Alerts for September 2019

Alert Edition September 2019

Welcome to the September 2019 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,
Ryan Smart, Esq., FORC Alert Editor

Blurb
Category(s): Alabama - 09/25/2019 Implementation of FORTIFIED Roof™ Endorsement Law New Section 27-31D-2.1, Code of Alabama 1975 Act 2019-240 (HB 283, 2019 Regular Session) Act 2019-240 was recently enacted into law in Alabama. The law adds a new Section 27-31D-2.1 to the Code of Alabama 1975, which requires all insurance companies writing homeowners insurance to offer an endorsement that upgrades a home to a fortified standard adopted by the Institute for Business and Home Safety (IBHS) when the insured incurs damage covered by the policy that will require the roof to be replaced. The law also specifies when the endorsement shall be made, it requires insurance companies to file the endorsement and accompanying rates at least 90 days before the effective date of the act, and it authorizes the Commissioner of Insurance to adopt rules to implement the act. The effective date of this new law is January 1, 2020. On August 7, 2019, the Alabama Department of Insurance issued Bulletin 2019-06 implementing this new law. A copy of this Bulletin can be found at this link. The State of Alabama, through the Alabama Department of Insurance, is a recognized leader in encouraging wind mitigation through its Strengthen Alabama Homes Program. In 2011, the Alabama State Legislature established the Strengthen Alabama Homes Act. The act was designed to help Alabama homeowners improve their homes with updated building modifications that reduce property damages caused by hurricanes or other catastrophic windstorm events. When funds are available, the Alabama Department of Insurance offers financial assistance to qualified homeowners to assist in the cost of retrofitting their homes. Strengthening a home against wind damage may also qualify the owner to receive significant homeowner insurance premium discounts. There are established retrofitting standards that must be met to qualify for these discounts. The mitigation standard adopted by the Strengthen Alabama Homes program is known as the FORTIFIED Home™ program and it was developed by the Insurance Institute for Business and Home Safety (IBHS). To receive this grant, you must reach the IBHS FORTIFIED Bronze or Silver standard. Learn more about FORTIFIED™ by visiting fortifiedhome.org Stephen W. Still, Esq. - BALCH & BINGHAM LLP, (205) 488-5512 , sstill@balch.com
Category(s): Florida - 09/30/2019 CFO Appoints New Insurance Consumer Advocate On August 1, Chief Financial Officer (CFO), Jimmy Patronis, appointed Tasha Carter as Florida’s Insurance Consumer Advocate. Carter joined DFS in 2003 and most recently served as the Director of the Florida Department of Financial Services’ (DFS) Division of Consumer Services. In her new role, Carter will work independently from DFS and will serve Floridians by actively engaging with consumers and working with stakeholders to find consumer focused solutions on insurance matters. Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530
Category(s): Florida - 09/30/2019 Citizens Revises Flood Waiver Forms On August 1, Citizens Property Insurance (Citizens) released bulletins on the Revised Flood Waiver Form for Commercial Lines, and the Revised Flood Waiver Form for Personal Lines. Fred E. Karlinsky, Esq. - GREENBERG TRAURIG, P.A., (954) 768-8278 , karlinskyf@gtlaw.com
Category(s): Florida - 09/30/2019 FLOIR Issues Memo on PBM Contract Requirements On July 19, the Office of Insurance Regulation (FLOIR) issued memorandum OIR-19-03M regarding Pharmacy Benefit Manager Contract Requirements. A contract between a Pharmacy Benefit Manager (PBM) and an Insurer or Health Maintenance Organization (HMO) must require that the PBM update the maximum allowable cost pricing information (MAC list) at least every seven days. The contract shall also require that the PBM maintain a process that will eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data used in formulating maximum allowable cost prices and product availability. Insurers and HMOs must ensure that such contractual language is present in any contract entered into or renewed with a PBM on or after July 1, 2018, and that the PBM is complying with these required terms. Questions can be directed to Christopher Struk at Christopher.Struk@floir.com or 850-413-2480. Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530
Category(s): Florida - 09/27/2019 Florida Hurricane Catastrophe Fund Advisory Council Approves Reimbursement Contract Requirements On August 23, The Florida Hurricane Catastrophe Fund (FHCF) met to approve the Reimbursement Contract Requirements for the 2020-2021 Contract Year. Throughout the document, technical changes were made to update references to the 2020-2021 contract year dates as well as changes to meet statutory requirements of bills passed in the 2019 Legislative Session. Other changes to the contract include provisions relating to Reports and Remittances, Inspection of Records and Contract Election. All comments on Rule 19-8.010 , if received, will be reviewed at the October 17 meeting. Fred E. Karlinsky, Esq. - GREENBERG TRAURIG, P.A., (954) 768-8278 , karlinskyf@gtlaw.com
Category(s): Florida - 09/27/2019 Governor Appoints Florida’s First Chief Resilience Officer On August 1, Governor Ron DeSantis announced the appointment of Dr. Julia Nesheiwat as Florida’s first Chief Resilience Officer (CRO). The CRO is tasked with preparing Florida for the environmental, physical and economic impacts of sea level rise and will work in partnership with the Florida Department of Environmental Protection, the Florida Department of Transportation, the Florida Division of Emergency Management, the Florida Department of Agriculture and Consumer Services, the Florida Fish and Wildlife Conservation Commission and the Florida Department of Economic Opportunity, in addition to local communities and stakeholders. Dr. Nesheiwat has over 20 years of renewable energy and environmental experience focused on water and natural resources as a senior executive in federal cabinet-level agencies, academia and as a combat veteran. Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530
Category(s): Florida - 09/30/2019 OIR Announces 2020 Patient Protection & Affordable Care Act Rates The Florida Office of Insurance Regulation (OIR) announced the Individual Patient Protection & Affordable Care Act (PPACA) Premiums for Plan Year 2020. Per federal guidelines, the health insurance companies submitted their rate filing to OIR for review in June. The final rate determinations were due by August 22. The PPACA Premiums document can be found here . A total of ten health plans submitted their rate filings which have not been finalized and are subject to change due to federal review by the Department of Health & Human Services. Fred E. Karlinsky, Esq. - GREENBERG TRAURIG, P.A., (954) 768-8278 , karlinskyf@gtlaw.com
Category(s): Florida - 09/30/2019 OIR Issues Orders Establishing 2019 Citizens Rates On July 30, the Office of Insurance Regulation (OIR) announced it had established the 2019 personal and commercial property insurance rates for Citizens Property Insurance Corporation (Citizens). In June 2019, Citizens revised its 2019 rates due to Assignment of Benefits (AOB) reform during the 2019 Legislative Session. OIR’s orders for Citizens personal and commercial property accounts are available here. The proposed rate changes for all three Citizens accounts (Coastal, Commercial Lines, and Personal Lines) will become effective December 1, 2019. Fred E. Karlinsky, Esq. - GREENBERG TRAURIG, P.A., (954) 768-8278 , karlinskyf@gtlaw.com
Category(s): Florida - 09/30/2019 OIR Issues Rule Change regarding Registration of Insurers On August 21, the Office of Insurance Regulation (OIR) issued notice of a change in No. 69O-143.046, registration of insurers. The changes, available here, are in response to written comments received from the Joint Administrative Procedures Committee, regarding Form B - Insurance Company Holding System Annual Registration Statement. Fred E. Karlinsky, Esq. - GREENBERG TRAURIG, P.A., (954) 768-8278 , karlinskyf@gtlaw.com
Category(s): Florida - 09/30/2019 OIR to Enhance Data Call for Additional Hurricane Michael Claims Data On July 25, the Office of Insurance Regulation (OIR) issued a Hurricane Michael informational memorandum OIR-19-04M (which supplements OIR-18-01M). As of June 28, 2019, insurers reported that a total of 147,877 Hurricane Michael claims had been filed. While 126,208 claims were reported closed, 21,669 claims remained open. Insurers should quickly resolve all open claims, using whatever resources are necessary, to provide policyholders with the tools to rebuild their lives and property. OIR plans to issue an enhanced data call to collect additional information from insurers regarding open Hurricane Michael claims. Questions can be directed to Susanne Murphy at Susanne.Murphy@floir.com or 850-413-5083. Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530
Category(s): Florida - 09/25/2019 Surplus Lines Agent Policy Fee Reporting Guidance The Florida Surplus Lines Service Office (FSLSO) issued an update regarding the removal of the $35 cap on surplus lines agent policy fee. The cap removal comes as a result of the passage of HB 301 (2019) and requires the fee be reasonable, itemized to the customer before purchase, and enumerated in the policy. FSLSO now requires that only the surplus lines agent policy fee be filed in the “Policy Fee” field when making a SLIP or Batch submission. Richard J. Fidei, Esq. - GREENBERG TRAURIG LLP, (954) 592-5530
Category(s): Idaho - 09/27/2019 Idaho 2019 Legislation Update: What the Insurance Industry Should Know The 2019 Idaho Legislature adopted several pieces of new legislation that impact the insurance industry. Highlights of the new laws, which went into effect July 1, 2019, include: • Contracts with Dental Service Providers. Senate Bill 1069 amended Idaho Code Section 41-1849 to provide that dentists cannot be required to charge in-network rates for services that exceed the annual maximum coverage provided under a patient’s dental policy. When the annual maximum is reached, the dentist must disclose any change in fees for service to the patient and the patient must agree to the new fees. The dentist also must not charge more than the lowest amount the dentist charges to uninsured patients. • Coverage for Patients in Clinical Trials. Senate Bill 1097 added a new Chapter 65 to the Idaho Insurance Code. The new chapter requires health insurers to continue to cover the routine costs of care for an insured who is enrolled in an approved clinical trial. The insurer is not required to cover the costs of investigational treatments, the costs of the study, costs that are not covered under the plan, or services that are not consistent with widely accepted medical guidelines. Except for the requirement to cover the routine costs of care, the new chapter does not override cost sharing requirements or other limitations on coverage stated in an insured’s benefit plan. • Revisions to Requirements for Non-ERISA Self-Funded Health Plans. House Bill 149 made two revisions to Idaho’s law governing non-ERISA self-funded plans (i.e. MEWAs, governmental plans, church plans, etc.). First, the bill exempted the state’s own employee health plan from the requirement to register with the Idaho Department of Insurance. Second, the bill revised the surplus requirements for self-funded plans. As revised, the plan’s aggregate stop loss policy can substitute for some or all the plan’s required surplus. The overall effect is to permit “level-funded” arrangements. • Enhanced Short-Term Health Insurance Plans. House Bill 275 revised Idaho’s individual health insurance statutes to create a new category of health insurance referred to as “enhanced short-term.” The legislation dovetails with recent federal action to allow non-ACA coverage to be renewable for up to 36 months. Under the new Idaho law, any plans that are renewable for more than 12 months must comply with benefit mandates and other consumer protections to be specified in administrative rules of the Department of Insurance. • Internationally Active Insurance Groups. House Bill 71 updated the Idaho Insurance Holding Company Systems law to incorporate the NAIC’s 2014 amendments related to supervision of internationally active insurance groups. • Investments. House Bill 112 amended three provisions of the chapter on insurance company investments. First, the bill clarified the recordkeeping requirements when an officer or director has an interest in an insurer’s investments. The revision also includes an exclusion from reporting when the investment is in a publicly traded company and the officer or director owns less than 1% of the company’s stock or bonds as components of investments in ETFs or mutual funds. Second, the bill increased the limitation on investment in home office property from 10% to 15% of assets. Third, the bill increased the limitation on “miscellaneous” investments to the lower of 10% of assets or 75% of capital and surplus. The prior limitation was 5% of assets or 50% of surplus. • Online Vehicle Insurance Verification. House Bill 179 requires the Idaho Department of Transportation to enhance the vehicle insurance verification system so that the system will automatically compare the insurance data to outstanding vehicle registrations and cancel vehicle registrations for vehicles that do not meet the state’s financial responsibility requirements. Gabriel Hamilton, Esq. - Holland & Hart LLP, (208) 383-3952 , gahamilton@hollandhart.com
Category(s): Idaho - 09/27/2019 Idaho’s Code of Administrative Rules: Department of Insurance Updates The 2019 Idaho legislature failed to reauthorize the state’s code of administrative rules, which caused all state administrative rules to expire. At Governor Brad Little’s direction, the state agencies used the expiration of their rules to eliminate unneeded or redundant regulation and to update out-of-date rules. The revised rules took effect on July 1, 2019, as temporary rules that will remain in effect through at least the 2020 legislative session. There are several changes made to the rules of the Idaho Department of Insurance, which are outlined below. While the State Fire Marshall is also housed in the Department of Insurance, this summary excludes changes to rules related to the fire code. 1. Most rules were reauthorized in their entirety with minimal changes. The Department, however, did take the opportunity to reorganize and renumber its rules. The full list of currently in force rules is available at ://adminrules.idaho.gov/rules/current/18/index.html 2. The following rules were allowed to completely expire. The expiration of these rules generally clarifies, but does not change, the legal requirements for insurers operating in Idaho. For the most part, these expiring rules were generally superseded by later legislation or were duplicative of other rules. a. 18.01.03, Military Sales Practices Rule b. 18.01.07, Maternity Benefits Under Hospital, Surgical, and Medical Contracts in Idaho c. 18.01.14, Proxies, Consents, and Authorizations of Domestic Stock Insurers d. 18.01.15, Fingerprinting of Producer License Applicants e. 18.01.17, Surplus Lines -- Delegation of Responsibility f. 18.01.18, Open Lines for Export -- Surplus Lines g. 18.01.33, Domestic Insurer Purchasing and Selling of Exchange-Traded Call and Put Options h. 18.01.39, Rebates and Illegal Inducements in Title Insurance Business i. 18.01.45, Domestic Insurers Regarding Financial Futures Contracts j. 18.01.51, Unfair Discrimination on the Basis of Blindness or Partial Blindness k. 18.01.57, Permitting Smoker/NonSmoker Mortality Tables For Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits l. 18.01.58, Permitting Same Minimum Nonforfeiture Standards for Men and Women Insured Under 1980 CSO and 1980 CET Mortality Tables m. 18.01.59, Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits n. 18.01.71, Rule to Implement Uniform Health Claim Form Act o. 18.01.79, Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities p. 18.01.80, Preneed Life Insurance Minimum Standards for Determining Reserve Liabilities and Nonforfeiture Values 3. The following subparts of certain rules were allowed to expire, but the balance of the rule remains in effect. As with the rules allowed to expire in full, the expiration of selected sections of these rules will clarify and streamline compliance for insurers, but generally not change the substantive law. a. 18.0.1.05, Health Carrier External Review. Sections 23.03, 23.04, and 30. Appendices C-1 and C-2. b. 18.01.13, Life Settlements. Appendices A-1, A-2, A-3, A-4, B, C, and D. c. 18.01.16, Variable Contracts. Sections 17 and 18. d. 18.01.44, Schedule of Fees, Licenses, and Miscellaneous Charges. Sections 40.04 and 40.08. Gabriel Hamilton, Esq. - Holland & Hart LLP, (208) 383-3952 , gahamilton@hollandhart.com
Category(s): Tennessee - 09/30/2019 TDCI Issues Guidance on Certification of Health Benefit Plan Mandated Benefits The Tennessee Department of Commerce and Insurance has issued guidance regarding the certification process for health insurers and health benefit plans to confirm compliance with the federal Mental Health Parity and Addiction Equity Act of 2008 and a complementary state law (Public Chapter 1012, Tenn. Code Ann. Section 56-7-2360) that took effect in January mandating that health benefit plans cover mental health, alcoholism and drug dependency services. In accordance with the TDCI guidance (Bulletin 19-01), effective as of 2020 all chief executive officers and chief medical officers of Tennessee-licensed health insurance carriers must execute a certification of compliance and submit annually to mhpcertifcation@tn.gov on or before March 1st. 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
Category(s): Tennessee - 09/25/2019 TDCI Names New Assistant Commissioner for Insurance Rachel Jrade-Rice has been named Assistant Commissioner for Insurance by Interim Tennessee Commissioner of Commerce and Insurance Carter Lawrence, succeeding Mike Humphreys who has accepted a position as of Chief of Staff at the Pennsylvania Insurance Department. Prior to her promotion, Ms. Jrade-Rice served for two years as Director of Insurance at TDCI. 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
Category(s): Washington - 09/30/2019 Demand for Hearing Filed by ACE American Insurance Company and Indemnity Insurance Company of North America Regarding Washington State Proposed Consent Order for $1.5m and Other Remedies On August 12, 2019, two insurer members of the Chubb Group (ACE American Insurance Company and Indemnity Insurance Company of North America) filed a demand for hearing to refuse and challenge the Insurance Commissioner for the State of Washington’s proposed Consent Order of a fine of $1,500,000 (with $500,000 suspended) and outside auditor requirement. A hearing was demanded by these two insurers to challenge the fine and the [proposed] requirement for outside auditors for the [proposed] “Corrective Action Plan”. These insurers are apparently the target of the Insurance Commissioner with regard to allegations related to their insurance coverage sold by Healthy Paws Pet Insurance, LLC, under a “general agency” agreement. Specifically, the thrust of this regulatory matter relates to the Insurance Commissioner allegations that “oversight of Healthy Paws was substantially nonexistent before the Insurance Commissioner opened a Market Continuum Action in 2017.” These insurers have demanded a hearing and are challenging the Insurance Commissioner. These challenges include refuting allegations of failure in identifying insurers by their own legal name on all writings by Healthy Paws (including email messages, website, and other advertisements). Hearing has also been demanded to challenge the Insurance Commissioner’s allegations of insurance agent appointment issues, allegations of faulty cancellation notices (styled by the regulator as “policy administration”), allegations of improper privacy disclosure, allegations of use of outdate/unfiled/unapproved forms, and lastly allegations use of unapproved rates including misapplied discounts. No hearing date has yet been posted. Nor has jurisdiction for this hearing been set with either the Washington State Office of Administrative Hearings or internally at the Office of the Insurance Commissioner for the State of Washington. Demand For Hearing, Order 19-0231 (filed 8/12/2019). Steven Beeghly, Esq. - BEEGHLY RICOY LAW GROUP, Serving the Pacific Northwest, (206) 618-6110 , sb@BeeghlyRicoy.com
Category(s): Washington - 09/30/2019 Hawaii Captive Insurer for Alaska Air Ordered By Washington to Pay Tax, Interest, and Penalties. Insurance Commissioner for Washington State issued an order 9/6/2019 against Hawaii captive ASA Assurance and its insureds, including Alaska Air Group and affiliates. Order demands back premium tax of $1,823,494, interest $228,354, and penalties $364,698 for coverage for three years beginning 2016. Contracts allegedly cover self insured retention, deductible, copayment, and LPT. Commissioner asserts the captive lacked license in Washington and no surplus lines broker placed the insurance properly with the captive. A self-reporting plan was apparently filed in January, 2019. The WAOIC alleges a disagreement to the regulator’s authority to tax and regulate, and as to overall calculation of the premium base to determine penalties, tax, and interest against the captive. Regulator states ASA filed a demand for hearing on 8/30/2019. Let us know if you want a copy of the Order issued 9/6/2019 sent to ASA Assurance, Inc. and AON Captive Insurance Managers to discuss captives in Washington State. Steven Beeghly, Esq. - BEEGHLY RICOY LAW GROUP, Serving the Pacific Northwest, (206) 618-6110 , sb@BeeghlyRicoy.com
Category(s): Washington - 09/30/2019 Washington State Court of Appeals Disqualifies Entire Law Firm In Bad Faith Suit Representing Insured Against Former Insurer Client. Lawyers from a Seattle law firm represented USAA insurance company in many matters over many years. Once lawyers from this law firm ceased representing USAA, other lawyers from this same law firm were engaged by first party insured clients for a bad faith lawsuit against USAA within three months after ending their attorney-client relationship with USAA. Lawyers from this law firm involved in suit against USAA were not the same attorneys that had previously individually represented USAA. However, USAA asserted a conflict of interest of the entire law firm, demanded withdrawal, and then sought discretionary review from the Court of Appeals after the trial court found no conflict. The Court of Appeals agreed with USAA. The entire law firm was disqualified due to a conflict of interest even though the individual attorneys had not previously represented USAA. The Court of Appeals reviewed conflicts of interest and imputed conflicts of interest and found that this law firm’s prior representation of USAA in bad faith matters was “substantially related” to representing an insured against the insurer, and thus the entire law firm had a conflict preventing further representation. The Court of Appeals found these lawyers had “learned significant confidential information about USAA’s strategies for bad faith litigation”, including “confidential and proprietary business information” and other attorney-client confidences. The Court of Appeals determined there was a conflict of interest and disqualified the lawyers and this law firm representing a party against the firm’s prior client, even though the individual attorneys had not represented USAA previously. Plein v. USAA Cas. Ins. Co., 78190-1-I (Washington State Court of Appeals, Div. I)(July 29, 2019). Steven Beeghly, Esq. - BEEGHLY RICOY LAW GROUP, Serving the Pacific Northwest, (206) 618-6110 , sb@BeeghlyRicoy.com
Category(s): Washington - 09/25/2019 Washington State Legislative Priorities for 2020 Released The Washington State Office of the Insurance Commissioner published its five “priorities” for the upcoming 2020 Legislative Session. Those priorities include (1) a request to create a separate account and taxing authority for criminal investigation/prosecution, (2) revise the insurance holding company laws to fully adopt NAIC requirements to ensure accreditation, (3) modify the long term care guaranty fund to also adopt NAIC requirements, (4) create statutory framework for Washington State insured corporations as to captive insurance premium tax payment and guidance as to “who can form them”, and lastly (5) creating an lawful means for payment of “implementation credits” as a form of inducement to help offset costs borne by public agencies for state purchased healthcare, and a framework for performance guarantees. Steven Beeghly, Esq. - BEEGHLY RICOY LAW GROUP, Serving the Pacific Northwest, (206) 618-6110 , sb@BeeghlyRicoy.com