Reporting Developments Affecting the Insurance and Reinsurance Industries


Connecticut Enacts New Changes to Its Captive Insurance Laws

On July 16, 2024, the Connecticut Department of Insurance (the “Department”) issued a press release announcing that Governor Ned Lamont has signed Public Act No. 24-138, “An Act Concerning Insurance Market Conduct and Insurance Licensing, the Insurance Department’s Technical Corrections and Other Revisions to the Insurance Statutes and Captive Insurance”, (the “Act”) into law. According to the Department, the Act furthers Connecticut’s commitment to the captive insurance industry, and the “new legislation underscores Connecticut’s dedication to fostering a business-friendly regulatory environment that promotes innovation and supports the growth of captive insurance companies.”

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State Insurance Regulators Wrapping up Preliminary Guidance on ‎Accelerated Underwriting

Last week, both the New York Department of Financial Services (“DFS”) and the National Association of Insurance Commissioners (“NAIC”) acted on official guidance pertaining to accelerated underwriting by life insurance companies. DFS formally adopted Insurance Circular Letter No. 7 (2024), which establishes principles for when insurance carriers use artificial intelligence in underwriting and pricing, and clarifies the pre-existing Insurance Circular Letter No. 1 (2019), which chiefly concerns external data sources and “expedited, accelerated or algorithmic underwriting process[es] in lieu of a traditional medical underwriting.” The NAIC’s Accelerated Underwriting (A) Working Group met the next day to consider comments on its previously exposed Regulatory Guidance and a referral for the Market Regulation Handbook. The working group exposed for public comment a revised guidance document for a two-week comment period that is presumably the final version before adoption at next month’s Summer National Meeting.

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NY Prohibits Affordable Housing Status as Rating Factor in Commercial Property & ‎Casualty Policies While New Jersey Issues Bulletin and Survey

On June 24, 2024, the New York Department of Financial Services (“DFS”) issued Insurance Circular Letter No. 6 (2024), informing property and casualty insurers writing and delivering commercial property and liability insurance policies in New York, including excess/surplus lines insurers, that the newly enacted N.Y. Insurance Law § 3462 prohibits insurers from inquiring about or making underwriting and rating decisions based on a property’s status as an affordable housing development or containing affordable housing units. If an insurer used this data in the past as part of their application, underwriting process, or rate-setting process, they must revise such applications, underwriting guidelines, and rates accordingly.

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State Regulators Concerned Insurance Carriers Are Quietly Exiting Lines of ‎Business

It has been heavily covered in national news media that property & casualty insurers have been withdrawing from certain business lines, in particular homeowners, in states such as California, Florida, Louisiana, and Texas. Other states around the country are also experiencing heightened numbers of insurance carriers exiting some markets. In response states have been addressing different aspects of insurance carrier withdrawal in various ways. For instance, last fall, Connecticut issued a Bulletin which requires property & casualty insurers that discontinue or substantially reduce “writings in a line or subline” to provide prior notice to the state insurance regulator. Earlier this year, Iowa extended the consumer notice period for renewals and non-renewals of personal lines policies from 30 days to 60 days. This spring, the Delaware Department of Insurance (the “Department”) raised the issue of “carriers quietly exiting lines of business” while the New Mexico Office of Superintendent of Insurance (the “OSI”) proposed a regulation which would impose on property & casualty insurers prior notice to OSI when discontinuing products in the state.

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You’re Invited: Locke Lord and FTI Consulting Present a Webinar – Recognizing and Resolving Financial and Legal Issues Encountered by Distressed Health Care Businesses

Please join Locke Lord and FTI Consulting for a complimentary webinar series on market influences and legal and regulatory issues impacting the health care industry in 2024. Over the next several months, we will explore the current deal-making environment, the role of bankruptcy and restructuring solutions and enforcement trends.

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NAIC Privacy Protections Working Group Takes First Step on Its New Path ‎Forward

The Privacy Protections (H) Working Group of the National Association of Insurance ‎Commissioners (“NAIC”) met on Wednesday June 12, 2024, to consider which proposed path ‎forward to pursue as it considers a new NAIC privacy model presumably for all licensed ‎insurance entities and insurance lines of business. Readers will recall that last month, the ‎working group posed to the public a two-part question should the working group: (i) continue its ‎work on a combined unitary draft Model 674‎ ‎which would replace Models 670‎ ‎and 672‎‎ as a ‎unitary model applicable to all licensees and lines of business? or (ii) revise one or both of the ‎preexisting Models 670 and 672? In a twist, a consortium of trade associations offered a revised ‎version of Model 672, which they referred to as 672+, as an option for public comment. In a ‎close vote, the working group decided to revise Model 672, effectively abandoning last year’s ‎work on draft Model 674, while also not embracing the trades’ proposed Model 672+.‎

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Massachusetts Issues Insurance Bulletin Discussing Inducements, Rebates and Affiliated ‎Entities

On May 24, 2024, the Massachusetts Division of Insurance (the “Division”) issued Insurance Bulletin 2024-06, “inducements, rebates and affiliated entities” (the “Bulletin”). The Bulletin is addressed to “all licensed insurance companies and insurance producers.” The Division issued the Bulletin to “remind insurance companies, officers thereof, and insurance producers authorized to operate in Massachusetts” that Massachusetts law prohibits, as an unfair or deceptive act or practice in connection with the transaction of insurance business, insurance companies, officers, and producers from “paying, giving, or allowing to pay or give, directly or indirectly, ‘anything of value’ or ‘any valuable consideration’, not specified in the insurance contract, as an inducement to the purchase of insurance or a rebate of insurance premium.” The Bulletin further reminds insurance producers that Massachusetts law also prohibits any “special favor or advantage” to accrue to an such producer that is not specified in the policy. Unlawful rebates or inducements are not solely limited to “reductions on insurance premiums”, but rather such rebates or inducements “include payments, reductions or discounts, not specified in the insurance contract, that would bestow anything of value, valuable consideration, special favor or advantage on the insurance producer.”

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New York Department of Financial Services Issues Guidance on Insurance Loss Mitigation ‎Tools and Services

On May 23, 2024, the New York Department of Financial Services (the “Department”) issued Insurance Circular Letter No. 3 (the “Letter”). The Letter is addressed to “all insurers authorized to write property/casualty insurance in New York State, the New York Property Insurance Underwriting Association [‘NYPIUA’], and rate service organizations.” The purpose of the Letter is to “encourage all insurers authorized to write property/casualty insurance in New York State (‘insurers’) to offer loss mitigation tools and services to insureds for free or a reduced fee…and to encourage insurers, the [NYPIUA], and rate service organizations…to file with the [Department] actuarially appropriate discounts for insureds for the installation of devices or systems that mitigate or prevent losses….” As a result in a rise in the InsurTech space, in 2021 the National Association of Insurance Commissioners (“NAIC”) updated the anti-rebating section of the NAIC Model Unfair Trade Practices Act (#880) (Section 4(I)) by excluding various value-added products or services that an insurer or producer may offer at no cost or a reduced fee from the definition of impermissible discrimination or rebates. Other states have also implemented such changes.

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