Federation of Regulatory Counsel, Inc.

December 2008

Greetings,

The December 2008 issue of FORC Alert is now available. We hope you find this information useful. If you have interested colleagues, please forward to them a link to the publication.

Best regards,

Kevin G. Fitzgerald
Editor, FORC Alert

Alabama

Jim Ridling, New Alabama Commissioner -

Jim L. Ridling, a native Arkansan who has lived and worked in Montgomery for the past 20 years, was appointed State Insurance Commissioner by Gov. Bob Riley on September 15, 2008. Commissioner Ridling takes the reins at the Alabama Department of Insurance, replacing Walter A. Bell.

Commissioner Ridling is a graduate of the University of the Ozarks. Upon graduation, he entered a management training program in 1967 with Fireman's Fund Insurance, leading to several management positions and culminating in his service as Executive Vice President of U.S. Operations.

In 1987, Commissioner Ridling embraced a new challenge, leaving California to come back to his native South. He traded his stock in American Express (which owned Fireman's Fund at the time) for ownership in Southern Guaranty, a Fireman's Fund subsidiary headquartered in Montgomery. He came to Montgomery as President and Chief Executive Officer of Southern Guaranty. The following year, Southern Guaranty sold to Winterthur Swiss, and Commissioner Ridling remained in his previous role and added the duties of Chairman until his retirement on December 31, 2003.

Following his retirement from Southern Guaranty, Commissioner Ridling remained active. He and other local business leaders formed River Bank and Trust, where he serves as Vice Chairman today. He has also been an integral part of many community civic charitable endeavors.

Commissioner Ridling serves as Chairman of the Board of Directors for Jackson Hospital and on the Boards of Directors of the Montgomery Airport Authority, the Montgomery Area Chamber of Commerce and the Central Alabama Community Foundation. He is a former Chairman of the River Region United Way and holds memberships on several other boards.

He is married to the former Cathy Turner. He has two daughters.

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

Delaware

Delaware Democrats Sweep In General Election -

Democrat Karen Weldin Stewart beat Republican John Brady to become Delaware’s next Insurance Commissioner. Democrat Jack Markell will succeed outgoing Governor Ruth Ann Minner, and former Insurance Commissioner Matt Denn, also a Democrat, will succeed John Carney as Lieutenant Governor. Democrats also strengthened their hold on the state Senate, and rolled Republicans in the House of Representatives, where Republicans had held a majority since 1985. This is the first Delaware election cycle in recent memory in which Democrats won Governor, Lieutenant Governor, Insurance Commissioner, and majorities in both houses of its General Assembly. Delawareans voting for “change” got what they wanted. It remains to be seen how this change will impact insurance interests.

Michael W. Teichman, Esq. - PARKOWSKI, GUERKE & SWAYZE, P.A., (302) 594-3331, mteichman@pgslegal.com

Federal News

Election Raises New Questions -

The November 4 election has given us an answer to the basic question of "who?", but that answer only begins to provide a picture of what the new Administration and Congress will look like, and more importantly, how they will govern. As expected, Democrats made significant gains in both the House (at least 20 seats) and Senate (at least 6 seats). Throughout his campaign, President-Elect Obama called for the modernization of the regulatory framework of our financial services sector and will be working with the new Congress to make it happen. The President can appoint a completely new team of Treasury Secretary and Assistant Secretaries. Speculation is of course rampant, and announcements for the key positions will probably be among the earlier decisions made by the Obama team. But many current Federal officials with fixed terms will be at the center of the debate.

Chairman of the Federal Reserve – Chairman Ben Bernanke was nominated and confirmed to a four-year term in 2006. His term and position as Chairman is fixed through 2010.
Chairman of the Securities and Exchange Commission – Chairman Chris Cox was confirmed to a five-year term on the SEC in 2005. The new President cannot remove Cox from the SEC, but could appoint a new Chairman.
Federal Deposit Insurance Corporation – Sheila Bair was appointed to a five-year term as FDIC Chair in 2006. Her membership on the FDIC Board runs through 2013.
Office of the Comptroller of the Currency – Comptroller John Dugan was appointed to a five-year term in 2005, but under the law may be replaced by the new Administration.

The new Administration will have to sell its plans, especially for the more complicated aspects of financial services regulatory reform, to those independent souls, as well as to the new Congress and the American public.

Charles T. Richardson, Esq. - BAKER & DANIELS LLP, (202) 312-7487, crichardson@bakerd.com

Eleventh Circuit Rules That Claim Against Engineering Firm for Negligent Site Survey Is Precluded from Professional Liability Insurance Coverage Based on Policy's Pollution Exclusion -

The U.S. Court of Appeals for the Eleventh Circuit held that a professional liability insurance carrier is not obligated to defend or indemnify its policyholder against a claim for negligence in conducting an environmental assessment of a site when the policy excludes claims or damages related to pollution. The engineering firm insured by the policy conducted a Phase I environmental assessment and failed to discover construction debris and other contamination on the property. When the property owner sued the engineering firm for damages related to the pollution, the engineering firm filed a claim with its insurance carrier. The Eleventh Circuit concluded that while the engineering firm did not cause the pollution, the damages arose from pollution on the site and, thus, were not covered by the insurance policy. James River Insurance Co. v. Ground Down Engineering, Inc., 540 F.3d 1270 (11th Cir. 2008).

Brian T. Casey, Esq. - LOCKE LORD LLP, (404) 870-4638, bcasey@lockelord.com and Alexis W. Summers - LOCKE LORD BISSELL & LIDDELL LLP, (404) 870-4649, asummers@lockelord.com

Florida

Form Filing Requirement Applies To Surplus Lines Policies -

Under an Eleventh Circuit U.S. Court of Appeals decision dated August 18, 2008, CNL Hotels & Resorts, Inc. v. Twin City Fire Insurance Company, 2008 WL 3823898, citing favorably and following a Florida Supreme Court decision, Essex Insurance Company v. Zota, 985 So. 2d 1036 (June 26, 2008), Sections 627.021 (2) (e) and 627.410 (1) of the Florida Insurance Code have been interpreted to require that most property and casualty policies and endorsements issued by nonadmitted insurers through a surplus lines broker must be filed for approval with the Florida Office of Insurance Regulation (OIR). This applies to policies issued under the Federal Risk Retention Act as well. Group certificates to be delivered or issued for delivery in Florida under group insurance policies effectuated and delivered outside Florida but covering Florida residents must be filed with OIR for information purposes only, except for certificates issued under group life and health policies.

Citizens Property Insurance Emergency Assessment -

As approved by the Florida Office of Insurance Regulation by Order No.: 87822-06, an emergency assessment fee of 1.4 percent levied by Citizens Property Insurance Corporation will be applicable on all new and renewal surplus lines policies and any subsequent endorsements to those policies with an effective date on, or after December 15, 2008. The assessment period will continue until further notice.