It has been closely lined in nationwide information media that property & casualty insurers have been withdrawing from sure enterprise strains, specifically householders, in states reminiscent of California, Florida, Louisiana, and Texas. Different states across the nation are additionally experiencing heightened numbers of insurance coverage carriers exiting some markets. In response states have been addressing completely different points of insurance coverage service withdrawal in varied methods. For example, final fall, Connecticut[1] issued a Bulletin which requires property & casualty insurers that discontinue or considerably scale back “writings in a line or subline” to supply prior discover to the state insurance coverage regulator. Earlier this yr, Iowa[2] prolonged the buyer discover interval for renewals and non-renewals of non-public strains insurance policies from 30 days to 60 days. This spring, the Delaware Division of Insurance coverage (the “Division”) raised the problem of “carriers quietly exiting strains of enterprise” whereas the New Mexico Workplace of Superintendent of Insurance coverage (the “OSI”) proposed a regulation which might impose on property & casualty insurers prior discover to OSI when discontinuing merchandise within the state.
Delaware
In Could, the Division issued Bulletin No. 40[3] requesting that insurance coverage carriers undergo the Division at the very least 90 days’ discover when withdrawing a line or subline of enterprise from Delaware. The Division famous “potential disruptions within the insurance coverage market attributable to service withdrawals and the chance of carriers quietly exiting strains of enterprise.” (emphasis added) In gentle of those considerations, the Division requests that carriers notify the Division in the event that they “intend to terminate all or any of a enterprise line or product that will result in withdrawal from the State’s market.” The Division additional clarified that this discover request “covers conditions the place insurance coverage carriers stop using agency-facing functions and different technological instruments,[4] processes (e.g., underwriter referrals), communications to producers, or every other modifications in enterprise practices that successfully end result within the discontinuation or discount of a line of enterprise or product” reminiscent of “transition[ing] all enterprise from its firm to an affiliated or non-affiliated insurer” and discontinuing “a complete ebook of enterprise on the finish of the coverage time period” or failing to “renew to a block of a enterprise.”
The Division requests that insurance coverage carriers submit a written letter of intent “at the very least 90 days earlier than the insurance coverage service intends to problem notices relating to withdrawal exercise.” Such letters of intent ought to embrace the next:
- Listing of every line of enterprise and/or merchandise to be withdrawn;
- Cause for withdrawal;
- Efficient date of withdrawal;
- Whole Annual Premium loss;
- Variety of impacted Delaware insureds, together with county knowledge; and
- Is the withdrawal particular to Delaware or will different jurisdictions be impacted?
Letters of intent needs to be submitted by way of the System for Digital Price & Type Filings (“SERFF”) and by way of e-mail to [email protected].
New Mexico
Final month, the OSI hosted a public listening to relating to a proposed emergency rule (13.8.7)[5] which might add alongside the present shopper discover requirement a regulator discover requirement at the very least 30 days “previous to the efficient date of the discontinuation date of the primary insurance coverage product.” The New Mexico proposal different from the Delaware bulletin in that it targeted on insurance coverage merchandise slightly than enterprise strains or sublines and that it required very granular data relating to particular policyholders. On the public listening to, OSI employees acquiesced to trade confidentiality considerations relating to policyholder identities, acknowledging that for regulatory discover functions mixture knowledge suffices. Business raised further questions relating to affiliate transfers, comparable substitute merchandise, and materiality of modifications which have been addressed in a follow-up draft which confirmed that OSI sought discover of affiliate transfers and materials modifications to protection, whereas replacements are much less clear.[6] Earlier this month the listening to officer revealed his advice that the Superintendent of Insurance coverage problem a last order for publication within the state register adopting the ultimate type regulation which might take impact no later than July 30, 2024, and require insurance coverage carriers to supply to the property & casualty bureau chief discover of the impacted merchandise, efficient date, and variety of impacted insureds.[7]
Locke Lord will proceed to observe developments by state companies and state legislatures. You probably have any questions, please attain out to the creator or your Locke Lord associate.
See additionally earlier Locke Lord commentary on associated exercise final fall: Connecticut Expands Notice Requirements for Withdrawing From a Line of Business.
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* With appreciation for the contributions of our summer time affiliate Matt Cossu of the New York Regulation College Class of 2025.
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[1] Bulletin PC 34-23, Notice to Commissioner of Intent to Discontinue or Substantially Reduce a Line or Subline of Business (September 19, 2023).
[2] H.F. 2265 signed by Governor Kim Reynolds on April 10, 2024.
[3] Bulletin No. 40, Request for Letter of Intent when Withdrawing a Line of Business/Product from the Market in Delaware (May 3, 2024).
[4] The emphasis on agency-facing apps echoes Bulletin PC-34-23 issued final September by the Connecticut Division of Insurance coverage.
[5] See, OSI eDocket Proposed Amended 13.8.7 NMAC, Notification Requirement of Discontinuation of Insurance Product (April 9, 2024).
[6] See, OSI eDocket Staff’s Response to Oral and Written Comments (Could 21, 2024).
[7] See, OSI eDocket Hearing Officer’s Recommended Decision (June 6, 2024).
