Category(s): Federal - 12/21/2016

The Senate Banking Committee passed the Restoring American Financial Stability Act of 2010 on Monday, March 22, on a party line vote of 13 to 10 after brief statements from Committee Chairman Chris Dodd (D-CT) and Ranking Member Richard Shelby (R-AL) and a matching vote on the manager’s amendment to the bill, the only amendment offered on the sweeping legislation.  Republicans initially submitted hundreds of amendments to the legislation, but chose to withdraw all of them until debate begins on the Senate floor.  Both sides expressed optimism that the bill would eventually pass on a bipartisan basis.  Here is the link to the original bill and hereis the link to the Manager’s Amendment.

Charles T. Richardson, Esq. - FAEGRE BAKER DANIELS LLP, (202) 997-0681 , crichardson@faegrebd.com

Category(s): Florida - 12/21/2016

The Florida Cabinet met on March 9, 2010, during which it considered Proposed Rule 69O-170.0155 for final adoption by the Florida Office of Insurance Regulation ("OIR"). The approved amendments to Rule 69O-170.0155 will serve to modify two forms, OIR-B1-1802 and OIR-B1-1655, which are used respectively by home inspectors and insurance companies for providing information about windstorm mitigation features on residential properties.

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

Category(s): Florida - 12/21/2016

The Florida Hurricane Catastrophe Fund ("FHCF") Contract Year will be returned to June 1 through May 31 beginning June 1, 2010 if Florida Governor Charlie Crist signs SB 1460, which was passed unanimously by the 2010 Florida Legislature.  The FHCF Contract Year, after being legislatively curtailed in 2009, had created unintended negative financial consequences for insurers due to the way in which the cost of reinsurance is amortized on their financial statements.  Without passage of SB 1460, an insurer's 2010 financial statement would show a larger-than-normal expense associated with the purchase of FHCF reinsurance.

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

Category(s): Florida - 12/21/2016

The Florida Office of Insurance Regulation has agreed to begin proceedings to adopt a new rule to implement Florida’s workers’ compensation excess profits law.  The agreement was reached with FFVA Mutual Insurance Company, which challenged the Office’s use of unpublished internal policies on what expenses companies were allowed to claim for excess profits reporting purposes.  FFVA Mutual alleged that the Office was implementing invalid non-rule policy which restricted companies’ ability to reduce their excess profits exposure by claiming certain expenses, such as federal and state income taxes, reinsurance expenses, surplus note expenses, and investment expenses.

The agreement reached between the workers’ compensation insurer and the Office will stay pending administrative proceedings while the Office attempts to promulgate a valid rule.  The rulemaking process should begin within the next several weeks.  Interested insurers, as well as the public at large, will have an opportunity to participate in the rulemaking process.

Florida’s excess profits law, section 627.215, Florida Statutes, was originally enacted in 1979 when the Florida Legislature adopted a so-called wage-loss system to replace traditional permanent partial compensations benefits.  At the time, the excess profits law was intended to address legislators’ concerns that workers’ compensation insurers might reap excessive profits as a result of the change in the workers’ compensation benefit structure.  The 1979 wage-loss system has come and gone, and Florida has seen numerous benefit system reforms since then.  But, the excess profits law has remained on the books.

Until recently, it was a fairly rare occurrence for a Florida workers’ compensation insurers to be required to refund excessive profits to its policyholders.  In the past several years, however, as the Florida market improved for workers’ compensation insurers, numerous companies have been forced to make refunds totaling hundreds of millions of dollars.  In some cases, companies complained that they were not allowed to take deductions for expenses they incurred in the ordinary course of doing business.  The rulemaking process, which will shortly get under way, should provide the insurance industry with a forum to air its views on which expenses should be allowed for excess profits reporting purposes.

Thomas J. Maida, Esq. - FOLEY & LARDNER LLP, (850) 513-3377
Austin B Neal - Foley & Lardner, aneal@foley.com

Category(s): Florida - 12/21/2016

A comprehensive study by Risk Management Solutions ("RMS") on windstorm mitigation credit implementation in the State of Florida and its impact on the insurance industry has concluded that the current system is a significant contributing factor in the reported decline of Florida insurance premium income since 2007.  The study was conducted on behalf of the Florida Department of Financial Services and based on a set of objective analyses designed by RMS.  The full report was presented to key members of the Florida Legislature on March 19, 2010.To access the report on www.rms.com, click here.

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

Category(s): Georgia - 12/21/2016

On March 15, 2010, the Georgia Supreme Court responded to an Eleventh Circuit certified question inquiring whether an insurer’s notice of cancellation of a commercial automobile insurance policy, properly given after a premium payment is past due, is ineffective because it provides an opportunity for the insured to keep the policy in force by paying the past-due premium within the statutory ten day notice period. The Georgia Supreme Court answered the question in the negative, holding that O.C.G.A. § 33-24-44 does not require that a cancellation notice be in any particular form. The court further stated that as long as the notice clearly and unambiguously states that the cancellation will occur, the mere fact that the notice contains an option for the insured to avoid the cancellation does not render the cancellation notice ineffective. See Reynolds et al., vs. Infinity General Ins. Co., S09Q1613 (March 15, 2010).

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

Category(s): Iowa - 12/21/2016

Iowa has adopted by statute a model put forward by the National Conference of Insurance Legislators dealing with "extraordinary life circumstances" experienced by insurance consumers. It provides that an insurer licensed in Iowa must, upon written request, provide "reasonable" exceptions  to the insurer's rates, rating classification or underwriting rule to a consumer suffering from  a declared disaster or who has experienced a personal event such as a serious illness or divorce. 2010 Iowa Acts, Senate File 2075. An insurer receiving this request may require the consumer to provide written verification and show the event hashad  a meaningful impact on the consumer's credit information. Within ten daysof providing this information , the consumer must be informed of the disposition of the request by the insurer.

This statute was passed as a a result of public hearings on credit scoring held in 2009 by the Iowa Insurance Consumer Advocate.

Fred M Haskins, Esq. - PATTERSON LAW FIRM, (515) 283-2147 , fhaskins@pattersonfirm.com

Category(s): Mississippi - 12/21/2016

The Mississippi Supreme Court recently held that contractors are entitled to coverage under their commercial general liability policies for work performed by their subcontractors that is later found to be defective.  The case, Architex Association, Inc. v. Scottsdale Insurance Company, rejected the Fifth Circuit Court of Appeals ruling seven years earlier in ACS Construction Company v. CGU  which held that the hiring of a subcontractor is a deliberate and intentional decision by a general contractor which does not constitute an "occurrence" which would trigger coverage under a CGL policy.

In the Architex case, the contractor filed a claim under its CGL policy when the owner of a hotel for which Architex was performing work sought damages for subcontractor work later deemed defective.  Scottsdale Insurance Company denied any defense obligation to the insured general contractor on grounds that the hiring of a subcontractor was an intentional act falling outside the definition of "occurrence." 
 
The Mississippi Supreme Court rejected the ACS Court's prior analysis, stating that "[w]hile the alleged 'property damage' may have been 'set in motion' by Architex's hiring of the subcontractor, the 'chain of events' may not have 'followed a course consciously devised and controlled by [Architex], without the unexpected intervention of any third person or extrinsic force.'"  As an example, the court noted that when a subcontractor accidentally drops a tile off a roof and strikes a passerby, there is no real dispute that this is an unintentional and unexpected accident. To hold otherwise, the Court stated, "subverts the plain language and purpose of the CGL part of these policies."

Robert B. House, Esq. - JONES WALKER LLP, (601) 949-4830 , rhouse@joneswalker.com
David L. Martin, Esq. - JONES WALKER LLP, (601) 949-4901 , davidmartin@joneswalker.com

Category(s): New York - 12/21/2016

It is highly unusual, but the Department's Life, Health and Property Bureaus all have had vacancies at the Chief Examiner level at the same time. Martin Schwartzman has left the Life Bureau to become Deputy Superintendent for Strategic Planning and Market Initiatives and Eugene Bienskie, Chief Examiner of the Health Bureau, moved over to the Property Bureau to replace retiring Larry Levine, with the Life and Health Chief Examiner positions yet to be filled.

Francine L Semaya, Esq. - LEGAL AND REGULATORY CONSULTANT, (732) 241-8090 , flsemaya@gmail.com
William K Broudy, Esq. - NELSON LEVINE de LUCA & HORST, LLC, (212) 233-3254 , wbroudy@nldh.com

Category(s): Ohio - 12/21/2016

Ohio’s agent licensing laws have been amended to more closely align with the NAIC Producer Licensing Model Act.  As the only insurance legislation expected to be enacted this year, a couple of unrelated amendments were added.  Ohio’s “mini-COBRA” statute was revised to require small employers to extend COBRA eligibility periods.  And the Life & Health Guaranty Fund law now provides coverage for annuities up to $250,000 (increased from $100,000)

Faith M Williams, Esq., (614) 227-2374