Alert Edition May 2019

Welcome to the May 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): Alabama - 05/30/2019

Alabama Department of Insurance 2019 Legislative Agenda

Corporate Governance Annual Disclosure Law & Insurance Holding Company Act Amendments 
HB102 by Rep. Kerry Rich; Status: Pending in Senate Banking & Insurance Committee 
SB52 by Sen. Shay Shelnutt; Status: Final Passage in House on 4/23, Pending Governor’s Signature 
Synopsis: This bill seeks to establish best practices and provide enhancements to strengthen corporate governance standards, including the annual collection of detailed information on an insurer’s corporate governance practices. The bill is based on the NAIC Corporate Governance Annual Disclosure Model Act, which was introduced in the 2018 Regular Session as House Bill 506 by Rep. Kerry Rich. Additionally, this bill incorporates provisions from the current version of the NAIC Insurance Holding Company System Regulatory Model Act into existing Alabama law. In particular, this bill adds the definition of “Internationally Active Insurance Group” and provides that documents, materials, and other information filed with the Commissioner relative to the group-wide supervision of an internationally active insurance group is confidential and privileged. 
Insurance Data Security Law 
HB101 by Rep. Kerry Rich; Status: Pending in Senate Banking & Insurance Committee 
SB54 by Sen. Shay Shelnutt; Status: Final Passage in House on 4/23, Pending Governor’s Signature 
Synopsis: Based on the NAIC Insurance Data Security Model Law, this bill seeks to establish data security standards for the DOI and insurers in order to mitigate the potential damage of a data breach. The law applies to insurers, insurance agents, and other entities licensed by the DOI. The U.S. Treasury Department has urged prompt action by states to adopt this model law by 2022 or the administration will ask Congress to preempt the states. 
Bronze Endorsement 
HB283 by Rep. Chip Brown; Status: Pending In Senate 
SB118 by Sen. Jack Williams; Status: Pending In Senate 
Synopsis: This bill requires all insurers writing homeowner policies to offer an endorsement statewide that upgrades a home to IBHS Fortified Bronze building standard whenever the insured incurs roof damage covered by the policy requiring the roof to be replaced. This upgrade applies only when the insured incurs roof damage covered by their policy that will require a roof to be replaced.
Clarity Act Amendments 
HB106 by Rep. Chip Brown; Status: Pending In Senate 
SB55 by Sen. Jack Williams; Status: Pending In Senate 
Synopsis: This bill amends the Property Insurance Clarity Act to require information to be reported according to the perils required under the By-Peril reporting regulation: (1) Fire, (2) All non-hurricane wind/hail, (3) Hurricane, and (4) All other perils. This bill would also authorize the Commissioner of Insurance to create educational and informational programs and presentations regarding how the Department of Insurance can assist consumers. 
Roofing Contracts 
HB127 by Rep. David Faulkner; Status: Pending In House 
SB62 by Sen. Rodger Smitherman; Status: Final Passage in House on 4/23, Pending Governor’s Signature 
Synopsis: Under current law, a homeowner may cancel a roofing contract up to ten (10) business days from the date the contract is initiated. The 10-day period may expire prior to an inspection by the property insurer. If the home did not sustain a covered loss, the homeowner will still be bound by the contract. This bill will allow a homeowner to cancel a roofing contract within five (5) business days after the property insurer provides written notice that the property did not sustain a covered loss. 
Strengthen Alabama Homes – Grant Applicant Personal Information 
HB363 by Rep. Chip Brown; Status: Pending In Senate 
SB239 by Sen. Jack Williams; Status: Pending In Senate 
Synopsis: This bill would require the SAH program to maintain as confidential all documents and information submitted to the Department by property owners or insurance companies in support of grant applications. Applicant’s personal information submitted to the Department in their grant applications would be required to be kept confidential.

Stephen W. Still, Esq. - MAYNARD COOPER & GALE PC, (205) 254-1097 , sstill@maynardcooper.com

Category(s): Arizona - 05/30/2019

Governor Doug Ducey announced last month, that he has appointed Arizona Department of Insurance (DOI) Director Keith Schraad to also head up the Arizona Department of Financial Institutions (DFI)

Governor Doug Ducey announced last month, that he has appointed Arizona Department of Insurance (DOI) Director Keith Schraad to also head up the Arizona Department of Financial Institutions (DFI).  Current DFI Director Bob Charlton will retire on March 22.  The appointment of Schraad comes with the anticipation that Senator Livingston’s agency consolidation bill, SB 1469 will pass the Legislature.  SB 1469 consolidates the DFI and the Automobile Theft Authority into the DOI.  The bill would require the consolidation of the agencies by January 1, 2020.  SB 1469 is currently scheduled for House Rules and passage is likely.

S. David Childers, Esq. - KUTAK ROCK LLP, (480) 429-4880 , David.Childers@KutakRock.com

Category(s): Florida - 05/30/2019

CFO Launches Fraud Free Florida Program

On March 4, 2019, Chief Financial Officer (CFO) Jimmy Patronis launched Fraud Free Florida, a program aimed to protect Floridians, particularly senior citizens, against fraud and scams. Law enforcement officers, state attorneys, private sector stakeholders and the CFO’s fraud investigative team will work together to stay ahead of the curve on scams in identity theft, cybersecurity, opioid treatment centers and public assistance fraud.  Florida currently ranks #1 in fraud in the Nation, and #2 in identity theft. Patronis looks forward to future innovative efforts to make Florida become the toughest state on fraud in the Nation.

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

Category(s): Florida - 05/30/2019

FHCF Posts Finalized Rules on Reimbursement Contracts and Reporting Requirements

The Florida Hurricane Catastrophe Fund (FHCF) posted final versions of Rule 19-8.010, Reimbursement Contract, and Rule 19-8.029, Insurer Reporting Requirements and Responsibilities. Additional information on addendums, claims listing instructions and loss reports are available here.

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

Category(s): Florida - 05/30/2019

Florida Hurricane Catastrophe Fund Issues 2019 Annual Report

On April 18, 2019, the Florida Hurricane Catastrophe Fund (FHCF) issued their 2019 Annual Report of Aggregate Net Probably Maximum Losses, Financing Options, and Potential Assessments. Section 627.35191, Florida Statues, enacted in 2013, requires the Florida Hurricane Catastrophe Fund to provide a report for the upcoming contract year to the Legislature and the Financial Services Commission regarding the aggregate net probable maximum losses, financing options, and potential assessments of the FHCF. Please click here to view the report.

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

Category(s): Florida - 05/30/2019

Florida Legislature Passes AOB Reform Bill

On April 24, 2019, the Florida Senate approved HB 7065 on a vote of 25-14. The bill protects Floridians from Assignment of Benefits (AOB)—provisions of the bill are included here. In his statement on the passage of AOB reform, Governor DeSantis affirmed, “The exponential growth in AOB abuse has contributed to mounting insurance costs for Floridians for far too long.”  He looks forward to “signing this meaningful legislation into law.”

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

Category(s): Florida - 05/30/2019

Governor Extends State of Emergency and Creates Task Force on Opioid Abuse

On April 2, 2019, Governor Ron DeSantis signed two executive orders. Executive Order 19-97 addresses Florida’s substance abuse crisis, establishing the Office of Drug Control and the Statewide Task Force on Opioid Abuse. Executive Order 19-98 extends the state of emergency following Hurricane Michael for 60 days in counties: Okaloosa, Walton, Holmes, Washington, Bay, Jackson, Calhoun, Gulf, Gadsden, Liberty, Franklin, Leon, Wakulla and Jefferson.

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

Category(s): Florida - 05/30/2019

Governor Ron DeSantis Announces Plans for Increased Healthcare Pricing Transparency

On February 27, 2019, Governor Ron DeSantis announced plans for increasing transparency in healthcare pricing in Florida.  He applauded the recently proposed Patient Savings Act legislation and directed the Agency for Health Care Administration (AHCA) to expedite the development of Florida’s healthcare transparency portal, Florida Health Finder.

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

Category(s): Florida - 05/30/2019

Homeowners' Insurance Policy Disclosure Bill Effective January 1, 2019

On January 1, 2019, House Bill 1011 took effect regarding Homeowners' Insurance Policy Disclosures, providing and revising homeowner's flood damage insurance policy disclosure requirements. The bill expands flood insurance notice requirements in homeowner property insurance policies to include notice that the purchase of homeowner’s insurance does not cover flood, despite hurricane winds and rain possibly causing the flood.

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

Category(s): Florida - 05/30/2019

OIR Proposes Rule Update to Workers’ Compensation Application and Audit Procedures

On February 6, 2019, the Office of Insurance Regulation (OIR) issued a notice of development rulemaking on rule no. 69O-189.003 regarding Workers' Compensation: Application and Audit Procedures. The proposed rule amendment would add a reference to section 92.525, F.S., for sworn statements and remove notarization requirements in portions of the rule. If requested in writing a rule development workshop will be noticed in the next available Florida administrative register.

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

Category(s): Georgia - 05/30/2019

2019 Changes to Georgia’s Captive Law (HB 99)

On April 2 the Georgia Legislature passed a new law updating Georgia’s existing captive statutes (HB 99).  HB 99 makes three significant changes; 1) it authorizes the creation of protected cell captives, 2) made technical corrections to the definition of controlled unaffiliated business, and 3) created a dormant license status.  The passage of the legislation showcases Georgia’s continued commitment and support of the captive industry.

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

Category(s): Georgia - 05/30/2019

Georgia Legislature Approves Captive Insurance Legislation

The Georgia Legislature approved captive insurance legislation that authorizes cell captives and provides new requirements for captives that have a certificate of dormancy, including minimum capital and surplus requirement of $25,000 and annual financial reporting.  The legislation defines incorporated protected cell as “a protected cell that is established as a stock corporation or manager-managed limited liability company separate from the sponsored captive insurance company of which it is a part”.  Commissioner Beck is encouraging the growth and momentum of the captive insurance market in Georgia.

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

Category(s): Indiana - 05/30/2019

2019 Indiana Legislative Update

House Bill 1362 establishes insurance requirements for vehicles used as peer-to-peer (P2P) car rentals.  The legislation provides important definitions that will allow insurance companies to accurately provide or exclude coverage for P2P usage.  Although the legislation requires the P2P company to assume primary liability for the use of the vehicle as a P2P, it allows the insurance requirements to be met through a policy maintained by the P2P company, the vehicle owner, the vehicle renter, or a combination of those three.
 
House Bill 1183 provides consumer safeguards regarding towing practices as recommended by the National Conference of Insurance Legislators model towing law.  Among the legislation’s key provisions, it requires towers to provide an itemized invoice, provides for consumer choice in choosing a tower or storage facility, and stipulates tow fees and associated costs must be reasonable.  It also creates jurisdiction for the Attorney General to enforce violations of the law as a deceptive consumer act.  
 
House Bill 1588, introduced as the insurance omnibus bill, requires a pharmacy benefit management company to update its maximum allowed cost every 7 days.  It further requests the topic of pharmacy benefit managers be studied during the interim for potential legislation in 2020.  Although the legislature ultimately chose to not address the issue this year, the bill was home to discussion regarding the potential adoption of the National Association of Insurance Commissioners cyber security model law and portends to possible legislative activity next session.
 
House Concurrent Resolution 62 adopts the National Conference of Insurance Legislators model resolution regarding the most recent American Law Institute (ALI) Restatement of Laws Liability Insurance.  The insurance industry has expressed concerns the ALI Restatement departs from long standing common law and attempts to move courts in a problematic direction for the industry.  House Concurrent Resolution 62 establishes that the ALI Restatement reflects neither the law nor the public policy of Indiana.   
 
House Bill 1631 creates greater flexibility for insurers offering short-term health insurance plans by allowing policy terms of up to 364 days with renewals up to 36 months.  Prior Indiana law only allowed short-term health insurance policies to have a term of 6 months with no option for renewal.  The legislation is intended to create more affordable insurance options.  
 
House Bill 1374 establishes bonding requirements for certain public-private agreements, primarily relating to roadway infrastructure.  Specifically, the legislation requires performance bonds must be issued for at least 50% of the cost to design and construct the project and payment bonds must be issued at 100% of the cost to design and construct the project.  Prior to the bill, Indiana had no bonding requirement for these public-private agreements.

Greg E. Mitchell, Esq. - FROST BROWN TODD, LLC, (859) 244-7548 , gmitchell@fbtlaw.com

Category(s): Kentucky - 05/30/2019

New Law Put Kentucky on Cutting Edge of Insurance Innovation

Kentucky recently passed new legislation, House Bill 386, into law that establishes the nation’s first comprehensive framework structuring a regulatory sandbox for insurance innovation. The legislation was developed through a collaborative effort among Frost Brown Todd’s Insurance Industry Group, Rep. Bart Rowland, executive staff at the Kentucky Department of Insurance (KDOI), and members of the insurance industry.  Under the new law, the KDOI may allow insurers and other companies, including startups in the Financial Technology (FinTech) and Insurance Technology (InsurTech) industries, to come to Kentucky and beta test their inventions, granting them relief from specified state insurance laws and regulations. The law also ensures those with a research and development background in any area can then work under an exclusivity period of at least one year without the fear of others gaining information about their work, gain admittance to the regulatory sandbox, and establishes a Director of Insurance Innovation to act as a liaison between those on the innovation side and the Kentucky Department of Insurance. Governor Matt Bevin signed the bill on March 26, 2019 and the law becomes effective 90 days after enactment, June 27, 2019.

Greg E. Mitchell, Esq. - FROST BROWN TODD, LLC, (859) 244-7548 , gmitchell@fbtlaw.com

Category(s): Louisiana - 05/30/2019

Surplus Lines Insurers

On June 24, 2002, the Louisiana Department of Insurance (“LDOI”) issued Advisory Letter 02-01 advising that surplus lines insurers may be removed from a list of unapproved authorized insurers if the Commissioner finds that it is not in the best interest of policyholders or the citizens of Louisiana for the insurer to be allowed to continue to do business in this state. The LDOI has given notice that Advisory Letter 02-01 has been rescinded as the cited language, and thus, the authority of the Commissioner provided above, is no longer supported by current law.

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): New York - 05/30/2019

Decision by the United States District Court for the Southern District of New York

Federal
A much anticipated decision by the United States District Court for the Southern District of New York in favor of the New York Department of Financial Services (DFS), upheld DFS’ challenge to the authority of the United States Office of the Controller of the Currency (OCC) to grant a special purpose national bank (SPNB) charter to non-depository fintech companies that lend money on the basis that such charter issuance exceeds the authority of the  OCC under the National Bank Act (NBA)  and usurps DFS’ regulatory authority over such institutions. The victorious end to the lawsuit, instituted in May 2017 at the behest of recently departed DFS Superintendent Maria T. Vullo, now obliges the OCC to seek redress from the federal appellate courts or to seek an amendment by Congress of the NBA. The lawsuit was initially dismissed on grounds of standing and ripeness in December 2017 because at the time the lawsuit was initiated, OCC had not yet determined whether it would accept applications for SPNB charters from fintech companies including those which were not yet engaged in taking deposits. However, once OCC agreed to accept such applications from fintech businesses not engaged in taking deposits, DFS sued OCC again, this time in September 2018.

The primary issue in the lawsuit centered around a provision in the NBA stating that OCC has power to charter businesses that are lawfully engaged in the business of banking. In its own regulations, OCC had interpreted the “business of banking to involve conducting one of …three core banking functions, of which receiving deposits was one of three core banking functions. DFS’ position, from the inception of its legal challenge, was that granting a SPNB charter to a non-depository fintech company exceeded the scope of OCC’s authority under the NBA. A key element in the case was grounded in the U.S. Supreme Court’s Chevron doctrine (a judicial  interpretative tool in Chevron U.S.A., Inc. v. National Resources Defense Council, Inc., 467 U.S. 837 (1984) which allows government agencies to apply reasonable interpretations to ambiguous statutory language.

The presiding federal court judge disagreed with OCC after concluding that Chevron deference was inapplicable because the meaning of “the business of banking” in the NBA “unambiguously requires receiving deposits as an aspect of the business” (of banking).

DFS is likely to request an injunction against OCC’s continued acceptance, consideration and granting of SPNB charters to nondepository fintechs.

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

Category(s): Texas - 05/30/2019

Texas Commissioner Kent Sullivan

Texas Commissioner Kent Sullivan has done the unheard of by asking all Texas Insurance Stakeholders to provide information and identify any rules that make compliance unreasonably difficult or that they find to be ambiguous, out of date, or inconsistent with statute.  TDI is working on a structured process and timeline to collect, review, and prioritize suggestions about specific rules that need to be modernized or changed and wants information from industry.

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

Category(s): Virginia - 05/30/2019

Virginia Becomes the 4th State to Adopt a Version of the NAIC Travel Insurance Model Act

On March 8, 2019, Virginia became the 4th state to adopt a version of the NAIC Travel Insurance Model Act when Governor Ralph Northam signed SB 1565 into law.  The new law, which passed the House of Delegates and Senate unanimously, inserts into the Virginia code the provisions of the NAIC Model that the NAIC Executive Committee (EX) and Plenary approved in December of 2018.  The new law codifies much of existing industry practice and provides a comprehensive framework for the regulation of travel insurance in the Commonwealth of Virginia.

Duke de Haas, Esq. - Allianz Global Assistance, (804) 281-6707 , duke.dehaas@allianzassistance.com
Jack L. Zemp, Esq., JD/MBA, CPCU - Allianz Global Assistance, (804) 673-3391 , jack.zemp@allianz.com

Category(s): Washington - 05/30/2019

The Surprise Billing Legislation (HB1065 and SB5031) passed in WA

The Surprise Billing Legislation (HB1065 and SB5031) passed in WA.  This legislation prohibits balance billing after the health plan has paid its portion and the patient has paid his portion (co-pay, etc.) upon receipt of emergency medical care at an out-of-network ER and when there is an approved surgery at an in-network hospital/surgery center but services, such as anesthesiology, radiology, labs are provided by an out-of-network provider.    Under the legislation, a dispute between an insurer and provider/facility goes to binding arbitration if the parties do not agree on a commercially reasonable reimbursement for out-of-network services within 30 days.

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

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