Category(s): Colorado - 06/01/2011

Senate Bill 200 adds a new article, C.R.S. § 10-22-101 et seq., creating the Colorado Health Benefit Exchange.  The new law is intended to all individuals and small businesses looking for insurance to join together to negotiate for group rates and discounts from insurers.

Joel A. Glover, Esq. - Faegre Drinker Biddle & Reath LLP, (303) 607-3648 , Joel.Glover@FaegreDrinker.com

Category(s): Connecticut - 06/01/2011

The Connecticut Insurance Department (the “CID”) issued a notice April 28, 2011 (the “Notice”) announcing the launch of a formal inquiry into the business practices of life insurance companies regarding the payment of death benefits and the protocols used to locate beneficiaries.  According to the Notice, the inquiry is prompted by a concern that some insurers do not make reasonable efforts to locate life insurance beneficiaries once a policyholder has died or fail to confirm that a policyholder has died. 

The Connecticut action is part of a larger nationwide investigation into life insurance companies’ claim settlement practices.  The National Association of Insurance Commissioners has recently formed a task force to help coordinate and facilitate a formal examination of life insurers’ use of the U.S. Social Security Administration’s Death Master File (“DMF”).  Life insurers have been accused of using the DMF to stop payments on annuity products, while neglecting to use the list to identify deceased policyholders in order to timely pay life insurance benefits.  

The Connecticut Notice puts insurers “on notice that the [CID] fully expects them to make every effort to locate all beneficiaries,” and indicates that the CID “will not tolerate” insurer use of the DMF to stop annuity payments once a policyholder dies, while failing to use the same database to check dormant life insurance policies to determine if the policyholder has died.

Alan J. Levin, Esq. - LOCKE LORD LLP, (212) 912-2777 , alan.levin@lockelord.com
Michael T. Griffin, Esq. - ACCEL LAW GROUP P.C., (860) 761-8550 , mgriffin@accelcompliance.com

Category(s): Connecticut - 06/01/2011

The Connecticut Insurance Department recently issued Bulletin IC-27, which imposes new disclosure requirements on life insurers effective May 4, 2011.  Bulletin IC-27 requires life insurers to provide beneficiaries with written information at the time a claim is made describing the settlement options available under the policy and how to obtain specific details relevant to those options.  If the insurer settles benefits through a retained asset account (by depositing the proceeds into an account from which the proceeds may be drawn, where those proceeds are retained by the insurer pursuant to a supplementary contract not involving annuity benefits), the insurer must provide the beneficiary with a supplemental contract before the account is selected that clearly discloses the rights of the beneficiary and the obligations of the insurer.  Specific required disclosures regarding retained asset accounts are set forth in Bulletin IC-27.

Alan J. Levin, Esq. - LOCKE LORD LLP, (212) 912-2777 , alan.levin@lockelord.com

Category(s): Florida - 06/01/2011

The United States Court of Appeals for the 11th Circuit in Estate of Michelle Evette McCall v. United States of America has determined that Florida's cap on noneconomic medical malpractice damages is permissible under the Equal Protection Clause and Takings Clause of the U.S. Constitution as well as the Takings Clause of the Florida Constitution.  However, the court has certified several other state constitutional questions to the Florida Supreme Court, such as whether the caps violate state provisions relating to equal protection, access to courts, trial by jury and separation of powers.

Travis L. Miller, Esq. - RADEY LAW FIRM, (850) 425-6654 , tmiller@radeylaw.com

Category(s): Florida - 06/01/2011

Signed into law by Florida Governor Rick Scott on May 26, 2011, CS/CS/CS/SB 1816 relating to Surplus Lines Insurance is now effective.  The bill creates s.626.9362, F.S. and substantially amends s. 626.931, 626.932, 626.9325 and 626.938, F.S., authorizing the Florida Department of Financial Services ("DFS") and the Florida Office of Insurance Regulation ("OIR") to enter into a cooperative reciprocal agreement with another state or group of states to collect and allocate nonadmitted insurance taxes for multi-state risks pursuant to the Nonadmitted and Reinsurance Reform Act of 2010 ("NRRA"), part of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

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

Category(s): Florida - 06/01/2011

Meeting in Session on March 24, 2011, the Florida House voted unanimously to override former Florida Governor Charlie Crist's 2010 veto of HB 7103 relating to Agriculture.  Among other provisions, HB 7103 amends s. 624.4095, F.S. to allow additional fiscally sound multi-peril crop insurers to meet the statutorily required capital and surplus requirements for admission into the State.  It also allows the Florida Office of Insurance Regulation latitude in considering financial accounting matters for crop insurers.  HB 7103 provides that gross written premiums for certain crop insurance should not be included when calculating an insurer's gross writing ratio and requires that liabilities for ceded reinsurance premiums be netted against the assets for amounts recoverable from reinsurers.  Insurers that write other insurance products will be required to disclose a breakout of the gross written premiums for crop insurance.  Further, with certain crop insurers interested in doing business in Florida, but currently unable to write insurance because of current statutory constructs, the changes effected by HB 7103 are expected to allow individuals who grow agricultural products to have increased insurance options offered by fiscally sound insurers.  To access complete bill information, click here.

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

Category(s): Florida - 06/01/2011

The Florida Office of Insurance Regulation has published its annual statutory report ("Report") on aggregate net probable maximum losses, financing options and potential assessments of the Florida Hurricane Catastrophe Fund ("FHCF") and Citizens Property Insurance Corporation ("Citizens").  According to the Report, both Citizens and the FHCF have more resources to pay claims than in previous years, largely due to a consecutive five-year period in which no major hurricane has affected Florida.  At the end of 2010, Citizens had an estimated combined policyholders' surplus of $4.6 billion and the FHCF had an estimated fund balance of $5.9 billion.  The Report, which can be accessed by clicking here, concludes by cautioning that Citizens' exposure to catastrophic risk has grown.  It also suggests that strategic methods for encouraging the movement of capital and property insurance policies to the private market should be employed as quickly as possible to reduce the likelihood and magnitude of future assessments.

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

Category(s): Florida - 06/01/2011

The Florida Office of Insurance Regulation released an Informational Memorandum on April 4, 2011 to notify all assessable insurers and surplus lines insurers that Citizens Property Insurance Corporation has reduced the Emergency Assessment for the 2005 Plan Year within its High-Risk Account from 1.4 percent to 1.0 percent, effective July 1, 2011. The Memorandum can also be viewed by clicking here.

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

Category(s): Florida - 06/01/2011

On May 18, 2011, the Supreme Court of Florida entered an order denying United Automobile Insurance Company's ("UAIC") motion for rehearing and request for oral argument in Custer Medical Center v. United Automobile Insurance Company, 2010 WL 4340809 (Fla. Nov. 4, 2010) (Case No. Sc08-2036). The Court contemporaneously entered additional orders relating to ancillary motions and amici briefs. One of the Court's orders struck all amici briefs filed in the case, including briefs filed by numerous industry trade associations, insurance companies, and even the National Insurance Crime Bureau. Other orders denied motions filed in the case which were rendered moot by the court's denial of UAIC's motion for rehearing.  The Custer opinion, issued on November 4, 2010, contained language ancillary to the case's holding, known as dicta, that frustrates the purpose of the anti-fraud provisions of the personal injury protection ("PIP") statutes. The dicta opined that:

1.  PIP policy provisions that do not directly mirror the PIP statutes may be unenforceable.

2.  Unless otherwise provided by statute, a PIP carrier may not deny payment of medical expenses incurred and submitted by the insured prior to the date of a scheduled independent medical exam ("IME"), even if an insured does not attend the IME.

3.  Unless otherwise provided by statute, a PIP carrier may only deny payment of an insured's medical expenses incurred and submitted after the date of the IME if the carrier can affirmatively prove the unreasonableness of an insured's failure to attend an IME. Thus, the burden of proving the unreasonableness of the insured's action/non-action rests with the insurer.

4.  Denial of benefits for an insured's failure to submit to an examination under oath without counsel ("EUO") may no longer be permissible, as the Court points out that EUOs are not expressly permitted under the PIP statutes.

Denial of UAIC's motion for rehearing cements the Custer decision into State lawbooks, creating uncertainty for PIP insurers in Florida. The full effects of the Supreme Court's decision are yet to be determined, but the use of IMEs and EUOs may be significantly impaired due to litigation contesting the use of these fraud fighting tools.

Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530

Category(s): Florida - 06/01/2011

On May 25, 2011, the Florida Third District Court of Appeal issued an opinion in Universal Property and Casualty Insurance Company v. Colosimo, -- So. 3d -- 2011 WL 2031332 (Fla. 3d DCA 2011) (Third District Case No. 3D11-180), strictly construing the requirements of section 627.7015 of the Florida Statutes requiring insurers to notify first party claimants of their right to participate in mediation. The Third District affirmed the lower court's denial of Universal Property and Casualty Insurance Company's ("UPCIC") motion to stay the Colosimo's lawsuit, which was filed during the contractual appraisal process, thus permitting the insureds to commence with their claims for breach of contract and breach of the implied covenant of good faith and fair dealing.  The Court rejected UPCIC's arguments that compliance with § 627.7015, Fla. Stat. was necessary, inasmuch as the insureds had knowledge of the mediation process due to a contemporaneously filed claim, and because their insurance policy contained language apprising the insureds of their right to mediation.  The Court also rejected UPCIC's argument that the insureds' participation in appraisal bound them to complete the process. 

It appears from this case that a failure to strictly comply with the mediation notice requirements of § 627.7015, Fla. Stat. may effectively eviscerate appraisal provisions in carriers' insurance policies.

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