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Westmont Wire

Louisiana Issues Directive Clarifying Position on Property Insurance Rates

On March 22, 2019, the Louisiana Department of Insurance (“LDI”) issued Directive 215 clarifying its position on La. R.S. § 22:1460(I)(1)(c), which prohibits the grouping of higher classified public fire protection areas with lower classified public fire protection areas in order to determine fire insurance rates.

Directive 215 specifies that insurers shall not apply the same premium or use the same factor to calculate premiums for any two fire protection areas. The Directive goes on to state that all insurers authorized to write fire insurance, including fire and allied lines for personal or commercial property and homeowners’ insurance policies, must adhere to La. R.S. § 22:1460(I)(1)(c) and comply with the rates and rules of the Property Insurance Association of Louisiana (“PIAL”), subject to certain exceptions under La. R.S. § 22:1468.

The LDI mandates that insurers authorized to write fire and allied lines or homeowners’ insurance review their rate manuals and rules currently in place to ensure compliance with Directive 215 and La. R.S. § 22:1460(I)(1)(c). Any insurer not in compliance with the new regulations must file with the LDI updated rates by August 1, 2019 to be effective on or before January 1, 2020.

For questions regarding Directive 215 and La. R.S. § 22:1460(I)(1)(c), or for assistance in any rate filing matters, please contact Westmont Associates, Inc.

New York Attempts to Modernize Its Approach to Excess Lines Brokers

In Issue 19-1 of ELANY Elaborates, ELANY details their collaborative effort with the New York legislature to modernize New York’s approach to excess lines brokers. In an effort to streamline the diligent effort search process, the New York Senate Insurance Committee recently introduced Senate Bill 769. The Bill attempts to amend NYCLS Ins. § 2118 in order to exempt certain commercial lines policies placed by wholesale brokers from the diligent effort requirement and expedite the process for retail and wholesale brokers filing affidavits regarding declinations.

 

SB 769 would only exempt commercial lines insurance transactions through unaffiliated retail and wholesale brokers from diligent effort requirements. As only the diligent effort is waived, brokers would still be required to file all coverage documents and affidavits with ELANY. Additionally, to expedite the affidavit process, SB 769 would remove the declination date, the reason for the declination, and the name and affiliation of the declining company representative. By eliminating certain elements of the affidavit, filing time speeds up and mistakes are reduced, thus avoiding any delays and extra fees for “suspended” filings.

 

ELANY and the New York legislature expects this bill to improve the service to insureds without sacrificing the state’s ability to monitor the market. Additionally, retail and wholesale brokers would both experience an improved, time-efficient declinations process, boosting their speed to market.

 

For any questions regarding New York’s SB 769, or for assistance in any excess line compliance matters, please contact Westmont Associates, Inc.

Kentucky DOI Clarifies Position on Arbitration Provisions

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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