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Greetings, What follows is the March 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.
Recent News - Sen. Lott Puts McCarran-Ferguson in the Crosshairs; Ally Likely in Judiciary's Leahy Senator Trent Lott (R-MS) is building bipartisan support among his colleagues to repeal insurers' antitrust exemption contained in the 1945 McCarran-Ferguson Act. Lott says he expects to cosponsor legislation with Senate Judiciary Committee Chairman Patrick Leahy (D-VT) and will model their approach after a bill (S. 4025) that was introduced last year. Charles T. Richardson, Esq. - BAKER & DANIELS LLP, (202) 312-7487, crichardson@bakerd.com Recent News - "Big Apple" in Danger of Losing Status as Global Financial Center, Says Report by Mayor Bloomberg, Senator Schumer New York could lose its position as the world's premier financial center within the next decade without major course corrections in public policy, says a report released January 22 by Mayor Michael Bloomberg and Sen. Charles Schumer (D-NY). New York's financial markets are beset by complicated SOX rules, frivolous litigation, and tough foreign competition for human talent. The report lays out a number of recommendations, including support for an optional federal charter for insurers that "would benefit the competitiveness of both domestic and international firms doing business in the United States.” Charles T. Richardson, Esq. - BAKER & DANIELS LLP, (202) 312-7487, crichardson@bakerd.com
Reduced Time for Insurers to Pay Cash Surrender Value on Deferred Annuities - New legislation proposed in Arizona reduces time for insurers to pay cash surrender value on deferred annuities at maturity. SB1073 would amend the NAIC Model Non-Forfeiture Act to require insurers to pay the cash surrender value of a deferred annuity at maturity within 30 days. Currently, insurers have up to six months to make such a payment if they request same of the Director of Insurance and the request is approved. J. Michael Low, Esq. - LOW & CHILDERS, P.C., (602) 266-1166, mlow@lowchilders.com
Governor Ritter Appoints Marcy Morrison as Commissioner of the Division of Insurance and Rico Munn as Head of the Department of Regulatory Agencies - On January 24, 2007, the Senate Business Affairs and Labor Committee of the General Assembly held a confirmation hearing recommending confirmation by the whole Senate of Marcy Morrison and Rico Munn. Commissioner Morrison has served as El Paso County Commissioner, as a republican state representative from 1992–2000, and until her appointment, as the mayor of Manitou Springs. Most recently Ms. Morrison served as a consumer representative to the National Association of Insurance Commissioners (NAIC) and as chair of the Division of Insurance Volunteer Consumer Council. As a Representative in the General Assembly, Ms. Morrison served on and then chaired the House Business Affairs and Labor Committee. The vast majority of insurance issues are presented to this committee. Rico Munn, a member of a prominent Denver law firm, most recently represented the First Congressional District on the Colorado State Board of Education. The Department of Regulatory Agencies regulates businesses and individuals, including insurance companies, banks, utilities, and regulated professions. Robert M. Ferm, Esq. - HALL & EVANS, L.L.C., (303) 628-3380, fermr@hallevans.com
Reformed Workers Comp Laws - The commencement of the 144th General Assembly featured whirlwind reforms to Delaware workers compensation laws. These changes include the establishment of a panel to develop statewide fee schedules and protocols; substantial reductions in hospitalization rates; direction that rating plans be filed with the insurance department within 90 days of the publication of medical payment system and practice guidelines; codification of Delaware’s workplace safety program mandating premium discounts for safe workplace standards; substantial requirements and restrictions relating to plaintiffs attorneys’ fees; and the creation of arbitration panels to hear workers compensation disputes. Michael W. Teichman, Esq. - PARKOWSKI, GUERKE & SWAYZE, P.A., (302) 594-3331, mteichman@pgslegal.com Recent News - Regs for Online Premium Rates On the regulatory front, the insurance department has followed up on its regulations creating online premium comparison for auto rates with Regulation 704, which requires homeowners’ insurance carriers to complete a survey on or before April 15, 2007. The results of this survey will be used to develop homeowners’ insurance rate comparisons on the insurance department’s Web site. Michael W. Teichman, Esq. - PARKOWSKI, GUERKE & SWAYZE, P.A., (302) 594-3331, mteichman@pgslegal.com
Two Key Captive Insurance Bills - In its closing session, the District of Columbia City Council passed two key captive insurance bills which were signed by the Mayor and will become law after Congress has been in session for 30-days. It passed the Captive Insurance Company Amendment Act of 2006 which deals with the formation and regulation of segregated cell captives. The act provides that segregated cells can be incorporated entities and adds significant improvement to assure the integrity of individual cells. The other bill is the Special Purpose Financial Captive Authorization Act of 2006, which permits the formation of special purpose financial captive insurance companies to facilitate the securitization of risk as a means of accessing alternative sources of capital. Arthur D. Perschetz, Esq. - MULDOON MURPHY & AGUGGIA LLP, (202) 686-8624, aperschetz@muldoonmurphy.com
New Property Insurance Legislation - Responding to intense public and media pressure to address property insurance rates, the Florida Legislature enacted sweeping legislation in January, which will dramatically increase the state's participation in Florida's property insurance market. The legislation, which was signed into law by newly-elected Governor Charlie Crist, will allow state-operated Citizens Property Insurance Company to compete directly against private insurers. The new law will also expand the catastrophic reinsurance coverage offered by the Florida Hurricane Catastrophe Fund, which is available to both Citizens and private insurers. Thomas J. Maida, Esq. - FOLEY & LARDNER LLP, (850) 513-3377, tmaida@foley.com
Georgia DOI Prohibits Commission Changes for Coastal Agents - St. Paul Travelers Insurance Companies recently tried to reduce commissions to its agents for policies sold in six Georgia coastal counties. Commissioner John Oxendine objected to the decrease as a tacit withdrawal from the Georgia coastal market. The Georgia DOI had scheduled a show cause hearing, but the hearing was cancelled when St. Paul Travelers rescinded the proposed commission changes. 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 Supreme Court of Georgia Upholds State’s Identity Fraud Statute - In Hernandez v. State, 2007 WL 34874 (Ga. January 8, 2007), Hernandez, an illegal immigrant, misappropriated the social security number of a U.S. citizen to obtain a social security card, a California driver’s license, and a job at a poultry processing plant in Georgia. The court affirmed Hernandez’s conviction for identity fraud and held: (1) Georgia’s identity fraud statute, O.C.G.A. § 16-9-121, explicitly prohibits an individual from improperly accessing another’s account at a financial institution; (2) Georgia’s identity fraud statute was not unconstitutionally vague as applied to Hernandez; and (3) § 1324c of the Immigration Reform and Control Act of 1986 (8 U.S.C. § 1324c), which subjects an illegal immigrant using falsified identification documents to a cease and desist order and civil monetary penalties, does not preempt O.C.G.A. § 16-9-121. Brian T. Casey, Esq. - LOCKE LORD BISSELL & LIDDELL LLP, (404) 870-4638, bcasey@lockelord.com and Hemant Piduru - LORD, BISSELL & BROOK, LLP, 404.870.4686, HPiduru@lordbissell.com Arbitration Clause Under Insurance Policy Issued by International Insurer Held Enforceable Under United Nations Convention on the Recognition of Foreign Arbitral Awards - In Goshawk Dedicated Ltd. v. Portsmouth Settlement Co. I, Inc., 2006 WL 3718205 (N.D.Ga. December 18, 2006), a British insurance company insured a Georgia-based life settlement provider against risks related to the uncertainty of the provider’s life expectancy evaluations used in valuing life insurance policies the provider acquired all interest. The policy at issue, known as cost contingent insurance, included an arbitration clause. The district court held that the arbitration clause was enforceable: (1) despite the policy being “novated” as to the provider when the provider assigned its interest in the policy to a third party; and (2) because the United Nations Convention on the Recognition of Foreign Arbitral Awards controlled arbitration agreements in the international context and superseded the McCarran-Ferguson Act. Brian T. Casey, Esq. - LOCKE LORD BISSELL & LIDDELL LLP, (404) 870-4638, bcasey@lockelord.com and Hemant Piduru - LORD, BISSELL & BROOK, LLP, 404.870.4686, HPiduru@lordbissell.com
MCCA Changes - On January 18, 2007, the Commissioner of the Office of Financial and Insurance Services issued an order approving changes in the Plan of Operation of the Michigan Catastrophic Claims Association (MCCA). The MCCA reimburses no-fault auto insurers for personal injury protection benefits that exceed a dollar threshold (currently $400,000). The changes to the plan would allow the MCCA to reimburse medical bill re-pricing or other medical bill expense cost containment measures under certain circumstances. This reimbursement will encourage insurers to work to reduce ultimate costs. Stephen H. Zimmerman, Esq. - DYKEMA GOSSETT, P.L.L.C., (517) 374-9195, szimmerman@dykema.com
Homeowners' Insurance - Homeowners’ insurance is a hot topic on a number of fronts, and availability and affordability have become significant concerns to many, including residents in the coastal area. Legislative and regulatory activities stemming from Hurricane Katrina continue to impact this market as well as highly publicized homeowner litigation and civil and criminal proceedings instituted by Mississippi Attorney General Jim Hood. Congressional hearings are expected to consider federal regulation of the property and casualty insurance industry and the elimination of the McCarran-Ferguson antitrust exemption. Mississippi Congressman Gene Taylor plans to introduce federal legislation that would amend the national flood insurance law and create a national insurance policy for wind and water damage. 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 Wind Pool Legislation - Possibly the most important legislation being debated during the 2007 regular session of the Mississippi Legislature are amendments to the Mississippi Windstorm Underwriting Association. Hurricane Katrina resulted in industry assessments totaling $545M. Legislative proposals would seek to place limits on assessments in any one year, provide for the recovery of assessments through policyholder surcharges, and provide incentives for carriers to write insurance on the Mississippi Gulf Coast. 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 Policyholder Bill of Rights - Mississippi Insurance Commissioner George Dale has proposed Regulation 2007-1 that would establish a policyholder bill of rights and require insurance companies writing homeowners’ personal lines residential property insurance in Mississippi to provide a written outline of coverage and policy checklist upon issuance or renewal of the coverage, effective April 1, 2007. A public hearing was held January 26, 2007. It is anticipated that the proposed regulation will be revised based on industry and public comments, and that a revised proposed regulation will be published for further comment. 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 Commissioner Dale to Seek Re-Election - Commissioner of Insurance George Dale announced that he will seek re-election. Dale said, “There is still too much work to be done on the insurance issues raised by Hurricane Katrina for me to leave now. I am committed to continue working for the consumers of this state and firmly intend to use my vast knowledge and experience of this office to see this state through this current insurance crisis.” Dale has been Mississippi Commissioner of Insurance since 1975 and is the longest-serving commissioner of insurance in the United States. 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
New Director of the Missouri Department of Insurance - Effective January 1, 2007, Douglas M. Ommen began serving as director of the Missouri Department of Insurance, Financial Institutions and Professional Registration (MDIFP). Mr. Ommen served as deputy director and general counsel for the MDIFP since 2005. Dale Finke, former director of the MDIFP, resigned his position effective December 31, 2006. Ann M. Warren, Esq. - INGLISH & MONACO, (573) 634-2522, awarren@inglishmonaco.com
New Director of Insurance for Nebraska - Tim Wagner has been reappointed director of insurance for Nebraska by recently-elected Governor Dave Heineman. Director Wagner has named Jim Nixon as chief examiner. He has been serving as acting chief examiner since the retirement of Davie Krumm last May. Lawrence F. Harr - LAMSON, DUGAN & MURRAY, LLP, (402) 397-7300, lharr@ldmlaw.com
Retaliatory Taxes - The New Hampshire Insurance Department is seeking to impose retaliatory taxes against insurance companies domiciled in Pennsylvania and Connecticut with respect to workers' compensation assessments in those two states. This is controversial because the workers' compensation assessments in those states are imposed upon employers, not insurers; the insurers simply are collecting these amounts in the form of a surcharge and remitting them to the states. Steven J. Lauwers, Esq. - RATH, YOUNG & PIGNATELLI, P.A., (603) 226-2600/(603) 226-9412, sjl@rathlaw.com Premium Taxes - The premium tax in New Hampshire will be reduced to 1.75 percent on July 1, 2007, part of a phased reduction to 1 percent. Steven J. Lauwers, Esq. - RATH, YOUNG & PIGNATELLI, P.A., (603) 226-2600/(603) 226-9412, sjl@rathlaw.com Health Insurance - The insurance department will soon be posting a new Web site that permits consumers to compare prices of common medical procedures at identified facilities. The data for this Web site is derived from claims information required to be provided to the department by insurance carriers and third-party administrators. Steven J. Lauwers, Esq. - RATH, YOUNG & PIGNATELLI, P.A., (603) 226-2600/(603) 226-9412, sjl@rathlaw.com
New Chief Deputy of Insurance - Recently appointed superintendent of insurance, Mo Chavez, has chosen attorney Brent Moore as his chief deputy. Moore was Chavez' law school classmate at University of New Mexico and since graduation has been a staff attorney for the Navajo Nation and then the New Mexico Environment Department. Gary Kilpatric, Esq. - MONTGOMERY & ANDREWS, P.A., (505) 982-3873, gkilpatric@montand.com
Travel Insurance - The New York Insurance Department has published Circular Letter No. 24 dated December 29, 2006, concerning the solicitation and sale, by unlicensed travel agents, tour operators, cruise ship companies of travel insurance waivers providing for a refund of cancellation penalties or other nonrefundable costs. Waivers that provide coverage upon the occurrence of a fortuitous event are considered to be insurance and may only be solicited or sold in New York by individuals or entities licensed as insurance brokers. Unlike many other states, a limited license for travel insurance only is not available under New York law. Frederick J. Pomerantz, Esq. - Wilson, Elser, Moskowitz, Edelman & Dicker LLP, (212) 490-3000, fred.pomerantz@wilsonelser.com
New Insurance Director - The new superintendent of insurance for the state of Ohio is Mary Jo Hudson. Ms. Hudson is an attorney who previously worked at the Ohio Department of Insurance before going into private practice. Alan F. Berliner, Esq. - THOMPSON HINE LLP, (614) 469-3268, Alan.Berliner@ThompsonHine.com New Life and Annuity Rules Take Effect - Ohio has adopted new rules regarding replacement of life insurance and annuities, and suitability and disclosure requirements related to annuities, effective March 1, 2007. All rules are consistent with the current NAIC Models. Faith M. Williams, Esq. - BRICKER & ECKLER LLP, (614) 227-2374, fwilliams@bricker.com Lame Duck Session - Several new laws of interest to insurers were enacted in the December lame duck session, and signed into law by outgoing Governor Bob Taft. The bills include minor reform of Ohio's health insurance laws (S.B. 5), agent compensation disclosure requirements affecting insurance sold to public sector clients (S.B. 5), mental health parity (S.B. 116), and campaign finance reform (H.B. 694). Faith M. Williams, Esq. - BRICKER & ECKLER LLP, (614) 227-2374, fwilliams@bricker.com
Wisconsin Governor Jim Doyle Names Sean Dilweg Commissioner of Insurance - On Friday, December 29, 2006, Governor Doyle named Sean Dilweg commissioner of insurance, effective January 1, 2007. Dilweg replaces Jorge Gomez, who announced his resignation last month. Dilweg was the executive assistant at the Department of Administration where he advised the secretary and Governor Doyle on legislative and policy matters. For more information or to read the entire press release, please click here. Kevin G. Fitzgerald, Esq. - FOLEY & LARDNER LLP, (414) 297-5841, kfitzgerald@foley.com |
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