Hot Topics in Maryland Property and Casualty Presentation to the Mid-Atlantic Chapter of Insurance Compliance Professionals

Transcription

1 Hot Topics in Maryland Property and Casualty Presentation to the Mid-Atlantic Chapter of Insurance Compliance Professionals June 3, 2013 Pier Five Hotel Baltimore, MD

2 Overview of the Maryland Insurance Administration s Property and Casualty Unit Complaints Robert Baron Director Benita Cooper Assistant Chief Investigator Mardrell Mitchell Assistant Chief Investigator Patricia Sweet Assistant Chief Investigator William Baker Investigator Andrew Beatty Investigator Sharon Booker Investigator Jean Geier Investigator Shelley Hawkins Investigator James Hurley Investigator Jason Jackson Investigator Cheryl Kouns Investigator Monique Leach Investigator Marie Lonesome Investigator Benjamin Malinowski Investigator Margaret McCarthy Investigator Stephanie Morcek Investigator Adrena Newman Investigator Marsha Rader Investigator Elizabeth Veasel Investigator Eric White Investigator David Zitterbart Investigator Virginia Boulin Secretary Cordelia Conyers Secretary Iris Cruz Administrative Associate Deborah Eggleston Secretary Mary Murray Secretary Renee Scott Data Entry Clerk Linda Tunstall Receptionist

3 Overview of the Maryland Insurance Administration s Property and Casualty Unit (cont d) Rates and Forms Geoffrey Cabin Director Anne Christ Chief Administrator Linas Glemza Actuary Janice Bonadio Insurance Analyst Shirley Corbin Insurance Analyst Marsha Hall Insurance Analyst Marjorie Langott Insurance Analyst Geraldine Howard Office Manager Alicia Jackson Intake Analyst

4 Quick Stats for Fiscal Year 2012 (July 1, 2011 June 30, 2012) Complaints Received/Processed* Percentage Closed In 90 days 6,887 78% Rate and Form Filings Received/Processed Percentage Closed In 30 days 22, % *This number does not include 1,200+/- complaints resolved through the MIA s Rapid Response Program on an informal basis.

5 Trends for Complaints Private Passenger Auto Protests (Premium increases, Cancellations and Non-renewals) Number received has increased slightly year over year Reasons for increase may not be clear and specific to insureds Approximately 33% of protests are resolved in the insured s favor General Complaints Number received has decreased slightly year over year Claims-related complaints predominate Denials Delays Adjuster handling Unsatisfactory settlement offers Rating and Underwriting Approximately 25% of general complaints are resolved in the complainant s favor

6 Trends for Rates and Forms Number of Filings Continues to Increase Year Over Year May 1 through 29, Form filings, consisting of 1236 separate forms and over 4,219 pages 208 Rate/rule filings, consisting of 6,839 pages Requests for underwriting guidelines Complexity of the Filings Rate/Rule/Underwriting Auto Insurance Credit scoring Tiering algorithms Usage based insurance data Property insurance Forms Catastrophe modeling Underwriting restrictions Coverage restrictions Cosmetic damage exclusions for exterior surfaces ACV for roofs Multiple deductibles Disclosures

7 A Brief History of Homeowners Disclosures in Maryland Date/Event Number of Disclosures Required 1872 through Offer of water/sewer backup (Section ) Claims considered for non-renewal and cancellation (Section )

8 Coverage for Water Damage a. Timing Inception of policy and renewal b. The law provides as follows: (a) An insurer that issues, sells or delivers a homeowner s insurance policy shall at the time of application and renewal offer in writing to provide coverage for loss that: (1) Is caused by or results from water that backs up through sewers or drains; and (2) Is not caused by the negligence of the insured.

9 Discrimination in Underwriting a. Timing Inception of policy and renewal b. The law provides as follows: (n)(2) If an insurer considers claims history for purposes of canceling or refusing to renew coverage, the insurer shall disclose the practice to an insured at the inception of the policy and at each renewal.

10 A Brief History of Homeowners Disclosures in Maryland Date/Event Number of Disclosures Required 1872 through Offer of water/sewer backup (Section ) Claims considered for non-renewal and cancellation (Section ) September, 2003 Tropical Storm Isabel strikes 2006 Legislative session 3 more were added Annual summary statements (Section ) Information and advice re: flood (Section ) Statement of optional coverage (Section )

11 Annual Summary of Coverage Statement a. Timing Annually b. Disclosure must state: (i) the policyholder should read the policy for complete information on coverages and exclusions; (ii) the policyholder should refer to the declarations page for a listing of coverages purchased; (iii) the policyholder should communicate with the insurance producer or the insurer for any additional information regarding the scope of coverages in the policy; (iv) the statement does not include additional optional coverage purchased by the policyholder, if any; (v) the statement is not part of the policy or contract of insurance and does not create a private right of action; (vi) all rights, duties, and obligations are controlled by the policy and contract of insurance; and (vii) the standard homeowner's insurance policy does not cover losses from flood.

12 Insurer to Provide Information and Advice Concerning Flood Insurance a. Timing At time of initial purchase b. Disclosure must: (i) state that flood insurance may be available through the National Flood Insurance Program or other sources; (ii) provide the applicant with the contact information for the National Flood Insurance Program; (iii) advise the applicant to confirm the need for flood insurance with the National Flood Insurance Program or the applicant's mortgage lender; (iv) advise the applicant to contact the National Flood Insurance Program, the applicant's insurer, or the applicant's insurance producer for information about flood insurance; (v) advise the applicant that flood insurance may be available for covered structures and their contents; (vi) advise the applicant that a claim under a flood insurance policy may be adjusted and paid on a different basis than a claim under a homeowner's insurance policy; and (vii) advise the applicant that a separate application must be completed to purchase flood insurance.

13 Statement of Optional Coverage Available a. Timing At time of application b. Disclosure must: (i) be on a separate form; (ii) be titled, in at least 12 point type, "Additional Optional Coverage Not Included in the Standard Homeowner's Insurance Policy"; (iii) contain the following disclosure in at least 10 point type: "Your standard homeowner's insurance policy does not cover all risks. You may need to obtain additional insurance to cover loss or damage to your home, property, and the contents of your home or to cover risks related to business or personal activities on your property. This statement provides a list of the types of additional insurance coverage that are available. Contact your insurance company, insurance producer, or insurance agent to discuss these additional coverages."; and (iv) contain a list of additional optional coverage.

14 A Brief History of Homeowners Disclosures in Maryland Date/Event Number of Disclosures Required 1872 through Offer of water/sewer backup (Section ) Claims considered for non-renewal and cancellation (Section ) September, 2003 Tropical Storm Isabel strikes 2006 Legislative session 3 more were added Annual summary statements (Section ) Information and advice re: flood (Section ) Statement of optional coverage (Section ) 2008 Legislative session 2 more were added % Deductible in the case of a hurricane or other storm (Section ) Actuarially justified premium discount (Section )

15 Underwriting Standard in Homeowner s Insurance Policy a. Timing Annually b. The law provides as follows: (c)(1) An insurer that has adopted an underwriting standard that requires a deductible equal to a percentage of the "Coverage A -- Dwelling Limit" of the policy in the case of a hurricane or other storm shall provide a policyholder with an annual statement explaining the manner in which the deductible is applied.

16 Actuarially Justified Premium Discount a. Timing Annually b. The law provides as follows: (f)(1) An insurer that offers a premium discount under this section shall provide a policyholder with an annual statement regarding the availability of the discount and the method of applying for the discount.

17 A Brief History of Homeowners Disclosures in Maryland Date/Event Number of Disclosures Required 1872 through Offer of water/sewer backup (Section ) Claims considered for non-renewal and cancellation (Section ) September, 2003 Tropical Storm Isabel strikes 2006 Legislative session 3 more were added Annual summary statements (Section ) Information and advice re: flood (Section ) Statement of optional coverage (Section ) 2008 Legislative session 2 more were added % Deductible in the case of a hurricane or other storm (Section ) Actuarially justified premium discount (Section ) September, 2009 Water main ruptures in Dundalk, MD 2010 Legislative session MIA agreed to study how best to disclose coverage for water that is discharged from a plumbing source, including a water main. See SB 906, 2010 Session.

18 A Brief History of Homeowners Disclosures in Maryland Date/Event Number of Disclosures Required 1872 through Offer of water/sewer backup (Section ) Claims considered for non-renewal and cancellation (Section ) September, 2003 Tropical Storm Isabel strikes 2006 Legislative session 3 more were added Annual summary statements (Section ) Information and advice re: flood (Section ) Statement of optional coverage (Section ) 2008 Legislative session 2 more were added % Deductible in the case of a hurricane or other storm (Section ) Actuarially justified premium discount (Section ) September, 2009 Water main ruptures in Dundalk, MD 2010 Legislative session 1 more was added MIA agreed to study how best to disclose coverage for water that is discharged from a plumbing source, including a water main. See SB 906, 2010 Session January, 2011 Study report issued and MIA committed to the development of a consolidated disclosure 2012 Legislative session 1 more was added Reasons an insurer may cancel or non-renew (Section )

19 Limitation on Number of Claims Made Notice a. Timing At time of application or issuance and at renewal b. The law provides as follows: (1) the insurer may cancel or refuse to renew coverage on the basis of the number of claims made by the policyholder within the preceding 3-year period; and (2) the insurer may cancel or refuse to renew coverage on the basis of: (i) (ii) three or more weather-related claims made within the preceding 3-year period; one or more weather-related claims made within the preceding 3-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 (iii) a change in the physical condition or contents of the premises that: (1) Increases the hazard insured against; and (2) if present and known to the insurer before the issuance of the policy, would have caused the insurer to refuse to issue the policy.

20 A Brief History of Homeowners Disclosures in Maryland Date/Event Number of Disclosures Required 1872 through Offer of water/sewer backup (Section ) Claims considered for non-renewal and cancellation (Section ) September, 2003 Tropical Storm Isabel strikes 2006 Legislative session 3 more were added Annual summary statements (Section ) Information and advice re: flood (Section ) Statement of optional coverage (Section ) 2008 Legislative session 2 more were added % Deductible in the case of a hurricane or other storm (Section ) Actuarially justified premium discount (Section ) September, 2009 Water Main ruptures in Dundalk, MD 2010 Legislative session 1 more was added MIA agreed to study how best to disclose coverage for water that is discharged from a plumbing source, including a water main. See SB 906, 2010 Session January, 2011 Study report issued and MIA committed to revamp the disclosures 2012 Legislative session 1 more was added Reasons an insurer may cancel or non-renew (Section ) April, 2012 Tracey v. Solesky Decision October, 2012 Super Storm Sandy 2013 Legislative session 2 more were added Concurrent causation exclusion and description (Section ) No coverage for breeds of dogs (Section )

21 Homeowner s Insurance Anti-Concurrent Causation Clause a. Timing Annually b. The law provides as follows: (i) An insurer that issues a policy of homeowner s insurance in the State that contains an anti-concurrent causation (ACC) clause shall provide a policyholder each year with a notice that: (a) (b) (c) (d) Is clear and specific Describes the ACC clause Informs the insured to read the policy for complete information on the exclusions; and States that the insured should communicate with the insurance producer or the insurer for additional information regarding the scope of the exclusions.

22 Homeowner s or Renter s Insurance Specific Breeds or Mixed Breed of Dogs a. Timing At time of application or issuance and at renewal b. The law provides as follows: (i) (ii) This section applies to an insurer that offers a homeowner s insurance or renter s insurance policy in the State that does not provide coverage for losses caused by specific breeds or specific mixed breeds of dogs. At the time of application for or issuance of a policy of homeowner s insurance or renter s insurance, and at each renewal of a policy of homeowner s insurance or renter s insurance, an insurer subject to this section shall provide to an applicant or an insured a written notice that: (a) States that the policy does not provide coverage for losses caused by specific breeds or specific mixed breeds of dogs; (b) Identifies the specific breeds or specific mixed breeds of dogs for which the policy does not provide coverage.

23 The following was developed by the MIA in 2006 to comply with the annual statement disclosure.

24 Annual Summary of Homeowner s Coverages and Exclusions This Annual Summary of your Homeowner s Coverages is to assist you by serving as an overview of the coverages and exclusions under your policy; it is not part of your policy; does not create a private right of action; and is not a substitute for your policy. This Summary is being provided for your general information only. You should read your policy for complete information on coverages and exclusions as all rights, duties and obligations are controlled by the policy and contract of insurance, not this Summary. This Summary outlines the usual coverages and exclusions contained in the policy form and does not include any optional coverages you may have purchased. If there is a conflict between this Summary and your policy, the language of your policy will control. Please note: The Standard Homeowner s Insurance Policy does NOT cover losses from flood. Flood insurance may be purchased through the National Flood Insurance Program or other sources.

25 Summary of Coverages: The two general types of coverage provided by your policy are 1) property coverage, also referred to as Section I coverage, and 2) liability coverage, also referred to as Section II coverage. The Property Coverage portion of your policy covers losses resulting from damage to your residence and structures attached to your residence (Coverage A), it covers losses resulting from damage to other structures on your residence premises set apart from your residence (Coverage B), it covers losses to personal property owned by you or used by you subject to specific coverage limits based on the location and type of personal property (Coverage C), and it covers certain additional living expenses and the fair rental value of the part of your residence in which you live if a covered loss makes your residence not fit to live in (Coverage D). The Liability Coverage portion of your policy protects you against claims and legal actions resulting from property damage or bodily injury to others as a result of an accident and for which you are legally liable (Coverage E), and medical expenses for bodily injury to others (Coverage F). In addition to the basic property and liability coverage, your policy contains some additional coverages that are summarized below. Each property, liability and additional coverage is subject to the specific terms, conditions, exclusions, limits and deductibles set forth in your policy and the Declaration Page, which is the front page of your policy that provides a listing of all the coverages and limits of those coverages that you have purchased.

26 Coverage A - Dwelling Structure: Replacement Cost Actual Cash Value Other Coverage B - Other Structures: Replacement Cost Actual Cash Value Other Coverage C - Personal Property: Replacement Cost Actual Cash Value Coverage D - Loss of Use: Actual Cash Value Perils Insured Against: Fire or Lightning Windstorm or Hail Explosion Riot or Civil Commotion Aircraft Vehicles Smoke Vandalism or Malicious Mischief

27 Theft Falling Objects Weight of Ice, Snow or Sleet Accidental Discharge or Overflow of Water or Steam Sudden and Accidental Tearing Apart, Cracking, Burning or Bulging Freezing Sudden and Accidental Damage from Artificially Generated Electrical Current Volcanic Eruption Any Other Peril Not Specifically Excluded (dwelling and other structures only) Exclusions: Ordinance or Law Collapse Earth Movement Water Damage Flood, surface water, waves, etc. Mold Remediation Power Failure Neglect War Nuclear Hazard Intentional Loss Governmental Action Other Exclusions as Listed Below:

28 Additional/Other Coverages: Debris Removal Reasonable Repairs Trees, Shrubs or Other Plants Fire Department Service Charge Property Removed Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Collapse Glass or Safety Glazing Material Landlord s Furnishings Law and Ordinance Grave Markers Identity Theft Other Coverages as Listed Below:

29 Liability (Section II) Coverages: Additional/Other Liability Coverages: Claim Expenses First Aid Expenses Damage to Property of Others Loss Assessment Exclusions: Expected or Intended Injury Business Professional Services Motor Vehicles Watercraft Aircraft Communicable Diseases Sexual Molestation, Corporal Punishment or Physical or Mental Abuse Controlled Substance War

30 This Annual Summary of Homeowner s Coverages is just a summary of the coverages and exclusions under your policy. It is not an exhaustive list. Some claims may or may not be covered depending on the facts and circumstances surrounding the loss. You should read your policy for complete information regarding your coverage. The Declarations Page, the front page of your policy, will provide a listing of all the coverages and limits of those coverages that you have purchased. Should you have any questions regarding this summary, your policy, its coverages or the limits of coverage, you should contact your insurance producer or agent or your insurance company directly to discuss your policy with them. (HO. ed. 10/06)

31 The following is the MIA s proposal as a result of the latest studies and consumer testing.

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39 Regulations in the Pipeline 1. Regulation Temporary Moratoriums and Weather Events 2. Regulation Addition, Reduction or Elimination in Coverage Notice Requirements 3. Regulation Percentage Deductible Regulations 4. Draft Proposed Regulations COMAR Underwriting Period Discovery of a Material Risk Factor

40 QUESTIONS? Sandra Castagna Associate Commissioner for Property & Casualty Kathy Schott Executive Asst. to Associate Commissioner