In Minnesota, the Commissioner of the Department of Commerce regulates the insurance industry, and he has a statutory right to conduct investigations “related to the duties and responsibilities entrusted to” him. Last month, in Matter of the Petition of the Property Casualty Insurers Association of America, Inc., 41 Minn. State Register 830 (Dec. 7, 2016), the state’s Office of Administrative Hearings took up the question of just what those “duties and responsibilities” ... Keep Reading »
Regulatory
Insuring Cyber Exposure Through a Captive Insurer
Cyber risks have been confounding insurers and policyholders alike as those risks have evolved and expanded in recent years. Indeed, the risks have effectively outgrown the confines of standard commercial insurance coverage, and numerous insurers have developed new products, creating a market for cyber-specific coverages and policies. While predictions about growth in this market have generally been bullish, there are some signs it may be flattening. One recent survey ... Keep Reading »
McCarran-Ferguson Lands a Jab on the FAA
As we reported in this space late last year, the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1745 (2011), tilted the scales toward federal power in the field of arbitration, preempting state laws that may stand in the way of enforcing arbitration agreements pursuant to the Federal Arbitration Act ( "FAA"). Naturally, this left the McCarran-Ferguson Act spoiling for a fight, given its restoration to the states of all power to ... Keep Reading »
Keeping it Basic: NJ Supreme Court Limits Amount Owed to Innocent Third Parties
The New Jersey Supreme Court recently held that an automobile insurer must pay an innocent third party the contracted $10,000 amount of basic coverage following an auto accident involving the insured's vehicle, despite that the policy was procured by fraud and rescinded. Luckily for the insurer, the Court held that the insurer was only responsible for the amount of coverage provided by the rescinded policy, which was $5,000 less than the $15,000 per person/$30,000 per ... Keep Reading »
Cybersecurity as a Regulatory Issue: The NAIC Considers The Anthem Breach And Weighs a “Cybersecurity Bill of Rights”
The Cybersecurity Task Force of the National Association of Insurance Commissioners (the "NAIC") met last month, as part of on the NAIC's 2015 Summer National Meeting in Chicago. The Task Force focused on two issues: the recent massive data breach suffered by Anthem, Inc., and a draft "Consumer Cybersecurity Bill of Rights" that was released for public comment in late July. The Anthem Breach Anthem's general counsel reported that the FBI has completed its ... Keep Reading »
Of Mice and Manpower: Companies That Lease Employees Cannot Be Self-Insured
In the recent California case of Kimco Staffing Services v. The State of California, the Court of Appeals for the 2nd Appellate District agreed with the lower court that staffing services that provide temporary service employees cannot self-insure their workers compensation liabilities. In making this decision, the Court rejected the plaintiff’s arguments that the State’s position of prohibiting self-insurance was a violation of equal protection. This litigation arose ... Keep Reading »
Telematics and Usage-Based Insurance: Benefits, Challenges, and the Future
The NAIC's Center for Insurance Policy and Research (CIPR) released a white paper in March 2015 providing an excellent overview of the brave new world of automobile "telematics" data and their use in premium rate-making by auto insurance. Telematics allow for the measurement of actual driving habits, through remote access to a vehicle's real-time driving data. Thus, a driver's actual experience can be studied in data transmitted from, for example, the vehicle's ... Keep Reading »
Hypothetically Speaking, Mr. Insurance Commissioner, There Is No Need To Answer.
A recent case pitted two State of Florida agencies involved in insurance regulation against one another, and resulted in a decision by the appellate court that the Insurance Commissioner could not be compelled to appear as a witness at trial or in deposition to answer hypothetical questions about regulatory decisions he might have made earlier in time if he had known certain information about the financial condition of particular insurance companies. Florida Office of ... Keep Reading »
Cyber Risk as a Regulatory Issue: Tales of Encryption
Spurred by the prescient reporting found in this space (and, just maybe, by the Anthem data breach, which occurred a week later), insurance regulators have recently engaged in a flurry of regulatory activity relating to cyber security issues. Very shortly after the Anthem breach was announced, the newly-formed Cybersecurity (EX) Task Force of the National Association of Insurance Commissioners (NAIC) called for a multi-state examination of Anthem's cybersecurity ... Keep Reading »
California Bans Use of Price Optimization
Yesterday California Insurance Commissioner Dave Jones became the latest voice in a growing chorus of state insurance regulators who condemn the use of "Price Optimization" as a mechanism for adjusting property-casualty insurance rates and pricing. In a Notice delivered to more than 750 P&C insurers, the Commissioner declared that "any use of Price Optimization in the ratemaking/pricing process or in a rating plan is unfairly discriminatory in violation of ... Keep Reading »