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| Even with Tears In Our Eyes,
We Vow To Stand Strong |
| Last week, the Washington Post reported that the San Bernandino mass shooting was the 355th incident in 2015. And I immediately thought about the church in Charleston, the college classroom in Oregon, the Planned Parenthood shooting in Colorado and the list goes on. The article went on to discuss whether the 355 figure was correct and that there are those searching for the right definition of “mass shooting.” Shocking to think that we need to define a mass shooting as we all wring our hands and wonder why these attacks happen, how we might stop them and as the article discussed, what data we need to sort, sift and size up how to understand the insanity of it all. The France crisis happened on Friday, November 13 and it’s been almost a month, and now San Bernandino is right in front of us. As time marches on, we see so many crises and in fact as I traveled in airports this week, I talked to complete strangers and we had one common bond…we won’t back down and we won’t stop living life in America as we know it. We know all too well the feeling of being crushed with our 9/11 experiences, with our faces pressed in front of our TVs. We know that the people of the world cried with us that awful day. We cry for the people of Paris and California and the list goes on during this recent reign of terror. But, even as our tears flow, we all know that success isn’t measured by how hard or how many times we fall…it is measured by how we rise up again. Our great country strives to promote and defend freedom and democracy. We are characterized by our determination to pursue and ensure liberty for our countrymen and women. These foundational values of the United States remain strong, even as we are the targets of terrorists, who not only wish to take lives, but also shatter our beliefs of life, liberty and the pursuit of happiness. They will not prevail. We will not run nor cower and in fact, we will even more passionately embrace our values and ideals. |
| What Do These Tragedies Mean To Insurers? |
| We know all too well how tragedy impacts our personal lives, but we wanted to take a look at how these events impact insurers, abroad and here in the U.S. In our research, we read an article wherein Dr. Robert Hartwig of the Insurance Information Institute addressed some of our questions, saying among other things that it was open whether, for example, the Paris terror attacks were “the first event in a series” which might target Europe or America. Dr. Hartwig said that it is not a question of if, it’s a matter of when. Sadly, the greatest casualty is the loss of life, not property damage. And while it didn’t produce large-scale property damage, it will bring attention to the vulnerability here in the United States. Dr. Hartwig was joined by Bradley Kading, the president and executive officer of the Association of Bermuda Insurers and Reinsurers, who stated that while the terrorism risk will be elevated in the public’s eye, insurers have been evaluating terrorism risk since 9/11. “There is an active, growing terrorism risk insurance market. Businesses should protect themselves with insurance. But the tragedies and loss of life are horrifying for us all.” In fact, the US government this year renewed its terrorism risk insurance program. The renewed legislation, first enacted in 2002 after the terrorist attacks on the World Trade Centre the year before, was designed to maintain terrorism insurance market stability, affordability and availability. The updated provisions in the Terrorism Risk Insurance Act (TRIA) for acts of terrorism certified by government officials will have a trigger which will gradually increase from the original $100 million to $200 million. The industry-wide retention – the amount of losses covered by the industry through deductibles and co-payments – increases to $37.5 million from the previous figure of $27.5 million. The problem is, however, that larger businesses, offices, shopping malls, tend to purchase coverage, but smaller businesses do not. In the States, the risk is seen as partly insurable. Some events are simply not insurable by the private sector. “Up to and including a 9/11 event, losses of that magnitude – $35 to $40 billion – would be paid by the private insurance industry,” according to experts. |
| Compliance Reminder for Managing General Agents: To Transact Insurance, Executives and Employees Must Be Licensed & Appointed |
| LMA frequently receives compliance questions from members of the industry and most of us here being former regulators enjoy the challenge of accessing our long-term memories and verifying with our friends at DFS that regulators’ interpretations haven’t changed. Recently, we received a very interesting inquiry from one of our property and casualty insurer clients and we thought we’d share the questions and answer with our newsletter readers.
The inquiry itself was actually a two-part question with the answer to the second part being considerably more complex. Part I reads as follows: “If an employee of a properly licensed Managing General Agent (MGA) is also a 2-20 (General Lines P&C Agent) and produces business, does that 2-20 agent (producer) have to hold active appointments with the insurers contracting with the MGA? The answer to this part of the question is an unqualified “Yes.” There are no exemptions from the licensure and appointment requirements of the Florida Insurance Code just because a person happens to work for an MGA.
Part II of the question goes like this, “Is a brokering agent who is required to submit pieces of business through an MGA also required to hold appointments from the insurers for which the MGA performs its contractual services? It appears the industry practice is that the producing broker (A.K.A. original producing agent) who sends business through the MGA in question is not appointed. Is that outside the law?” As noted above, the answer to this portion of the inquiry can become somewhat convoluted, depending on how the insurer(s), MGA and original producing agent have decided to conduct business together. Perhaps the single most important point to remember when analyzing an inquiry of this nature is that the insurance code does contain a provision allowing admitted insurers to accept P&C business from agents who are not appointed by the insurer in question. The statute we are referring to is section 626.752, F.S., Exchange of Business. This section of Florida’s insurance code allows P&C insurers to accept from 2-20 agents not appointed by that insurer up to 24 personal lines risks during a calendar year. The same section of law allows the writing insurer to provide to these agents its production material, application(s) and other material necessary for the agents to produce business on behalf of that insurer. Once an insurer accepts more than 24 personal lines risks in a calendar year from an unappointed agent, the insurer must within fifteen (15) days notify the Department of Financial Services (DFS), provide DFS requested information about this agent and pay certain fees which are equivalent to routine agent appointment fees. Obviously, accepting business from unappointed agents creates certain liability issues for insurers and we strongly recommend that insurers discuss these issues with legal counsel prior to proceeding. We also recommend that insurers thoroughly familiarize themselves with section 626.752 prior to entering into business relationships with agents they elect not to appoint. Please give us a call if you have any questions about this intriguing topic! |
| West Virginia Supreme Court Reaffirms Commissioner’s Authority Over Rates |
| In an extremely interesting legal case involving the business of insurance, the state of West Virginia’s highest court has reaffirmed the authority of that state’s insurance commissioner to have the final say in rate-making matters. In November the West Virginia Supreme Court, in Erie Insurance Property & Casualty Company and West Virginia Insurance Commissioner v Vincent J. King, docket number 14-1059, held that a state circuit court improperly substituted its own judgment for that of the Virginia Insurance Commissioner in a rate-making matter. The High Court remanded the case for reinstatement of the Commissioner’s decision. The West Virginia Supreme Court decision tracks with established Florida case law wherein courts have customarily shown significant deference to our state’s chief insurance regulators in interpreting the very statutes he or she have been responsible for implementing and enforcing. We will continue keeping an eye out for insurance related court cases having direct or indirect ties to Florida and share such cases when they appear informative for our industry. |
| FLOIR Issues Final Order Approving Workers’ Compensation Rates For 2016 |
| It’s always fascinating to watch when a statistical organization/clearinghouse/industry submits a rate filing! The NCCI (National Council of Compensation Insurance) had a slightly different view than OIR on how much workers compensation rates should go down. Read HERE the back and forth, and what the results were from the OIR decision. |
| NAIC’s New Cybersecurity Task Force Meets for Last Time in 2015 |
| After a year of high speed activity and an ambitious agenda, the NAIC’s fairly new Cyber security Task Force met for the last time this year on Friday, November 20 during the Fall National Meeting in Washington D.C. During its meeting the task force surprisingly skipped any discussion of the Cybersecurity Bill of Rights that they approved during an interim telephonic meeting in October. Discussion and action on the bill of rights was also omitted from the NAIC Executive Committee agenda leaving the criticized document without final approval by the full NAIC. In their respective meetings, the Cybersecurity Task Force and Executive Committee also avoided any discussion of opening two additional model laws that Cybersecurity Task Force Chair, North Dakota Commissioner Adam Hamm had identified for revision as part of the task force’s overall work plan for the coming year. While in Washington, task for members received a comprehensive update on federal legislative develop-ments as well as a report from the IT Examination Working Group on its work to update cyber examination standards. In addition, the task force received presentations on the importance of cybersecurity threat information sharing from Brian Peretti of the U.S. Department of the Treasury’s Office of Critical Infrastructure and Rick Lacafta from the Financial Services Information Sharing and Analysis Center (FS-ISAC). We will continue to monitor the NAIC’s activities regarding cybersecurity issues and keep you posted on how those activities will impact Florida’s insurance market and regulated entities.
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| We’ve Dodged Another Hurricane Season In Florida |
Floridians have coasted through another hurricane season mercifully unscathed. The season officially ended November 30.
It’s kind of eerie, really, for longtime residents. Newcomers – and our county has plenty since the last hurricane came our way in 1995 – will have to take our word for it.And it’s not just that we haven’t been hit by a hurricane in a decade; we really haven’t had a close call. We’re very used to hurricanes moving erratically in the Caribbean, wobbling toward us then away. But doesn’t it seem as though in those years in which no hurricane made landfall on our peninsula, that we still had plenty of tropical depressions soak us good, or the heavy rains that ring the hurricane eye for up to 1,000 nautical miles. But we’ve had nothing.Gov. Rick Scott called a state of emergency in Florida when Erika looked like she was heading our way the last week in August. Not only did she move offshore, but she never graduated tropical storm status into an honest-to-goodness hurricane. But it is very much worth noting that this non-hurricane wreaked havoc on the Lesser Antilles and Dominica, ultimately causing 32 deaths and $500 million in damages in Dominica alone.
You don’t necessarily need to hear the word “hurricane” shouted to begin preparation or evacuation plans. They can upgrade more quickly than we can track them.
Vegas couldn’t have done a much better job at handicapping the season than the National Weather Service. It predicted six to 11 named storms, three to six hurricanes and up to two major hurricanes. We did have 11 named storms, the last one Kate on Nov. 12. Four reached hurricane status. We’re not sure what the definition of a major hurricane is, but suspect that’s something that’s more clearly defined by someone hunkering down through one than by NOAA.
The weather service noted a continuing trend. Although the number of storms is about what was expected over the past decade, actual landfalls are much lower than the percentages suggest.
Consider that Florida, with nearly 1,300 miles of coastline, has accounted for 40 percent of all U.S. landfalls since record-keeping began in 1851. This 10-year run doubled the previous record of hurricane-free years 1980-84.
In honor of the record year, and in keeping with the holiday spirit now upon us, here’s a list of the Top 10 reasons hurricane season is like Christmas:
*Decorating the house (boarding up windows).
*Dragging out boxes that haven’t been used since last season (camping gear, flashlights).
*Last-minute shopping in crowded stores.
*Regular TV shows preempted for “specials.”
*Family coming to stay with you.
*Family and friends from out of state calling.
*Buying food you don’t normally buy … and in large quantities
*Days off from work
*Candles.
* At some point, you know you’re going to have a tree in your house.
This editorial was published in the November 29, 2015 issue of the St. Augustine Record. |
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| Don’t you just hate it when you have to take off your shoes, unload your laptop, and give up that manicure when you travel? I am the world’s mostimpatient person when I am hurriedly trying to get to my next gig. Overbooked airline flights, long, slow lines or anything that slows me down is a real challenge for me. But during recent travels, I really did stop and think, “You know, I need to be thankful for these folks who are working to keep me safe.” Yes, the horror in Paris made me pause and appreciate that these folks that slow us down are in every way our HEROES. After the recent attacks and the warning that the terrorists may and will strike at sporting events, theaters and aviation services, our TSA was clearly taking additional security steps. During the heavily traveled Thanksgiving season, I personally saw more guards in airport concourses, food courts, and along with them, bomb-sniffing dogs. Yes, I am sad that the security is so needed and yes, I do hate to wait, but folks, let’s keep it clear in our minds. We need these good people and we need to be thankful for them. Next time we have to patiently wait, let’s take a second and tell that TSA or security person “thanks for keeping me safe”.
Humble and Thankful….Lisa and the LMA Team
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| Important Legislative Calendars |
| Above:
Lisa working the 4th floor of Florida’s Capitol between House and Senate Chambers |
| First Day of 2016 Session
January 12, 2016
Tallahassee, FL |
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