Property & Casualty News May 2012

First Consulting is pleased to provide this brief review of selected items that may be of current interest to clients and friends. Please feel free to copy it for distribution to your staff. Contact us for more details about any item. We welcome your comments and suggestions on this letter. To contact us call 800-927-2730 or email us at Inquiry@firstconsulting.com


ASSESSMENTS

Florida amended its Code pertaining to Citizens Property Insurance Corporation reducing to 2% from 6% the amount of the projected deficit in the coastal account for the prior calendar year, which is to be recovered through regular assessments, and requiring that remaining projected deficits in personal and commercial lines accounts be recovered through emergency assessments described in the bill. House Bill No. 1127


AUTOMOBILE INSURANCE

Colorado amended its Code concerning certain adverse actions of auto insurers. Included in the changes is a provision that the insurer may include the notice of the intended action in the renewal documents, nonrenewal, or cancellation notice provided to the policyholder. House Bill 12-1289

Idaho amended its law concerning proof of liability insurance to be carried in a motor vehicle to provide that such proof may be produced in either paper or electronic format. Acceptable electronic formats include display of electronic images on a cellular phone or any other type of portable electronic device. S.B. No. 1319

Kentucky amended its Code concerning declination, cancellation and nonrenewal of personal automobile liability insurance and use of credit information. 304.20-040

Kentucky amended its Code concerning motor vehicle personal injury reparation benefits. Effective 7-12-2012, an insured may direct the payment of benefits for medical expenses already paid arising from a covered loss to reimburse a health benefit plan, Medicaid, Medicare, or a Medicare supplement provider. 304.39-241

Kentucky enacted legislation to create new provisions in its Code concerning an insurer’s obligation to advise claimants with a motor vehicle damage claim that they can select a repair facility. Specific language and format for such notice is provided. HB 207 - Uncodified HB 207 s 5 (2012); Uncodified HB 207 s 6 (2012)

Texas issued a Commissioner Order concerning rate changes for private passenger and commercial automobile insurance provided through the Texas Automobile Insurance Plan Association. Commissioner Order No. 12-0395

Wisconsin amended its Code concerning motor vehicle insurance policies. Changes include the addition of a provision specifying that a commercial liability policy is not subject to requirements that motor vehicle insurance policies must include uninsured motorist coverage and medical payments coverage if the coverage provided under the policy for the insured's liability arising out of the maintenance or use of a motor vehicle is limited to nonowned motor vehicles; however, if such a policy does provide uninsured or underinsured motorist coverage or medical payments coverage, that coverage must have at least the limits that are required under the statutes for those coverages. SB 378


AUTOMOBILE INSURANCE - USAGE-BASED INSURANCE FILINGS

Washington amended its Code regarding private passenger automobile coverage to provide that for "usage-based insurance" filings, the usage-based component of the rate is confidential and must be withheld from public inspection effective 6-7-2012. 48.19.040


BINDERS

Idaho amended its Code to delete a provision that allowed binders to be extended or renewed. 41-1823


CERTIFICATES OF INSURANCE

Idaho added a section to its Code concerning certificates of insurance. Included in the new law is a requirement that such forms be filed with the director, except that the current edition of standard certificate of insurance forms promulgated and filed by ACORD or ISO are not required to be refiled by individual insurers. The law also provides language to be included in certificate of insurance forms and describes the proper use of such forms. 41-1850

Washington adopted a new regulation concerning the appropriate use of certificates of insurance. WAC 284-30-355


COMMERCIAL INSURANCE - LARGE COMMERCIAL INSUREDS

New York amended its Regulations pertaining to special risks insurance to make permanent emergency insurance regulations that became effective February 10, 2012. Included in the changes are provisions revising the definition for “special risk” to include a “Class 3” special risk and setting forth procedures for use of "Class 3". 11 NYCRR 16.0 +


CREDIT SCORING

Idaho issued a bulletin to notify insurers using credit history for rating purposes that the Department is modifying its approach to determining what constitutes compliance. The bulletin describes the Department’s current approach and the modified approach for reviewing the impact of credit history. Bulletin 2012-1


DISASTER AND EMERGENCY OPERATIONS

Connecticut issued a Bulletin advising property and casualty insurers (including surplus lines and workers' compensation insurers) that they are to provide the Department by June 1st of each year with catastrophe contact information. A description of the required information is included in the Bulletin. The requirement does not apply to monoline financial guaranty, mortgage guaranty, title, fidelity and surety and medical malpractice insurers. The Bulletin also describes other catastrophe preparation initiatives being developed in the state. Insurance Commissioner Bulletin IC-36

North Carolina issued a bulletin to provide insurers with procedures to follow if a catastrophic event were to occur. The Department requires that insurers provide each catastrophic adjuster with an identification badge. A template for use in producing the badges is included with the bulletin. Bulletin 12-B-02


FILING REQUIREMENTS

Florida issued an order explaining the exemption of certain commercial lines forms from certain filing requirements. Note that the exemption is only applicable for 1 year from the date of the order, and the exempted forms are to be submitted in informational filings with certification that each form within the filing is in compliance with all applicable Florida Laws as described in the order. Order Exempting Specified Forms from the Requirements of Section 627.410 Florida Statutes

New Jersey issued a bulletin advising insurers that the MARS002 form, a New Jersey-specific form for final prints, is no longer required. The bulletin asks that filers use the SERFF Form Schedule and the SERFF Rate/Rule Schedule to identify the manual pages and forms being submitted. The bulletin also provides examples of filing submissions that are deficient. Bulletin 2012-6

Virginia issued an Administrative Letter regarding implementation of search options for rate/form submissions and establishment of additional filing requirements. The Letter explains that Virginia will launch a new website function for viewing information about rate and form submissions on file with the Bureau of Insurance. The Letter also advises insurers that the SERFF Filing Description must now provide a brief summary of the filing, including a statement describing whether the materials in the filing are new, revisions of existing materials or are additional materials that will be used with previously filed or approved rates or forms in Virginia. Administrative Letter 2012-3


FRAUD LANGUAGE - APPLICATIONS

Maryland issued a bulletin regarding recent changes in requirements pertaining to fraud disclosure statements on insurance applications. The bulletin notes that the change is a substantive change and requires that insurance applications bearing the prior fraud disclosure statement be revised. BULLETIN 12-07


HOMEOWNERS INSURANCE

Mississippi enacted legislation providing for an insurance premium discount or rate reduction for homeowners who build, rebuild, or retrofit property to better resist hurricane or other catastrophic windstorm events. HB 1410


LOSS RUN STATEMENTS - COMMERCIAL LINES INSURANCE

Kentucky has added provisions to its Code concerning insurers’ obligations to provide loss run statements within 20 calendar days of receiving a written request from an insured or the insurer's agent. Penalties for failure to provide the statements are described. HB 207 - Uncodified HB 207 s 1 (2012); Uncodified HB 207 s 2 (2012);


MEDICAL MALPRACTICE INSURANCE

Arizona enacted legislation concerning wrongful birth or life claims. SENATE BILL 1359


MISCELLANEOUS

Kentucky enacted legislation concerning holding company systems, captives, surplus lines and agents. Included is a requirement that diligent searches must be performed by a licensed agent with a line of authority for property and casualty. HB 295

Minnesota enacted legislation providing for the delivery of the guaranty fund notice to applicants for telephonic sales transactions, allowing a vehicle insurance identification card to be provided in an electronic format if the insured agrees, and providing for access to traffic accident reports. Chapter 185--SF No. 1875

Oregon distributed an email noting that the Division has decided to allow companies with a certificate of authority for both health insurance and property and casualty, to file a blanket accident and sickness policy that includes the option to purchase property and casualty riders and spells out the filing requirements. Email Dated 4-19-12 and DOI Website

West Virginia added a new Section to its Code concerning requirements to disclose certain information when requested by a claimant’s attorney for insurers that provide personal lines liability coverage to pay claims asserted against a motor vehicle insurance policy. House Bill 4486


PERSONAL LINES INSURANCE

Kentucky amended its Code to add to the list of reasons for which an insurer cannot decline to issue, cancel, nonrenew, or otherwise terminate property and casualty insurance contracts covering personal risks. 304.20-042


POLICY LANGUAGE

Oregon issued a Memorandum regarding impermissible discretionary clauses and describes such a clause as "any clause that provides the insurer with a superior right to interpret the contract—that is, which makes the insurer’s interpretation of the contract legally superior to that of the insured". The Memorandum advises filers "to consider the legal effect a reasonable person would assume a particular provision to have, rather than the specific words it uses, before submitting a filing for approval". Memorandum dated 4-20-2012


PORTABLE ELECTRONICS INSURANCE

Idaho enacted new requirements concerning the distribution of portable electronics insurance. Included are requirements for the termination or modification of a policy of portable electronics insurance, producer and adjuster license exemptions for certain persons. HB 649

Kentucky enacted legislation concerning Portable Electronics Insurance. Included are requirements that a portable electronics insurance supervising entity maintain a register of business locations where a retailer offers and disseminates portable electronics insurance and requirements for brochures made available to prospective customers. Uncodified HB 392 s 4 through 6 (2012)

Mississippi enacted new legislation pertaining to portable electronics insurance. Included are requirements for sale and termination of this coverage which may be offered on a periodic basis as a group or master commercial inland marine policy issued to a vendor of portable electronics for its enrolled customers. HB 894

Oklahoma amended its law concerning insurance coverage of portable electronics. Included in the changes are modification of consumer disclosure requirements and establishment of a registry of all licensed vendors authorized to sell or solicit portable electronics insurance by supervising entities. SB 1012

Washington amended its Code pertaining to specialty producer licenses for portable electronics insurance. Included are requirements concerning recordkeeping and the written materials made available to prospective customers. S.S.B. No. 6242

Wisconsin enacted legislation concerning portable electronics insurance which includes provisions concerning distribution, disclosures, termination of insurance and other requirements. Senate Bill 429


PREMIUM TAX

Kentucky issued a bulletin regarding premium tax. The bulletin describes insurance company requirements for compliance with the 2012 to 2013 Kentucky local government premium tax schedule. Bulletin 2012-01


REINSURANCE

Virginia amended its Code regarding credits for reinsurance. HB 1139


SURPLUS LINES INSURANCE

Colorado enacted legislation to conform with the requirements of the Federal Nonadmitted and Reinsurance Reform Act of 2010. HB 1215

Oklahoma amended its Code pertaining to Surplus Lines Insurance. Several changes are made and include clarifying that certain actions must be performed by a broker or licensee, specifying when domestic surplus lines insurers pay premium tax, modifying requirement for a surplus lines insurer, and modifying procedures regarding procurement of surplus lines insurance with a multistate risk. House Bill 2458; Senate Bill 378

Wisconsin added Sections and amended existing Code concerning Surplus Lines insurance. Included in the changes are additional definitions and provisions concerning qualification for placement of surplus lines insurance with an unauthorized insurer. SB 378


TITLE INSURANCE

Wisconsin issued a Bulletin regarding requirements for downward deviation of filed rates for Title Insurance. Bulletin dated April 30, 2012


TRAVEL INSURANCE

Kentucky enacted legislation concerning Travel Insurance. Included in the changes are a revised definition of Travel Insurance and a new definition for Limited Lines Travel Producer. Uncodified HB 392 s 2 (2012)

Minnesota amended its Code and added a new section regulating the offer and dissemination of travel insurance. SF 2069


WARRANTIES - SERVICE AGREEMENTS

Florida amended its Code concerning motor vehicle service agreements, home warranty contracts, and service warranties. Included in the changes are a revised definition of motor vehicle service agreement, refund guidelines for a motor vehicle service agreement, and recordkeeping requirements for such agreements. HB 1011

Nebraska amended its Code pertaining to the Motor Vehicle Service Contract Reimbursement Insurance Act. Additional definitions were added, the definition of motor vehicle services contract was amended, and provisions concerning the applicability of the service contract reimbursement act were amended. 44-3521 and 44-3526


Is it Worth It?

Is it really worth all the hassle to put an Enterprise Risk Management Program in place? Are regulators really going to care about whether your program is not only robust enough, but effective?

The verdict is in!

The 2012 E-Reg Conference in Kansas City, sponsored by the National Association of Insurance Commissioners (NAIC) and National Insurance Producers Registry (NIPR), ended recently.

Regulators there confirmed that when one person in an organization crosses ethical and regulatory boundaries, they will go after the individual and the Company. HOWEVER, if they find that the company had robust and effective controls in place, ones that the violator had to circumvent in order to cross those boundaries, they will NOT pursue the Company.

So, is it worth it? Call us to find out how we can help you ease the hassle and still move the “compliance ball” toward the goal.

C.J. Rathbun, FLMP, CCEP, HIA, AIRC
Senior Consultant
Direct Dial: 816-391-2740
Email: cj.rathbun@firstconsulting.com


Compliance at your Fingertips with First Consulting’s Web-Based Services

At First Consulting, we understand the need to access good information quickly, and we are always working to help our clients meet this need. One way we’ve done so is with our web-based research services, including:

 

  • Anti-Fraud Compliance, detailing state requirements regarding use of fraud warnings, content and filing of anti-fraud plans and fraud reporting duties.  This service also defines what constitutes a fraudulent insurance act in all states.
  • HIV Informed Consent Service, describing HIV consent requirements, allowable AIDS application questions and HIV testing and screening protocol.
  • Third Party Administrator Licensing Service, which outlines whether an entity needs to be licensed as a TPA and the requirements for obtaining such license.

    We also offer complimentary on-line research on a variety of topics of interest to insurers in all lines of business.

    Visit First Consulting’s website and learn more.

    Contact Sean Cox or Stacy Koron to discuss how First Consulting can help solve your product drafting or filing challenges.


    Have You Registered for our Advertising Compliance Seminar?

    A Practical Approach to Advertising Compliance for the Insurance Industry
    (includes sessions on Internet Advertising and Social Media Issues)

    August 13 – 14, 2012
    Kansas City, Missouri

    Click here for complete details and registration information from our website

    Any questions can be answered by

    Jerry L. Wickersham, JD, AIRC
    Vice President and Senior Consultant
    Direct Dial: 816-391-2743
    Email: jerry.wickersham@firstconsulting.com


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