution to address the increases.

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

Category(s): Florida - 07/01/2016

DFS Reminds Agencies of Prohibition Against Misleading Names

The Florida Department of Financial Services reports that it is seeing an increasing number of agencies attempting to obtain licenses using names that imply a connection to the Affordable Care Act or Medicare. DFS has reminded agencies that Florida law prohibits agencies from having misleading names, and DFS advises that it is scrutinizing agency names under this standard.

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

Category(s): Florida - 07/01/2016

Federal Reserve Board Approved Advance Notice of Proposed Rulemaking for Conceptual Frameworks for Capital Standards

The Federal Reserve Board recently approved an advanced notice of proposed rulemaking (ANPR) and invited public comments on a conceptual framework rule relating to capital standards that could apply to systemically important insurance companies or insurance companies that own a bank or thrift. The ANPR distinguishes two different approaches in creating the structure of a conceptual framework: a “consolidated” approach that applies to systemically important insurance companies and a “building block” approach for less complex insurance companies. For systemically important insurance companies, the consolidated approach would categorize an entire insurance firm’s assets and insurance liabilities into risk segments and apply appropriate risk factors to each segment at the consolidated level, while the building block approach aggregates existing capital requirements from the firm’s different legal entities for a combined, group-level capital requirement. Comments on the ANPR are due by August 2, 2016.

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

Category(s): Florida - 07/01/2016

Final Rule on Certification Program for Access to the Death Master File

The National Technical Information Services (NTIS) recently issued their final rule establishing a certification program in which persons may become eligible to access the Death Master File (DMF). The certification program permits individuals, government entities and companies, such as life insurers, to access DMF information within three years of a person’s death. Without certification, there is now a statutory three-year waiting period after death to receive access to the decedent’s DMF records. For access to the final rule, please click here.

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

Category(s): Florida - 07/01/2016

Florida Consumer Advocate Forum

The stark increase in water loss claims and issues surrounding the assignment of benefits (AOB) were the main topics of discussion at a forum hosted recently by Florida’s Insurance Consumer Advocate. The forum was held with the hopes that policy recommendations to protect consumers would develop from an in-depth exploration of water-loss claims and AOB crises targeting Florida’s insurance industry. During the forum, the Florida Office of Insurance Regulation revealed that water-loss claims have increased 46% in the state since 2010 and that AOB claims and related fraud were rising in severity and spreading across the state. If these issues are not properly addressed, participants at the forum from both the public and private sectors expressed a concern that insurance rates will soon reach unaffordable levels for consumers and insurers alike.

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

Category(s): Florida - 07/01/2016

Florida Supreme Court Strikes down Statute Limiting Temporary Disability Benefits for Workers Compensation

In a long-awaited decision, the Florida Supreme Court held that the statutory limitation for the recovery of benefits to 104 weeks for temporary total disability in workers’ compensation cases is an unconstitutional denial of the claimant’s right of access to the courts under the state’s constitution. In Westphal v. City of St. Petersburg, the Court decided 5-2 to strike down the two-year temporary disability benefit limitation set forth in Section 440.15(2)(a), F.S., and restored the statutory requirement to pre-1994 law, which provides for the right to recover temporary total disability benefits up to 260 weeks. The Court determined there was no showing of an “overwhelming public necessity” in the enactment of this statute in order to justify denial of the right of access to the Courts for workers that find themselves subject to the limitation because they had not yet reached maximum medical improvement and were therefore ineligible for permanent disability. It is expected that the Florida Legislature will attempt to resolve the workers’ compensation statutory issues raised by the Court in their next regular session.

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

Category(s): Florida - 07/01/2016

House Financial Services Committee Passes Bill Aimed at Protecting U.S. Insurance Markets

The U.S. House Financial Services Committee approved H.R. 5143, a bill related to the Transparent Insurance Standards Act of 2016 and aimed at protecting the nation’s insurance markets by insisting on transparency and congressional oversight of international insurance standards setting processes. According to Rep. Blaine Luetkemeyer (MO-03), the bill’s sponsor, the objective of the legislation is that the states, the executive branch and Congress will work cooperatively to signal to the International Association of Insurance Supervisors (IAIS), the Financial Stability Board and foreign governments, that the U.S. will only lend their name to standards and agreements that benefit U.S. consumers and foster a robust insurance marketplace. The bill is headed to the House floor for a vote.

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

Category(s): Florida - 07/01/2016

Revised NCCI Filing Would Lead to 19.6% Increase

The National Council on Compensation Insurance has revised its rate filing pending before the Florida Office of Insurance Regulation. The filing reflects the impact of two recent Florida Supreme Court cases that ruled against limitations on benefits or costs in Florida's workers' compensation system. The rate effect of the adverse decisions is said to be +19.6%. The Florida OIR will hold a public hearing on August 16 to further review and receive input regarding the filing.

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

Category(s): Georgia - 07/01/2016

GEORGIA ISSUES DIRECTIVE REGARDING FIRE LOSS QUARTERLY FILING REQUIREMENT

On July 1, 2016, the Georgia Department of Insurance issued a new Directive (16-EX-3) that requires all insurers writing fire loss coverage in the State of Georgia to submit a quarterly report of all fire losses.  The reports are submitted through the Department's web portal:  https://www.oci.ga.gov/CompanyPortal/

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

Category(s): Illinois - 07/01/2016

Illinois Dept of Insurance Launches New Tool

On June 30, 2016, the Illinois Department of Insurance issued a bulletin informing consumers that, effective July 1, 2016, consumer could use a new tool, the DOI's Life Policy Locator Service, to find life insurance policies.  The Locator Service will help executors, legal representatives and family members search for benefits that the deceased may have left.  Acting Director Anne Melissa Dowling stated, “This search service eliminates the confusion of trying to locate missing life insurance policies or annuity contracts and helps get those benefits to the intended beneficiary.”

Daniel A. Cotter, Esq. - LATIMER LEVAY FYOCK LLC, (312) 422-8000 , dcotter@llflegal.com

Category(s): Illinois - 07/01/2016

Land of Lincoln Health Ordered to Stop Writing New Plans

The Illinois Department of Insurance recently ordered the ACA startup, Land of Lincoln Health, to stop writing new plans without permission and to not pay the $31.8 million risk adjustment. Land of Lincoln had recently sued the federal government to recover money it claims it is owed under the risk corridor program that is also part of the ACA. The action by the Illinois DOI was designed to protect the existing policyholders of Land of Lincoln.

Daniel A. Cotter, Esq. - LATIMER LEVAY FYOCK LLC, (312) 422-8000 , dcotter@llflegal.com

Category(s): New Mexico - 07/01/2016

New Mexico Conforms its Licensing Provisions with the Producer Licensing Model Act

In order to adopt the standardized State Based System (SBS) and institute a reciprocal licensing system for insurance producers, New Mexico passed into law statutory language based upon the Producer Licensing Model Act. Effective July 1, 2017, changes to the Insurance Code include implementing insurance producer licensure requirements that conform with National Association of Insurance Commissioners (NAIC) standards, instituting a system of reciprocity for insurance producer licenses, increasing the deposits that providers must maintain with the Office of Superintendent of Insurance, defining a new category of stop loss insurance, and adding consumer-disclosure requirements related to compensation paid to a producer by the insurer or certain third parties. These changes bring the New Mexico Insurance Code into regulatory conformance with the majority of states.

Gary Kilpatric, Esq. - MONTGOMERY & ANDREWS, P.A., (505) 982-3873 , gkilpatric@montand.com
J. Brent Moore, Esq. - Montgomery & Andrews, (505) 986-2648 , bmoore@montand.com

Category(s): Oklahoma - 07/01/2016

Rural Fire Protection -Insurance-Insurance Department Bulletin

The Oklahoma Insurance Department issued a Bulletin in June (Bulletin No. PC 2015-05) reminding insurers that Oklahoma statute (36 O.S. Section 4809) requires insurers to include a question on every application to determine if the property in a rural fire protection district has paid all fire protection association dues or subscription payments. The statute cited prohibits insurers or agents from giving underwriting credit for fire protection unless the applicant has paid the applicable fire protection association dues and provides the insurer and agent with evidence of such payment. The Bulletin mandates insurers to respond to the Insurance Department as to whether they are asking this question on applications.

Angela Ables, Esq. - KERR, IRVINE, RHODES & ABLES, P.C., (405) 272-9221 , aables@kiralaw.com

Category(s): Oklahoma - 07/01/2016

Small Group Definition - Correction of Insurance Department's Previous Guidance

The Oklahoma Insurance Department issued Bulletin No. LH 2016-03.1 relating to the definition of whether sole proprietors qualify for group health insurance. In March of 2016, the Department withdrew Bulletin LH 2016-03 after receiving more questions concerning sole proprietors and partnerships. Oklahoma law states a small group to have 2-50 employees and federal law states a "small group" is 1-50 employees. Confusion has arisen as to whether "sole proprietors" and "sole proprietors and spouses" may be counted as employees. Since state law is preempted, the Department has withdrawn previous OID guidance and stated that the federal law controls.

Angela Ables, Esq. - KERR, IRVINE, RHODES & ABLES, P.C., (405) 272-9221 , aables@kiralaw.com

Category(s): Rhode Island - 07/01/2016

July 2016 Rhode Island Alert

Toward the end of its 2016 legislative session, the Rhode Island General Assembly passed H7412 Sub A and S2375 as amended, which would have made it an “unfair claims practice”, as defined by R.I. Gen. Laws § 27-9.1-4(a), to refuse to compensate a rental car company for loss regardless of “fleet utilization or any other requirement.” According to the industry, such a change would unjustly enrich rental car companies for phantom loss claims because the bills make it mandatory to compensate the rental car company without having to provide any proof of loss. The two companion bills were transmitted to Governor Raimondo for consideration on July 7, 2016. The Governor’s Insurance Council sent a letter to the Governor recommending she veto the bills. Recognizing the legitimate deficiencies, the Governor vetoed the bills on July 13, 2016, but in doing so has directed the Rhode Island Department of Business Regulation to work with rental car and insurance companies to identify common-sense changes to ensure that neither unfair barriers nor unnecessary delay exist in pursuing a loss of claim.

John J. Partridge, Esq. - PARTRIDGE SNOW & HAHN LLP, (401) 861-8200 , jjp@psh.com

Category(s): Tennessee - 07/01/2016

Commissioner McPeak Elected to Global Insurance Committee Leadership Post

Tennessee Department of Commerce and Insurance Commissioner Julie Mix McPeak has been elected to serve as vice chair of the Executive Committee of the International Association of Insurance Supervisors (IAIS). In addition to her new leadership position with IAIS, the international standard-setting body for insurance supervision, Commissioner McPeak currently serves as Vice President of the National Association of Insurance Commissioners (NAIC).

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 - 07/01/2016

TDCI Issues Bulletin on PBR Valuation Manual Operative Date

Tennessee Department of Commerce and Insurance Commissioner Julie Mix McPeak, who was instrumental in the NAIC’s development of principle-based reserving methodology, has confirmed that the operative date of the Principle-Based Valuation Manual for Tennessee domestic insurers is January 1, 2017. In the TDCI Bulletin issued on June 13, Commissioner McPeak noted that Tennessee is one of 45 states that have enacted laws substantially similar to the NAIC Model Standard Valuation Law.

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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