Category(s): Florida - 07/01/2016

The Citizens Property Insurance Corporation’s (Citizens) Board of Governors recently approved a 6.8% statewide increase in personal lines rates due to rising non-weather water losses and increased litigation because of assignment of benefit abuses. The recommended rate increase was unanimously approved at their June 22, 2016 meeting and will be reviewed for approval by the Florida Office of Insurance Regulation. Under the proposed rates, inland homeowners with multi-peril policies would see an average increase of 6.3 percent and homeowners along the coast would experience an average rate hike of 8.6 percent. Citizens warn that there will be future rate hikes to meet their statutory obligations unless stakeholders make a collective effort to develop a solution to address the increases.

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

Category(s): Florida - 07/01/2016

The Federal Reserve Board recently approved an advanced notice of proposed rulemaking (ANPR) and invited public comments on a conceptual framework rule relating to capital standards that could apply to systemically important insurance companies or insurance companies that own a bank or thrift. The ANPR distinguishes two different approaches in creating the structure of a conceptual framework: a “consolidated” approach that applies to systemically important insurance companies and a “building block” approach for less complex insurance companies. For systemically important insurance companies, the consolidated approach would categorize an entire insurance firm’s assets and insurance liabilities into risk segments and apply appropriate risk factors to each segment at the consolidated level, while the building block approach aggregates existing capital requirements from the firm’s different legal entities for a combined, group-level capital requirement. Comments on the ANPR are due by August 2, 2016.

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

Category(s): Florida - 07/01/2016

The stark increase in water loss claims and issues surrounding the assignment of benefits (AOB) were the main topics of discussion at a forum hosted recently by Florida’s Insurance Consumer Advocate. The forum was held with the hopes that policy recommendations to protect consumers would develop from an in-depth exploration of water-loss claims and AOB crises targeting Florida’s insurance industry. During the forum, the Florida Office of Insurance Regulation revealed that water-loss claims have increased 46% in the state since 2010 and that AOB claims and related fraud were rising in severity and spreading across the state. If these issues are not properly addressed, participants at the forum from both the public and private sectors expressed a concern that insurance rates will soon reach unaffordable levels for consumers and insurers alike.

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

Category(s): Florida - 07/01/2016

The U.S. House Financial Services Committee approved H.R. 5143, a bill related to the Transparent Insurance Standards Act of 2016 and aimed at protecting the nation’s insurance markets by insisting on transparency and congressional oversight of international insurance standards setting processes. According to Rep. Blaine Luetkemeyer (MO-03), the bill’s sponsor, the objective of the legislation is that the states, the executive branch and Congress will work cooperatively to signal to the International Association of Insurance Supervisors (IAIS), the Financial Stability Board and foreign governments, that the U.S. will only lend their name to standards and agreements that benefit U.S. consumers and foster a robust insurance marketplace. The bill is headed to the House floor for a vote.

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

Category(s): Georgia - 07/01/2016

On July 1, 2016, the Georgia Department of Insurance issued a new Directive (16-EX-3) that requires all insurers writing fire loss coverage in the State of Georgia to submit a quarterly report of all fire losses.  The reports are submitted through the Department's web portal:  https://www.oci.ga.gov/CompanyPortal/

Tony Roehl, Esq. - BAKER HOSTETLER LLP, (404) 256-8419 , troehl@bakerlaw.com

Category(s): Illinois - 07/01/2016

The Illinois Department of Insurance recently ordered the ACA startup, Land of Lincoln Health, to stop writing new plans without permission and to not pay the $31.8 million risk adjustment. Land of Lincoln had recently sued the federal government to recover money it claims it is owed under the risk corridor program that is also part of the ACA. The action by the Illinois DOI was designed to protect the existing policyholders of Land of Lincoln.

Daniel A. Cotter, Esq. - Dickinson Wright PLLC, (312) 423-8170 , DCotter@dickinson-wright.com

Category(s): Oklahoma - 07/01/2016

The Oklahoma Insurance Department issued a Bulletin in June (Bulletin No. PC 2015-05) reminding insurers that Oklahoma statute (36 O.S. Section 4809) requires insurers to include a question on every application to determine if the property in a rural fire protection district has paid all fire protection association dues or subscription payments. The statute cited prohibits insurers or agents from giving underwriting credit for fire protection unless the applicant has paid the applicable fire protection association dues and provides the insurer and agent with evidence of such payment. The Bulletin mandates insurers to respond to the Insurance Department as to whether they are asking this question on applications.

Angela Ables, Esq. - KERR, IRVINE, RHODES & ABLES, P.C., (405) 272-9221 , aables@kiralaw.com

Category(s): Rhode Island - 07/01/2016

Toward the end of its 2016 legislative session, the Rhode Island General Assembly passed H7412 Sub A and S2375 as amended, which would have made it an “unfair claims practice”, as defined by R.I. Gen. Laws § 27-9.1-4(a), to refuse to compensate a rental car company for loss regardless of “fleet utilization or any other requirement.” According to the industry, such a change would unjustly enrich rental car companies for phantom loss claims because the bills make it mandatory to compensate the rental car company without having to provide any proof of loss. The two companion bills were transmitted to Governor Raimondo for consideration on July 7, 2016. The Governor’s Insurance Council sent a letter to the Governor recommending she veto the bills. Recognizing the legitimate deficiencies, the Governor vetoed the bills on July 13, 2016, but in doing so has directed the Rhode Island Department of Business Regulation to work with rental car and insurance companies to identify common-sense changes to ensure that neither unfair barriers nor unnecessary delay exist in pursuing a loss of claim.

John J. Partridge, Esq. - PARTRIDGE SNOW & HAHN LLP, (401) 861-8200

Category(s): Tennessee - 07/01/2016

Tennessee Department of Commerce and Insurance Commissioner Julie Mix McPeak, who was instrumental in the NAIC’s development of principle-based reserving methodology, has confirmed that the operative date of the Principle-Based Valuation Manual for Tennessee domestic insurers is January 1, 2017. In the TDCI Bulletin issued on June 13, Commissioner McPeak noted that Tennessee is one of 45 states that have enacted laws substantially similar to the NAIC Model Standard Valuation Law.

T. Stephen C. Taylor, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-7758 , staylor@bassberry.com
Robins H. Ledyard, Esq. - BASS, BERRY & SIMS, PLC, (615) 742-6259