Insurance Regulatory Report
The following regulatory information may be of interest to attorneys practicing insurance law. This information is current as of September 15, 2020.
Office of Administrative Law Actions on Department of Insurance Regulations
OAL has approved the following CDI rulemaking submissions during the past 45 days:
- CDI Address: – OAL File #2020-0717-02 changes the address of the CDI Bay Area office from San Francisco to Oakland.
The CDI has issued several notices relating either to COVID-19 or to wildfire losses. These notices define CDI expectations and may, to a degree, provide a safe harbor against hostile enforcement actions if insurers follow the requests and expectations outlined in them. All Notices can be found here.
- August 26, 2020 – Expedited Claims Handling & Billing Grace Period Procedures for California Policyholders due to Wildfires. The Commissioner “call[s] on all property and casualty insurance companies to implement emergency expedited claims handling procedures and billing grace periods” in response to California wildfires. The Notice refers to the Governor’s wildfire emergency declaration and, therefore, appears to apply statewide.
- August 26, 2020 – Notice Regarding Impending Bulletin Imposing a Moratorium on Residential Property Policy Cancellations Pursuant to CIC 675.1. This Notice tells that the Commissioner is assessing fire losses to determine which zip codes will be subject to a moratorium on cancellation of residential property policies pursuant to section 675.1(b) of the Insurance Code.
CIC 675.1(b) prohibits such cancellations or nonrenewals only if they are “based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.” Otherwise lawful cancellation or nonrenewal based upon criteria other than solely upon location is still permissible under § 675.1.
- September 3, 2020 – Additional Living Expense (ALE) Benefits. This Notice “call[s] on all residential property insurance companies to cover additional living expenses (ALE) for those policyholders who remain under mandatory evacuation or whose homes are otherwise inaccessible or uninhabitable due to the wildfires.” This Notice is apparently intended to address circumstances in which policyholders are subject to evacuation orders or whose homes are uninhabitable. CDI says that there have been complaints that insurers are terminating payment of ALE benefits when there is no proof of a covered loss. This appears to be a burden of proof issue. If the facts stated in the Notice are correct, some insurers are requiring policyholders to demonstrate that there is a covered loss before paying, or continuing, ALE payments. The Department is, in effect, asking insurers to presume the existence of a covered loss based upon the policyholder’s assertion, until it is proven that there is no coverage.
On September 8 CDI distributed a Pre-hearing Notice advising that a hearing on the Export List will occur this year and requesting that anybody with recommendations for additions to the List, or deletions from it, advise CDI. The Export List specifies types of insurance which may be written in the non-admitted market without first being declined three times in the admitted market. This is historically not a controversial exercise. The Notice can be found here.
This e-Bulletin was prepared by Bill Gausewitz, Shareholder in the Sacramento office of Greenberg Traurig. Mr. Gausewitz is the Regulatory Advisor to, and former Chair of, the Insurance Law Standing Committee of the Business Law Section of the California Lawyers Association.