This year is proving to be yet another challenging time forproperty and casualty (P&C) compliance professionals,especially those charged with identifying legislative changes andassessing their impact on the business. Both claims andunderwriting functions are the subject of enacted and pendingrevisions.

A case in point is an upcoming claims settlement requirement inVirginia. Effective July 1, 2013, SB 984 outlinesa new notification requirement for insurers in certain settlementsituations. The requirement states if the insurer sends asettlement check of at least $5,000 to a claimant's attorney theymust also send notification of this action to the claimantdirectly. The insurer must also send a copy of the noticesimultaneously to the attorney or representative of the claimant orjudgment creditor.

Claims Settlement Practices

Except as provided and authorized by the statute, it prohibitsinsurers from otherwise communicating directly with claimants knownto be represented by an attorney or other representative regardingthe settlement of a claim or satisfaction of a judgment without thewritten consent of such attorney or other representative.

The bill also addresses both the delivery method and content ofthe notice. The insurer must send the notice to the physicaladdress, email or other electronic address furnished by theclaimant or judgment creditor, unless the claimant or judgmentcreditor has notified the insurance company in writing that he orshe waives notice of payment. Absent an address or waiverfurnished by the claimant or judgment creditor, the notice must besent to the last known physical address, email or other electronicaddress, of the claimant or judgment creditor. The insurer isrequired to send this notice only after a settlement has beenagreed to by the attorney or other representative of the claimantor judgment creditor. The exact language required for the noticereads as follows:

“Pursuant to §38.2-236 of the Code of Virginia, you are herebynotified that a payment was sent on (insert date on which paymentwas sent) by (insert name of insurer) to your attorney or otherrepresentative (insert name, address, and telephone number ofattorney or other representative known to insurer), in satisfactionof your claim or judgment against (insert name of insurer, orinsured, whichever is appropriate). If you have any questions,please contact your attorney or other representative.”

Hurricane Deductibles

An upcoming issue in Maine concerns a focus onhurricane deductible programs. The recently enacted propertyinsurance initiative, LD 452, requires the Maine Bureau ofInsurance to adopt uniform policy standards concerning hurricanedeductible programs. Specifically, the billrequires that the superintendent of insurance “adopt rulesestablishing procedures and standards for an insurer that uses ahurricane deductible program or programs regarding theapplicability of hurricane deductibles. Procedures and standardsmust include without limitation uniform policy standards and theform of notice that the insurer must provide to the named insuredunder a policy subject to this subchapter issued by the insurer.”Homeowners insurers will certainly be watching for expectedproposals from the Bureau.

Colorado also has some upcoming newrequirements for homeowner's insurers effective January 1, 2014.These pending compliance challenges affect both underwriting andclaims practices:

• Before issuing or renewing a replacement-cost homeowners'insurance policy whose dwelling limit is equal to or greater thanthe estimated replacement cost of the residence, the insurer mustprovide the applicant with an opportunity to obtain extendedreplacement-cost coverage and law and ordinancecoverage.
• All homeowners' insurance replacement cost policies for adwelling must include additional living expense (ALE)coverage.
• The text of all endorsements, summary disclosure forms, andhomeowners' insurance policies must not exceed the tenth-gradereading level, as measured by the Flesch-Kincaid grade-levelformula, or must not score less than 50, as measured by the Fleschreading ease formula. Insurers must revise all homeowners'insurance policies issued or renewed in Colorado on or afterJanuary 1, 2015, to comply with these requirements.
• Insurers must provide written notification to policyholdersdescribing changes in insurance policy language that are applicableto the renewal period.
• An electronic or paper copy of the policyholder's insurancepolicy must be available to the policyholder, including thedeclaration page and any endorsements, within 3 business daysafter a request from the policyholder. The policyholder must beable to select the method of delivery.
• Insurers must make available to a policyholder a certified copyof the policyholder's insurance policy within thirty days after arequest from the policyholder.
• In the event of a total loss of the contents of anowner-occupied primary residence that was furnished at the time ofloss, the insurer shall offer the policyholder a minimum of 30percent, or a larger percent by mutual agreement of thepolicyholder and insurer, of the value of the contents coveragereflected in the declaration page of the homeowners' policy withoutrequiring submittal of a written inventory of the contents. Inorder to receive up to the full value of the contents coverage, thepolicyholder may accept the offer under this paragraph (a) andsubmit a written inventory as required by the insurer.
• If the policyholder receives the depreciated value of contentsinsured under a policy, then the insurer must make availableto the insured the methodology used for determining the depreciatedvalue of the insured contents.
• An insurer shall allow the policyholder at least 365 daysafter a total loss claim to submit an inventory of lost or damagedproperty.

Turning to Maryland, effective June 1, 2013, aninsurer that issues a policy of homeowners' insurance in the statethat contains an anti-concurrent causation (ACC) clause is requiredto provide its policyholder each year with a notice that:

• Is clear and specific.
• Describes the ACC clause.
• Informs the insured to read the policy for completeinformation on the exclusions.
• States that the insured should communicate with theinsurance producer or the insurer for additional informationregarding the scope of the exclusions.

We are fast approaching the true halfway mark in the year, butactual changes and pending ones definitely have impacts on P&Coperations. With varying effective dates, insurers will need toreview, assess, and implement any required procedural changes intheir processing systems.