Kentucky DOI Clarifies Position on Arbitration Provisions

By on February 28, 2019   /   Westmont Wire Category   /   Leave a comment

On January 25, 2019, the Kentucky Department of Insurance issued Bulletin 2019-1, explaining its position on arbitration or other out-of-court dispute resolution provisions contained in insurance policies.

In accordance with KRS § 417.050 and prior court decisions, any insurance policy, except surety contracts, mandating the arbitration of disputes shall be considered void and misleading per se. Additionally, any policy offering, but not explicitly requiring, voluntary arbitration will be subject to disapproval if the policy is deemed to use misleading or ambiguous language or headings. Kentucky’s Uniform Arbitration Act does not recognize non-binding arbitration and policies containing such provisions will be subject to disapproval as well.

Furthermore, the Bulletin points out that even if the Department approves policies containing such provisions, this does not insulate these provisions and they are still subject to judicial review.

For any questions regarding the Kentucky Department of Insurance’s arbitration requirements or any other compliance needs, please contact Westmont Associates, Inc.

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Maryland Seeks to Impose Fiduciary Standards on Agents, Brokers, and Dealers

By on February 28, 2019   /   Westmont Wire Category   /   Leave a comment

The Maryland Senate and House of Representatives have introduced companion bills-Senate Bill 786 and House Bill 1127-aimed at boosting consumer protection by imposing fiduciary standards on agents, brokers, and dealers (hereinafter “insurance producers”). Known as the Financial Consumer Protection Act of 2019, this initiative would designate the insurance producer as a fiduciary and require insurance producers to act in their clients’ best interest regarding any fee-based financial advice, without regard to their own interests.

According to reports, the bills face concerns from insurance professionals and the ACLI who fear that imposing fiduciary standards on insurance producers may limit consumer access, particularly for low and moderate income consumers, to financial and retirement security products. Maryland believes the bills are necessary to fill a void in consumer protection after Federal efforts to impose similar obligations failed.

For any questions regarding the proposed Financial Consumer Protection Act of 2019 or any updates on its progress through the Maryland legislature, please contact Westmont Associates, Inc.

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ELANY Issues Bulletin Reiterating Position on Excess Line Binders and Confirmations of Coverage

By on February 21, 2019   /   Westmont Wire Category   /   Leave a comment

The NYDFS recently completed an audit of records of NY excess line transactions submitted by brokers and found that binders were being issued by brokers who had no binding authority at all or who had not filed binding authority agreements with ELANY. As a result, on February 19, 2019, ELANY issued Bulletin No. 2019-09 clarifying the NYDFS’ interpretation of binder and the proper issuance of binders.

A binder may only be issued for an eligible excess line insurer or its representative by a New York licensed excess line broker with a proper written binding authority or a third party with a legitimate binding authority. Excess line brokers without binding authority should, instead, issue a “confirmation of placement of coverage” (“confirmation”), which serves as a broker’s representation of insurer’s actions without acting on the insurer’s behalf. While binders and confirmations must be initially submitted to ELANY for review and stamping, brokers are still required to submit the subsequent declarations page to ELANY as soon as possible.

The full bulletin may be viewed here: https://www.elany.org/f/2114.

For any questions regarding New York’s excess line broker requirements, or for assistance in any excess line compliance matters, please contact Westmont Associates, Inc.

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