May 2017 Edition of Alerts

Welcome to the May 2017 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 on the Alerts main page where they can subscribe to receive FORC Alerts automatically.

Regards,
Ryan Smart, Esq., FORC Alert Editor
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Category(s): Connecticut - 05/23/2017

Connecticut General Assembly Passes Bill Authorizing Domestic Insurers to Divide

Both houses of the Connecticut General Assembly have passed HB 7025, which would create a new legal process whereby a Connecticut domestic insurer could divide into multiple insurers and allocate assets and obligations to the “new” insurer. The new insurer would become a legal successor to the original insurer. HB 7025 requires dividing insurers to develop a division plan before effectuating a division. The plan must comply with requirements specified in the bill and be approved by the insurance commissioner and the dividing insurer. Before HB 7025 becomes law, it must be signed by Governor Malloy.

Alan J. Levin, Esq. - LOCKE LORD LLP, (860) 541-7747 , alan.levin@lockelord.com
Aaron Igdalsky, Esq. - LOCKE LORD LLP, (860) 541-7766 , aaron.igdalsky@lockelord.com

Category(s): Florida - 05/23/2017

CFO Atwater Moves to Higher Education Position

Prior to the 2017 legislative session, Florida Chief Financial Officer Jeff Atwater announced that he would be leaving his post when the session ended.  Atwater was approaching the end of his tenure as Chief Financial Officer and was rumored as a potential candidate for future elected positions including Governor and U.S. Senate.  Ultimately, however, Atwater decided to take a Vice President position at Florida Atlantic University.  Governor Rick Scott appoints a successor for the balance of Atwater’s term.

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

Category(s): Florida - 05/23/2017

Citizens Board of Governors Approves 2017 Risk Transfer Program

Recently, Citizens Property Insurance Corporation’s (“Citizens”) Board of Governors met to vote on their 2017 Risk Transfer Program (the “Program”), which was approved by a unanimous vote.  Citizens is required by Florida Statute to procure catastrophe reinsurance in the private marketplace.  Each year, the Board of Governors meets to review the reinsurance coverage recommendations offered by its staff.  

Citizens and its reinsurance broker, Guy Carpenter, and others convened with a number of global traditional reinsurance markets over the last several months to market the Program, which is designed to set forth a strategic plan to transfer hurricane risk for the Coastal Account to the global reinsurance markets, including traditional risk transfer and capital markets risk transfer.  The Program also includes coverage for the mandatory layer of the Florida Hurricane Catastrophe Fund, through which Citizens transfers risk.  Citizens intends to transfer roughly $1.33 billion in exposure to global reinsurance and capital markets in 2017.  The approved recommendation requires that the 2017 cost to Citizens not exceed $94 million.

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

Category(s): Florida - 05/23/2017

Citizens Introduces Emergency Water Removal Services and Managed Repair Contractor Network Program

Citizens Property Insurance Corporation (“Citizens”) recently announced they will begin offering two new programs in an effort to mitigate rapidly rising claims costs due to water losses. Citizens will now offer consumers emergency water removal services and add a managed repair contractor program to their claims services.  Citizen notes that the two services are optional and only offered at the time of actual loss, which are limited to those water losses not caused by weather.
 
The optional services would cover losses such as accidental discharge or overflow of water or steam from plumbing, heating, air conditioning, automatic fire-protective sprinkler systems or household appliances.  The services will become available for new business and renewals effective on or after July 1, 2017, for Citizens Homeowners 3 - Special Form (CIT HO-3) and Dwelling Property 3 - Special Form (CIT DP-3) policy types.  The services will be offered when policy holders or their agents call Citizens to report and loss and a representative deems they are eligible to participate.

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

Category(s): Florida - 05/23/2017

Estoppel Certificate Legislation in Florida

The Florida Legislature is contemplating changes to the laws governing Estoppel Certificates in real estate transactions.  An estoppel certificate certifies the amount of any total debt owed to the condominium and homeowners associations for unpaid monetary obligations by a unit or parcel owner as of a specified date.  Among the changes, the new law would reduce the time period from 15 to 10 business days that an association must respond to a request for an estoppel certificate, and provides for a 30-day effective period, while identifying the persons who may complete the estoppel certificate on behalf of the board or association.  The new law would set fee limits an association can charge with a maximum fee of $250 for the preparation and delivery of an estoppel certificate, and an additional $100 fee for an expedited certificate; with an additional maximum fee of $150 if there is a delinquent amount owed.  It would also prohibit an association from charging a fee for an amended estoppel certificate, and provides that an association waives the right to collect any moneys owed in excess of the amounts set forth in the estoppel certificate from any person, and his or her successors and assigns, who in good faith relies upon the certificate. The bill is in response to association practices of charging excessive fees for such a release.

Gary Sumner - MANG & SANTURRI, P.A., (850) 222-7710 , gsumner@manglaw.com
Richard J. Santurri, Esq. - MANG & SANTURRI, P.A., (850) 222-7710 , rsanturri@manglaw.com

Category(s): Florida - 05/23/2017

Florida Cabinet Approves CAT Fund Reimbursement Premium Formula and Rule 19-8.028

Recently, the Florida Cabinet State Board of Administration (“SBA”) unanimously approved the 2017-2018 Florida Hurricane Catastrophe Fund (“CAT Fund”) Reimbursement Premium Formula.  The SBA also adopted a proposed rule for Rule 19-8.028, F.A.C., Reimbursement Premium Formula (the “Rule”), which implements the formula.  The formula follows statutory criteria that has been in place since the inception of the CAT Fund.  Two key statutory requirements mandate that the formula must be actuarially sound and must also be developed by a third-party actuary under contract with the SBA.
 
The formula has been considered twice in public proceedings and was recommended for adoption by the CAT Fund Advisory Council during those proceedings.  It was also discussed during a Rule Development Workshop on March 24, 2017, during which no objections were made.  It was slated for another public hearing on May 9, 2017, however, no timely request for a hearing was made.  The Rule will be filed for adoption, as authorized by vote of the SBA Trustees at the April 11, 2017 Cabinet meeting.

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

Category(s): Florida - 05/23/2017

Florida First District Court of Appeals Upholds 14.5 Percent Increase in Workers’ Compensation Rates

The Florida First District Court of Appeals (the “Appeals Court”) recently upheld a 14.5 percent increase in workers’ compensation insurance rates that became effective in December 2016.  The Appeals Court’s opinion in National Council on Compensation Insurance v. James F. Fee Jr. overturned the decision of Leon County Circuit Court Judge Karen Gievers striking down the rate hike, which was approved by the state Office of Insurance Regulation (“OIR”) in October 2016.  The rate hike was submitted to the OIR for approval by the National Council on Compensation Insurance (“NCCI”), a rating organization that files rate proposals with OIR.  NCCI originally proposed a 19.6 percent increase, but OIR rejected that proposal and, instead, issued a conditional approval of 14.5 percent.
 
Judge Gievers’ ruling striking down the increase was based, in large part, on her finding that NCCI did not comply with the Florida Sunshine Law.  Specifically, Judge Gievers found that NCCI violated the Sunshine Law when it failed to hold open committee meetings while determining the proposed rate hike prior to submitting the proposal to OIR for approval.  Though Judge Gievers ruled against the rate hike, she allowed the hike to move forward while NCCI and OIR appealed the Judge’s ruling.
 
The Appeals Court disagreed with Judge Gievers, finding, in pertinent part, that NCCI was not subject to the Sunshine Law requirement because NCCI did not determine its proposed rate hikes through the use of a committee.  According to the Appeals Court, the Sunshine Law provision at issue “applies only when the rate-determination committee of a rating organization meets to determine workers’ compensation insurance rates . . . and it is undisputed that no committee at NCCI has been charged with the responsibility for determining workers’ compensation insurance rates in over twenty-five years.”

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

Category(s): Florida - 05/23/2017

Florida Insurance Policy Transfer Bill Signed by Governor

HB 805, sponsored by Rep. Blaise Ingoglia (R-Spring Hill), recently passed the Florida Legislature.  This bill allows an insurer to transfer a personal lines or commercial residential policy to an affiliated insurer or holding company upon renewal.  Under the measure, insurers may transfer a personal lines residential or commercial residential policy to another authorized insurer that is a member of the same group or owned by the same holding company if the following conditions are met:

•The insurer transferring the policy must be admitted in Florida and other states and must write residential property insurance in multiple states;
•The policy may not include conversion to a surplus lines policy;
•The transfer must results in substantially similar coverage;
•The insurer to which the policy is being transferred must provide the policyholder with notice of the transfer, change in any terms, the renewal premium and the new insurer’s financial rating at least 60 days in advance;
•There can be no discrimination in the selection of the policy being transferred; and
•The Office of Insurance Regulation (“OIR”) must determine that the insurer receiving the policy has the same or better financial strength as the transferring insurer, and OIR approves the transfer.

Governor Rick Scott signed the bill into law on May 9, 2017.  It will take effect on July 1, 2017.

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

Category(s): Florida - 05/23/2017

Florida Transportation Network Company (“TNC”) Regulation Bill Signed by Governor

Following several attempts in previous legislative sessions, HB 221, which was sponsored by Rep. Chris Sprowls (R-Clearwater), was approved in the final weeks of session.  The bill pre-empts regulation of these entities to the state to address the proliferation of local ordinances that have recently passed.  It also establishes a regulatory framework for TNCs.  The bill requires a TNC driver or a TNC on behalf of the TNC driver, to maintain primary automobile insurance that acknowledges that the TNC driver is a TNC driver or otherwise uses a vehicle to transport riders for compensation. 
 
The bill provides that, if the driver's insurance policy lapses or does not provide the required coverage, the TNC’s insurance must cover, beginning with the first dollar of a claim, and the TNC has the duty to defend the claim.  The coverage must be provided through an insurer authorized to do business in Florida or through an eligible surplus lines insurer with a superior, excellent, exceptional, or equivalent financial strength rating by a rating agency acceptable to Office of Insurance Regulation.  The coverage requirements may be satisfied by automobile insurance maintained by the TNC driver, an automobile insurance policy maintained by the TNC, or a combination of automobile insurance policies maintained by the TNC driver and the TNC.  
 
Importantly, the bill provides that a county, municipality, special district, airport authority, port authority, or other local governmental entity or subdivision may not impose a tax on or require a license for a TNC, TNC driver, or TNC vehicle if it related to providing prearranged rides.
 
Governor Rick Scott signed the bill into law on May 9, 2017.  It will take effect on July 1, 2017.

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

Category(s): Florida - 05/23/2017

Legislature Fails to Address “Assignment of Benefits” Issue

The Florida legislature concluded its 2017 legislative session without adopting “assignment of benefits” reforms.  The Florida residential property insurance market has seen an increase in lawsuits brought by third party vendors who have received assignments of policyholders’ one-way rights of attorneys’ fees against their insurers.  Despite substantial testimony from the Office of Insurance Regulation and Citizens Property Insurance Corporation, the legislature did not address the issue this year.

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

Category(s): Florida - 05/23/2017

Session Concludes Without Workers’ Compensation Reform

Florida’s workers’ compensation market was one of the highest profile insurance topics in this year’s legislative session.  Recent Florida Supreme Court decisions invalidating portions of the law produced rate increases averaging 15%.  Business leaders hoped the legislature would adopt changes in response to the court decisions to alleviate these increases, but the legislature could not reach agreement on the reforms.

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

Category(s): Georgia - 05/23/2017

Georgia Passes Legislation Permitting Self-Driving Cars

Senate Bill 219 was signed into law by Governor Deal on May 8th.  SB 219 permits and regulates the operation of self-driving cars on Georgia roads.  The law does not require a driver’s license for the vehicle itself with its automated driving system engaged and clarifies specific accident reporting requirements for autonomous vehicles.  A fully autonomous vehicle may operate on Georgia roads if it is certified by the manufacturer as being in compliance with the applicable federal motor vehicle safety standards and can automatically be safely brought to a stop in the event of failure of the automated driving system.  Until December 31, 2019 autonomous vehicles must be covered by motor vehicle liability insurance coverage equivalent to 250% of the requirement for commercial vehicles (100/300/50).  On and after January 1, 2020, autonomous vehicles must be covered by the minimum commercial limits.  SB 219 is effective on July 1, 2017.

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

Category(s): Georgia - 05/23/2017

Georgia Passes Update to Captive Statutes

Governor Deal signed Senate Bill 173 into law on May 9th.  SB 173 revises Georgia’s captive law to permit the formation of LLCs as captive insurance companies, updates Georgia’s statutes to more closely match other leading captive domiciles and substantially streamlines the process for the formation of a captive insurance company.  The changes to the law are effective on July 1, 2017.

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

Category(s): Georgia - 05/24/2017

Key Insurance Industry Bills Passed by Georgia Assembly in 2017 Legislative Session

The following are summaries some of the key legislative bills that the Georgia General Assembly adopted in its 2017 legislative regular session that affect the insurance industry.  The 2017 legislative session, which ended on March 30, 2017, was the first year of the state’s two year regular legislative session, and thus bills that did not pass will be carried over to next year’s session.  Unless a passed bill has a specific effective date, passed bills become effective on July 1, 2017.

Firefighters’ Cancer Insurance:  HB 146 requires fire departments to buy and maintain insurance covering fire departments’ members’ cancer related health risks as defined by statute by amending [Title 21] of the Georgia Code. This bill becomes effective in January 1, 2018.  

Regulation of Pharmacy Benefit Managers:  SB 103 and HB 276 amends The Pharmacy Patient Protection Act, Chapter 64 of the Georgia Insurance Code, to provide express authority for the Georgia Insurance Commissioner to adopt regulations governing pharmacy benefit managers, prohibit pharmacy benefit managers from requiring insureds under group or individual health insurance policies to use mail order pharmacies in certain circumstances, and imposing certain prohibitions on pharmacy benefit managers in dealing with insureds, pharmacies and pharmacists.  This bill applies to group or individual health insurance policies issued on or after July 1, 2017.  

Children’s Hearing Aid Insurance Coverage:  SB 206 amends Chapter 24 of the Georgia Insurance Code to create the Hearing Aid Coverage for Children Act, which requires group and individual health insurance policies issued on or after January 1, 2018 to provide coverage for one hearing aid per impaired ear for billed charges not to exceed $3,000 per hearing aid for covered individuals of 18 years of age or younger and one replacement of a hearing aid every 48 months and various other children’s hearing aid coverage requirements.  

Life and Health Insurer Risk-Based Capital Negative Trend Trigger:  HB 74 amends Georgia Insurance Coe Section 33-56-3 to require a life or health insurer to file a risk-based capital report if the insurer’s total adjusted capital is equal to or great than its company action level RBC but less than the product of its authorized control level RBC multiplied by 3, amending the former 2.5 multiplier to conform to the NAIC’s accreditation standards.  

Medical Marijuana Expansion:  SB 16 add six new types of illnesses which can be treated with cannabis oil with a physician’s prescription: Autism, AIDS, Alzheimer’s Disease, Epidermolysis Bullosa, Peripheral Neuropathy, Tourette’s Syndrome.

Vetoed: Expansion of Insurers’ Permissible Payment Means:  The Georgia Governor vetoed HB 174 which would have amended Georgia Insurance Code Section 33-24-43 to expand the means by which insurers may pay insurance policy benefits or covered losses to include wire transfers, cashier’s checks, bank checks and drafts, electronic funds transfers and other forms of electronic payments, general us gift cards without any expiration date, dormancy or non-use fee and any other payment method that the Georgia Insurance Commissioner may approved.

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

Category(s): Missouri - 05/23/2017

Lindley-Myers appointed as Director of the Missouri Department of Insurance, Financial Institutions and Professional Registration

Missouri Republican Governor Eric Greitens appointed Chlora Lindley-Myers as Director of the Missouri Department of Insurance, Financial Institutions and Professional Registration. Director Linley-Myers was confirmed as the Missouri Director of Insurance by the full Senate on April 13, 2017. Prior to her appointment, she served as Deputy Commissioner with the Tennessee Department of Commerce and Insurance; served in Kansas City as the Director of the Consumer Protection and Anti-Fraud Division of the NAIC; and was the Chief Compliance Officer of Examinations for the Kentucky Department of Insurance where she was responsible for the administration and oversight of market conduct examinations. Lindley-Myers previously served as head of the property and casualty section for the Missouri Department of Insurance. She received the Robert Dineen Award for Outstanding Service and Contribution to State Regulation of Insurance. Lindley-Myers is an attorney licensed to practice law in various states, including Missouri. Source: Missouri Governor’s Office press release.

Mark G.R. Warren, Esq. - INGLISH & MONACO, P.C., (573) 634-2522 , mwarren@inglishmonaco.com
Ann Monaco Warren, Esq. - INGLISH & MONACO, P.C., (573) 634-2522 , awarren@inglishmonaco.com

Category(s): New Mexico - 05/23/2017

Public Adjuster Regulation

After trying for many years to amend the New Mexico Insurance Code to include the regulation of public adjusters, the Superintendent of Insurance successfully added regulatory authority over public adjusters during the 2017 Legislative Session.  Public adjusters are insurance claim adjusters who are hired by and work for claimants rather than for insurance companies.  Conflict arose in the past when roofing contractors also acted as public adjusters and encouraged extensive roof repairs while assuring homeowners that insurance companies will fully pay for repairs.   While the Insurance Code previously required all adjusters to be licensed, the Office of Superintendent of Insurance only issued licenses to insurance company adjusters and did not regulate public adjusters.  The new law (Senate Bill 88), which will become effective on June 16, 2017, defines public adjusters and specifically prohibits contractors, roofers, plumbers, or anyone else who provides building repairs or products for compensation from serving in the role of adjuster.  This new law establishes requirements for public adjusters to deposit funds received from insureds in escrow or trust accounts.  Furthermore, the new law provides for continuing education requirements and allows the Superintendent of Insurance to review public adjuster reports of insurance fraud.

Gary Kilpatric, Esq. - MONTGOMERY & ANDREWS, P.A., (505) 982-3873 , gkilpatric@montand.com

Category(s): New Mexico - 05/23/2017

Stop Loss Insurance

The regulatory requirements for stop loss insurance in New Mexico will have greater clarity after the 2017 Legislative Session.  Stop loss insurance has become a very popular coverage in New Mexico for small employers seeking to self-insure for health coverage.  Prior to this past legislative session, stop loss insurance was included in the statutory definitions of both “accident and health insurance” and “casualty insurance” under the New Mexico Insurance Code.  These definitions created an uncertainty as to the regulatory requirements for stop loss insurance as a health insurance product due to the potential application of “medical loss ratio” requirements.  In order to ensure that insurers continue to offer stop loss insurance in New Mexico, Senate Bill 367 removed stop loss insurance from the definition of “accident and health insurance”.  In addition, the new law creates an exception which allows an insurer or a health maintenance organization authorized to transact accident and health insurance to write stop-loss liability insurance.

Gary Kilpatric, Esq. - MONTGOMERY & ANDREWS, P.A., (505) 982-3873 , gkilpatric@montand.com

Category(s): Rhode Island - 05/23/2017

Rhode Island Auto Body Update

The Rhode Island auto body industry continues to challenge the process of setting auto body repair labor rates.  Pursuant to R.I. Gen. Law § 27-29-4.4 and Division of Insurance Regulation 108, each insurer must survey the auto body repair shops annually; however, nothing in the statute “requires an insurer to establish the prevailing rate for each classification of full collision licensed auto body repair facilities based solely on the survey results.” § 27-29-4.4(b).  Recently, several auto body repair shops have filed complaints with the Division of Insurance against multiple insurers challenging the prevailing auto body labor rates each insurer set for 2017.  Additionally, an auto body bill has been submitted in the General Assembly to amend § 27-29-4.4 that would require insurers to execute its labor rate survey under the penalties of perjury.

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

Category(s): Tennessee - 05/23/2017

Legislation to Enhance Tennessee Captive Laws Signed into Law

On May 12, Governor Bill Haslam signed into law a bill passed by the Tennessee General Assembly to help maintain Tennessee’s status as a favorable and competitive domicile for captive insurers.  The legislation (S.B.1190) authorizes domestic pure and protective cell captives to apply for and operate under a letter of dormancy issued by the Tennessee Department of Commerce and Insurance, and permits protected cells to spin off into freestanding pure captives.

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 - 05/23/2017

Lorrie Brouse Named Deputy Commissioner of TDCI

Tennessee Department of Commerce and Insurance Commissioner Julie Mix McPeak has named her longstanding General Counsel, Lorrie Brouse, as Deputy Commissioner of TDCI.  Ms. Brouse, who will continue to serve as General Counsel, succeeds Chlora Lindley-Myers, who left TDCI earlier this year to become Director of the Missouri Department of Insurance, Financial Institutions and Professional Registration.

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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