One thing we can definitely count on during the late spring legislative “rush” is that a significant number of bills are signed into law, with multiple impacts on the property and casualty insurance industry. Four states in particular offer prime examples of this type of activity:

Maryland

While Maryland's recent enactment of SB 531, effective Oct. 1, 2013, allows for insurers to take action on the discovery of a material risk factor during the underwriting period, it also imposes a notice requirement on insurers availing themselves of this option. Specifically, “if the insurer discovers a material risk factor during the underwriting period, the insurer shall recalculate the premium for the policy or binder based on the material risk factor as long as the risk continues to meet the underwriting standards of the insurer in accordance with the rates and supplementary rating information filed by the insurer.” However, to the extent that an insurer does recalculate the premium, the insurer is bound to provide a written notice to the insured. The notice must be on a form approved by the commissioner and must state the following:

  • Amount of the recalculated premium.
  • Reason for the increase or reduction in the premium.
  • Insured's right to terminate the policy.

Alabama

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