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AM BEST'S MONTHLY INSURANCE MAGAZINE


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In the News
Regulatory Update

New insurance commissioners named, gender ban in auto insurance rate setting and the continuing impact of Brexit are in focus.
  • February 2019
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New Head of N.Y. DFS: New York Gov. Andrew Cuomo has nominated Linda Lacewell as superintendent of the New York State Department of Financial Services. She would succeed outgoing Superintendent Maria Vullo, who is stepping down Feb. 1. The nomination must clear the state Senate.

Lacewell previously served as Cuomo's chief of staff and counselor, overseeing executive chamber operations, as well as ethics and law enforcement matters. She also served as special counsel to Cuomo when he was the state's attorney general, overseeing a public pension fund pay-to-play investigation and the out-of-network health insurance investigation.

 

Auto Insurance: California has issued new rules, which ban automobile insurers from using a driver's gender when setting rates. The new regulations went into effect Jan. 1. The rules bring private auto insurance prices into line with the provisions of voter-approved Proposition 103, which prohibits unfair and discriminatory pricing, said Carmen Balber, executive director of Consumer Watchdog, a California advocacy group.

Gender had previously been approved as an optional rating factor, Balber said. Testing by the Consumer Federation of America has shown, in some markets, one insurer would grant a price break for female drivers while another insurer in the same market would surcharge those same drivers.

 

Claims: The California Supreme Court has rejected an appeal by PacifiCare Life and Health Insurance Co., upholding the state's Fair Claims Settlement Practices Regulations and paving the way for $91 million in penalties imposed by state regulators.

The state's highest court rejected the company's appeal from an adverse ruling by the California Court of Appeals, Fourth Appellate District. There were no written findings attached to the denial. The regulations under litigation prescribe how insurers must process insurance claims.

Insurance Commissioner Dave Jones applauded the ruling, noting the California Department of Insurance found PacifiCare committed 908,547 separate violations of the Unfair Insurance Practices Act. Jones imposed fines aggregating $173,603,750. The state Supreme Court decision involves just $91 million in penalties, the CDI said. An additional related case involving another $82 million in penalties reversed by the Superior Court has been appealed by both sides, according to the CDI.

 

Brexit: Representatives of the United States and the United Kingdom have signed a final covered agreement to protect international insurers and reinsurers that might be exposed to adverse market conditions with the anticipated U.K. exit from the European Union in March.

The U.S.-U.K. Covered Agreement will provide regulatory certainty as the United Kingdom prepares to leave the EU, according to a joint statement by the U.S. Department of the Treasury and the Office of the U.S. Trade Representative.

The new agreement — which became necessary with the planned March 29 Brexit —largely tracks the existing agreement between the United States and the EU, according to a letter sent by U.S. negotiators to congressional leaders. The United Kingdom is the world's fourth-largest insurance market; many U.S. insurers and reinsurers do business in the United Kingdom.

American Council of Life Insurers President and Chief Executive Officer Susan Neely supported the U.S.-U.K. covered agreement.

Under the U.S.-EU covered agreement, states must eliminate collateral requirements for EU reinsurers that meet certain conditions for financial strength and market conduct within five years.

Should states fail to do so, the Federal Insurance Office has authority under the agreement to pre-empt within 42 months any state law that still imposes collateral on EU reinsurers.

 

New Commissioner: Wisconsin Gov. Tony Evers named American Family Insurance Chief Legal Officer Mark Afable to serve as insurance commissioner. Afable succeeds Ted Nickel, who was appointed to the position eight years ago by Republican Gov. Scott Walker. His term concluded on Jan. 7.

Afable joined American Family Insurance in 1994 as associate general counsel and director of government affairs. During his 24 years at American Family he also served as vice president, government affairs and compliance; vice president of claims; executive vice president, overseeing claims and integrated sales and service divisions; and chief legal officer, said spokeswoman Linda Wagener.

Earlier, he worked at Allstate and was counsel for the National Association of Independent Insurers. His appointment as insurance commissioner is subject to state Senate approval.


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