Alert Edition May 2022

Welcome to the May 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 - 05/25/2022

Insurance Regulators Endorse Climate Risk Disclosure Standards

The NAIC Climate and Resiliency (EX) Task Force adopted a Task Force of Climate-Related Financial Disclosures (TCFD) aligned survey. The TCFD will help regulators and consumers better understand the effects of climate-related risks on the U.S. insurance market.

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

Category(s): National - 05/25/2022

Rhode Island Insurance Superintendent Appointed to Financial Stability Oversight Council

The NAIC Executive (EX) Committee appointed Superintendent Beth Dwyer to serve as the NAIC members’ representative on the Financial Stability Oversight Council (FSOC). Superintendent Dwyer will succeed recently retired Superintendent Eric Cioppa of the Maine Bureau of Insurance.

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

Category(s): Alabama - 05/25/2022

IBHS presents Commissioner Jim Ridling with Lifetime Achievement Award

The Insurance Institute for Business & Home Safety (IBHS) has named Alabama Insurance Commissioner Jim Ridling the recipient of its inaugural Lifetime Achievement in Resilience Award. Click here  to view full article.

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

Category(s): Florida - 05/25/2022

Avatar Deemed Insolvent

Avatar Property & Casualty Insurance has been deemed insolvent as of April 13, 2022. Avatar had approximately 37,000 policyholders in Florida. This brings the number of Florida property insurance firms in liquidation to seven since 2014 according to Chief Financial Officer Jimmy Patronis.

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

Category(s): Florida - 05/25/2022

Citizens Requests Rate Increase

As policies are expected to hit 1 million this year, Florida’s “insurer of last resort”, Citizens Property Insurance Corporation requests a 11% increase to its rates. This is the highest increase allowed by Florida statutes. The request comes as the property insurance marketplace sinks further into turmoil.

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

Category(s): Florida - 05/25/2022

DFS Three-Member Panel Approves Maximum Reimbursement Allowances

The Department of Financial Services, Division of Workers’ Compensation held a meeting of its Three-Member Panel, Insurance Commissioner David Altmaier, Tammy Perdue, and David Robbins. The Panel approved methodologies for maximum reimbursement allowances for hospital inpatient and outpatient services as well as ambulatory surgical centers. The Division of Workers’ Compensation will now enter into administrative rulemaking to adopt the methodologies into the healthcare manual.

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

Category(s): Florida - 05/25/2022

Florida House Bill 7055 on its way to the Governor

House Bill 7055 on cybersecurity passed the House and Senate unanimously during the 2022 Regular Legislative session. The legislation would expand the state’s cybersecurity leadership, establish cybersecurity readiness and reporting standard, and address ransomware attacks.

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

Category(s): Florida - 05/25/2022

Insurers Can Offer Reduced Roof Replacement Coverage

Florida’s Insurance Commissioner David Altmaier announced that Florida insurers will be allowed to offer coverage that will not cover the full cost of a roof replacement. The reduced coverage will be voluntary to homeowners likely in exchange for lower insurance premiums.

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

Category(s): Florida - 05/25/2022

Property Special Session

Governor Ron DeSantis announced a Special Session of the Florida Legislature to address the rise of property insurance rates. Governor DeSantis says the goal is to “bring some sanity and stabilize and have a functioning market”. The Special Session will begin on May 23, 2022 and end on May 27, 2022.

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

Category(s): Florida - 05/25/2022

Without Reform, More Turbulence Ahead for Florida’s Property Insurance Market

The 2022 legislative session ended in mid-March without a consensus on reforms that could have curbed the growth of unsubstantiated claims and frivolous lawsuits, lowered some costs for insurers and slowed the growth of Citizens Property Insurance, the state-run insurer of last resort. That has left many Florida insurance companies struggling financially and the likelihood of more turbulence for the market ahead for many homeowners and businesses. Read the article here. 

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

Category(s): Georgia - 05/25/2022

Bulletin 22-EX-2

On March 16, 2022, Commissioner King issued a Bulletin 22-EX-2 stating that insurance companies who do business in Georgia should begin the process of eliminating any financial support, via investments or business operations, for the Russian regime. Insurance companies that transact business in Georgia should review their financial holdings and operations to begin the process of identifying and divesting from any investments and/or operations in Russian assets or operations that may provide financial support for Russia.

Julie M. Pomerantz, Esq. - MITCHELL, WILLIAMS, SELIG, GATES & WOODYARD, P.L.L.C, (512) 480-5100 , jpomerantz@mwlaw.com

Category(s): Georgia - 05/25/2022

Directive 22-EX-3

On March 31, 2022, Commissioner John F. King issued Directive 22-EX-3 to advise that unlicensed persons or entities selling, soliciting, or negotiating insurance in Georgia prior to obtaining an insurance license in this state is not permitted under O.C.G.A §33-23-4(a)(1) (the “Code”), and therefore subject to a fine.  It appears that the Directive is intended to focus on sales of policies for a Risk Retention Group without a license.
Beginning July 1, 2022, the Office of Commissioner of Insurance and Safety Fire will implement the below tiered fine schedule for any person or entity selling, soliciting, or negotiating insurance in Georgia without a license or charter (for Risk Retention Groups) in violation of the Code.
Number of Policies   Fine Amount
1st Policy	                           $100
2nd Policy	                           $500
3rd Policy	                           $1,000
4th Policy	                           $1,500
5th Policy	                           $2,000
6th Policy and Up	   $5,000 each

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

Category(s): Georgia - 05/25/2022

Georgia Directive 22-EX-3

On March 31, 2022, Commissioner King issued Directive 22-EX-3 regarding the intent to assess a fine against certain unlicensed persons and entities are selling, soliciting, or negotiating insurance in Georgia prior to gaining an insurance license in Georgia. Beginning July 1, 2022, the Department will implement a per policy fine for policies solicited, produced, negotiated by a person without a license that ranges from $100 for the first policy to $5,000 for the 6th policy and even more.

Julie M. Pomerantz, Esq. - MITCHELL, WILLIAMS, SELIG, GATES & WOODYARD, P.L.L.C, (512) 480-5100 , jpomerantz@mwlaw.com

Category(s): Georgia - 05/25/2022

Georgia Mental Health Parity Act (HB 1013)

Georgia passed the Mental Health Parity Act (HB 1013) which is intended to assure that the state will enforce parity in insurance coverage for behavioral health care for the first time. It will require Medicaid care management organizations and private insurance plans that are regulated by the state to follow the federal parity law; the Georgia Department of Community Health and Department of Insurance to regularly monitor parity compliance and take action when violations occur; making it easier for families to file parity complaints with the state; making parity compliance data transparent and publicly available; and ensuring medical necessity determinations are based on generally accepted standards of care.  Georgia passed other mental health legislation, including: HB 752 which creates/allows for Psychiatric Advanced Directives; SB 341 which ensures that prior authorization from an insurer to cover a chronic condition would last a year; SB 566 which adds mental health/substance use to existing rules preventing surprise billing.

Julie M. Pomerantz, Esq. - MITCHELL, WILLIAMS, SELIG, GATES & WOODYARD, P.L.L.C, (512) 480-5100 , jpomerantz@mwlaw.com

Category(s): Georgia - 05/25/2022

Key New Insurance Laws from Georgia’s 2022 Legislative Session – Georgia Governor, Brian Kemp, has until May 14, 2022 to Approve or Veto New Legislation

HB 733, will amend O.C.G.A. § 33-7-7 to revise the definition of property insurance to exclude GAP waivers for total physical damage or unrecovered theft if a motor vehicle, which mat also include providing a credit to a borrower towards the purchase of a replacement motor vehicle.
HB 969, will add to the Insurance Holding Company Act provisions based on the NAIC model act for group capital calculation instructions and liquidity stress test framework. 
HB 1013, a 75-page piece of legislation, adds Georgia’s comprehensive mental health parity law, which amends various sections of the state’s insurance and healthcare codes and the Governor has already signed.
HB 1059, will amend O.C.G.A. § 33-6-4, the Insurance Unfair Trade Practices Act, to allow insurers and insurance producers to provide insurance customers with specified value-added services which will not constitute an unlawful insurance inducement based on the NAIC’s recent amendments to its model unfair trade practices act.  
HB 1308, will add O.C.G.A. § 33-24-14.1 and allow a plan sponsor of a health benefit plan, on behalf of an individual enrolled in a plan, to consent to receiving all required communications related to a plan by electronic means and electronic delivery of health insurance identification cards so long as the plan sponsor first confirms that an enrollee routinely uses electronic communications during the normal course of employment and provided an enrollee the right to opt-out of receiving electronic deliveries. Whether this opt-out framework accords with Georgia’s Uniform Electronic Transactions Act remains to be seen.

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

Category(s): Georgia - 05/25/2022

Northside Hospital v. Anthem (Fulton County Superior Court)

Northside Hospital, one of the largest hospital systems in the Atlanta metropolitan area, has been embroiled in a lawsuit since late last year with Anthem’s Blue Cross Blue Shield Healthcare Plan of Georgia over its attempt to terminate, effective as of January 1, 2022, its network provider agreements with the hospital system. Northside Hospital obtained a temporary injunction against the terminations in late December 2021. A court order issued on April 13, 2022 extended that injunction indefinitely and sent the dispute for resolution to the Georgia Insurance Commissioner under the doctrine of primary jurisdiction and deference to the view of the state agency, even though the doctrine of exhaustion of administrative remedies is not in play in this case. The court has instructed the Georgia Insurance Commissioner to make a declaratory ruling on the issue of whether O.C.G.A. § 33-20C-2(g)(2), which, during a public health emergency and the 150 day period following its termination, prohibits an insurer from terminating its health care provider and requires an insurer to reimburse providers in the network at its most recent contracted in-network rates, applies to this controversy. In a consent order issued on March 29, 2022, the Georgia Insurance Commissioner fined Blue Cross Blue Shield Healthcare Plan of Georgia $5 million, the largest fine ever levied by a Georgia Insurance Commissioner, based on certain violations of the Georgia Insurance Code following a market conduct examination of its health care provider database system and in-network claims having being processed as out-of-network claims and other claims processing errors during 2015-2018.

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

Category(s): Georgia - 05/25/2022

Second Republican Candidate Enters Georgia Insurance Commissioner’s Election Race

Patrick Witt, withdrew from the race for Georgia’s 10th Congressional District seat, a 19-county, northeast Georgia district, in March to enter the race for election of the next Georgia Insurance Commissioner on November 8, 2022. Witt, who previously worked in the Trump Administration, has received the down-ballot endorsement of former President Trump, who grudges Georgia’s Republican Governor Brian Kemp for his handling of the voting controversy in the 2020 Presidential election. In 2019, Governor Kemp appointed current Georgia Insurance Commissioner John King in the wake of the arrest of the state’s last elected insurance commissioner, Jim Beck. Commissioner King entered the race several months ago. Primary elections for Georgia’ statewide offices will be held on May 24, 2022.

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

Category(s): Louisiana - 05/25/2022

Anti-Public Adjuster Clauses in Policy Provisions or Endorsements

The Louisiana Department of Insurance (“LDOI”) promulgated Directive 219, on January 24, 2022, directing insurers, defined under the Louisiana Insurance Code (“Code”) as every person engaged in the business of making contracts of insurance, to review all policy forms and endorsements to ensure compliance with La. R.S. 22:1704(E)(2). This provision, according to the LDOI, grants insureds the right to hire a public adjuster to help meet obligations under their insurance policies. The LDOI cites reports that insurers are seeking to prohibit the use of public adjusters by insureds through policy provisions or endorsements. These anti-public adjuster clauses reportedly attempt to prohibit insureds from hiring, engaging, retaining, contracting with, or otherwise utilizing the services of a public adjuster. The LDOI interprets such a prohibition to directly contravene La. R.S. 22:1704(E)(2).

Van R. Mayhall, Jr., Esq. - BREAZEALE, SACHSE & WILSON, L.L.P., (225) 381-8009 , van.mayhall.jr@bswllp.com
Kristin E. Oglesby, Esq. - BREAZEALE, SACHSE & WILSON, L.L.P., (225) 381-3166 , Kristin.oglesby@bswllp.com

Category(s): Maryland - 05/25/2022

Maryland Extends Health Insurance Provider Assessment Fee

Governor Hogan signed into law House Bill 413 at the end of the 2022 legislative session.  The legislation extends the health insurance provider fee assessment through the calendar year 2028.  This program was created with bi-partisan support in 2018 to help stabilize the individual health insurance market in Maryland.  The assessment was created to redirect the amount of the health insurance provider fee that would have been assessed on carriers at the federal level under PPACA.

Brett S. Lininger, Esq. - THE CAPITAL LAW FIRM, P.A., (443) 321-9988 , brett@kresshammen.com

Category(s): New York - 05/27/2022

DFS Superintendent Harris Announces Nationwide Life Insurance Company to Pay $5.6 Million for Deferred to Immediate Annuity Replacement Violations

On May 20, 2022, Superintendent of Financial Services Adrienne A. Harris announced that the Department of Financial Services (“DFS”) had entered into a Consent Order with Nationwide Life Insurance Company (“Nationwide”) for violations of New York Insurance regulations with respect to deferred to immediate annuity replacement transactions. Nationwide will pay approximately $3.4 million in restitution to New York State consumers as a result of the settlement in addition to $2.24 million in penalties. Impacted consumers will also receive higher monthly payouts for the remainder of their contract terms. 
DFS's investigation found that Nationwide failed to properly disclose to consumers income comparisons and suitability information, causing consumers to exchange more financially favorable deferred annuities with immediate annuities. Hundreds of New York consumers – primarily elderly individuals - received incomplete information regarding the replacement annuities, resulting in less income for identical or substantially similar payout options.

Frederick J. Pomerantz, Esq. - INSURANCE LEGAL & REGULATORY CONSULTING, PLLC, (516) 297-3101 , PomerantzF35@gmail.com

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