Alert Edition March 2022

Welcome to the March 2022 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 - 03/28/2022

FIO Outlines 2022 Priorities

The Federal Advisory Committee on Insurance (FACI) held a meeting on February 17, 2022, to discuss the priorities of the Federal Insurance Office (FIO). FIO has outlined three focus areas for 2022: cyber and ransomware, international activities, and climate-related financial risk.

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

Category(s): National - 03/28/2022

NAIC Lists Climate Risk/Natural Catastrophes & Resiliency as 2022 Regulatory Priority

Just like 2021, The National Association of Insurance Commissioners (NAIC) has determined climate resiliency will be one of four regulatory priorities for the upcoming year. To support this effort, the NAIC will consider the established of a Center of Excellent on Catastrophe Modeling. The NAIC will also evaluate financial regulatory approaches to climate resiliency with its relevant committees and working groups.

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

Category(s): National - 03/28/2022

Treasury Names New Acting Director of the Office of Financial Research

The U.S. Department of the Treasury announced that James Martin will become the Acting Director of the U.S. Department of the Treasury’s Office of Financial Research. The current director, Dino Falschetti, is leaving.

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

Category(s): Florida - 03/29/2022

DIFS-DWC Releases Annual Workers’ Compensation Fraud Joint Report

The Florida Division of Investigative and Forensic Services and the Florida Division of Workers’ Compensation released their annual report  on their efforts and finding in combating workers’ compensation in the state. During this fiscal year, the Division faced several challenges in the completion of cases during the COVID-19 pandemic.

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

Category(s): Florida - 03/28/2022

DWC Releases COVID-19 Report

The Florida Department of Financial Services Division of Workers’ Compensation (DWC) released an updated report outlining on the effects of the COVID-19 pandemic on Florida’s workers’ compensation program. The February report can be found here. 

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

Category(s): Florida - 03/28/2022

Governor Ron DeSantis Announces Over $91 Million in Hurricane Relief

On February 11th, 2022, Gov. DeSantis announced that more than $91 million would be distributed to Florida panhandle communities devastated by Hurricane Michael. The funding is through the Florida Department of Economic Opportunity’s Rebuild Florida Mitigation General Infrastructure Program.

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

Category(s): Florida - 03/28/2022

Governor Ron DeSantis Signs Bill to Protect Health Care Providers

Gov. DeSantis signed SB 7014  on February 24, 2022. The bill allows health care providers to enjoy protections from COVID-19 liability lawsuits until June 1, 2023.

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

Category(s): Georgia - 03/28/2022

Directive 22-EX-2: Calculation of Taxes When Auto Insurers Pay First Party Claims

On March 11, 2022 Commissioner John F. King issued Directive 22-EX-2 to advise automobile insurers on appropriate method for calculating taxes to be paid to the insured when settling total loss vehicle claims.  The Directive notes that the purpose of insurance is to make an insured whole again following a loss, and therefore insurers of first-party auto insurance claims must properly calculate taxes to be paid by the insured when replacing a lost vehicle.
Beginning April 1, 2022, for first-party total loss vehicle claims, insurers using the cash equivalent method of settlement must calculate the actual taxes required to be paid by the insured when replacing a total loss vehicle.  Insurers may not base tax payments on an amount lower than the agreed-upon total loss value as this does not accurately provide for the unique cash value of the lost vehicle and fails to make the insured whole.

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

Category(s): New York - 03/28/2022

New RBC Disclosure Obligations for New York Domestic and Foreign Insurers

The DFS promulgated Regulation 220, effective as of December 15th, 2021, which provides that a New York domestic insurer must treat shares of an exchange traded fund (“ETF”) that meet certain requirements as bonds for purposes of its RBC report until January 1st, 2027. 
The DFS also amended existing Regulation 172 to require a foreign insurer to calculate RBC consistent with the requirements for the treatment of ETFs under new Regulation 220, and to report that RBC in a New York Supplement to the company’s annual financial statements. Previously, a foreign insurer could provide the same RBC to New York that it filed with its domestic regulator and the NAIC.

Allison J. Tam, Esq. - WILLKIE FARR & GALLAGHER LLP, (212) 728-8282 , atam@willkie.com

Category(s): New York - 03/28/2022

New York Issues Climate-Related Guidance for Domestic Insurers

In furtherance of the Circular Letter issued by the New York State Department of Financial Services (DFS) in September 2020, the DFS released guidance for New York domestic insurers in November, which states that insurers are expected to manage financial risks from climate change by taking actions that are proportionate to the nature, scale and complexity of their businesses. For instance, insurers should incorporate climate risk into their financial risk management and manage this risk through their enterprise risk management functions. Insurers must have an implementation plan in place by August 15, 2022, with respect to the DFS’s expectations for corporate governance and organizational structure changes. With respect to implementing more involved changes (e.g., reflecting climate risks in the ORSA and using scenario analysis when developing business strategies), insurers are encouraged to start working on these changes, although the DFS plans to issue further guidance with more specific timing information.

Allison J. Tam, Esq. - WILLKIE FARR & GALLAGHER LLP, (212) 728-8282 , atam@willkie.com

Category(s): Pennsylvania - 03/28/2022

PA Insurance Commissioner to Lead Covered California

Pennsylvania Insurance Commissioner, Jessica Altman, will lead Covered California, a state-run Affordable Care Act public exchange. Altman will leave her role at the end of February. Chief of Staff, Mike Humphreys will serve as acting insurance commissioner.

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

Category(s): Puerto Rico - 03/28/2022

Puerto Rico Governor Backs Efforts for NAIC Re-accreditation

In support of the Office of the Insurance Commissioner of Puerto Rico’s efforts to regain Puerto Rico’s status as an NAIC accredited member, Puerto Rico Governor, Pedro R. Pierluisi, introduced measures, currently Senate Bills 721 PS721  and 722 PS722,  for the adoption in Puerto Rico of the NAIC’s Corporate Governance Annual Disclosure Model Act and the implementation of the Covered Agreement provisions in the NAIC’s Credit for Reinsurance Model Act (785), respectively.

C. Ignacio Matos, Esq. - REXACH & PICO, CSP, (787) 723-8520 , imatos@rexachpico.com

Category(s): Puerto Rico - 03/28/2022

Puerto Rico Supreme Court Upholds Post-Loss Assignment of Claims

In San Luis Center Apartments et al vs. Triple Propiedad, Inc., 2022 T.S.P.R. 18 2022tspr18,  the Puerto Rico Supreme Court upheld a Court of First Instance ruling against a motion to dismiss an assignee’s claim on the grounds that it violated the policy transfer of rights clause, finding that the same did not apply to post-loss assignments. The Supreme Court also found that the post-loss assignment did not expose the insurer to a different or increased liability than that stipulated in the policy. Insured assigned a claim and not the policy, thus the assignment did not increase the insurer’s liability nor constitute a change in the insured property, coverage, exclusions, or policy term. Assignee’s role processing the claim and collecting under the policy, while including the insured as a party to the claim, presented no risk to insurer, despite assignee’s effectiveness in pursuing collection of monetary rights under the policy for which the insurer was liable and obligated to pay.

C. Ignacio Matos, Esq. - REXACH & PICO, CSP, (787) 723-8520 , imatos@rexachpico.com

Category(s): Virginia - 03/28/2022

Virginia Bureau of Insurance Issues Guidance on Arbitration for Balance Billing Claims

The Bureau of Insurance administers the arbitration process for balance billing claim disputes between carriers and providers. In response to a determination that certain provider groups are filing arbitration requests with such frequency as to indicate a general business practice in violation of § 38.2-3445.05 D of the Code of Virginia, the Bureau issued Administrative Letter 2021-04.
In Administrative Letter 2021-04, the Bureau (i) set a standard of no more than one arbitration request per provider group during a seven day period regardless of geographic area, CPT code, or carrier involved (but bundling of claims in accordance with established rules is allowed); (ii) reminded parties involved in payment disputes to engage in good faith negotiations as required by § 38.2-3445.01 F; and (iii) reminded carriers to pay a commercially reasonable amount as required in § 38.2-34405.01 F.  
In addition, the Bureau recommended that carriers and providers consider the results of previous arbitration decisions and adjust the payment offer during negotiations as appropriate.

Scott J. Sorkin, Esq. - BLAND & SORKIN P.C., (804) 747-6667 x12 , ssorkin@blandsorkin.com

Category(s): Washington - 03/28/2022

Allstate Vehicle & Property Insurance Company Agrees Giving Free Services Unrelated to Insurance Is an Illegal Insurance Inducement

Allstate Vehicle & Property Insurance Company signed a consent order on February 15, 2022, and agreed with the Washington Insurance Commissioner that granting free use, for a period of time, of its non-insurance “Allstate Identity Protection” service, regardless whether the consumer purchased any other insurance, was an “illegal inducement” consequent to the purchase of insurance. Allstate also agreed in this same consent order to correct certain website deficiencies of the company to properly identify the proper name of the underwriting company and the home office. Order 21-0702.

Steven Beeghly, Esq. - KREGER BEEGHLY PLLC, (206) 618-6110 , sb@kregerbeeghly.com

Category(s): Washington - 03/28/2022

Washington State Court of Appeals Creates New Third Party Bad Faith Remedy For “Prelitigation Misconduct” In Claims Handling

The Court of Appeals for the State of Washington, in a title matter, created a new bad faith attorney’s fees remedy for third party claimants, establishing “prelitigation misconduct” as to claim administration that may compel insurers to consider refiling rates for this new third party exposure:

In a case of first impression, we hold that fees can be awarded for the prelitigation bad faith of a party that entails a refusal to honor a valid claim, thereby forcing the plaintiff to file suit to rectify a problem.

Prior to this decision, attorney’s fees for insurance bad faith were generally limited to first party insureds by both precedent and legislative action. That first party distinction was erased by the Court to expand to third party claimants because: 

. . . the comment does not rule out bad faith as a permissible ground and presumably one Washington court can finally grant fees on this equitable basis. We are that court.
Prelitigation misconduct refers to obdurate or obstinate conduct that necessitates legal action to enforce a clearly valid claim or right.

Cite as Dalton M., LLC v. North Cascade Trustee Services, Inc., (No. 37448-3-III)(State of Washington Court of Appeals, Div.III)(Published Decision Filed February 17, 2022).

Steven Beeghly, Esq. - KREGER BEEGHLY PLLC, (206) 618-6110 , sb@kregerbeeghly.com

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