Flood Insurance

The National Association of Professional Insurance Agents asked on Sept. 15 that the Federal Emergency Management Agency delay implementation of the National Flood Insurance Program’s new Risk Rating 2.0 methodology, which is scheduled to go into effect on Oct. 1. In announcing PIA’s request on Sept. 16, the association said it “strongly supports” RR 2.0 and its move toward more risk-based pricing of flood insurance policies backed by the NFIP. In recent months, PIA became increasingly concerned about the rollout of the new rating system for a number of reasons including delays, confusion, failure of the rating engine and the absence of adequate training for flood insurance agents who must accurately explain the changes to policyholders and prospective policyholders. In its letter to FEMA Administrator Deanne Criswell, PIA requested that RR 2.0 be postponed until April 1, 2022.


The Louisiana Department of Insurance released a new advisory reminding people who sell insurance in the state that they must have a license to do so. The department’s Advisory Letter 2021-05 states that “only duly licensed insurance producers are authorized to sell, solicit, make an application for, procure, negotiate for, or place for others insurance coverage in Louisiana as required by the Louisiana Insurance Code.” The department said it issued the advisory letter “for the purpose of providing industry guidance and strict instruction,” and to reiterate that licensed producers are responsible for “determining coverage types and levels and potential endorsement options.” The letter warns that “a producer who knowingly accepts insurance business from a person who is not licensed as a producer but actually performing the functions of solicitation, negotiation, sale, and/or making of applications may be subject to regulatory action.”

Insurance Commissioner Jim Donelon issued an emergency rule to increase Louisiana’s hospital bed capacity at 24-hour acute care hospitals during the coronavirus surge by facilitating insurance coverage of care provided in step-down facilities such as small rural hospitals, LDI announced Aug. 12. Emergency Rule 46 requires health insurance providers to provide coverage for patients who are transferred from major traditional hospitals to appropriate step-down facilities to open acute care beds critical to the state’s capacity to respond to Covid-19. This insurance directive essentially allows acute care hospitals to discharge convalescing patients to appropriate alternative settings, freeing hospital beds to accept new patients with immediate care needs. Emergency Rule 46 echoes Emergency Rule 41 which was issued in spring 2020 as hospitals were also in danger of being overwhelmed with Covid-19 cases, but the situation today is much worse. Normally, hospital transfers require prior authorization from insurance. Emergency Rule 46 ensures that patient transfers can occur smoothly and without disrupting facility reimbursement. Patients who are transferred will pay the same cost-sharing amount that they would have paid in an acute care hospital.


The financial stability rating of A, Exceptional, assigned to Lighthouse Property Insurance Corporation and Lighthouse Excalibur Insurance Company have been affirmed by Demotech Inc., Demotech announced Sept. 14. This level of FSR is assigned to insurers who possess exceptional financial stability related to maintaining positive policyholders’ surplus, sufficient liquidity of invested assets, an acceptable level of financial leverage, reasonable loss and loss adjustment expense reserves and realistic pricing, Demotech said in announcing the rating. Given Demotech’s current understanding of revisions in the corporate business model, in anticipation of the favorable impact of the efforts on the company’s operating plan and future operating results, in conjunction with the company’s immediate access to sufficient capital to honor or defend meritorious claims as they come due, including the recent catastrophe losses and loss adjustment expenses, founder and President Joe Petrelli said, “we issue this affirmation of the financial stability rating based upon the totality of our review of the June 30, 2021, operating results and actions of management. Any future affirmations will require demonstrable evidence of the impact of the revisions on the company’s financial stability.”

The financial stability ratings of A, Exceptional, assigned to United P&C Insurance Company, Interboro Insurance Company, American Coastal Insurance Company and Family Security Insurance Company have been affirmed by Demotech Inc. This level of FSR is assigned to insurers who possess exceptional financial stability related to maintaining positive policyholders’ surplus, sufficient liquidity of invested assets, an acceptable level of financial leverage, reasonable loss and loss adjustment expense reserves and realistic pricing, to name some critical metrics. Sharon Romano Petrelli, CPCU, AIAF, CCP, ARC, co-founder of Demotech, said, “Over the past several years, Demotech rated insurers have addressed the needs of claimants despite the natural disasters of wind, wildfire or flood.” Petrelli added, “A significant number of weather events in a single season has become all too typical. Having instituted more rigorous horizontal catastrophe reinsurance requirements in 2002, our insurers were ready. While we acknowledge that even a victorious champion looks different at the end of the game versus stepping on the field, despite the financial impact of the storms, these four carriers retain the ability to honor meritorious claims.”

AM Best has upgraded the financial strength rating to A- (Excellent) from B++ (Good) of Canal Insurance Company and Canal Indemnity Company. The ratings reflect Canal’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The rating upgrades reflect Canal’s much improved operational performance, which is the result of re-underwriting initiatives introduced by management several years ago that are now being manifested in the group’s reported results over the past few years. The much improved results of late also take into consideration management’s more conservative reserving practices and the elimination of prior-year loss reserve development, which was a drag on earnings in previous years. Canal’s business profile remains limited, given that the company is a monoline commercial automobile insurer, yet the group benefits from its specialty niche orientation, well-recognized brand and its long-standing broker distribution network. Canal’s balance sheet is assessed at very strong but is viewed as containing somewhat more volatile risk due to its higher-than-average investment in equities, as evidenced in 2020.


The National Association of Insurance Commissioners (NAIC) formed a new working group to address the improper marketing of health plans. The working group will address the deceptive marketing of health plans and other products that lead consumers to believe they are purchasing comprehensive health coverage when they are really purchasing coverage that does not cover all pre-existing conditions or hospital care. The working group is part of the National Antifraud Task Force, which provides guidance and resources around tracking and analyzing fraud-related trends and works with insurance departments, and local state, federal and international law enforcement agencies.


A Connecticut state judge has refused to dismiss Covid-19 business interruption litigation filed against Zurich Insurance Group by a hotel chain seeking coverage for its Louisiana property, stating it has adequately alleged physical loss or damage, Business Insurance reported Sept. 10. Shelton, Connecticut-based New Castle Hotels LLC filed a lawsuit against Zurich in state court in Hartford in March, seeking coverage for its properties in Maine, South Carolina, New York, Connecticut, Georgia and Canada as well as its New Orleans Fairfield Inn Downtown, according to court papers in New Castle Hotels LLC v. Zurich American Insurance Co. In its ruling Sept. 7, the court dismissed litigation for all but the Louisiana hotel, citing the coverage’s virus exclusion. Louisiana law does not allow the exclusion, Judge Thomas Moukawsher’s ruling said. Zurich “claims that there is nothing ‘physical’ about the loss or damage flowing from the COVID-19 virus,” the ruling said. New Castle alleges the virus “is a cause of real physical loss or damage to property” and “goes on to cite government and private sources to allege that the virus is extremely damaging to humans” and can linger on surfaces for up to three days.


Amwins announced Aug. 18 the release of its State of the Market report, providing the latest market intelligence, spanning rate, capacity and coverage trends across numerous lines of business and industries. “The market continues to be dynamic,” said James Drinkwater, president of Amwins and Amwins Brokerage. “The last two years have not been easy. We have experienced some of the hardest market conditions most of us have ever seen, and recent events have demonstrated that we work in a tremendously resilient industry. At Amwins, our goal is to add value to our clients – regardless of the market environment.” In this issue of the State of the Market report, Amwins’ specialists share exclusive thought leadership leveraging their collective global expertise and unique market perspective while delivering added value to their clients. Topics include summary commentary on the property, casualty, professional lines and London markets as well as discussions on emerging issues related to cannabis, real estate, public entity, lumber, construction, marine, transportation, cyber, environmental, healthcare and more.


The U.S. Department of Health and Human Services plans to launch the new Office of Climate Change and Health Equity, which will treat climate change as a public health issue and report to a White House climate task force, The Wall Street Journal reported Aug. 30. The new office is expected to address health risks related to climate change, including those that disproportionately affect poor and minority communities. The new office is expected to offer protections for populations most at risk — including the elderly, minorities, rural communities and children — and could eventually lead to policies compelling hospitals and other care facilities to reduce carbon emissions, WSJ said citing sources. Among the risks cited by recent research are deaths and injuries from extreme events such as heat waves, storms, and floods or infectious diseases borne in food or water, as well as higher levels of air pollution.


A new survey from the Council of Insurance Agents and Brokers (CIAB) found that commercial insurance prices moderated for all account sizes in the second quarter of 2021. CIAB says the average increase during the second quarter was 8.3 percent, but the cyber market saw an increase of 25.5 percent. The price increase for the cyber market was the biggest of all lines and was higher than the 17.4 percent seen for umbrella insurance. The sharp increase for cyber insurance was caused by more ransomware attacks, poor risk management protocols, and lack of employee training. Despite the increase in prices, 95 percent of respondents said there was an increase in demand for cyber insurance. CIAB adds that insurers also have started to cut limits and demand customers complete additional risk management protocols.