Around the PIA Western Alliance States

California — An Important Message for California Agents: CA Code section 1725.5 and amended by the state senate with bill 1242

Starting January 1, 2023, a new law will require most types of insurance producers, as well as independent insurance adjusters, public insurance adjusters, and analysts, to include their license number on emails. (California Insurance Code section 1725.5, as amended by Senate Bill 1242 [Committee on Insurance, Chapter 424, Statutes of 2022]) This Notice answers some of the most common questions about the new law.

Which types of insurance license does the law apply to?

The law applies to individuals and organizations* licensed as:

• Property broker-agents

• Casualty broker-agents

• Life agents

• Accident and health or sickness agents

• Personal lines agents

• Limited lines automobile insurance agents

• Surplus lines brokers

• Independent insurance adjusters

• Public insurance adjusters

• Life and disability insurance analysts

*Insurance Code section 1628 defines “organization” as meaning any legal entity other than a natural person. The term “organization” includes corporations, partnerships, Limited Liability Companies, and unincorporated associations that hold a license.

California — Lara & Climate Change: Insurance Commissioner Ricardo Lara and the United Nations’ Principles for Sustainable Insurance Initiative (PSI) announced a first-of-its-kind “Sustainable Insurance Roadmap” for the nation’s largest insurance market. The roadmap marks a strategic shift for insurance’s role combating the consequences of climate change for California residents and businesses, toward actively helping reduce emissions and increase community resilience while better aiding recovery from climate-linked disasters.

Commissioner Lara and Butch Bacani, who leads the PSI at the United Nations, introduced the Sustainable Insurance Roadmap during the UN Climate Change Conference in Egypt (COP27), highlighting the four interlocking goals of reducing emissions, accelerating community mitigation, keeping insurance affordable and available for vulnerable communities, and closing protection gaps between insured and uninsured losses.

“California is being aggressive in protecting vulnerable communities from growing climate threats. We need the insurance sector to match our aggressiveness in protecting consumers,” said Commissioner Lara, who attended the global climate conference in Sharm-el-Sheikh, Egypt. The event was co-hosted by Cal Poly Humboldt, California’s public university focused on the interdisciplinary study of the environment, climate crisis, and resilience to climate change. “Working with the United Nations, California is making a strategic shift to put the insurance sector on a sustainable path far into the future. We cannot wait. The route to true sustainability requires reducing emissions while protecting insurance options for residents and businesses. There is no other option.”

“California’s Sustainable Insurance Roadmap is truly pioneering and timely, particularly amid escalating climate and environmental impacts that are leading to many more lives and livelihoods lost, and homes and communities destroyed. It’s a comprehensive strategy and action plan that harnesses the insurance industry’s risk management services, insurance solutions and investments to accelerate the transition to resilient, inclusive, net-zero communities and economies, and to protect life-supporting natural ecosystems,” said Mr. Bacani, who attended from Geneva. “This roadmap helps pave the way for California’s insurance industry to be in line with the aims of this UN Decade of Action to cut greenhouse gas emissions in half, reverse nature loss, and achieve the the UN Sustainable Development Goals. We commend Commissioner Lara’s vision and leadership in delivering this roadmap — it serves as a lighthouse to guide other insurance markets navigating their own sustainability journey.”

Experience shows the economic consequences of climate risks may begin at the point of a disaster, but they have ripple effects throughout communities.

    Protection gaps between insured and uninsured costs delay recovery and shift expenses to families and taxpayers, such as during the 2017 San Jose flood in which lack of coverage led to uncovered losses and lawsuits that took years to resolve.

    Destructive climate-intensified wildfires lead to a surge in apartment and home rental costs, material, and labor costs, as witnessed after 2017 and 2018 fires that claimed 147 lives and damaged or destroyed 35,000 buildings.

    If insurance companies only wait and react to climate-linked disasters through non-renewal of consumers, increasing the protection gap, and straining safety net programs, the opportunity is missed to provide stronger incentives today to reduce risks and costs and be more resilient tomorrow. 

Roadmap gives clear direction for climate action

The Sustainable Insurance Roadmap envisions climate actions by insurance companies, including rewarding resilience, increasing green investments, underwriting more climate-friendly technologies, and protecting nature-based solutions such as healthy wetlands and forests. Commissioner Lara has already taken actions to implement the Sustainable Insurance Roadmap, including:

    Enforcing the first-in-the-nation regulation requiring insurance companies to provide wildfire safety discounts to homes and businesses, in order to increase community resilience and prevent future losses.

    Issuing the first-ever Climate Insurance Report in 2021, which made 40 recommendations to protect vulnerable communities from the costs of climate change. Commissioner Lara sponsored legislation first proposed in the report that make California the first state to provide a health-based early warning system for heat waves (AB 2238, Chapter 264, Statutes of 2022) and creating climate resilience districts that can support nature-based solutions (SB 852, Chapter 266, Statutes of 2022).

    Providing the public with analysis and disclosure on insurance company fossil fuel investments and green investments, in order to increase transparency for consumers and measure progress.

    Leading a successful bipartisan national effort to endorse a strong new standard for insurance companies to report their climate-related risks, in alignment with the international Task Force on Climate-Related Financial Disclosures (TCFD).

    Creating a Climate Smart Insurance Products Database, with insurance supporting the expansion of green technology by businesses and consumers.

What others are saying about the Sustainable Insurance Roadmap

“Cal Poly Humboldt is proud to be among California’s leading institutions of higher learning with a focus on sustainability and solutions to address climate change,” said Eric Riggs, Dean of the College of Natural Resources and Sciences, Cal Poly Humboldt. “Universities like ours are in a unique position to conduct the rigorous research and development needed to find viable solutions to address the challenges posed by climate change and develop the workforce necessary to apply these solutions at scale to benefit reduce risks to the state, the nation and the world. We are excited to join Commissioner Lara in this effort to protect our diverse communities.”

“The California Sustainable Insurance Roadmap is an action plan to protect communities from climate impacts like extreme heat, particularly communities of color who are disproportionately exposed to this climate threat,” said Sona Mohnot, Associate Director of Climate Equity, Greenlining Institute. “Ranking heat waves and studying the insured and uninsured impacts will help us identify extreme heat as the life-threatening emergency it is and give communities the information needed to stay safe, healthy and protected.”

“The insurance sector can play an important role in protecting households, businesses, and communities from the increasing risk of climate extremes, while also facilitating decarbonization of the economy,” said Carolyn Kousky, Associate Vice President for Economics and Policy at the Environmental Defense Fund. “The California Sustainable Insurance Roadmap provides a guidebook for how to harness insurance in support of climate policy.”

“As Climate change impacts — worsening droughts, heat, floods, and wildfires — grow, economic losses mount. In California many of those losses are uninsured, meaning that disaster victims often shoulder the expense of recovery themselves,” said Alice Hill, the David M. Rubenstein Senior Fellow for Energy and the Environment at the Council on Foreign Relations and chair of the Climate Insurance Working Group at the Department of Insurance. “With insurance, however, homeowners, businesses, and communities can recover more quickly. The Sustainable Insurance Roadmap, created by the California Department of Insurance in partnership with the United Nations, provides a first-of-its kind guide to assist the insurance sector in achieving greater insurance protection in the face of climate change. Following this roadmap could strengthen communities, make homes safer, and drive greater reductions in harmful greenhouse gas emissions.”

“The resilience strategies in the Sustainable Insurance Roadmap provide another tool to protect California communities from the dangers of wildfire,” said Yana Valachovic, forest advisor and county director for the University of California Cooperative Extension-Humboldt and Del Norte counties. “Insurance companies promoting home hardening before a wildfire is a critical ingredient in protecting families and preventing losses.”

“California Insurance Commissioner Lara and the Department of Insurance team deserve significant credit for developing and publishing their Sustainable Insurance Roadmap. This is a thoughtful analysis of the first-in-the-nation actions they have already taken to address the significant financial risk that climate change causes and the additional steps that hopefully will be addressed across the nation,” said Steven M. Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets. “It is a pleasure to work with them and other insurance regulators across the nation to address this growing financial crisis.”

“We are proud to host this important conversation at our COP27 pavilion. Under Commissioner Lara’s leadership, California is working hard to be at the vanguard of sustainability when it comes to the insurance industry,” said Amy Holm, Executive Director of The Climate Registry. “This partnership with another leader in the space, the PSI, is incredibly encouraging. It’s in The Climate Registry’s DNA to promote such innovative collaborations to move the needle on climate change, especially in arenas as expansive and all-encompassing as the insurance industry, and we could not be more honored to do so at COP27.”

“Every industry has a role to play in the fight against the climate crisis, and the insurance industry is no different,” said Brandon Dawson, Director of Sierra Club California. “The Sustainable Insurance Roadmap proposed by Commissioner Lara successfully aligns California’s GHG emission reduction goals and efforts to protect vulnerable communities with cutting edge insurance policy. California needs a rapid transition to a clean transportation economy to best protect communities, and this roadmap will aid in that effort.”

“Insurance companies have a responsibility to help prevent a climate crisis that is already hurting California’s most vulnerable communities, including seniors and immigrants – and Commissioner Lara has created a roadmap to do just that,” said Mary Creasman, Chief Executive Officer of California Environmental Voters. “The actions he is taking to protect consumers from wildfires and flooding are showing the way for truly sustainable solutions here in California and around the world.”

“Ongoing drought, extreme heat, and the continued threat of catastrophic, severe wildfire serve as poignant reminders of the climate challenges facing California. In addition to safeguarding people we also need to ensure economic resilience and protect the natural systems that support us all,” said Jay Ziegler, Director of External Affairs & Policy at The Nature Conservancy. “The Nature Conservancy applauds the California Department of Insurance for its work developing the California Sustainable Insurance Roadmap to help Californians address climate risks, protect nature, and strengthen communities’ climate resilience through new models of insurance.”

“The California Sustainable Insurance Roadmap begins the transition towards a more sustainable insurance industry that will continue to protect vulnerable communities. Innovative financial mechanisms — such as premium discounts for customers that enhance their climate resilience — will help increase climate resilience, ensure the availability of insurance in disaster prone areas, and maintain affordability of insurance policies for the most impacted communities,” said Alfonso Pating, climate finance manager at NRDC (Natural Resources Defense Council). “While many climate-related physical risks manifest as increased premiums of insurance policies sold by insurers, market declines in the value of investments insurers hold facing transition risk are also a major concern that needs to be addressed. It is encouraging to see a plan that recommends action in both areas.”

Source link: California Department of Insurance —  http://bit.ly/3gn3JZX

Oregon — Updated Product Standard:

● 440-5809 Paid leave Oregon

A little more detail was added to the first page of these Product Standards.

This e-notify was distributed to the following groups:

● Rates & Forms Updated Product Standards

You can view or update your subscriptions, password or e-mail address at any time on your User Profile Page. All you will need are your e-mail address and your password (if you selected one).

This service is provided to you at no charge by Oregon Department of Consumer and Business Services. Visit us on the web at http://www.oregon.gov/DCBS/.

Oregon — To all Oregon-based professional liability insurance producers: The Oregon Division of Financial Regulation has issued a bulletin regarding errors and omissions liability coverage for state licensed investment advisers.

Purpose

The purpose of this bulletin is to provide guidance to Oregon-based professional liability insurance producers regarding errors and omissions insurance coverage required for state investment advisors under Oregon Revised Statute (ORS) 59.175(5). In order to meet the requirements, policies may not exclude investment advice or other management services performed by the investment advisor.

Guidance

Producers should be aware of the requirement that a state investment adviser obtain errors and omissions coverage which covers the primary functions of being an investment adviser.

Click here to review this bulletin:

https://dfr.oregon.gov/laws-rules/Documents/Bulletins/bulletin2022-06.pdf

Washington — Kreidler issues $111,000 in fines for violations in October: Insurance Commissioner Mike Kreidler issued fines in October totaling $111,000 against insurance companies, agents and brokers who violated state insurance regulations.

Insurance companies

AmGUARD Insurance Company, Wilkes Barre, Penn.; fined $30,000 (order 22-0548).

AmGUARD failed to provide timely payment to a consumer who filed a claim after their apartment building was damaged. The consumer eventually filed suit under the Insurance Fair Claims Act (IFCA) and a judge’s partial summary judgement found AmGUARD to have engaged in unfair trade practices.

    The repair work was completed in December 2019, but AmGUARD didn’t issue payment in full until August 2020. 

    The amount issued at that point also wasn’t enough to satisfy the lien the repair company had filed against the consumer’s property. 

    The repair company filed suit to foreclose on the property and AmGUARD failed to hire the consumer a defense attorney for several months.

Sedera, Inc., Austin, Texas; fined $50,000 (order 22-0598).

    Sedera, a medical cost sharing community, was fined for transacting insurance business in Washington state without authorization.

UnitedHealth, Lake Oswego, Ore.; fined $75,000 with $25,000 suspended (order 22-0467). 

    UnitedHealth incorrectly denied 195 physical therapy claims from 36 enrollees over a span of three months due to a lack of preauthorization. 

Ameritas Life Insurance Corp., Nebraska; fined $2,500 (order 22-0592). 

    Ameritas Life Insurance Corp. charged incorrect small group vision rates, amounting to $2,981 in overcharged premiums across 281 policies. Ameritas implemented corrected rates. 

Reliance Standard Life Insurance Company, Chicago; fined $2,000 (order 22-0593). 

    Reliance Standard Life Insurance Company charged incorrect small group vision rates, amounting to $112 in overcharged premiums across 26 policies. Reliance implemented corrected rates.

Agents & brokers

    John Donovan/John Donovan Agency, Kennewick; fined $2,000 (order 22-0608). Donovan instructed unlicensed employees to solicit business.

    PacificSource Health Plans, Springfield, Ore.; fined $1,000 (order 22-0356).

    Edwin Mackethan, Grosse Pointe Farms, Mich.; fined $500 (order 22-0546).

    Nhou Thao, Kirkland, fined $500 (order 22-0609). 

    Jerome Burton, San Jose, Calif.; fined $500 (order 22-0485).

    Theresa Marie Morris, Mohawk, NY; fined $500 (order 22-0614).

    Bagheera Franklin, Gulfport, Miss.; fined $500 (order 22-0607).

   Brock Norton Insurance Agency, Chantilly, Va.; fined $250 (order 22-0611).

    Jennings Insurance Services Inc., Orlando, Fla.; fined $250 (order 22-0617).

    STP Enterprises Inc., Chicago, Ill.; fined $250, (order 22-0616). 

    Brent Giroux, Irvine, Calif.; fined $250 (order 22-0488).