Florida's HB 1101 and HB 119, collectively, add a new subsection to the state's Unfair Methods of Competition and Unfair or Deceptive Acts or Practices statutory provisions, addressing the timely handling of personal injury protection claims. Effective July 1, 2012, the Office of Insurance Regulation (Office) has additional enforcement authority when an insurer has failed to pay personal injury protection insurance claims within the statutory time periods.

The Office “may order the insurer to pay restitution to a policyholder, medical provider, or other claimant, including interest at a rate consistent with the amount set forth in s. 55.03(1), for the time period within which an insurer fails to pay claims as required by law. Restitution is in addition to any other penalties allowed by law, including, but not limited to, the suspension of the insurer's certificate of authority.”

Insurers in Kentucky need to know that effective July 12, 2012, there will be some changes aimed at protecting consumers with auto or home insurance. HB 497 essentially prohibits insurers from canceling, refusing to renew, or increasing the premium on an automobile liability insurance policy or a homeowner's insurance policy solely as the result of an inquiry about the insured's coverage, versus an actual claim.

Maryland's HB 1068 creates new policy cancellation and nonrenewal disclosure requirements for homeowners insurers. Effective Oct. 1, 2012, these insurers must provide applicants and insureds with a notice that states certain claim-related grounds under which the insurer may cancel or refuse to renew the policy. This notice must state, in substantially similar language, that, in addition to the other allowable reasons for cancellation or refusal to renew underMarylandlaw, the insurer:

• May cancel or refuse to renew coverage on the basis of the number of claims made by the policyholder within the preceding three-year period; and
• May cancel or refuse to renew coverage on the basis of:
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  • Three or more weather-related claims made within the preceding three-year period;
  • One or more weather-related claims made within the preceding three-year period if the insurer has provided written notice to the insured for reasonable or customary repairs or replacement specific to the insured's premises or dwelling that: 1. The insured failed to make; and 2. If made, would have prevented the loss for which a claim was made; and
  • A change in the physical condition or contents of the premises that increases the hazard insured against; and if present and known to the insurer before the issuance of the policy, would have caused the insurer to refuse to issue the policy.

These changes are aimed at both setting limits on the claims-related reasons insurers may use in cancellation and nonrenewal of these policies and providing clear information to insureds about these permitted reasons in advance of any potential adverse action.

Effective Oct. 1, 2012, Virginia requires that each P&C insurance policy contain a list of all policy forms and endorsements applicable to that policy. The list must also display the respective form numbers and, if those form numbers are not unique identifiers of such forms, the applicable edition dates. This requirement guarantees that insureds will have easy access to complete information about all of the applicable forms and endorsements.

So, while the focus is definitely on the consumer when we look at these legislative changes, the compliance focus quickly turns to the P&C insurer. The crucial next steps for the industry are assessing the business impact of these new requirements, determining what process modifications need to be done, getting the revised systems up and running, and validating the established controls to ensure that these are all working as intended and will achieve full compliance for the company.