Alert Edition September 2023

Welcome to the September 2023 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,
C. Ignacio Matos, Esq., FORC Alert Co-Editor
Ryan Smart, Esq., FORC Alert Co-Editor
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Category(s): National - 09/21/2023

Kansas Urges State Regulatory Group to Abandon Data Privacy Proposal

Recently, LeAnn Crow, Director of Consumer Assistance for the Kansas Insurance Department, called for potential abandonment  of the NAIC privacy initiative. She stated, “"As far as Kansas can tell, the model would only add costs to the business of insurance, costs that would ultimately be passed on to the customers.”

Daniel A. Cotter, Esq. - Dickinson Wright PLLC, (312) 423-8170 , DCotter@dickinson-wright.com

Category(s): National - 09/21/2023

Regulators Give Insurers a Break on Reporting Interest Rate Losses

On August 12, state insurance regulators voted to adopt a key rule change on how insurers report interest rate-related losses. Several industry trade groups lobbied for the rule change, which seeks free up hundreds of millions of dollars that insurers can use to write new policies or reinvest in business innovation. The change concerns the interest maintenance reserve (IMR), an accounting standard that helps carriers smooth their annual income across market conditions.

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

Category(s): National - 09/21/2023

SEC Adopts New Cyber Rule, Unveils Brokerage AI Proposal

On July 26, the U.S. Securities and Exchange Commission adopted new rules requiring publicly traded companies to disclose hacking incidents, a measure officials said was to help the investing public contend with the mounting cost and frequency of cyber-attacks. On a party-line vote, the five-member Commission also proposed requiring broker-dealers to address conflicts of interest in using artificial intelligence in trading.

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

Category(s): Alabama - 09/26/2023

Alabama to Benefit from NAIC/IBHS Agreement

From the ALDOI: The National Association of Insurance Commissioners (NAIC) and the Insurance Institute for Business and Home Safety (IBHS) have entered into a memorandum of understanding (MOU) that provides state insurance regulators access to IBHS member-only content and additional opportunities to collaborate on select topics concerning disaster preparedness. Click here  to read the full article on the Alabama Department of Insurance website.

Stephen W. Still, Esq. - BALCH & BINGHAM LLP, (205) 488-5512 , sstill@balch.com

Category(s): Alabama - 09/21/2023

The Alabama Department of Insurance has Issued/Updated Legal Regulations Effective January 1, 2023

Regulation Number 151: Independent Adjusters 

Regulation Number 148: Title Insurance Agents 

Regulation Number 147: Insurance Producers, Temporary Producers, and Service Representatives

Stephen W. Still, Esq. - BALCH & BINGHAM LLP, (205) 488-5512 , sstill@balch.com

Category(s): Florida - 09/23/2023

Florida Office of Insurance Regulation Issues Emergency Rule Relating to Claims-Handling Manual

The Florida Office of Insurance Regulation (OIR) has issued an Emergency Rule regarding claims-handling manuals requirements for residential property insurers. The new requirements are from the of CS/SB 7052 provisions relating to Insurer Accountability passed during the 2023 Regular Legislative Session and signed into law by Governor Ron DeSantis on June 1, 2023.

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

Category(s): Florida - 09/23/2023

Florida’s Citizens Property Insurance Faces Regulatory Scrutiny Over Proposed Rate Hikes

Regulators have ordered the state-backed Citizens Property Insurance Corp. to revamp — and trim — proposed rate increases. Florida Insurance Commissioner Michael Yaworsky signed an order on August 19 that took issue with parts of a Citizens rate proposal that included increasing rates by 12 percent for homeowners with the most common policies.

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

Category(s): Florida - 09/23/2023

Massive Citizens Takeout Plan Seen as Sign of Improvement in Florida Market

Stakeholders near and far are hailing a near-record number of takeouts from Citizens’ Property Insurance Corp. as a sign that the troubled Florida insurance market is improving. Altogether, 184,000 policies could be removed from Citizens, the state-created insurer of last resort that has ballooned to become Florida’s largest property insurer, with more than 1.3 million policies in force this year. The insurance companies assuming these new policies and working with Citizens to assist with depopulation include Slide Insurance Company which will assume 100,000 policies; SafePoint Insurance Company, with 30,000, and Southern Oak Insurance Company, with 25,000.

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

Category(s): Florida - 09/23/2023

New Florida Workers’ Comp Rules in Effect for Employer Penalties and Exemptions

Beginning July 1, several new workers’ compensation rules took effect in Florida, affecting penalties for employers who fail to obtain comp insurance and setting new requirements for exemptions for corporate officers. The Florida Division of Workers’ Compensation announced that rule revisions that had been in the works for months, some of which were needed to comply with new state laws, have been adopted. The effective date for the rules was July 18.

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

Category(s): Georgia - 09/23/2023

DIRECTIVE 23-EX-4: PET INSURANCE SALES IN THE STATE OF GEORGIA

On August 1, 2023, Commissioner John F. King issued Directive 23-EX-4 to inform that effective August 1st, 2023, Pet Insurance is included in the types of insurance eligible to be sold by agents holding Life, Accident and Sickness, Property and Casualty, or Personal Lines licenses. 
Companies holding or wishing to offer Pet Insurance within the lines of Life, Accident and Sickness, or Property and Casualty can submit their insurance products for approval.

Tony Roehl, Esq. - BAKER HOSTETLER LLP, (404) 256-8419 , troehl@bakerlaw.com

Category(s): Georgia - 09/29/2023

Eleventh Circuit Affirms Former Georgia Insurance Commissioners Criminal Convictions

On August 7, 2023, the U.S. Court of Appeals for the Eleventh Circuit issued its decision in the appeal by Jim Beck, who was elected as Georgia’s Insurance Commissioner in 2018, of his 2021 criminal convictions on eight counts of wire fraud, 13 counts of mail fraud, 12 counts of money laundering and four counts of aiding the filing of false tax returns for which he was sentenced to 87 months in prison.

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

Category(s): Georgia - 09/29/2023

Eleventh Circuit Rejects Insurer’s Recoupment of Defense Costs

On July 13, 2023, the U.S. Court of Appeals for the Eleventh Circuit issued a matter of first impression ruling in Continental Casualty Co. and Valley Forge Ins. Co. v. Winder Laboratories, LLC that an insurer is not entitled under Georgia law, absent a contractual clause allowing for recoupment of defense costs, to recoup such costs it advanced under a reservation of rights letter before a determination that it owed no duty to defend its insured.

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

Category(s): Georgia - 09/29/2023

Georgia Insurance Commissioner Issues Pet Insurance Directive 23-EX-4 (August 1, 2023)

Under Directive 23-EX-4, life insurance, accident and sickness insurance and property and casualty insurance companies may issue, and insurance agents holding any of these lines of authority may sell, pet insurance in Georgia.

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

Category(s): Georgia - 09/29/2023

Georgia’s Mirror Image Pre-Suit Settlement Offer Rule Strictly Applied

In Pierce v. Banks,  2023 A23A0394 (Ga Ct. App. June 28, 2023), the Georgia Court of Appeals reversed a trial court order denying plaintiff’s partial motion for summary judgment and granting a cross-motion to enforce a settlement in favor of the defendant. The primary question at issue was whether a binding presuit settlement agreement existed between the parties under Georgia’s presuit demand statute (O.C.G.A. § 9-11-67.1). The plaintiff was involved in an auto accident with the defendant, and following the accident, the plaintiff made a written presuit offer for his personal injury claim to the defendant’s insurer. The offer letter required payment of the bodily injury policy’s limit and prescribed that the insurer must accept the offer in writing within 31 days and further required that the following conditions must be met: (a) the settlement payment check must be made payable jointly to plaintiff and his law firm, (b) payment had to be received 15 days after the insurer’s written acceptance and (c) the insurer’s settlement payment could not include any terms, conditions, descriptions, expirations or restrictions that were not expressly allowed in the offer. The offer letter also cautioned that “this offer must be accepted exactly as stated” and that “any variance at all from any terms or conditions of acceptance or any variance at all from the quoted language above, even if accidental, will be a rejection of this offer.” Before the end of the offer’s 15-day acceptance period, the insurer sent a letter accepting the offer, which enclosed a settlement payment check including a notation that it was “void after 180 days.” In response, the plaintiff timely rejected the settlement check as a counteroffer, asserting that the insurer’s acceptance was not identical to the plaintiff’s offer. The appellate court determined that the trial court erred in granting the defendant’s motion to enforce the settlement agreement because an acceptance by act must be “identical” and “without variance of any sort,” notwithstanding the defendant’s early delivery of its settlement payment check before the 15th day.

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

Category(s): Georgia - 09/29/2023

Non-Solicitation of Employees Covenant Must Contain Express Geographic Limitation

In North American Senior Benefits, LLC v. Wimmer, 2023 WL 3963931 (Ga Ct. App. June 12, 2023), the Georgia Court of Appeals upheld a Georgia State-wide Business Court decision that an employee non-solicitation covenant must contain an express geographic limitation to be enforceable. Here, an insurance marketing company sued two former independent agents for violation of their agent contracts. The case also explained that, while courts have some discretion to “blue pencil” restrictive covenants to bring them into compliance with Georgia law, a court may not supply a geographical limitation to an agreement that lacks such a material term.

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

Category(s): Georgia - 09/23/2023

Press Release Regarding the Liquidation of Friday Health Plans of Georgia, Inc.

On August 4, 2023, Commissioner John F. King issued a press release to inform that, as of August 1, 2023, Friday Health Plans of Georgia, Inc. was placed in liquidation. The Department has created a special open enrollment period on the Georgia Health Insurance Marketplace until September 29, 2023. Click here  to view the FAQs and the liquidation documents.

Tony Roehl, Esq. - BAKER HOSTETLER LLP, (404) 256-8419 , troehl@bakerlaw.com

Category(s): Illinois - 09/23/2023

Illinois Prohibits Dog Breed Discrimination

House Bill 1049 (P.A. 103-0011), effective January 2024, eases restrictions so owners of certain dog breeds will be able to get homeowners or renters insurance. Previously some insurance agencies could refuse or modify their policy because of the type of dog. The new law bans policies that refuse to issue or renew, cancel, or impose a premium rate for a policy if a homeowner adopts a dog of a certain breed. The law allows insurance companies to cancel a policy if the individual dog is deemed dangerous or vicious under Illinois’ Animal Control Act. Currently, insurance companies have the discretion to refuse, remove or modify coverage based on the breed of a pet owner’s dog. This amends the Illinois Insurance Code to prohibit an insurer from refusing to issue or impose an increased premium or rate or restrict or reduce coverage based solely upon harboring or owning any dog of a specific breed or mixture of breeds.

Steve W. Kinion, Esq. - ZACK STAMP, LTD, (217) 525-0700 x108 , skinion@601w.com

Category(s): Illinois - 09/23/2023

Public Act 103-0075

On June 9, 2023, Governor J.B. Pritzker approved and signed legislation in Illinois that adds it to the small number of states that have enacted insurance business transfer (“IBT”) frameworks. Previously, Illinois had created a division mechanism. Public Act 103-0075  establishes the rules and requirements for a successful IBT in Illinois. The new law is effective January 1, 2025.

Daniel A. Cotter, Esq. - Dickinson Wright PLLC, (312) 423-8170 , DCotter@dickinson-wright.com

Category(s): Montana - 09/23/2023

The Montana Commissioner of Securities and Insurance (CSI) Issues Advisory Memorandums Regarding Property Casualty

The Montana Commissioner of Securities and Insurance (CSI) has issued several advisory memorandums regarding property casualty recently.  
Click here  to view the first memorandum which requires each company rate, rule or rate/rule filing be accompanied by a certification that to the best of an officer’s knowledge and belief, the rate, rule or rate/rule filing complies with Title 33 of the Montana Code and Chapter 6.6 of the Montana Administrative Rules. The certification will further require the officer to certify that the officer has reviewed the CSI’s P & C Rate/Rule Filing Guide. Click here  to view the P & C Rate/Rule Filing Guide and the Certification form on the CSI’s website.
Click here  to view the second memorandum which reminds property casualty issuers there has been an advisory memorandum since 2000 that prohibits insurance companies from refusing to issue policies in areas which do not have a substantially increased risk of loss due to wildfires.  CSI has seen instances of refusal to offer coverage in a geographic location some 60 miles from fires.

Bruce M. Spencer, Esq. - Law Offices of Bruce M. Spencer PLLC, (406) 459-2122 , bruce@brucespencerlaw.com

Category(s): NAIC - 09/21/2023

NAIC Adopts Change to Better Monitor Life Insurer Investments

On August 16, members of the National Association of Insurance Commissioners (NAIC) voted to adopt a change to the Life Risk-Based Capital (RBC) formula under RBC Blanks proposals 2023-09-IRE and 2023-10-IRE at the 2023 NAIC Summer National Meeting. The change will require residual tranches, and only residual tranches, of structured securities to receive a 30% factor for year-end 2023 RBC filings and a 45% factor for year-end 2024 RBC filings.

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

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