Weather is one of the key variables that can greatly impact the number of communications issued by departments of insurance in a given year. Unfortunately, this year has proven to be one marked by severe weather events. Those circumstances have led to a number of bulletins being issued to address claims and underwriting issues in many states:

• Alabama's Bulletin of Apr. 28, 2011 addressed the extension of grace period to May 27 to assist those impacted by the line of tornados that crossed the state.
• Georgia's Directive 11-EX-5A focused on the tornados that touched down during that same time period and the Department of Insurance's expectations regarding leniency in dealing with individuals impacted by those storms.
• Kentucky issued two “adjuster catastrophe serials” in April and May, detailing steps that needed to be taken in conjunction with that state's severe weather outbreaks.
• Multiple orders and bulletins were issued after the widespread destruction in Missouri, with Executive Order 11-12 providing that coverage for insureds in Jasper and Newton counties must continue under all insurance policies in effect immediately preceding the severe storms occurring on May 22, 2011. That order remained in effect until June 20 and also detailed licensed public adjuster requirements for services performed in those two counties.
• North Carolina's Bulletin 11-B-3, in addressing the tornados, severe storms, and flooding in April, directed insurers to account for an extended time period for insureds to file a proof of loss and the option of deferring premium or debt payments that are due during the time period covered by the disaster declaration.
• West Virginia issued five emergency orders for severe weather events during the first half of this year.

Additionally, we've seen a number of states impacted by floods this year, which resulted in various bulletins advising insurers of actions to be taken in light of the devastation.

Mississippi's Department of Insurance issued Bulletin 2011-5, directing a 60-day moratorium on the cancellation/non-renewal of policies for the non-payment of premiums for Mississippians residing in flood-impacted areas. This moratorium applies to commercial property, homeowners', dwelling fire and commercial and personal automobile policies.

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The Nebraska Department of Insurance issued a notice dated June 14, 2011 addressing that state's disaster areas related to the recent floods and the issues associated with evacuation zones. Commenting on the reasonableness of requiring insureds to comply with neglect and/or preservation of property provisions, the Department strongly encouraged insurers that any property removed from its insureds' premises on or after May 25, 2011 from areas flooded or in danger of flooding should be covered at the same amount as if the property were located at the insured premises. However, after July 15, 2011, insurers are permitted to subject the personal property to any applicable reduced coverages as provided for in the policy for being located away from the insured premises.

North Dakota's Bulletin 2011-1 alerted insurers to the declaration of a federal disaster for 42 counties. Labeled as a “guidance document,” this bulletin outlined expectations regarding policyholder services.

South Dakota's Bulletin 11-05, issued in response to flooding, included the Division's directive that no notice of cancellation or nonrenewal is valid between June 1, 2011, and Sept. 1, 2011, for any South Dakota insured who resides in a county where a disaster has been declared and who has had their ability to timely act or respond to an insurer materially affected by the flood.

Thankfully, emergency and/or unexpected communications are balanced with routine bulletins and other guidance documents. These range from legislative summaries to notices regarding reimbursements for workers' compensation insurers. Of course, bulletins also announce surveys, update risks eligible for exports lists, and provide clarification on recently enacted legislation and adopted regulations.

As an example of the latter genre, Arizona's Bulletin B-5.29, issued in April, focused on delineating the Department's expectations as to “clear and specific” reasons that must be provided in its adverse underwriting notices.

While the insurer's notice must include a statement of reasons that is sufficiently clear and specific so that a person of average intelligence can identify the basis for the insurer's decision without making further inquiry, the insurer must also clearly describe or quote its underwriting rule, policy, or guideline that it is using as the basis for the proposed adverse action.

To the extent a hearing officer ultimately reviews the adverse action notice, the bulletin lists the additional informational expectations beyond the basic elements of clear and specific reasons and basis. The Department's hearing officer would expect the following information to also be clearly identified in the adverse action notice:

• First and last name of the driver involved;
• Date of loss (if applicable);
• Description of the loss that resulted in claim payment;
• Total amount paid for the loss;
• Motor vehicle violation or conviction date (if applicable); and
• Description of the motor vehicle violation (as indicated in the consumer report from which the information was obtained). And if the description includes the term “moving violation,” the insurer should have a definition of “moving violation” on file with the Division of Insurance Rates and Forms Section.

The use of credit information is another issue that routinely gets attention in the underwriting process. Connecticut's Bulletin PC-69 is aimed at detailing the disclosure expectations regarding the use of credit required by Public Act 10-7 by providing not only the specifics, but also the “Summary of Consumer Protections” notice.

Effective July 1, 2011, insurers are required to provide a written disclosure of consumer protections regarding an insurer's use of credit. In addition to the “Summary of Consumer Protections” disclosure, insurers are required to notify consumers of the insurer's name, address, telephone number, and toll-free telephone number, as well as detailed information about how the insurer uses credit information to underwrite and rate such insurance policies.

Maryland has also focused on underwriting issues, in this case adding a prohibited reason. Effective Oct. 1, 2011, as outlined in Bulletin 11-13, an insurer may not:

• Cancel, refuse to underwrite or renew, or refuse to issue a policy of homeowner's insurance; or
• Increase a premium, add a surcharge, apply a rating factor, re-tier a policy, remove a discount, or take any other adverse underwriting or rating action on a policy of homeowner's insurance based solely on information about an individual's status as a victim of a crime of violence.

While insurers must comply with this revision as of the effective date, they do have until Oct.1, 2012 to revise policy forms to conform to the new law.

And earlier in 2011, Arizona's Bulletin 2011-02 announced this year's revision to the private passenger automobile property damage threshold that insurers may use to non-renew private passenger automobile policies.

Product Filings

New product filing requirements and actuarial procedures are featured in Hawaii's Memorandum 2011-1R, issued in June, which mandates all homeowners' insurers to submit new rate filings within 120 days of the date of the memorandum. However, homeowners' insurers are encouraged to submit their filings within 60 days of that date to facilitate the review process.

The Vermont Department of Banking, Insurance, Securities, and Health Care Administration issued Bulletin 160 advising property and casualty insurers of the new rates and forms filing procedures, which became effective on May 15, 2011. The Department adopted Regulation I-2010-3, which replaced the Department's longstanding filing regulation, I-85-1. Among other new requirements, filers now need to certify that the filing complies with all applicable Vermont laws and regulations, as well as to state whether any of the filing's provisions have been previously objected to in Vermont and to declare, on information and belief, whether the filing contains any unusual or controversial provisions.

Policy Provisions

Oklahoma's Department of Insurance Bulletin No. PC 2011-01 and its Commissioner Order of March 22, 2011 present a dual opportunity to learn more about how the state regards defense expenses within the limits of certain liability policies. Defense expenses within the limits of liability will be allowed in certain insurance policies satisfying specific criteria and the insurance policy must be one of the following types:

• A professional liability insurance policy;
• A directors and officers liability insurance policy;
• An errors and omissions liability insurance policy;
• A fidelity or surety bond;
• A pollution liability policy; or
• An employees' practices liability insurance policy.

With all the statutes, rules, and regulations (including those promulgated on an emergency basis), one thing insurers can count on is that all communications from the departments of insurance provide helpful and much-needed information. They not only convey immediacy of actions needed, but also provide guidance and key information that clarifies our ever-changing regulatory environment.