Alert Edition September 2022

Welcome to the September 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 - 09/12/2022

NCOIL Adopts Resolution Identifying Certain Enhanced Cash Surrender Value Endorsements As Violating The Standard Nonforfeiture Law

At NCOIL’s Summer National Meeting in Jersey City, NJ, members unanimously adopted a Resolution Identifying Certain Enhanced Cash Surrender Value Endorsements As Violating The Standard Nonforfeiture Law. The Resolution is in response to some life insurers disregarding the Standard Nonforfeiture Law’s “smoothness requirement”. The “smoothness requirement” prohibits sharp increases in cash values.

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

Category(s): Alabama - 09/12/2022

Alabama Department of Insurance Bulletin No. 2022-04

On July 14, 2022, the Alabama Department of Insurance issued Bulletin No. 2022-04 which addresses advanced premium tax credits-filing guidance.  
A copy of the bulletin can be found here: Advanced premium tax credits - filing guidance 

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

Category(s): Florida - 09/12/2022

Citizens Surpasses 1 Million Policies

Florida’s insurer of last resort, Citizens Property Insurance Corporation has surpassed 1 million policies for the first time since 2013. The state-backed government entity was established by the Florida Legislature to provide insurance coverage to property owners who cannot find private insurance.

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

Category(s): Florida - 09/12/2022

Florida Establishes Temporary Reinsurance Arrangement for Insurers Facing Potential Financial Stability Rating Downgrades

The Florida Office of Insurance Regulation (OIR) announced a plan to establish a temporary reinsurance arrangement through Citizens Property Insurance Corporation (Citizens) in the event of financial rating downgrades from Demotech, Inc. This solution would allow insurers to meet an exception offered by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) and ensures Floridians can maintain coverage during hurricane season.

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

Category(s): Florida - 09/12/2022

Governor DeSantis Appoints Judge Renatha Francis to Supreme Court

On August 5th, Florida Governor Ron DeSantis appointed current 15th Circuit Court Judge Renatha Francis as the newest addition to the Florida Supreme Court. The appointment comes as Florida Supreme Court Justice Alan Lawson announced his retirement in late April. This marks the sixth Florida Supreme Court appointment for Governor DeSantis.

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

Category(s): Florida - 09/12/2022

Judge Tosses Challenge to Part of Insurance Law

Leon County circuit judge J. Lee Marsh issued an order on August 29 dismissing a constitutional challenge filed in May by the Restoration Association of Florida and Air Quality Assessors, LLC. The lawsuit named Melanie Griffin, Secretary of the state Department of Business and Professional Regulation and Donald Shaw, Executive Director of the Construction Industry Licensing Board as defendants because they have disciplinary and regulatory authority over contractors. 
Judge Marsh dismissed the case because Griffin and Shaw were not "proper defendants" because they are not responsible for enforcing the law.

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

Category(s): Florida - 09/12/2022

OIR Proposed Rule: Property Claims Litigation Data Call

As a result of the passage of SB 76 during the 2021 Legislative Session, codified as section 624.424(11), F. S., each authorized insurer issuing personal lines or commercial lines residential property insurance policies shall report to the Office of Insurance Regulation, for specified lines of insurance, an annual Florida Property Claims Litigation data call on a form prescribed by the Financial Services Commission detailing closed claim experience. Rule 69O-171.011, F.A.C., is created to implement section 627.7152, F.S. Form OIR-B1-2221 is incorporated by reference and contains information insurers must report to the Office pursuant to the statute.

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

Category(s): Florida - 09/12/2022

U.S. District Court for the Northern District of Florida Dismisses Constitutional Challenge Relating to Roof Solicitations

On Friday June 17, Chief Judge Mark Walker of the United States District Court for the Northern District of Florida dismissed a 2021 constitutional challenge of a limitation on roof solicitations passed by the Florida legislature in an attempt to curb frivolous insurance claims related to roofs. The dismissal comes after the legislature changed the limitations on roofing solicitations during the 2022 special legislative session on property insurance. Filings by both the plaintiff, Gale Force Roofing & Restoration LLC, and the State indicated the changes adopted during the 2022 special session resolved the complaint.

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

Category(s): Georgia - 09/22/2022

DIRECTIVE 22-EX-4: Unauthorized Surplus Lines Fees

On August 19, 2022, Commissioner John F. King issued Directive 22-EX-4 to remind surplus line insurers and brokers that it is unlawful to charge customers added fees in conjunction with the sale of a surplus line insurance policy. With specific exceptions, a surplus line insurer or broker may not collect any sum in excess of the premiums and charges for insurance specified by the insurer in the insurance policy. 
According to the Directive, collecting any sum in excess of fees specified in the insurance policy would be considered an unfair method of competition and unfair and deceptive act or practice in the business of insurance. The surplus lines industry is discussing the Directive with the Department since the Directive appears to contradict previous Department policies and long-standing practices within the industry.

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

Category(s): Georgia - 09/22/2022

DIRECTIVE 22-EX-5: Prohibitions on the Practice of "White Bagging"

On August 30, 2022, Commissioner John F. King issued Directive 22-EX-5 to inform all entities offering health plans in Georgia that the practice of white bagging is prohibited at any hospital that is designated as a Critical Access Hospital or any hospital not designated as a Critical Access Hospital that is located 30 miles or more from another hospital.
“White bagging” refers to the distribution of patient-specific medication from a pharmacy, often a specialty pharmacy, to a physician’s office, hospital, or clinic for administration and is often used in oncology practices to obtain costly injectable or infusible medications. 
The Department is still studying the effects of white bagging on Georgia consumers and will issue further appropriate regulations when that study is complete. However, the Department concluded that the practice of white bagging may create patient protection issues, especially in the context of oncology treatment. Moreover, in rural parts of the state, the practice of white bagging puts increased stress on patients and hospitals who may not be able to obtain necessary drugs from local pharmacies. Health plans may continue to notify a patient that they may receive savings from utilizing the practice of white bagging.

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

Category(s): Georgia - 09/12/2022

Georgia Governor Wins Case against CMS Upholding Medicaid Expansion Work/Education Requirements for Eligibility

On August 19, 2022, the federal Southern District Court Georgia handed a victory to the State of Georgia in its lawsuit against the Centers for Medicare and Medicaid Services (CMS) in its attempt to revoke “Georgia Pathways”, the state’s demonstration project for Medicaid coverage expansion for low-income earning Georgians, which the Trump Administration approved in October 2020 and CMS has subsequently tried it revoke, claiming that the applicant eligibility requirements would not further the purposes of Medicaid. Under the Georgia Pathways, to become eligible for expanded Medicaid coverage, an applicant would be required to complete eighty hours of qualifying activities like work or education each month. In this case, the court held that CMS’s revocation was arbitrary and capricious and granted the state’s motion for summary judgement.

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

Category(s): Georgia - 09/12/2022

Georgia Insurance Commissioner’s New Directive on Surplus Lines Broker Fees

On August 19, 2022, the Georgia Insurance Commissioner issued Directive 22-EX-4. This Directive states that “[t]he purpose of this Directive is to remind surplus line insurers and brokers that it is unlawful to charge customers added fees in conjunction with the sale of a surplus line insurance policy. With specific exceptions, a surplus line insurer or broker may not collect any sum in excess of the premiums and charges for insurance specified by the insurer in the insurance policy.”  The Directive further states that a surplus lines broker’s collection of an  amount in excess of fees specified in the insurance policy is an unfair method of competition and unfair and deceptive act or practice.

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

Category(s): Georgia - 09/12/2022

Georgia Insurance Department Declines Pursuit of Proposed Annuity Suitability Regulation Amendment

On August 5, 2022, the Georgia Insurance Department held a hearing on several proposed new regulations and proposed amendments to certain existing regulations, including a proposed amendment to Georgia Insurance Regulation 120-2-94, “Suitability in Annuity Transactions”. The proposed amendment would have modified the annuity suitability regulation through brevity by simply inserting the phrase “shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the producer’s or the insurer’s financial interest ahead of the consumer’s interest”, rather than revising the entire regulation to conform it to the NAIC’s Suitability in Annuity Transactions Model Regulation, adopted by the NAIC in early 2020. Based on life insurance and annuity industry testimony, the Georgia Insurance Department has determined not to proceed with its proposed amendment and will likely re-propose an entirely new regulation based on the NAIC’s model.

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

Category(s): Louisiana - 09/12/2022

Weston and UPC Policyholders Have 60 Additional Days to Place Policies with Louisiana Citizens

Louisiana Insurance Commissioner Jim Donelon announced that Louisiana Citizens will provide an additional 60 days after cancellation for insurance agents to place Weston Property & Casualty Insurance Company policies with Citizens while maintaining coverage for policyholders. Weston Property & Casualty Insurance Company is a Florida insurer with over 10,000 policies in Louisiana. The Company was placed into liquidation by a Florida court on August 8, 2022. Louisiana policies will be cancelled on September 7, 2022. Another Florida-based insurer, United Property & Casualty Insurance Company (UPC), a Florida-based insurer was recently downgraded by Demotech. UPC policyholders with mortgage-paid policies may receive notice that they will need to find a new insurer depending on that mortgage company's guidelines.

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

Category(s): Maryland - 09/12/2022

Maryland Insurance Administration Bulletin 22-09

The Maryland Insurance Administration (MIA) recently published Bulletin 22-09 pertaining to Senate Bill 572/ House Bill 563, entitled Insurance-Surplus Lines Brokers – Policy Fees.  This bill amends s.27-216 of the Insurance Article by: (1) clarifying that a qualified surplus lines broker to charge a reasonable policy fee on a policy issued by a surplus line insurer to an exempt commercial policyholder; (2) allowing a qualified surplus lines broker to charge a reasonable policy fee not exceeding $200 on each personal lines policy issued by a surplus lines insurer; and (3) allowing a qualified surplus lines broker to charge a reasonable policy fee not exceeding $500 or 7% of the policy premium, whichever is greater, on each non-exempt commercial lines policy issued by a surplus lines insurer.  The bulletin makes clear that pursuant to current law, “in all instances, the policy fee charged must be reasonably related to the cost of underwriting, issuing, processing, and servicing the policy by the surplus lines broker for the surplus lines insurer.”  To verify fees charged are compliant, the MIA is adding a new column to the Surplus Lines Quarterly Report for brokers to disclose the policy fee amount associated with each policy beginning with the report for the 3rd quarter of 2022, which must be submitted by November 15, 2022.

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

Category(s): NAIC - 09/12/2022

NAIC Adopts Pet Insurance Model Law

At the NAIC's Summer 2022 National Meeting in Portland, Oregon, members voted to adopt the Pet Insurance Model Act.  Elements of the model law address pet wellness programs, preexisting conditions, consumer protections, and training for insurance producers.

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

Category(s): NAIC - 09/12/2022

NAIC Completes First Full Year of Work by Climate and Resiliency (EX) Task Force

The NAIC Climate and Resiliency (EX) Task Force completed its first full year of work in August 2022. Several additional states will not require insurers domiciled in their states to submit the climate disclosure survey.

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

Category(s): New York - 09/12/2022

$30 Million Penalty Assessed Against Robinhood Crypto, LLC For Violations

On August 2, 2022, Superintendent of Financial Services Adrienne A. Harris announced that Robinhood Crypto, LLC (RHC) will pay a $30 million penalty to New York State for significant failures in the areas of bank secrecy act/anti-money laundering (BSA/AML) obligations and cybersecurity that resulted in violations of the Department’s Virtual Currency Regulation (23 NYCRR Part 200), Money Transmitter Regulation (3 NYCRR Part 417), Transaction Monitoring Regulation (23 NYCRR Part 504), and Cybersecurity Regulation (23 NYCRR Part 500). In addition to the penalty, RHC will also be required, as part of the settlement, to retain an independent consultant that will perform a comprehensive evaluation of RHC’s compliance with the Department’s Regulations and RHC’s remediation efforts with respect to the identified deficiencies and violations. Click here  read the press release issued by the New York State Department of Financial Services.

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

Category(s): New York - 09/12/2022

Highlights of New York State Legislature’s Recently Concluded Legislative Session

As reported on June 6, 2022 in City and State New York, New York State’s legislative year came to a close in a timely fashion with lawmakers left riding the highs of new gun legislation, strengthening abortion access and codifying voting rights in state law. But despite major victories in those areas, which will no doubt play well on the campaign trail, a slew of activists were left disappointed as leaders left their priorities on the table. 
Both gun laws and abortion rights became priorities for lawmakers at the end of the session, with many negotiations revolving around what a final deal on those two topics would look like. In the end, lawmakers approved a series of 10 gun bills and six abortion bills, announced to fanfare. 
Those two issues were hardly the only ones that lawmakers addressed during the session. By the time they went home, state legislators had passed over 1,000 pieces of legislation. The state Senate managed to revive one major environmental priority – a moratorium on cryptocurrency mining – from the dead, sending it to Governor Kathy Hochul to decide whether or not to sign it. 
Advocates for the community demanded more action after the budget failed to replenish the Excluded Workers Fund or expand publicly subsidized health care to all regardless of immigration status. Immigrant rights, criminal justice reform and housing, among the biggest issues in Albany, ultimately fell to the wayside as pressing, recent national issues took the forefront. 
Click here  for more information.

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

Category(s): New York - 09/12/2022

Waiver of Fees for Holocaust Reparation Payments

On August 10, 2022, New York State Governor Kathy Hochul signed a legislative package to honor and support Holocaust survivors in educational, cultural, and financial institutions. The legislative package will help ensure schools are providing high-quality Holocaust education, require museums to acknowledge art stolen by the Nazi regime, and require the New York State Department of Financial Services to publish a list of financial institutions that voluntarily waive fees for Holocaust reparation payments. 

•	Legislation (A.472C /S.121B) Will Help Ensure that New York State Schools are Properly Educating Students on the Holocaust 
•	Legislation (A.3719A/S.117A) Requires Museums To Acknowledge Art Stolen from the Jewish Community during the Nazi Era in Europe 
•	Legislation (A.9338/S.8318) Requires the Department of Financial Services To Publish a List of Banks that Voluntarily Waive Fees for Holocaust Reparation Payments   

Click here  to read the press release issued by the New York State Department of Financial Services.

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

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