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Greetings, What follows is the June/July edition of the FORC Alert. I hope you find the information useful. 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. Best Regards, Kevin G. Fitzgerald Sign up to receive FORC Alerts (and Journals) via email.
House Starts Action on Surplus Lines - The House Financial Services Committee started the process of looking into the reform of insurance regulation by holding hearings on the Nonadmitted and Reinsurance Reform Act (HR 5637). The bill would provide the domicile state of a nonadmitted carrier with dominant regulatory authority over other states and require the adoption of the NAIC nonadmitted insurance model act by all states while implementing a national system of premium tax allocation and collection among the states. The legislation is supported by NAPSLO, CIAB and IIAA. Robert 'Skip' H. Myers, Jr., Esq. - MORRIS, MANNING & MARTIN, L.L.P., (202) 408-5153, rmyers@mmmlaw.com Optional Federal Charter Talk - Senators John Sununu (R-NH) and Tim Johnson (D-SD) introduced the "National Insurance Act of 2006" (S. 2509) on April 5, a bill that would permit life and property/casualty insurers to choose federal - instead of state - charters under an optional federal charter regulatory system. Both Senators are members of the Senate Banking Committee. That committee kicked off a discussion of insurance regulatory improvement in July with a wide-ranging hearing that included witnesses from insurance industry trade groups, the NAIC and a consumer organization. Presumably OFC legislation will be reintroduced in the next Congress, with there likely to be more hearings and other activity then. There continue to be reports that OFC legislation will be introduced in the House yet this year. Charles T. Richardson, Esq. - BAKER & DANIELS LLP, (202) 312-7487, crichardson@bakerd.com SMART-Lite - After multiple hearings over the last two Congresses on proposals that would reform the insurance industry, the SMART Act was pared down to just two of 17 original titles, with the hope of passing the first small piece of the original aggressive package. The new bill, H.R. 5637 - "The Non-admitted and Reinsurance Reform Act of 2006" filed on June 19 in the House - would create regulatory standardization for non-admitted insurance and reinsurance by applying single-state regulation and uniform standards. There was a hearing on the bill on June 21, with supporting testimony from the reinsurance and surplus lines industries. The expectation is that more pieces from the original SMART puzzle will find their way into legislation this year or next. Charles T. Richardson, Esq. - BAKER & DANIELS LLP, (202) 312-7487, crichardson@bakerd.com The Insurance Industry's Antitrust Exemption Under Review - On June 20, the Senate Judiciary Committee focused on the continuing applicability of the antitrust exemption enjoyed by the insurance industry. Only Chairman Arlan Spector (R-PA) and Ranking Member Patrick Leahy (D-VT) attended the hearing and questioned the six witnesses. Charles T. Richardson, Esq. - BAKER & DANIELS LLP, (202) 312-7487, crichardson@bakerd.com Morris Manning Puts Model Audit Rule Resources on Web - Morris Manning has been tracking the developments with the Model Audit Rule and has established a website at http://www.mmmlaw.com/naic/default.asp to aggregate information on the MAR and to provide updates to any interested parties. In addition to links to previous telephone conferences and client alerts, the site will be updated to maintain current information on the NAIC Implementation Guide and other best practices as companies come into compliance with the MAR. Ward Bondurant - MORRIS, MANNING & MARTIN, L.L.P., 404.504.7606, wsb@mmmlaw.com and Chris Peterson - MORRIS, MANNING & MARTIN, L.L.P., 202.408.5147, lcp@mmmlaw.com Final Regs on IRS Section 6045 - At long last, the IRS has released the final regulations on reporting of payments to attorneys under section 6045. Despite objections from many commenters, the final regs require insurance companies to backup withhold on payments to attorneys where the attorney provides an inaccurate TIN or refuses to provide a TIN. The final regulations also require so-called "duplicative reporting" -- meaning that companies may be faced with issuing more than one Form 1099-MISC per payment. Kevin G. Fitzgerald, Esq. - FOLEY & LARDNER LLP, (414) 297-5841, kfitzgerald@foley.com and Tracy D. Williams, Esq. - FOLEY & LARDNER LLP, 414.297.5841, twilliams@foley.com
New Legislation - On June 30, 2006, the Delaware General Assembly completed its 143rd session, which was busy respecting insurance issues in 2005 and 2006. Legislation passed includes: a complete rewrite of Delaware’s captive insurance statute, changes to Delaware’s Unfair Trade Practices Act that impose time limits on an insurer’s response to Department inquiries, requirements for health insurers to cover dependent children up to age 24, and a “fraud busters” program that will provide incentives for citizens to report insurance fraud. A number of legislative initiatives, however, failed to attract enough votes to make it to the Governor’s desk. These include: legislation banning or limiting the use of credit scoring; legislation that would tax the reserves of health service corporations in order to subsidize certain medical malpractice premiums, legislation that would create a statewide health insurance pool, reforms to Delaware’s workers compensation law, new provisions respecting the approval of health insurance rates, and changes to investment limitations for insurer investments in foreign countries. Insurance Department Adopts New Regulations - On the regulatory front, the Insurance Department has adopted a number of new regulations. These include: new requirements respecting “founded complaints” published on the Department’s website, requirements for auto carriers to provide information facilitating a rate comparison feature on the Department’s website, standards respecting the sale of annuities to seniors, and changes to Delaware’s defensive driving regulation. A regulation adopted in 2005, restricting the use of claims history by homeowners insurers, is presently in litigation in the Superior Court. Michael W. Teichman, Esq. - PARKOWSKI, GUERKE & SWAYZE, P.A., (302) 594-3331, mteichman@pgslegal.com Standby Commercial Joint Underwriting Association - As a result of the increasing number of complaints by businesses that they are being non-renewed by their private market insurer, and can't find replacement coverage that is affordable, the Florida Office of Insurance Regulation is considering activation of a standby Commercial Joint Underwriting Association (CJUA). Section 627.3515, Florida Statutes, gives the Financial Services Commission (a/k/a the "Cabinet") the ability to activate a standby CJUA. Douglas A. Mang, Esq. - MANG LAW FIRM, P.A., (850) 222-7710, dmang@manglaw.com
Florida Legislature Adopts Residential Property - The Florida Legislature adopted sweeping residential property legislation in the closing minutes of its 2006 Regular Session. The compromise legislation, among other things, appropriates $715 million from the State's general revenue to Citizens Property Insurance Company to offset the substantial surplus deficit created by recent hurricane losses and somewhat limits eligibility for coverage in Citizens. The legislation will also impose a 25 percent "risk load," over and above actuarially indicated rates, on property insurers covered by the Florida's Hurricane Catastrophe Fund. In addition, Florida's Insurance Commissioner is granted far-reaching powers to issue "general orders" to all entities regulated by the Florida Insurance Code after the Governor declares a state of emergency. Smaller residential property writers in Florida may benefit from a $250 million surplus loan program aimed at providing insurance company owners with incentives to contribute more capital to their companies. Beginning July 1, 2007, in any area in which Florida regulators determine there is adequate competition, any property insurer may increase rates by up to 10 percent in any rating territory (subject to a 5 percent statewide cap) without being subject to disapproval for rates being excessive or unfairly discriminatory. Details of Senate Bill 1980 can be found at flsenate.gov. Thomas J. Maida, Esq. - FOLEY & LARDNER LLP, (850) 513-3377, tmaida@foley.com
Georgia Law Effective on Individual Health Renewal Options - On July 1, 2006, O.C.G.A. Section 33-29-9(b) became effective. The new statute allows insurers operating in the major medical, comprehensive or guaranteed renewable health insurance business in the State to permit insureds to change his or her coverage at any renewal. The condition on the insured changing coverage is that such insured shall not be subject to a preexisting conditions exclusion that did not apply to his or her original coverage. The Department of Insurance through Directive 06-EX-2 has interpreted this statute to also apply to health maintenance organizations and preferred provider organizations offering individual health coverage. Compliance with the new law requires insurers to give a notice of the renewal options in one of two ways: 1) First the insurer can outline the renewal options with the required 60-day advance notice of an increase in premium; 2) Alternatively, if there is no increase in premium, the Department has indicated that the renewal options must still be sent 60 days before renewal. Michael W. Teichman, Esq. - PARKOWSKI, GUERKE & SWAYZE, P.A., (302) 594-3331, mteichman@pgslegal.com, Joseph L. Cregan - MORRIS, MANNING & MARTIN, L.L.P., 404.504.7782, jcregan@mmmlaw.com and Anthony C. Roehl - MORRIS, MANNING & MARTIN, L.L.P., 404.495.8477, troehl@mmmlaw.com Georgia Supreme Court ruled that a non-solicitation covenant was not unenforceable for failing to include restriction on time period during which employees had served customers - In Palmer & Cay of Georgia v. Lockton Cos., Inc., 629 S.E.2d 800 (Ga. 2006), four former employees of an insurance agency sought declaratory judgment regarding the enforceability of a restrictive covenant in their employment agreements that prohibited each employee from soliciting any customer of the insurance agency that such employee had served during his employment for a period of two years after such employee's termination, without limiting the length of time that had passed since such employee served the customer. The Georgia Supreme Court upheld the restrictive covenant and ruled that the employer's interest in protecting its customers is not diminished by the length of time since the employee ceased serving the customer. Brian T. Casey, Esq. - LOCKE LORD BISSELL & LIDDELL LLP, (404) 870-4638, bcasey@lockelord.com and Kyle P. Magee, Esq. - LOCKE LORD BISSELL & LIDDELL LLP, 404.870.4703, KMagee@lordbissell.com Liability of insurance broker for negligently failing to procure insurance policy is limited to amount of coverage under insurance policy the broker failed to procure - In J. Smith Lanier & Co. v. SouthEastern Forge, Inc., 630 S.E.2d 404 (Ga. 2006), an independent insurance broker prepared an application for general liability insurance for the insured and submitted it to the insurer but did not disclose a prior personal injury matter about which the broker knew. Subsequently, a personal injury lawsuit was instituted against the insured relating to such matter, the insurer refused to pay any amounts under the policy, the insured settled the litigation for an amount greater than the amount of the policy's limits of liability and the insured sued the broker for failing to procure insurance requesting damages equal to the entire amount of the settlement. The Georgia Supreme Court ruled that the broker's liability is limited to the amount of the insurance policy that the broker failed to procure. Brian T. Casey, Esq. - LOCKE LORD BISSELL & LIDDELL LLP, (404) 870-4638, bcasey@lockelord.com and Kyle P. Magee, Esq. - LOCKE LORD BISSELL & LIDDELL LLP, 404.870.4703, KMagee@lordbissell.com Claimants may stack sources of uninsured or underinsured motorist coverage, but priority of multiple carriers must be determined through either "Receipt of Premium" or "More Closely Identified" test - In Nationwide Mut. Fire Ins. Co. v. Progressive Bayside Ins. Co., 628 S.E.2d 177 (Ga. App. 2006), a motorist was injured in a collision and demanded payment from his uninsured motorist insurers. The Georgia Court of Appeals ruled that is was inappropriate to apportion liability between the carriers on the basis of the amount of each carrier’s policy and that a primary insurer must be determined through the “receipt of premium†test, and, if such test is not conclusive, then through the “more closely identified†test. On that basis, primary responsibility for the loss was assigned to the carrier that actually insured the vehicle in the collision, rather than the carrier that insured the motorist’s other vehicles, because, although the motorist paid premiums to both insurers, the claim was more closely identified with the carrier that actually insured the vehicle in the collision. Brian T. Casey, Esq. - LOCKE LORD BISSELL & LIDDELL LLP, (404) 870-4638, bcasey@lockelord.com and Kyle P. Magee, Esq. - LOCKE LORD BISSELL & LIDDELL LLP, 404.870.4703, KMagee@lordbissell.com
New Legislation - The 2006 Regular Session of the Louisiana Legislature has brought a number of important changes to Louisiana insurance law. For example, while previously only cash and certificates of deposits in banks and certain other financial institutions "domiciled" in Louisiana qualified for a reduction of the premium tax under Louisiana law, Act 587 expands the law to allow qualifying assets to be held in banks or certain other financial institutions "operating in the state of Louisiana with a main office or one or more branches." Similarly, Act 414 expands the list of admitted assets for domestic insurers to include mutual funds that invest in foreign securities. Act 335 repeals the entire section of the Louisiana Insurance Code relative to the regulation of automobile service clubs by the Commissioner of Insurance. Much of the legislation was sparked by the recent hurricanes: Act 429 requires certain property insurers to maintain written catastrophe response plans, which are subject to review by the Commissioner. Finally, Act 813 significantly increases the penalties for an insurer's failure to timely pay a claim, and includes the imposition of reasonable attorney fees and costs against the insurer. Van R. Mayhall, Jr., Esq. - BREAZEALE, SACHSE & WILSON, L.L.P., (225) 381-8009, vrm@bswllp.com New Directives & Advisory Letters Issued - The Louisiana Department of Insurance continues to issue Directives and Advisory Letters relative to promulgation of Emergency Rule 23 in December of last year. Emergency Rule 23 suspends an insurer's right to cancel or nonrenew certain residential or commercial property insurance in the state until the earlier of either sixty (60) days after substantial completion of the repair or reconstruction of the property, or December 31, 2006, for insureds that have Hurricane Katrina or Rita related claims. Directive 195, issued by the Department in February, prohibits an insurer from imposing a six (6) month deadline within which insureds must make any necessary repairs due to damage from Hurricane Katrina or Rita in order to cover replacement costs. Under the Directive, all insureds in Louisiana are granted a period of at least one (1) full year from the date of an affected claim within which to make such repairs and still recover the replacement costs. Advisory Letter 06-03, issued by the Department in May, warns insurers that they are expected to renew or continue any policy covered by Emergency Rule 23 at the previous premium/rate, and with the same terms and conditions as previously written, unless the change to the premium/rate structure is based on "objective criteria." These "objective criteria" are limited to pre-hurricane underwriting guidelines, actual reinsurance costs, and "other objective rating and underwriting criteria." Van R. Mayhall, Jr., Esq. - BREAZEALE, SACHSE & WILSON, L.L.P., (225) 381-8009, vrm@bswllp.com
Review of Dirigo Health Agency Savings - The Superintendent of Insurance is now reviewing the second year findings of the Dirigo Health Agency (DHA) of $41.7 million in alleged "savings" relating to the expansion of coverage through a subsidized health insurance product offered by the DHA. This finding will become the basis for a "savings offset payment" to be paid by insurers. The insurance industry is vigorously contesting this finding as not being reasonably supported by the evidence and beyond the scope of the underlying law, the Dirigo Health Reform Act. The industry has already appealed the Superintendent's findings for year one to the courts. D. Michael Frink, Esq. - CURTIS THAXTER STEVENS BRODER & MICOLEAU LLC, (207) 774-9000, mfrink@curtisthaxter.com
New Legislation - The Superintendent of Insurance is now reviewing the second year findings of the Dirigo Health Agency (DHA) of $41.7 million in alleged "savings" relating to the expansion of coverage through a subsidized health insurance product offered by the DHA. This finding will become the basis for a "savings offset payment" to be paid by insurers. The insurance industry is vigorously contesting this finding as not being reasonably supported by the evidence and beyond the scope of the underlying law, the Dirigo Health Reform Act. The industry has already appealed the Superintendent's findings for year one to the courts. Kristine N. Tuma, Esq. - DYKEMA GOSSETT, P.L.L.C., (517) 374-9195, ktuma@dykema.com
Special Compensation Fund - In Lumbermens Mutual Casualty Company, et al., Respondents, v. Minnesota Special Compensation Fund, et al., Appellants, the Court of Appeals affirmed a $4.7 million award of summary judgment in favor of six workers' compensation insurers. At issue was the ability of the Minnesota Department of Labor and Industry's Special Compensation Fund (Fund) to assess insurers who no longer issue workers' compensation policies in the State of Minnesota. In 2002, the Legislature changed the way workers' compensation insurers were to be assessed and the mechanism by which they were to recover these assessment from their insured employers. The Court of Appeals held that the District Court was well within its discretion to order a refund of the $4.7 million that these six insurers were assessed based upon the fact that they were not able to recover these same amounts from insured employers as contemplated by the statute. John A. Knapp, Esq. - WINTHROP & WEINSTINE, P.A., (612) 604-6404, jknapp@winthrop.com New Legislation - The Minnesota Legislature in the 2006 legislative session adopted several new laws of interest to the insurance industry including the following: Interstate Insurance Product Regulation Compact (IIPRC) - Laws of Minnesota 2006, Chapter 255 (SF 3480) - This legislation adds Minnesota to the list of 26 other states which have joined the Interstate Insurance Product Regulation Compact (IIPRC), helping surpass the 26 state threshold to trigger operations of the Commission under the IIPRC. The language was included in the Department of Commerce Omnibus Insurance Bill, after being amended into the bill on a Senate floor vote of 53 - 11. Two changes made to Minnesota's participation include a requirement that the courts give deference to the commissioner's decision to opt out of a standard if that decision is challenged, and secondly, to require the commissioner to opt out of any standard that restricts a consumer's access to the courts. Effective: August 1, 2006. John A. Knapp, Esq. - WINTHROP & WEINSTINE, P.A., (612) 604-6404, jknapp@winthrop.com Construction Defect/Notice of Opportunity to Repair - Laws of Minnesota 2006, Chapter 202 (SF 1287) - This bill authorizes a "Notice of Opportunity to Repair" (NOR), requiring homeowners who wish to sue their builder over a home defect to first provide notice to the builder of the defect. This notice then gives the builder an opportunity to either offer to make a repair or to deny the claim. It also provides that homeowner warranty claims are not affected by the dissolution of the homebuilder and that insurance purchased by the builder is still in force, even if the builder's corporation is dissolved. Effective: August 1, 2006. John A. Knapp, Esq. - WINTHROP & WEINSTINE, P.A., (612) 604-6404, jknapp@winthrop.com Omnibus Identity Theft Prevention - Laws of Minnesota 2006, Chapter 233 (SF 2002) - This legislation allows consumers to freeze their credit-report information and only allow the information to be opened on their consent. The consumer reporting agency can charge a $5 fee for freezing the report, unless the consumer is a victim of identity theft and provides a valid police report. This does not apply to insurance underwriting/claims transactions. Effective: August 1, 2006. John A. Knapp, Esq. - WINTHROP & WEINSTINE, P.A., (612) 604-6404, jknapp@winthrop.com Omnibus Insurance Bill - Laws of Minnesota 2006, Chapter 255 (SF 3480) - In addition to including language authorizing Minnesota to join the Interstate Insurance Product Regulation Compact, this bill also includes provisions regarding the guaranteed loss ratio for individual health insurance policies, Medicare Supplement Plan language, Hospital Pricing Transparency, the Community Based Health Care Coverage Program as well as authorizing the sale of Long-Term Care Partnership Policies. Effective: August 1, 2006. John A. Knapp, Esq. - WINTHROP & WEINSTINE, P.A., (612) 604-6404, jknapp@winthrop.com Fire Safety Account - Laws of Minnesota 2006, Chapter 217 (HF 2916) - This legislation will repeal the .5% fire marshal tax that companies must report and replace it with a .65% policyholder surcharge on all homeowner's, commercial, and commercial non-liability policies sold in Minnesota. The money will then be placed in a dedicated account to fund the State Fire Marshal's office and other fire training programs. The surcharge will be effective for policies issued after June 30, 2007. Effective: July 1, 2007. John A. Knapp, Esq. - WINTHROP & WEINSTINE, P.A., (612) 604-6404, jknapp@winthrop.com
Wind v. Water Litigation: Flood Exclusion Held Valid - In a recent memorandum opinion Senior Judge L. T. Senter held that the water damage exclusions found in a homeowners policy for damage attributable to flooding are valid and enforceable policy provisions and rejected the argument that storm surge or wind-driven water is not covered by the exclusion. It was held that "the inundation that occurred during Hurricane Katrina was a flood, as that term is ordinarily understood, whether that term appears in a flood insurance policy or in a homeowners insurance policy" and since the water that entered and damaged the plaintiffs' home was tidal water, the damage caused by this inundation is excluded from coverage under the policy. Buente v. Allstate Prop. & Cas. Ins. Co. et al., United State District Court, Southern District of Mississippi, Civil Action No. 1:05CV712LTS-JMR. Robert B. House, Esq. - WATKINS LUDLAM WINTER & STENNIS, P.A., (601) 949-4830, rhouse@watkinsludlam.com and David L. Martin, Esq. - WATKINS LUDLAM WINTER & STENNIS, P.A., (601) 949-4901, dmartin@watkinsludlam.com Notice of Flood and Earthquake Exclusions - Mississippi Insurance Commissioner George Dale has proposed Regulation No. 2006-2 that would require all insurers and insurance producers selling personal lines residential property insurance coverage to provide written notice to the policyholder of any flood exclusion and/or earthquake exclusion in the policy. The notice would be required at the time of issuance and any renewal of the policy. A public hearing was held June 7, 2006 and the proposed regulation was revised based on industry comments submitted at the hearing. The revised proposed regulation was published and an additional period for submitting written comments on the proposed regulation expired July 7, 2006. Robert B. House, Esq. - WATKINS LUDLAM WINTER & STENNIS, P.A., (601) 949-4830, rhouse@watkinsludlam.com and David L. Martin, Esq. - WATKINS LUDLAM WINTER & STENNIS, P.A., (601) 949-4901, dmartin@watkinsludlam.com Hurricane Claims - Mississippi Commissioner of Insurance George Dale reports that as of June 6, 2006, insurance companies have paid out approximately $10.41 billion in homeowner hurricane-related claims for Hurricanes Katrina and Rita in Mississippi and that the National Flood Insurance Program has paid more than $2.4 billion in claims. Robert B. House, Esq. - WATKINS LUDLAM WINTER & STENNIS, P.A., (601) 949-4830, rhouse@watkinsludlam.com and David L. Martin, Esq. - WATKINS LUDLAM WINTER & STENNIS, P.A., (601) 949-4901, dmartin@watkinsludlam.com Rate Increase Filings - The Mississippi Windstorm Underwriting Association filed for a rate increase of 398% for homeowner wind insurance in the six coastal counties to cover the approximately $43M premium for reinsurance coverage in the amount of $350M. On June 5, 2006, a televised public hearing regarding this rate filing was held. The filing is under review by the Mississippi Insurance Department. Governor Haley Barbour has announced that $50M in federal grants will be used to offset the rate hike. Meanwhile, several insurers have filed for and obtained approval of rate increases on homeowner policies ranging from approximately 12% to 30%. Robert B. House, Esq. - WATKINS LUDLAM WINTER & STENNIS, P.A., (601) 949-4830, rhouse@watkinsludlam.com and David L. Martin, Esq. - WATKINS LUDLAM WINTER & STENNIS, P.A., (601) 949-4901, dmartin@watkinsludlam.com
Bill Passed Eliminating Certain Filing Requirements - Awaiting the Governor's signature is a bill passed by the New York Senate and Assembly that eliminates the requirement that New York domestic insurers file with the New York Superintendent, all life, accident and health, credit unemployment and annuity policy forms that are to be issued outside New York. The legislation specifies that only unallocated group annuity contracts or funding agreements and policy forms for accident and health insurance for use outside New York by domestic insurers and fraternal benefit societies are to be filed with the Superintendent, and for life insurance companies and fraternal benefit societies, only a list of other types of policies for delivery outside New York is to be filed. Francine L. Semaya, Esq. - COZEN O'CONNER, (212) 908-1270, fsemaya@cozen.com
Tort Reform Challenged - The constitutionality of major provisions of Ohio's 2005 tort reform package may be considered by the Ohio Supreme Court soon, as part of a multidistrict product liability case involving the Ortho Evra birth control patch. The U.S. District Court for the Northern District has certified four questions to the Ohio Supreme Court: (1) the noneconomic damages caps, (2) the punitive damages cap, (3) the collateral source provisions, and (4) the post-judgment review provisions. Faith M. Williams, Esq. - BRICKER & ECKLER LLP, (614) 227-2374, fwilliams@bricker.com Ising Named Deputy Director - Peg Ising has been named Deputy Director of the Ohio Department of Insurance, replacing the departing Holly Saelens. Ising, a 20-year veteran of the Department, has significant expertise in P&C issues, is actively involved in the NAIC, and serves on the Board of SERFF. Faith M. Williams, Esq. - BRICKER & ECKLER LLP, (614) 227-2374, fwilliams@bricker.com
New Legislation - Rhode Island enacted legislation in June that requires all licensed property and casualty companies in the auto line to survey body shops as to labor rates and report the result of the survey to the Department of Business Regulation. The legislation mandates that the Department promulgate regulations by October 1, 2006 as to the form of the survey. John J. Partridge, Esq. - PARTRIDGE SNOW & HAHN LLP, (401) 861-8200, jjp@psh.com and Brian Spero - PARTRIDGE SNOW & HAHN LLP, 401.861.8200, bjs@psh.com
New Legislation - South Carolina has passed new captive legislation which provides additional resources to the program and enhances the Special Purpose Financial Captive (SPFC) provisions of the captive statute. South Carolina has 151 licensed captives, 12 of which are SPFC's which have become extremely attractive to term life providers and reinsurers for reserve strain relief and for extracting embedded value from closed blocks of life, disability and other types of products. Our firm is very actively involved in all types of captives with a specific focus on the SPFC platform for insurance securitizations. Michael A. Molony, Esq. - Young, Clement, Rivers, LLP, 843.724.6631, mmolony@ycrlaw.com
New Deputy Commissioner Appointed - John F. Morris, III was appointed as Deputy Commissioner of Commerce and Insurance effective as of July 1, 2006, with jurisdiction over the Insurance, Securities and TennCare Oversight Divisions. Deputy Commissioner Morris previously served as Chief Counsel to the Insurance Division of the Department of Commerce and Insurance; no replacement for the Chief Counsel position has as yet been named. Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259, rledyard@bassberry.com and T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758, staylor@bassberry.com Appeals Court Reverses Ruling For Carrier Against Agency - In an opinion filed on July 5, 2006 (Globe American Casualty Co. v. The Heuer Insurance Agency, Inc.), the Tennessee Court of Appeals (Eastern Section) held that an insurance company which settled a liability insurance claim did so as a volunteer and as a result did not have an indemnity claim against the agency. While the trial court found the agent was negligent in taking the insured's application because it contained a material misrepresentation of which the agent was aware, the Court of Appeals concluded the carrier chose not to use that material misrepresentation to rescind the policy and therefore could not seek indemnification from the agency for the settlement payment to the insured. Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259, rledyard@bassberry.com and T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758, staylor@bassberry.com
New Legislation - The 2005-2006 Vermont General Assembly has officially wrapped up its work for the latest biennium and is adjourned until January 2007. The legislature successfully passed H.150 (Insurance Fraud), S.198 (Sorry Works/Reporting of Medical Errors), S.267 (Security Freeze), S.284 (Protection of Personal Information), and H.861 (Healthcare Reform) in 2006. Jeffrey P. Johnson, Esq. - PRIMMER PIPER EGGLESTON & CRAMER PC, (802) 864-0880, jjohnson@ppeclaw.com and Jonathan D. Wolff - PRIMMER PIPER EGGLESTON & CRAMER PC, 802.223.2102, jwolff@ppeclaw.com |
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