Alert Edition November 2022

Welcome to the November 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 - 11/21/2022

IAIS Provides Opportunity for Stakeholder Engagement Related to the Aggregation Method Comparability Assessment

The International Association of Insurance Supervisors has decided to provide additional opportunity for stakeholder engagement on the development of scenarios that will be used to inform the Aggregation Method Comparability Assessment. Consideration of the final criteria has been moved from November 2022 to March 2023. Link from iaisweb.org here. 

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

Category(s): National - 11/21/2022

Landmark U.S.-UK Data Access Agreement Enters into Force

The Agreement between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland on Access to Electronic Data for the Purpose of Countering Serious Crime (the “Data Access Agreement” or the “Agreement”) entered into force on October 3, 2022. The Agreement is authorized by the Clarifying Lawful Overseas Use of Data Act or the CLOUD Act, a law enacted by the United States Congress in 2018, and will be the first agreement of its kind, allowing each country’s investigators to gain better access to vital data to combat serious crime in a way that is consistent with privacy and civil liberties standards.

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

Category(s): National - 11/22/2022

Senate Committee on Banking, Housing, and Urban Affairs Hearing

The United States Senate Committee on Banking, Housing, and Urban Affairs (Committee) met on September 8, 2022, to conduct a hearing on “Current Issues in Insurance”. The growth of alternative asset management companies amassed interest from the Committee. Sen. Sherrod Brown (D-OH) sent a letter  in March 2022, to the National Association of Insurance Commissioners (NAIC) and the U.S. Department of the Treasury's Federal Insurance Office (FIO) concerning the growth of alternative asset management companies. NAIC and the U.S. Department of the Treasury provided responses to Senator Brown. Read the NAIC's response here.  Read the U.S. Department of the Treasury's response here. 

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

Category(s): National - 11/21/2022

Treasury Proposes Collecting Insurer Risk Data in Move Toward Climate Rules

The Treasury’s Federal Insurance Office (FIO) announced its intention to begin collecting data from insurers across the country in an effort to evaluate climate-related risk. FIO is seeking public input on a proposal to collect data from property and casualty insurers to gather current and historical underwriting data on homeowners’ insurance.

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

Category(s): Alabama - 11/21/2022

The Alabama Department of Insurance has recently issued/updated the following Legal Regulations:

1. Regulation Number: 94           
Surplus Notes 

2. Regulation Number: 151
Independent Adjusters (revised effective January 1, 2023)[amendment of Section 9 (Rule 482-1-151-.09] 

3. Regulation Number: 160
Adjustment of Certain Fees According to Changes in the CPI (revised effective January 1, 2023)[addition of new Section 4 (Rule 482-1-160-.04)] 

4. Regulation Number: 161
Adoption of Valuation Manual (revised effective January 1, 2023) [adoption of new Section 9 (Rule 482-1-161-.09)] 

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

Category(s): California - 11/21/2022

Export List Pre-Hearing Notice

On September 22, 2022, the California Department of Insurance published its annual “REQUEST FOR PROPOSED ADDITIONS, MODIFICATIONS OR DELETIONS TO THE EXPORT LIST”  requesting comments suggesting additions, deletions, or other modifications to the export list in advance of the scheduling of a hearing in the next few months.  The export list is a list of coverages determined to be suitable for placement in the surplus lines market without a diligent search because there is not a reasonable or adequate market among admitted insurers or that the type of coverage is for new, innovative products for which a reasonable or adequate market among admitted insurers has not had time to develop. The Export List hearing has been set for November 22, 2022, at 10:00 a.m. pacific.  Participation is by telephone by calling 877-226-8189 and entering 6170437 as the passcode.  Those who wish to speak are asked to RSVP to ExportListHearing@insurance.ca.gov with the names of participants, the organization they represent, and the e-mail address of each participant.

Nicole M. Zayac, Esq. - Willkie Farr & Gallagher LLP, (415) 858-7443 , nzayac@willkie.com

Category(s): California - 11/21/2022

Wildfire Moratorium

On September 22, 2022, The California Department of Insurance issued Bulletin 2022-13,  titled “Mandatory Moratorium on Cancellations and Non-Renewals of Policies of Residential Property Insurance After the Declaration of a State of Emergency” outlining the ZIP codes to which a moratorium on cancellations and nonrenewals applies under Cal. Ins. Code § 675.1 as a result of a the Fairview Fire and the Mosquito Fire. Bulletin 2022-14,  issued on September 26, 2022, has the same title and content with respect to the Mountain Fire, the Barnes Fire, and the Fork Fire.

Nicole M. Zayac, Esq. - Willkie Farr & Gallagher LLP, (415) 858-7443 , nzayac@willkie.com

Category(s): California - 11/22/2022

Wildfire Regulation

On October 14, 2022, as part of the Safer from Wildfires Framework, new Section 2644.9 of title 10 of the California Code of Regulations (Consideration of Mitigation Factors; Wildfire Risk Models) became effective.  This regulation requires insurers that use wildfire risk in rating to file new rating plans incorporating wildfire safety standards and to establish a process for releasing wildfire risk determinations to residents and businesses within 180 days.  A copy of the regulation is available here.  The California Department of Insurance’s press release is available here. 

Nicole M. Zayac, Esq. - Willkie Farr & Gallagher LLP, (415) 858-7443 , nzayac@willkie.com

Category(s): Florida - 11/21/2022

CFO Jimmy Patronis Proposes Legislation to Fight Back Against Post-Storm Fraud

On October 19, 2022, Florida Chief Financial Officer Jimmy Patronis held a press conference to highlight fraud prevention efforts in the wake of Hurricane Ian. During the press conference, Patronis committed to proposing fraud-related legislation, including cracking down on bad Public Adjusters by deterring their ability to take advantage of Floridians suffering from financial duress, combatting Assignment of Benefits (AOB) abuse by excluding the use of AOBs altogether, establishing a statewide prosecutor focused solely on property insurance fraud to hold fraudsters accountable to the full extent of the law, and lastly, requesting a $3 million anti-fraud public education campaign. See Press Release here. 

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

Category(s): Florida - 11/21/2022

DeSantis Announces Special Legislative Session to Fix Florida’s Insurance Industry

As Florida’s property insurance crisis continues to worsen following Hurricane Ian, Governor Ron DeSantis announced on October 20, 2022, that Florida legislative leaders have agreed to hold a special session following the midterm election on November 8, but prior to the end of the 2022. This special session will be used to address property taxes and property insurance in the aftermath of Hurricane Ian. This is the second time this year that legislators will address Florida's turbulent property insurance market.

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

Category(s): Florida - 11/21/2022

FedNat Insurance Company Declared Insolvent

State regulators have asked a judge to place FedNat Insurance Company in receivership. FedNat is the sixth Florida property insurer declared insolvent this year. The Florida Department of Financial Services sought to be appointed receiver for FedNat, which cancelled 56,000 policies in May. Another 83,000 policies were transferred to Monarch National Insurance Company in June with the condition that Monarch would not be responsible for obligations from before June 1.

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

Category(s): Florida - 11/21/2022

Florida Department of Financial Services Proposed Rules 69J-123.003

The Florida Department of Financial Services (DFS), Division of Consumer Services, proposed Rule 69J-123.003, Property Insurance Intent to Initiate Litigation in the October 26, 2022, edition of the Florida Administrative Rules Register. The rulemaking implements section 627.70152, Florida Statutes, which requires claimants under a residential or commercial property insurance policy to provide pre-suit notice of intent to initiate litigation to the insurer. The statute requires the Department of Financial Services to accept the notice and provide it to the appropriate insurer. The rule creates a form for claimants to provide statutory notice to insurers of the claimant’s intent to file a claim prior to initiating a lawsuit. See proposed rule here. 

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

Category(s): Florida - 11/21/2022

Florida Offering $5 Million to Help Needy Hurricane Victims Pay Insurance Deductibles

Additional efforts to provide much needed relief to Florida residents impacted by Hurricane Ian are underway, announced in a news release on October 22, 2022 by Governor Ron DeSantis. The Florida Housing Finance Corporation’s State Housing Initiatives Partnership (SHIP) program will provide $5 million to aid low- and moderate-income households in paying their homeowners insurance deductibles. With nearly 400,000 claims filed in Charlotte, Collier, DeSoto, Hardee, Lee and Sarasota counties following Ian, many homeowners in these counties are now eligible for support in covering fees. Link from flgov.com here. 

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

Category(s): Florida - 11/21/2022

Insurers Temporarily Blocked from Dropping Policies

Florida Insurance Commissioner David Altmaier issued an emergency order  on September 28, 2022, that temporarily prevents property insurers from dropping customers in the aftermath of Hurricane Ian. No insurer under the Florida Insurance Code will be allowed to cancel or non-renew a policy covering a property or risk between September 28, 2022, and November 28, 2022. The order also temporarily shields homeowners from losing policies if their properties are damaged in Hurricane Ian. Insurers will be barred from canceling or non-renewing policies for at least 90 days after the properties are repaired.

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

Category(s): Georgia - 11/22/2022

Auto Insurance Policy Covers Liability from Operation of Golf Cart

In its unanimous opinion filed on September 29, 2022, the Eleventh Circuit Court of Appeals reversed a Florida District Court’s grant of summary judgement to Geico General Insurance Company that its auto insurance policy did not cover injuries resulting from a collision between a golf cart operated by a minor and a car. The policy covered bodily injury arising from the use of a “private passenger, farm, or utility auto.” It defined “private passenger auto” as “a four-wheel private passenger, station wagon or jeep-type auto, including a farm or utility auto as defined.” On appeal, the court found in Geico General Insurance Company v. Eileen Gonalez, et al (District Court Docket No: 21-13304), that “[r]ead in isolation, the policy definition of private passenger auto includes golf carts like the one involved in the accident here — the golf cart was a four-wheeled, privately owned, passenger vehicle”. “Reading the definition of private passenger auto in context to include the definitions of the terms farm auto and utility auto results in a narrower interpretation, but one that still does not exclude golf carts."

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

Category(s): Georgia - 11/22/2022

Georgia Court of Appeals Remands Key Arbitration Case Back to Trial Court

On October 18, 2022, the Georgia Court of Appeals sent a contested arbitration award confirmation case back to the trial court following a Georgia Supreme Court  ruling that an arbitrator didn't manifestly disregard the law, ordering the lower court to rule on issues related to attorney fees and post-judgement interest. The appellate court previously held, in what was believed to be a first-of-its-type decision in Georgia, that an arbitrator deliberately ignored applicable law when he found in favor of Southern Mountain Adventures LLC and its affiliate Adventure Motorsports Reinsurance Ltd., awarding them nearly $500,000 in their commissions and fees dispute with vehicle service contract provider Interstate National Dealer Services Inc.  (later renamed Revolos and now owned by Protective Life). However, in December 2021, the Georgia Supreme Court reversed the Court of Appeals' ruling, finding that the arbitrator never expressed during the arbitration hearing in the dealership companies' fees dispute or in the subsequent award that the correct law should be ignored. In the appellate court’s recent ruling it adopted similar reasoning when addressing Interstate National's only remaining argument on remand — that the arbitrator had overstepped his authority under Georgia law in the way he interpreted the parties’ contracts and calculated the award. The panel said it was "clear" that the arbitration award was made "pursuant to and within the scope of the arbitration agreement entered into by the parties specifically to resolve this dispute."

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

Category(s): Georgia - 11/21/2022

GEORGIA DIRECTIVE 22-EX-5: PROHIBITIONS ON THE PRACTICE OF “WHITE BAGGING”

On August 30, 2022, Commissioner John F. King issued Directive 22-EX-5 to inform all entities offering health plans in Georgia that the practice of white bagging is prohibited at any hospital that is designated as a Critical Access Hospital or any hospital not designated as a Critical Access Hospital that is located 30 miles or more from another hospital.
“White bagging” refers to the distribution of patient-specific medication from a pharmacy, often a specialty pharmacy, to a physician’s office, hospital, or clinic for administration and is often used in oncology practices to obtain costly injectable or infusible medications. 
The Department is still studying the effects of white bagging on Georgia consumers and will issue further appropriate regulations when that study is complete. However, the Department concluded that the practice of white bagging may create patient protection issues, especially in the context of oncology treatment. Moreover, in rural parts of the state, the practice of white bagging puts increased stress on patients and hospitals who may not be able to obtain necessary drugs from local pharmacies. Health plans may continue to notify a patient that they may receive savings from utilizing the practice of white bagging.  Full text of Directive can be found here. 

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

Category(s): Georgia - 11/21/2022

GEORGIA DIRECTIVE 22-EX-6: EXPANDING WHITE BAGGING DIRECTIVE 22-EX-5

On October 17, 2022, Commissioner John F. King issued Directive 22-EX-6 to inform that the practice of white bagging is prohibited at any hospitals the Georgia Department of Community Health has qualified as being eligible for the Georgia HEART program. This Directive is expanding the scope of Directive 22-EX-5.  Full text of Directive can be found here. 
A list of qualified hospitals may be found here. 

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

Category(s): Georgia - 11/21/2022

Georgia Insurance Commissioner Election to be held on November 8, 2022

Incumbent Republican Georgia Insurance Commissioner John F. King faces Janice Laws Robinson, an insurance agent, for the Georgia Insurance Commissioner’s Office in the general election on November 8, 2022. Early voting began on October 17, 2022.

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

Category(s): Georgia - 11/22/2022

Intent to Sell Life Insurance Policy When Purchased Does Not Violate Insurable Interest

On October 25, 2022, the Georgia Supreme Court issued its long awaited opinion in response to certified questions from the Eleventh Circuit Court of Appeals in Crum v. Jackson National Life Insurance Company. 
In this case, Kelly Couch had purchased a $500,000 life insurance policy in 1999 when he was 32 years of age with the intention of later selling it, which he eventually did to Crum eight months later. Couch died in 2005, and a few years later Crum made a claim for payment of the policy’s death benefit. In response to the death benefit claim, the life insurer filed a declaratory-judgment action, seeking a declaration that the policy was void ab initio under Georgia law as an illegal human-life wagering contract. As reframed by the Georgia Supreme Court the main question addressed was: “Is a life-insurance policy an illegal wagering contract if the insured takes out the policy on his own life with the intent to sell the policy to a third party with no insurable interest, but without a third party’s involvement in causing the policy to be procured?” The Georgia Supreme Court responded: “…[u]nder Georgia law, a life-insurance policy taken out by the insured on his own life with the intent to sell the policy to a third party with no insurable interest, but without a third party’s involvement when the policy was procured, is not void as an illegal wagering contract.”

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

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