Alert Edition March 2019

Welcome to the March 2019 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

Blurb

Category(s): Colorado - 03/29/2019

Colorado Division of Insurance Filed Proposed Changes to Existing Rule 5-2-12

On February 28th, the Colorado Division of Insurance filed proposed changes to existing Rule 5-2-12 Concerning Automobile Insurance Consumer Protections.  The proposed changes primarily impact: (1) limitations on insurers’ ability to refuse to write, cancel, fail to renew, surcharge, increase premium, or reduce coverages; and (2) the notice to insured of insurers’ intended actions.  A public hearing will be held on April 1, 2019.

Joel A. Glover, Esq. - Faegre Baker Daniels LLP, (303) 607-3648 , Joel.Glover@FaegreBD.com

Category(s): Connecticut - 03/29/2019

Connecticut Hearing on Crumbling Foundations

Crumbling Foundations is no new issue in Connecticut, but on Friday March 8th, two state legislative committees held a joint public hearing on nine different bills currently aimed at addressing this long standing problem.  

Some of the bills discussed on Friday address insurance companies, which have mostly taken the position that their policies do not cover these crumbling basements. Although it has not been addressed in the various bills under consideration, a move to initiate a Connecticut Unfair Insurance Practices Act investigation into the insurance industry’s refusal to cover the crumbling basement claims has been a hot topic of discussion.

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

Category(s): Georgia - 03/29/2019

First Acceptance Corp. of Georgia v. Hughes (Case No. S18G0517 Ga. Supreme Court, March 11, 2019)

On March 11, 2019, the Georgia Supreme Court ended the uncertainty surrounding an insurer’s duty to settle a liability claim made against its insured.  In First Acceptance Insurance Company of Georgia, Inc. v. Hughes, decided March 11, 2019, the Georgia Supreme Court stated that “an insurer’s duty to settle arises when the injured party presents a valid offer to settle within the insured’s policy limits.”   The plaintiff in the underlying matter had presented First Acceptance with a settlement offer that was not time limited and did not put First Acceptance on notice that its failure to settle the offer within any specified period would constitute a rejection of the offer. Essentially, the ruling in the case places the burden squarely on the injured party to make clear to the insurer that the liability claim against the insured can be resolved within the coverage of the policy.  Likewise, the effect of the decision is that the injured party must put its cards on the table in terms of its willingness to settle and not be allowed to reap rewards from keeping the insurance company in the dark as to the ability to settle within an insurance policy’s limits.

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

Category(s): Georgia - 03/29/2019

Georgia 2019 Legislative Update

March 7, 2019 marked the crossover day in the Georgia legislature, and bills that did not crossover from one chamber of the legislature to the other by adjournment on that day are not eligible for further consideration in the 2019 legislative session.  The following are some of the key insurance related bills which remain under consideration for the 2019 legislative session:
HB 167  Bill permits employees of property and casualty insurers to adjust property claims of $1,000 and below with an adjuster’s license.
HB 337.   Bill provides for the regulation of peer to peer car sharing services.
HB 353.  Bill provides for a felony when a person intentionally causes a motor vehicle collision or fabricates evidence of a motor vehicle collision that did not occur.
HB 367.  Department of Insurance bill implementing the NAIC Model Corporate Governance Annual Disclosure Act.
HB 454.  Bill provides for the licensing and regulation, including rules of the road, for “motorized mobility devices” (scooters).
HB 484.  Bill regulates the operations of medical funding providers and provides that medical funding arrangements shall be discoverable and admissible.
SB 188.  This Department of Insurance bill would adopt the 2016 NAIC Credit for Reinsurance Model Law updates (as well as the 2019 updates if adopted by the NAIC at its March 2019 meeting).
SB 156 and HB 368.  Bill provides for the division of domestic insurers.  Similar to last year’s HB 754 which passed both chambers, but was ultimately vetoed by the Governor.
SB 110 and HB 239.  Bills establish the jurisdiction of the Georgia Business Court, including alleged violations of O.C.G.A. §§ 33-39-9, -10 and -11 regarding Collection, Use, and Disclosure of Information Gathered by Insurance Institutions, access and correction of personal information and adverse underwriting decisions.
SB 18.  Bill provides that direct primary care agreements between health care providers and their patients do constitute insurance and exempts a physician offering, marketing or entering into a direct primary care agreement with a patient from obtaining a certificate of authority or other insurance license.
We will continue to monitor these and other bills and provide an update for bills passing at the end of the 2019 legislative session.

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

Category(s): Georgia - 03/29/2019

State of Georgia v. International Indemnity Co. (Case No. S18G0493 Georgia Supreme Court, February 4, 2019)

On February 4, 2019, the Georgia Supreme Court determined that contractors hired by the Georgia Insurance Commissioner, acting as the liquidator of International Indemnity Co., were not entitled to either sovereign or official immunity pursuant to O.C.G.A. §33-37-8.1.  The case arose out of the liquidation of International Indemnity of which the Georgia Insurance Commissioner was appointed the liquidator.  As the liquidator, the Georgia Insurance Commissioner engaged Regulatory Technologies, Inc. to assist in the liquidation.  Sun States Group, Inc., the sole shareholder of International Indemnity, challenged the final order of liquidation alleging that Regulatory Technologies had charged excessive fees to the International Indemnity liquidation estate and that more funds should have been available to the estate.  Regulatory Technologies defended the allegations and asserted that it was protected by both sovereign and official immunity provisions of O.C.G.A. §33-37-8.1, because it was acting on behalf of the liquidator.  The Georgia Supreme Court disagreed and ruled that O.C.G.A §33-37-8.1 did not provide any immunity to a private corporation such as Regulatory Technologies and remanded the case to the trial court to determine whether Regulatory Technologies had engaged in intentional or willful or wanton conduct.

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

Category(s): Idaho - 03/29/2019

Insurance Bills of Note That Have Recently Been Signed by Idaho Gov. Brad Little

Insurance bills of note that have recently been signed by Idaho Gov. Brad Little include HB 27, which adds a provision to the premium tax law requiring insurers to round figures in forms, statements, and returns filed with the IDOI to the nearest whole dollar, and HB 1028, which adds a “post-traumatic stress injury” suffered by a first-responder as a “compensable injury” or “occupational disease” in Idaho’s workers’ compensation law. Other recently-enacted insurance laws include the adoption of the NAIC’s model language regarding groupwide supervision of internationally active insurance groups and minor updates to Idaho’s domestic insurer investment laws.  HB 179, which would permit the Idaho Transportation Department to suspend and then revoke the registration of an automobile in the event that the owner does not satisfy the insurance financial responsibility requirements, has passed the House and is pending in the Senate.

Geoffrey M. Baker, Esq., JD, CPCU, FLMI, AIRC - NAMIC, gbaker@namic.org

Category(s): Louisiana - 03/29/2019

Reimbursement for License Examination Fees For Louisiana Veterans

The Department of Veterans Affairs has a program entitled, “Veterans Federal Exam Reimbursement Program”, which became effective November 1, 2018. The Louisiana Department of Insurance has now established eligibility of Louisiana Veterans for reimbursement of the required Louisiana insurance examination fees through this program. A number of different types of licenses qualify for fee reimbursement, including Automobile Adjuster, Bail Bond, Casualty, Commercial Lines Adjuster, Crop Adjuster, Health & Accident, Industrial Fire, Life, Life Health and Accident, Property, Property & Casualty Adjuster, Personal Lines Adjuster, Personal Lines Producer, Property & Casualty, Public Adjuster, Surety, Surplus Lines, Title and Workers’ Compensation Adjuster.
This program enables Louisiana veterans to pursue careers in insurance by having licensing test fees reimbursed.
Veterans have to pay any fees up front at the time they take the license exam, but upon completion of the exam, eligible veterans have one year to apply for reimbursement of the fees through the Department of Veteran’s Affairs. There is no limit to the number of tests an individual may take, or the number of times the same test is taken. Information on the program can be secured by accessing the VA online at www.GIBILL.va.gov or calling 1-888-442-4551. Veterans may also contact the Louisiana Department of Insurance Production Licensing Division at 225-342-0860 or producerlicensing@ldi.la.gov for guidance.

Van R. Mayhall, Jr., Esq. - BREAZEALE, SACHSE & WILSON, L.L.P., (225) 381-8009 , van.mayhall.jr@bswllp.com
Van R. Mayhall, III, Esq. - BREAZEALE, SACHSE & WILSON, L.L.P., (225) 381-3169 , van.mayhall.iii@bswllp.com
Sunny Mayhall West, Esq. - BREAZEALE, SACHSE & WILSON, L.L.P., (225) 381-8049 , sunny.west@bswllp.com

Category(s): Michigan - 03/29/2019

HB 6491 Signed Into Lay in Michigan

On December 27, 2018, then-Governor Rick Snyder signed into lay HB 6491 in Michigan.  HB 6491 is based on NAIC Insurance Data Security Model Law.  Michigan is the third state to adopt the Model.

Daniel A. Cotter, Esq. - Howard & Howard Attorneys PLLC, (312) 456-3674 , dcotter@howardandhoward.com

Category(s): Mississippi - 03/29/2019

Mississippi Legislature

GONE WITH THE WIND -- “Take Two”
For the second consecutive year the Mississippi Legislature has dipped into the funds of the 
Mississippi Windstorm Underwriting Association, the residual market mechanism for wind and hail coverage along the Mississippi Gulf Coast.  HB 444 reauthorizes a 3% surplus lines policy fee designed to provide funds for MWUA, but diverts the first $3,500,000 of such fees to the Rural Fire Truck Fund.  This follows a similar $6,000,000 Legislative taking of these funds in 2018.  Additionally, this bill eliminates the statutory recoupment mechanism available for insurers to recover assessments paid to MWUA.  HB 444 is expected to be signed by Governor Bryant and would become effective July 1, 2019.  

Data Security
Mississippi joins the short list of states to have adopted legislation substantially similar to the NAIC Insurance Data Security Model Law.  SB 2831 is expected to be signed by the Governor and would become effective July 1, 2019.

Corporate Governance Annual Disclosure
Mississippi joins the longer list of states to have adopted the NAIC accreditation standard Corporate Governance Annual Disclosure Model Act.  HB 324 has been signed by the Governor and is effective January 1, 2020, with first CGAD due to be filed no later than June 1, 2020.
  
What the HAP
Legal wrangling continues in the civil actions brought by Mississippi Attorney General Jim Hood against a number of insurers arising out of grants awarded by the Homeowners Assistance Program (HAP) in the aftermath of Hurricane Katrina.  The Mississippi Supreme Court held oral argument on interlocutory appeal of procedural issues in two cases and one case remains before the Court on petition for rehearing of denial of interlocutory appeal as to another procedural issue.  The first of these cases were filed in 2015 and allege improper adjusting of claims, specifically the issue of damage caused by wind versus damage caused by water during Hurricane Katrina in 2005.  Thus far, twelve insurers have been sued, four of which have settled with the aggregate amount of settlements appearing to exceed approximately $11,000,000.

Robert B. House, Esq. - JONES WALKER LLP, (601) 949-4830 , rhouse@joneswalker.com

Category(s): New York - 03/29/2019

New York Department of Financial Services' 2019 Regulatory Agenda

The following alerts derive from excerpts in the New York Department of Financial Services' 2019 Regulatory Agenda (“Department”). These alerts call attention to highlights of the regulatory additions and amendments to Title 11 of the NYCRR that the Department is presently considering proposing during 2019: 

Proposed adoption of a new Part 5 to 11 NYCRR (Insurance Regulation 195) to implement the authority of the Superintendent of Financial Services under Insurance Law Section 316 to require an insurer or other person or entity making a filing or submission with the Superintendent to do so by electronic means, unless the insurer or other person or entity applies for, and the Superintendent grants, an exemption from the electronic filing requirement. 

Proposed adoption of a new Part 90 to 11 NYCRR to require an insurer to adopt a corporate governance function and submit to the Superintendent of Financial Services a corporate governance annual disclosure

Proposed adoption of a new Part 11 to 11 NYCRR to establish standards for insurers and certain other regulated persons regarding disaster planning, preparedness, and response. 

Proposed amendment of 11 NYCRR 30 (Producer Compensation Transparency) (Insurance Regulation 194) to incorporate more detailed consumer disclosure of producer compensation and material conflicts of interest.

Proposed adoption of a new Part 228 to 11 NYCRR (Issuance of Stop-Loss and Health Insurance Policies to Small Groups) to establish standards relating to the activities of insurers issuing stop-loss and health insurance policies to small groups in order to preserve and maintain the small group health insurance market in New York. 

Proposed amendment of 11 NYCRR 52 (Minimum Standards for Form, Content and Sale of Health Insurance, Including Standards of Full and Fair Disclosure) (Insurance Regulation 62) to establish minimum standards for the form, content, and sale of policies and contracts of dental insurance.

Frederick J. Pomerantz, Esq. - Insurance Legal & Regulatory Consulting, PLLC, (516) 297-3101 , PomerantzF35@gmail.com

Category(s): Ohio - 03/29/2019

Recently Passed Cybersecurity Legislation in Ohio

Ohio recently passed the cybersecurity legislation that is modeled after the NAIC Insurance Data Security Model Law.  Senate Bill 273 became effective on March 20, 2019, making Ohio the second state (after South Carolina) to adopt the Model Law.

Daniel A. Cotter, Esq. - Howard & Howard Attorneys PLLC, (312) 456-3674 , dcotter@howardandhoward.com

Category(s): Oklahoma - 03/29/2019

Oklahoma Commissioner Glen Mulready Proposed Rules for Rulemaking Authority

Oklahoma Commissioner Glen Mulready has published numerous proposed rules for Rulemaking Authority by the Oklahoma Insurance Department.  Public comments due by March 22 and a hearing will be held March 26.

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

Category(s): Texas - 03/29/2019

Commissioner Kreidler’s Priority for the 2019 Legislative Session

Commissioner Kreidler’s priority for the 2019 legislative session is to protect consumers from charges for out-of-network health care services by passing a comprehensive Surprise Billing law (HB 1065 and SB 5031).  The proposed bill passed out of the house easily but has not yet passed in the senate where a similar bill stalled in 2018 after passing through the house.  In the proposed legislation, an exception to the balance-billing prohibition applies if an enrollee knowingly chooses an out-of-network provider/doctor over in-network at least 72 hours before treatment at an in-network facility. The bill also includes some transparency provisions, e.g. a requirement that providers list the carriers with which they contract online.  There is much less opposition to this legislation by providers and insurers this year than in prior years.

Julie M. Pomerantz, Esq. - MITCHELL, WILLIAMS, SELIG, GATES & WOODYARD, P.L.L.C, (512) 480-5100 , jpomerantz@mwlaw.com

Category(s): Texas - 03/29/2019

Jim Beck Issued Directive 19-EX-2 for Private Passenger Auto and Homeowner Insurers

The new insurance commissioner, Commissioner Jim Beck, issued Directive 19-EX-2 for Private Passenger Auto and Homeowner Insurers, requiring them to enter their rates into the Department’s rate comparison portal once a rate filing is finalized.  There will be a certification process implemented in SERFF to ensure companies have complied that will require an attestation that the company’s rates have been entered into the Department’s portal.  Any company that does not comply will be subject to administrative penalty.

Julie M. Pomerantz, Esq. - MITCHELL, WILLIAMS, SELIG, GATES & WOODYARD, P.L.L.C, (512) 480-5100 , jpomerantz@mwlaw.com

Category(s): Texas - 03/29/2019

Texas Legislature Considering the Proposed House Bill 3306

The Texas Legislature is considering the proposed House Bill 3306 which will create a new Chapter 831 of the Texas Insurance Code, titled “Corporate Governance Annual Disclosure, and provide for the Texas equivalent of the NAIC Corporate Governance Annual Disclosures Model Act.  This law is intended to provide the Commissioner with a summary of an insurer’s or insurance group’s corporate governance structure, policies and practices to permit the Commissioner to gain and maintain an understanding of the insurer’s corporate governance framework.  This Model Act will become an accreditation requirement on January 1, 2020; the Texas Legislation, if it passes, is intended to take effect on September 1, 2019 and the first required filing would be on or after June 1, 2020.

Julie M. Pomerantz, Esq. - MITCHELL, WILLIAMS, SELIG, GATES & WOODYARD, P.L.L.C, (512) 480-5100 , jpomerantz@mwlaw.com

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