Alert Edition November 2023

Welcome to the November 2023 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 - 11/29/2023

Biden Signs Sweeping Executive Order Regulating Artificial Intelligence

President Joe Biden is directing the US government to take a sweeping approach to artificial intelligence regulation, his most significant action yet to rein in an emerging technology that has sparked both concern and acclaim. The lengthy executive order, released on October 30, sets new standards on security and privacy protections for AI, with far-reaching impacts on companies.

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

Category(s): Alabama - 11/29/2023

Alabama Department of Insurance: Notice of Regulation Hearing

From the Alabama Department of Insurance, Oct. 10, 2023: Pursuant to Ala. Code §§ 25-5-8(f) and revised 27-2-29, notice is hereby given that a hearing will be held before the Commissioner of Insurance at 2:00 pm Central Time on Thursday, December 7, 2023, in the offices of the Alabama Department of Insurance, 201 Monroe Street, Fifth Floor Conference Room, RSA Tower, Montgomery, Alabama. The purpose of this hearing will be to consider a filing by the National Council on Compensation Insurance [NCCI] on behalf of its subscribers of Alabama workers compensation voluntary loss costs, assigned risk rates, and rating values to be effective March 1, 2024. 
NCCI is recommending an average overall decrease of 11.8% to the current voluntary loss cost level and an overall average decrease of 4.7% to the current assigned risk rate level applicable to new and renewal business only. Testimony by NCCI and on behalf of the Department may be in narrative form. NCCI representatives may attend remotely by computer application. Any release of documents by the Department of Insurance will be limited in amount. The filing itself will not be disclosed in advance because the filing has not been approved by the Commissioner of Insurance and contains actuarial and trade secret data.  
Any written submission supporting or opposing the filing or otherwise to be taken into consideration by the Commissioner of Insurance must be submitted to the Department of Insurance so that it is received by 3:00 pm Central Time on December 5, 2023, by scan to the electronic mail address above or by mail to the Alabama Department of Insurance, Legal Division, Post Office Box 303351, Montgomery, Alabama 30130-3351. Persons desiring to orally testify at the hearing will be requested to sign in at the hearing and will be sworn prior to testimony.

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

Category(s): Alabama - 11/29/2023

Alabama Department of Insurance: Notice of Regulation Hearing

From the Alabama Department of Insurance, Oct. 10, 2023: Notice is hereby given that a hearing will be held at 10:00 a.m. Central Time, on Thursday, December 7, 2023, in the offices of the Alabama Department of Insurance, 201 Monroe Street, Fifth Floor Conference Room, RSA Tower, Montgomery, Alabama, as follows:

• Adoption of amendments to Insurance Regulation No. 88 (Chapter 482-1-088) to increase the value of a permissible gift or benefit to reflect inflation. This rule is narrowly tailored to reduce a regulatory burden and thus is within an exception to the moratorium on adopting or amending administrative rules as found in Executive Order No. 735. (4 pages.)   
• Adoption of amendment to Section 6 of Insurance Regulation No. 128 (Rule 482-1-128.06) to add a new paragraph addressing acceptance of Medicaid prior authorization and duty to respond to inquiries. This rule is narrowly tailored to comply with a federal law and thus is within an exception to the moratorium on adopting or amending administrative rules as found in Executive Order No. 735. (6 pages.)   
• Adoption of proposed new Section 10 of Insurance Regulation No. 161 [new Rule 482-1161-.10], which is added to adopt by reference the 2024 version of the Valuation Manual developed by the National Association of Insurance Commissioners (NAIC), to include the revisions made by the NAIC in 2023, as authorized in Section 27-36A-15, Code of Alabama 1975.  This rule is narrowly tailored to comply with a state law and thus is within an exception to the moratorium on adopting or amending administrative rules as found in Executive Order No. 735. (1 page.) 
 
The proposed effective date of all proposed regulation changes is January 1, 2024.

Any person wishing to submit testimony at said hearing is requested to submit said testimony in writing by 
3:00 p.m. Central Time on December 5, 2023, to the Alabama Department of Insurance, Attention: Legal Division, Post Office Box 303351, Montgomery, Alabama 36130-3351. Any written submission of testimony prior to the hearing will not preclude anyone from making an oral or written presentation at the hearing.  

A copy of the regulations may be obtained by written request to the Alabama Department of Insurance, Post Office Box 303351, Montgomery, Alabama 36130-3351. The request must include payment of $1.00 per page and a self-addressed, postage paid return envelope. A scanned copy may be obtained at no charge via electronic mail. You may send an e-mail request to Raymond.Taylor@insurance.alabama.gov.

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

Category(s): California - 11/29/2023

California Commissioner Wants FAIR Plan Changes, Modeling to Improve Insurance Market Conditions

California Insurance Commissioner Ricardo Lara announced a package of sweeping executive actions that include changes to the FAIR Plan, new rules for the review of climate catastrophe models, and public meetings exploring incorporating California-only reinsurance costs into rate filings – changes he says will improve insurance choices and protect Californians from increasing climate threats.

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

Category(s): Florida - 11/29/2023

FEMA Raises Federal Cost Share to 90% of Eligible Hurricane Ian Recovery in Florida

On October 25, the Federal Emergency Management Agency raised the federal cost share for funding assistance, potentially making millions more dollars available to Florida authorities for Hurricane Ian recovery efforts in Florida. President Biden authorized the agency to raise the federal government’s cost share, from 75% to 90% of total eligible costs, leaving Florida agencies to cover just 10%.

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

Category(s): Florida - 11/29/2023

Florida Citizens Insurance Policy Count Could Decrease

As it tries to move customers into the private market after three years of massive growth, the state’s Citizens Property Insurance Corp. could start to see its number of policies decrease. On September 27, Citizens President and CEO Tim Cerio announced that Citizens is now forecasting it will have about 1.3 million policies at the end of 2023, after earlier estimates of 1.5 million to 1.7 million policies.

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

Category(s): Florida - 11/29/2023

Florida Lawmakers to Give Insurance Changes Time

On October 10, a key senator said Tuesday he does not expect lawmakers to make major property insurance changes during the 2024 legislative session, as they continue to watch the results of an overhaul passed last year. Senate Banking and Insurance Chairman Jim Boyd, R-Bradenton, said after his committee received updates about the property-insurance market from state Insurance Commissioner Michael Yaworsky and Citizens Property Insurance President and CEO Tim Cerio.

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

Category(s): Florida - 11/29/2023

Florida Provides Updates on Hurricane Ian Recovery Efforts One Year After Landfall

On September 28, Governor Ron DeSantis provided updates on recovery on the one-year anniversary of Hurricane Ian making landfall in Southwest Florida and highlights the long-term recovery efforts over the last year. The state mobilized a massive effort to prepare resources before Hurricane Ian made landfall, which were deployed immediately following the storm. To date, over $1 billion in Public Assistance funding has been obligated to Florida communities in response to the devastating impacts of Hurricane Ian.

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

Category(s): Florida - 11/29/2023

Florida Toll Relief Program Provides More Than $300 Million in Customer Savings

On September 29, Governor Ron DeSantis and the Florida Department of Transportation announced that Floridians have saved more than $300 million through the toll relief program since January 2023. The toll relief program was introduced by Governor DeSantis and enacted by the Florida Legislature. The yearlong program automatically gives frequent users with at least 35 monthly toll transactions a 50 percent toll credit to their account.

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

Category(s): Florida - 11/29/2023

Governor Ron DeSantis Announces Implementation of Florida’s Prescription Drug Reform Act

On September 19, Governor Ron DeSantis and members of the Florida Cabinet approved rules to implement several provisions of the Prescription Drug Reform Act (SB 1550). The rules approved increase accountability among pharmaceutical middlemen known as pharmacy benefit managers (PBMs). As signed by the Governor earlier this year, SB 1550 institutes the most comprehensive reforms to Florida’s prescription drug market in state history.

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

Category(s): Georgia - 11/29/2023

“Other Insurance” Clauses Subject to Irreconcilable Contract Interpretation Rule

In Nat’l Cas. Co. v. Georgia School Bd. Ass’n Risk Mgmt Fund, 2023 WL 5977229 (11th Cir. Sept. 13, 2023), the Eleventh Circuit Court of Appeals held in a dispute between an insurer and a public risk management fund the insurance policies both of which included “other insurance” clauses providing that each insurance policy would serve as excess insurance over any  the insured’s other insurance policies that these clauses were irreconcilable as both policies could not stand as affording only excess coverage with neither policy providing primary coverage. The court affirmed the lower federal district court’s application of Georgia’s irreconcilable clauses contract rule following the answer to a certified question put to the Georgia Supreme Court which found that this rule also applied to a public, statutorily created insurance fund which is not a commercial insurer. As a result, both insurance policies were determined to provide primary coverage on a pro rata basis.

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

Category(s): Georgia - 11/29/2023

BULLETIN 23-EX-11: Annual Submission of Mental Health Parity Comparative Analyses Report

On November 6, 2023, Commissioner John F. King issued Bulletin 23-EX-11 to remind health insurers that offer coverage for mental health or substance use disorders to comply with Georgia’s Mental Health Parity Act. The Mental Health Parity Act requires health insurers to submit a comparative analyses report on mental health parity on an annual basis to the DOI. Insurers must submit mental health parity data to  GADataCall@riaconsulting.net by January 1st, 2024.
Companies that filed an Attestation for Annual Reporting MHPAEA Analyses for the prior reporting year and received approval from the OCI are not required to submit a CAR, unless coverage issued by the insurer in Georgia during the current reporting year is now subject to the Mental Health Parity Act.

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

Category(s): Georgia - 11/29/2023

Georgia Allows Sales of Medical Marijuana in Pharmacies

In October 2023, the Georgia Board of Pharmacy began accepting applications from independent licensed pharmacies for authorization to dispense permitted medical marijuana products. This new rule is expected to expand Georgia’s medical cannabis market and its need for commercial insurance products.

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

Category(s): Georgia - 11/29/2023

Reservation of Rights Letter with Right to Recover Reimbursement of Defense Costs Not Enforceable

In Continental Casualty Co. v. Winder Laboratories, 73 F.4th 934 (11th Circ. 2023), the Eleventh Circuit Court of Appeals held that the insurer’s reservation of rights letter to its insured, which included the insurer’s right to recover from the insured the defenses costs incurred by the insurer for defending claims not covered by the insured’s policy was not enforceable against the insured. In so holding, the court found that the insurer’s reservation of rights letter did not create a new contract between the insured and the insurer because of the lack of new consideration given the insurer’s pre-existing duty to defend the insured under the insurance policy and that the insurer’s gratuitous grant in the reservation of rights letter to the insured of the right to select defense counsel did not support new consideration.

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

Category(s): Georgia - 11/29/2023

Southeastern Regulators Association (SERA) Annual Conference 2023

On October 8-10, 2023, the Georgia Insurance Department hosted the annual Southeastern Regulators Association Conference in Savannah, Georgia. The conference featured a lively panel consisting of Georgia Insurance Commissioner John King, Mississippi Insurance Commissioner Mike Chaney, Former South Carolina Insurance Commissioner Ray Farmer and Former Florida Insurance Commissioner David Altmaier, which included a roasting of outgoing Louisiana Insurance Commissioner Jim Donelon.

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

Category(s): Georgia - 11/29/2023

Updates on Former Georgia Insurance Commissioners’ Criminal Cases

On October 16, 2023, the Eleventh Circuit Court of Appeals issued its decision in the appeal by Jim Beck, who was elected as Georgia’s Insurance Commissioner in 2018, of his original sentence term of 87 months for his 2021 criminal convictions on eight counts of wire fraud, 13 counts of mail fraud, 12 counts of money laundering and four counts of aiding the filing of false tax returns in connection with his role as executive director of the Georgia Underwriting Association (Georgia’s FAIR Plan). Mr. Beck’s sentence has been reduced by nine months based on new sentencing guidelines that the U.S. Sentencing Commission recommended be applied retroactively in part because he had no prior criminal history. 
On September 25, 2023, a Georgia federal judge set April 15, 2024, as the start date for the trial of Georgia’s former insurance commissioner, John Oxendine, on criminal health care fraud and money laundering charges alleging that he participated in a $2.5 million kickbacks scheme involving unnecessary medical testing.

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

Category(s): NAIC - 11/29/2023

NAIC Initiates 2024 Budget Approval Process

The National Association of Insurance Commissioners (NAIC) has released its proposed 2024 budget following months of development by NAIC officers, the NAIC Internal Administration (EX1) Subcommittee, and the NAIC Executive (EX) Committee, as well as input from NAIC staff. The NAIC's proposed 2024 budget includes total revenues (including investment income) of $157.3 million and total expenses of $158.4 million, which represents a 6.5% increase in revenues and a 5.2% increase in expenses from the 2023 budget.

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

Category(s): NAIC - 11/29/2023

NAIC Task Force: No Life Illustrations Rework Planned in 2024

On October 5, state insurance regulators advanced 2024 charges today and revealed no plans to confront a full-scale rewrite of the life insurance illustrations model. The Indexed Universal Life Illustration Subgroup is tasked with providing "recommendations for the consideration of changes to the Life Insurance Illustrations Model Regulation (#582) to the [Life Actuarial] Task Force, as needed." That wording is exactly the same as the 2023 charge for illustrations. The list of charges passed with no comment.

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

Category(s): New York - 11/29/2023

Governor Hochul Announces Updates to New York’s Nation-Leading Cybersecurity Regulations as Part of Sweeping Effort to Protect Businesses and Consumers from Cyber Threats

From the New York State Department of Financial Services, November 1, 2023: Amendments to New York’s First-In-The-Nation Cybersecurity Regulations Will Mandate New Controls, Require More Regular Risk Assessments, Update Notification Requirements to Enhance Protections for New York

Builds on Governor’s Commitment to Bolstering Cybersecurity Statewide Following Launch of New York’s First-Ever Cybersecurity Strategy.

See the  Amended Cybersecurity Regulations 

Governor Kathy Hochul today announced that the New York State Department of Financial Services has amended its nation-leading cybersecurity regulations to enhance cyber governance, mitigate risks, and protect New York businesses and consumers from cyber threats. The amended regulations builds on the sweeping impact of the original cybersecurity regulations, which established the innovative framework that is now modeled by both federal and state financial regulators to protect against cyber threats, and the Governor’s comprehensive, statewide effort to improve safeguards for businesses and consumers. A copy of the final adopted regulations is available on the DFS website. 

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

Category(s): New York - 11/29/2023

New York Department of Financial Services Superintendent Adrienne A. Harris Adopts Regulation to License Pharmacy Benefit Managers

Pharmacy Benefit Managers Required to Complete Licensing by January 1st.

Superintendent of Financial Services Adrienne A. Harris announced today that the New York State Department of Financial Services has adopted a new regulation outlining the process for Pharmacy Benefit Managers (PBMs) to obtain a license to operate in New York. 
In 2022, New York enacted  the most comprehensive regulatory regime for PBMs in the country. The New York Legislature charged DFS with licensing PBMs and addressing the widely reported problematic practices in the industry in order to help lower drug and health insurance costs and protect New Yorkers accessing those drugs. 
The regulation provides specific instructions to PBMs on how to obtain a license to operate in the state by January 1st, 2024.  For more information, a copy of the regulation can be found on the DFS website.  
The public is reminded that DFS’s Pharmacy Benefits Bureau is always available to accept and investigate complaints of PBM misconduct via email at PBM@dfs.ny.gov. Additionally, DFS is empowered to investigate significant spikes in the price of prescription drugs. Anyone experiencing a spike in the cost of drugs is encouraged to reach out at drugpricespikes@dfs.ny.gov.

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

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