In 2004, the big news in the Southeast revolved around hurricanes and floods, and state officials reactions in the aftermath of these events. The Florida Legislature as a result, is trying to decide what to do about multiple deductibles, the cancellation of policies and financing the state’s insurer of last resort, Citizens Property Insurance Corp. Alabama and Mississippi officials are closely watching what happens in Florida before deciding what to do in their states. A roundup of the year’s most important news events appears here state-by-state and in chronological order.
SOUTHEAST
JEANNE MAKES 2004 COSTLIEST:
Hurricane Jeanne, the fourth major storm to hit Florida caused between $4 billion and $14 billion in insured losses in the state, meaning that 2004 may be the insurance industry’s costliest year for U.S. hurricane losses. (September)
HURRICANES’ CLAIMS EXCEED $22B:
Thanks to Hurricanes Charley, Frances, Ivan and Jeanne, insurance claim payments are expected to exceed $22 billion, far surpassing the claims for hurricane Andrew in 1992, which totaled $15.5 billion. (October)
ALABAMA
STATE OF EMERGENCY DECLARED:
Gov. Bob Riley declared a state of emergency in Alabama due to the imminent threat posed by Hurricane Ivan. (September)
A.G. WARNS OF PRICE GOUGING:
Alabama Attorney General Troy King warned unscrupulous contractors and businesses that he will be vigilant against those who seek to profit illegally at the expense of Alabamians who suffer damage and others who seek refuge in the state from the ravages of Hurricane Ivan. (September)
FEDERAL DISASTER DECLARATION:
Gov. Bob Riley announced during a news conference at the Alabama Emergency Operations Center he has requested President Bush declare 44 counties federal disaster areas destroyed by Hurricane Ivan. (September)
HURRICANE VICTIMS GRACE PERIOD:
Gov. Bob Riley and Insurance Commissioner Walter Bell directed insurance companies to provide a 60-day grace period on non-payment of premiums to citizens affected by Hurricane Ivan. (September)
DOI EYEING BROKERS, COMPANIES:
The Alabama Department of Insurance is interviewing brokers and companies that are tied to entities that have attracted the attention of prosecutors in New York and other states. (October)
FLORIDA
LAW LIMITS INSURERS’ USE OF CREDIT REPORTS:
A law that went into effect Jan. 1 prohibits insurance companies from using a person’s credit history against them if they are dealing with unexpected medical bills or the death of a spouse. The new law also prohibits insurers from denying coverage or raising rates based solely on a credit report or score. (January)
$1B UNCLAIMED PROPERTY HELD:
At a bimonthly meeting with the governor and other Florida Cabinet members, Chief Financial Officer Tom Gallagher announced that the Department of Financial Services’ Bureau of Unclaimed Property is holding more than $970 million in cash and property belonging to Floridians. (January)
FLORIDIANS OPTIONS AFTER LOSING COVERAGE:
In the wake of a large health insurer announcing it will not renew policies of individual health customers, Florida’s chief insurance regulator cautioned affected policyholders to be aware of their options. Director of the Florida Office of Insurance Regulation, Kevin McCarty, said he regrets that United HealthCare has chosen not to renew all individual health insurance policies, particularly when other companies are exploring entering the Florida health insurance market. (January)
WORKERS’ COMP MARKET NEEDS TO RECUPERATE:
Although the Florida workers’ compensation market is still under stress, and the Florida Workers’ Compensation Joint Underwriting Associ-ation (FWCJUA) prepares to post hefty deficits, observers are confident that reform legislation passed last year will help improve the situation. The FWCJUA, Florida’s market of last resort for workers’ comp coverage, reported deficits for last year and could see deficits of as much as $42 million in 2004. (January)
SCORING BENEFITS CONSUMERS:
Insurance scoring is a proven, accurate, objective and consistent risk assessment tool that provides significant benefits to Florida consumers, the Florida insurance industry testified at a Florida Office of Insurance Regulation rule development workshop. (March)
SESSION ‘PRODUCTIVE’ FOR P/C:
Florida’s legislative session “proved to be very productive,” according to an official with the National Association of Mutual Insurance Companies. Florida lawmakers enacted several key property/casualty bills before adjourning. (May)
HOMEOWNERS LAW SIGNED:
A measure designed to increase the availability of homeowners insurance and improve Flori-da’s ability to recover financially from catastrophic hurricanes through improvements to Florida’s Hurricane Catastrophe (Cat) Fund was signed into law. The Cat Fund was created after Hurricane Andrew to ensure that Florida’s insurance companies could quickly pay homeowners claims after a major hurricane and continue to provide coverage. (May)
DFS FINES WORKERS’ COMP CARRIERS, SELF-INSURED PLANS:
The Florida Department of Financial Services fined 31 providers of workers’ compensation coverage more than $875,000 for failing to fully comply with Florida law in administering workers’ comp benefits to injured workers. The fines are the result of audits completed during the fiscal year 2003-04. (July)
MEASURE TO REDUCE HURRICANE LOSSES:
U.S. Sen. Bill Nelson of Florida, who helped rebuild the state’s insurance market following Hurricane Andrew, unveiled legislation to reduce the loss of life and property caused by hurricanes, tornadoes and other severe storms. Florida’s former insurance commissioner proposed a national program to help make homes and businesses more resistant to high winds from powerful storms. (July)
HURRICANE CAT FUND UPGRADED: The authorized bonding program of the Florida Hurricane Catastrophe (Cat) Fund (FHCF) has been upgraded to “AA” from “A+.” The FHCF provides reinsurance coverage of up to $15 billion per hurricane season, reimbursing insurers after hurricane-related residential property insurance losses have reached the deductible, currently $4.5 billion. (August)
A.G. WARNS ABOUT PRICE GOUGING:
Florida Attorney General Charlie Crist activated a toll-free hotline and urged Florida residents to report suspected price gouging associated with Tropical Storm Bonnie and Hurricane Charley. (August)
EVACUATION ACTION:
Two million residents and visitors evacuated Florida as Hur-ricane Charley edged its 110-mph winds closer to the state’s west coast. Charley’s center passed west of the Florida Keys before hitting Tampa Bay. (August)
PRESIDENT ORDERS DISASTER AID:
Gov. Jeb Bush announced that President Bush has ordered the release of federal disaster funds and emergency re-sources to aid people affected by Hurricane Frances. (September)
AIR WORLDWIDE RE-PORTS FRANCES LOSSES:
While significantly less intense than Hurricane Charley in terms of sustained wind speeds at landfall, AIR Worldwide estimates that total insured losses for Florida from Frances will be between $5 and $10 billion. (September)
PRESIDENT DECLARES THIRD MAJOR DISASTER:
The head of the U.S. Department of Homeland Security’s Federal Emergency Management Agency an-nounced that President Bush ordered the release of federal disaster aid resources for Floridians pummeled for the third time by a hurricane in little over a month. (September)
HURRICANE JEANNE TEARS FRESH PATH:
Hurricane Jeanne, the fourth major hurricane in six weeks, shut down much of Florida and prompted recovery plans on a scale never before seen in the nation. (September)
AMERICAN SUPERIOR IN RECEIVERSHIP:
Regulators placed American Superior Insurance Co. into receivership after it became overwhelmed by homeowners’ claims. The small company has about 60,000 policyholders. (October)
FIREMAN’S FUND OKS SINGLE DEDUCTIBLE:
The rapid succession of Hurricanes Charley, Frances, Ivan and Jeanne prompted Fireman’s Fund Insurance Co. to allow its homeowners policyholders to treat property damage from the four storms as one event for purposes of calculating the amount of the hurricane de-ductible on losses. (October)
AMENDMENT 2: LESS FOR MALPRACTICE:
Voters handed victories to both sides in the war between Florida doctors and law-yers, adopting a hotly contested constitutional amendment backed by Flor-ida doctors but also endorsing two amendments pushed by law-yers and bitterly opposed by doctors. The new amendments mean lawyers will get less money for taking on malpractice cases. But they will also have easier access to medical records. And doctors who make too many mistakes will lose their licenses. (November)
AG LAUNCHES ANTI-TRUST PROBE:
Attorney General Charlie Crist issued subpoenas seeking documents and records from 10 firms. Crist is investigating arrangements between insurers and brokers commercial group accounts for property and casualty insurance, life and health policies. (November)
MARSH SUBPOENAED:
To obtain a better look at insurance contracts with state agencies and any impact on public dollars, Tom Gallagher, Florida Chief Financial Officer, has subpoenaed Marsh & McLennan for documents related to the purchase of property insurance coverage for state-owned buildings. (November)
HOME BUYERS SWAMP CITIZENS:
Before any new home buyer can purchase a house, they have to have “proof of coverage,” and with home insurance harder and harder to obtain, potential homeowners are flocking to the state-sponsored insurer, Citizens Property Insurance Corp. (November)
SUBPOENAS ISSUED TO 11 INSURERS:
Attorney General Charlie Crist issued subpoenas to 11 insurance companies as part of an ongoing investigation into the business practices of the insurance industry. The subpoenas seek documents and records that involve questionable fee arrangements and possible bid rigging. (November)
CITIZENS ORDERED TO REVIEW RATES:
The Florida Office of Insurance Regulation has issued an order to the Citizens Property Insurance Corporation to review of its rates to assure they meet statutory guidelines. (November)
CHARGES FILED IN MURDER OF ADJUSTER:
Charges of murder and of sexual battery were filed in the slaying of an insurance adjuster who went to in-spect a hurricane-damaged rental home. (November)
MORATORIUM EXTENDED:
Gov. Jeb Bush and members of the Florida Cabinet have approved an emergency rule banning insurance companies from canceling or non-renewing insurance policies for victims whose homes have not been repaired and extending the moratorium to Dec. 31. (November)
FEMA PAID BOGUS CLAIMS:
The Legislature has asked for an investigation on $28 million in illicit insurance claims paid for damage done by Hurricane Frances in Miami and Dade County, an area barely touched by the hurricane. (November)
LEGISLATORS TO DISCUSS MULTIPLE DEDUCTIBLES:
Gov. Jeb Bush urged the Florida Legislature, during upcoming Dec. 13 special sessions to discuss citizens concerns about multiple insurance deductibles, repair work and property taxes. (December)
TASK FORCE TO IMPROVE CITIZENS’ SERVICES:
A 13-member joint task force will recommend improvements in the operation of the Citizens Property Insurance Corporation (Citizens) to improve customer service and return policies to the private-sector insurance market. It will also address commission payments for agents placing business with Citizens. (December)
LAWMAKERS–STICK TO KEY ISSUES: When the Legislature meets in special sessions lawmakers should focus on pressing matters facing more than 1.2 million commercial and residential property owners and leave less urgent concerns until March regular sessions, according to Kevin McCarthy, Florida Commissioner of Insurance Regulation. (December)
GEORGIA
$20.5M IN CLAIMS RECOVERED:
In 2003, Insurance Commissioner John Oxendine’s Consumer Services Division reportedly helped tens of thousands of Georgia consumers settle disputes with their insurance companies, returning $20.5 million in insurance claims to these consumers, money they might not have received without his help. (January)
43,000 RESIDENTS HELPED:
In the first half of 2004, Georgia Insurance Commissioner John Oxendine’s Consumer Services Division helped more than 43,000 Georgia residents settle disputes with their insurance companies, returning $7,900,840 in insurance claims to these residents. (August)
GOV. DECLARES STATE OF EMERGENCY:
Gov. Sonny Perdue declared a state of emergency in preparation for the impact from Hurricane Charley, which continued its romp across Florida. (August)
KENTUCKY
AMA SUPPORTS MEDICAL LIABILITY DEBATE:
The American Medical Associa-tion (AMA) said it supports the debate on Kentucky’s medical liability system. (February)
GOV. REQUESTS FEDERAL ASSISTANCE: In a letter to President George W. Bush, Kentucky Gov. Ernie Fletcher requested a declaration of “a major disaster for the Commonwealth as a result of devastating storms that moved through Kentucky producing tornadoes, floods, flash flooding, and mud and rock slides” that began May 27, 2004 and continued through May 31. (June)
PCI URGES WORKERS’ COMP REFORM:
The Property Casualty Insurers Association of America called on Kentucky lawmakers to make changes to the workers’ compensation program to prevent future financial collapses like those recently revealed by one of the major group self-insurance funds operating there. (June)
WATCHING FOR PRICE GOUGING:
Kentucky Attorney General Greg Stumbo alerted residents to watch for price gouging. Storms in Kentucky have resulted in widespread wind and flood damage. (July)
MISSISSIPPI
TORT REFORM BILL COULD SPUR IMPROVEMENTS:
An omnibus tort reform bill introduced in the Mississippi Senate is reportedly ambitious and wide-reaching enough to set the stage for serious reform in the state. “This ambitious bill deserves serious consideration by Missis-sippi legislators,” said William Stander, regional manager for the Property Casualty Insurers Association of America (PCI). “If this legislation passes, Mississippi could set the standard for tort reform and show the way for the rest of the nation.” (February)
MASSMUTUAL RE-ENTERS MISSISSIPPI MUNI MARKET:
The MassMutual Financial Group, a global diversified financial services organization, announced that Massachusetts Mutual Life Insurance Company and its affiliates would re-enter the market for Mississippi municipal bonds following the passage of tort reform legislation in the state. (June)
SOUTHERN LOCALES EVACUATE: Gov. Haley Barbour urged Mississippians in three coastal counties to evacuate immediately in anticipation of Hurricane Ivan’s arrival. (September)
SUPREME COURT URGED TO REVERSE LOCAL COURT’S DECISION:
The Property Casualty Insurers Association of America has urged the Mississippi Supreme Court to reverse a lower court decision that mandates insurance companies to provide coverage for punitive damages in automobile insurance policies. (December)
NORTH CAROLINA
PLAN TO DIVERT MILLIONS FROM SECOND INJURY FUND DROPPED:
In a move supported by the American Insurance Association, House leaders decided against appropriating $40 million from the state workers’ compensation Second Injury Fund to balance the state’s budget. (April)
PUNITIVE DAMAGES CAP UPHELD:
The Supreme Court reaffirmed the constitutionality of the state’s law capping punitive damages, a decision that maintains the certainty and predictability of North Carolina’s judicial system, according to the American Insurance Association. (April)
STATE OF DISASTER DECLARED:
Gov. Mike Easley declared a state of disaster and emergency for Bolton, Lake Waccamaw, Chadbourn, Tabor City, Fair Bluff and Whiteville due to a Jan. 26-27 ice storm. (June)
COAST TAKES ON HURRICANE ALEX:
With maximum sustained winds of almost 100 miles per hour, Hurricane Alex moved along the North Carolina coast toward the Outer Banks, as local property owners took precautions to ensure that their property is covered if the hurricane hits. (August)
$700M IN AUTO RATE REFUNDS:
Insurance Commissioner Jim Long advised the Federal Reserve Bank of Richmond, Va., of the potential for up to $700 million in auto rate refund checks being distributed. (September)
COMMISSIONER DEMANDS BID-RIGGING STATEMENTS:
A “demand to produce information” has been issued by the Department of Insurance in an effort to closely scrutinize the records and practices of more than 5,000 insurance companies and brokers licensed by the state. (October)
UHC COMPANIES SETTLE:
Insurance Commissioner Jim Long announced a voluntary settlement agreement between the Department of Insurance (NCDOI) and two companies, UnitedHealthcare of North Carolina Inc. (an HMO) and United HealthCare Insurance Company. NCDOI officials alleged that company practices violated state laws that govern claim settlement and payment. As part of the settlement, the companies agreed to pay a civil penalty of $1.1 million each. (November)
SOUTH CAROLINA
HOMEOWNERS BILL CLEARS HURDLE:
The Senate Banking and Insurance Committee approved a flex rating bill supported by the American Insurance Association that will eliminate prior approval for homeowners insurance rates. SB 686, as amended, would institute an initial flex-rating approach for personal property insurance rates, in which insurers, within 30 days of a filing, could increase or decrease rates within a 10 percent band above or below the current rate without approval (this is the same as South Carolina’s current personal lines auto law). (January)
COMMITTEE SAYS GO WITH FLEX BAND:
The Senate Banking and Insurance Committee’s recent favorable report on a bill creating flex band rating for homeowners and fire insurance is an encouraging first step toward passing legislation that will replace the state’s prior approval rating law for these lines. SB 686, introduced late during the 2003 legislative session would allow insurers to implement rate changes of up to 10 percent without prior Department approval. (February)
DMLR LAUNCHES CAMPAIGN:
Doctors for Medical Liability Reform (DMLR), a coalition of more than 230,000 medical specialists dedicated to national medical liability reform, launched an aggressive advocacy campaign informing citizens about the growing access-to-healthcare. (July)
TROPICAL STORM GASTON HITS:
Residents steeled themselves for a battering early as Tropical Storm Gaston picked up speed as it spun toward the coast. (August)
CSISZAR NEXT PCI PRESIDENT:
The Board of Governors of the Property Casualty Insurers Association of America (PCI) named South Carolina Director of Insurance and current president of the National Association of Insurance Commissioners Ernst N. Csiszar to serve as the association’s next president and chief executive officer, announced Anthony Dickson, PCI chairman. He will begin his new position Oct. 4. (August)
TENNESSEE
COMMISSIONER FILES SUIT:
Insurance Commissioner Paula Flowers, acting as liquidator for three failed malpractice insurance firms, filed suit in U.S. District Court seeking to recover damages on behalf of more than 50,000 former policyholders. The 62-page lawsuit, filed in the Western District of Tennessee, asserts that executives of Richmond-based Reciprocal of America and its network, together with two reinsurance companies, engaged in a massive conspiracy to defraud policyholders of The Reciprocal Alliance, American National Lawyers Insurance Reciprocal, and Doctors Insurance Reciprocal. The three Tennessee-domiciled risk-retention groups collapsed in January 2003, leaving thousands of doctors, hospitals and lawyers without malpractice coverage and unpaid claims totaling at least $200 million. (February)
PUNITIVE DAMAGE EXCLUSIONS REVERSED: A regulation disallowing exclusions for punitive damages in property casualty insurance policy forms was reversed after 15 years on the books. (August)
WORKERS’ COMP REFORM:
Senate Republicans stand ready to move the Volunteer State forward with a comprehensive workers’ compensation reform bill sponsored by Sen. Mark Norris (R-Collierville). Senate Bill 3169, is designed to carry the workers’ compensation reform legislative package needed this year. (April)
WEST VIRGINIA
NEW COMP RULES, RESOLUTIONS:
Executive Director Gregory Burton said four measures approved by West Virginia’s Workers’ Compensation Board of Managers represent important building blocks for the Commission’s future success. (April)
DISASTER DECLARATION APPROVED:
Gov. Bob Wise announced that President Bush granted a federal Major Disaster Declaration for West Virginia due to severe flooding. Residents in 24 counties can apply for individual assistance grants designed to help them recover flood-related expenses. Counties include: Boone, Braxton, Cabell, Calhoun, Clay, Fayette, Gilmer, Jackson, Kanawha, Lewis, Lincoln, Logan, Mason, McDowell, Mercer, Mingo, Nicholas, Putnam, Raleigh, Roane, Wayne, Webster, Wirt and Wyoming. (June)
$2.5M HURRICANE IVAN AID:
Federal and state grants to assist with flood recovery efforts have reached $2.5 million. (September)
HURRICANE IVAN AID AT $10M:
Federal and state funds to assist with flood recovery efforts were upped to $10.5 million, state and federal recovery officials said. President Bush’s Sept. 20 Hurricane Ivan disaster declaration for West Virginia now includes 22 counties. (October)
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