What State Insurance Regulators Have Asked of P/C Insurers to Address Coronavirus

As state insurance regulators monitor and respond to the coronavirus impact on insurance, property/casualty insurers are calling on them to coordinate their requests for data and ease up on some requirements.

David A. Sampson, president and CEO of the American Property Casualty Insurance Association (APCIA), told the National Association of Insurance Commissioners (NAIC) special session on COVID-19 that the less time insurers have to spend on responding to regulators seeking information, the more they will be able to focus on customers.

What have the state insurance regulators been up to?

States have postponed or canceled planned insurance licensing exams and adjusted deadlines for education and various filings. Several states have requested information on carriers’ continuity plans while others have called on them to be flexible with policyholders over premium payments. New York got insurers to offer a special travel policy and provide details on their business interruption policies while Wisconsin directed insurers to add insurance coverage to existing commercial or personal auto policies for people now doing restaurant deliveries– at no charge.

Sampson noted the “unprecedented conditions” that are stressing industry systems as insurers seek to work with regulators. “The more the NAIC can help coordinate data calls to make them uniform, limited in scope, and reasonable in timing, the more insurers will be able to focus on our customer service obligations,” he said.

In addition to state regulation…

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Sampson also urged regulators to discourage growing calls for retroactive coverage under policies not intended to pay virus-related business income losses. That issue was raised in legislation under consideration in New Jersey.

He also called on government to relax requirements for first-class mail delivery and allow electronic delivery for all communications.

Other items on his wish list for states:

Sampson’s wish list came in the wake of a number of state insurance regulators taking coronavirus-related actions and requesting information from P/C insurers. The following is a brief look at the actions some state regulators have taken in the crisis.

New York

Perhaps no state has been more active than New York, which has become the center of the pandemic in the country.

On March 10, the New York State Department of Financial Services (DFS) asked insurers to submit details of business interruption policies that have been provided to insureds, as well as the coverage each policy offers regarding COVID-19. Explanations regarding the commercial property insurance each insurer has written in New York as well as details of business interruption coverage provided were required to be submitted by Wednesday of last week.

“Given the potential impact of COVID-19 on business losses, particularly concentrated effects in local communities, DFS considers insurers’ obligations to policyholders a heightened priority,” DFS stated in its instructions. The instructions required each insurer to provide to DFS the volume of business interruption coverage, civil authority coverage, contingent business interruption coverage and supply chain coverage the insurer wrote that has not lapsed as of March 10, expressed in amounts of direct premium, policy types and numbers of policies written of each type.

Each insurer was also required to examine the policies it issued and explain the coverage each policy offers in regard to COVID-19, both presently and in the future if there is potential for COVID-19 coverage as the situation could develop. For each policy type, insurers were asked to prepare information in a clear and concise explanation of benefits suitable for policyholder review. The instructions then ask insurers to send the explanations to each of their policyholders for the applicable policy types as well as to DFS, along with a representation that the explanations have been provided to policyholders.

In a March 10 circular letter, DFS is also requiring that each regulated entity to provide detailed descriptions of business continuity plans within 30 days or sooner. Specifically, the letter calls for descriptions of both “plans of preparedness to manage the risk of disruption to its operations” and descriptions of plans “to assess and monitor the financial risk that may arise from COVID-19.”

In a list of eight items to be included “at a minimum” to describe operational preparedness, the DFS calls for: information on preventative measures to mitigate the risk of operational disruption; assessments of facilities, systems and procedures needed to continue critical operations and services when employees are unavailable for longer periods or are working offsite; assessments of security of remote access; employee protection strategies; assessments of the preparedness of critical third-party service providers and suppliers. The DFS also asks for details of communication plans with various stakeholders, testing plans, and overall governance and oversight of the business continuity plan.

Six items to be discussed with respect to financial impacts include an “assessment of the valuation of assets and investments that may be, or have been, impacted by COVID-19” and “assessment of the overall impact of COVID-19 on earnings, profits, capital, and liquidity.”

In early March, New York DFS also took action to make “cancel for any reason” travel policies available in the state after DFS received consumer complaints that these types of polices were not available in the state. Many standard travel insurance policies do not cover trip interruption or cancellation due to COVID-19 because standard policies typically exclude coverage for an epidemic, pandemic or similar public health event. Six global and national insurance companies agreed to offer the travel policies in New York state: Allianz, Nationwide, Starr Indemnity, Berkshire, Crum & Forster and Zurich.

Wisconsin

The Wisconsin Office of the Commissioner of Insurance (OCI) has asked insurers to offer flexibility to insureds who are incurring economic hardship by offering non-cancellation periods, deferred premium payments, premium holidays and acceleration or waiver of underwriting requirements.

It has also directed insurers to provide insurance coverage for delivery drivers for restaurants during the COVID-19 public health emergency, even if those drivers/restaurants previously did not have coverage for such activities. The extra coverage must be provided at no extra cost to the insured. The order states insurers must “cover delivery services for restaurants on personal auto insurance policies and must offer coverage for hired drivers and non-owned automobiles as a rider on a restaurant’s general liability insurance if it is requested – both at no extra cost to the policyholders.

The order also bars insurers from denying a claim under a personal auto policy solely because the insured was engaged in delivering food on behalf of a restaurant impacted by the restaurant closure.

Citing staff having to work remotely, Wisconsin (and also Kansas) advised insurers to expect delays in processing license applications and company filing approvals and not to assume that filings not handled in a timely manner have been deemed to be approved.

Florida

Florida’s state of emergency created a need for many workers to work remotely. However, certain licensed insurance employees were restricted from doing so by a Florida law that required they conduct business from their agency offices. In response, Florida Chief Financial Officer Jimmy Patronis, who oversees the Florida Department of Financial Services, issued a directive allowing Florida agency customer service representatives who would otherwise be restricted from conducting business outside of a licensed agency to do so given the current circumstances.

The Florida Office of Insurance Regulation (OIR) directed all insurers to update their business continuity plans in a memorandum issued on March 16. Insurer continuity plans must provide a framework for the continuation of company operations, including key insurance functions such as policy issuance, premium collection, claims adjustment and payment and policyholder service, OIR said. The continuity plans should also account for DOH and CDC guidance surrounding COVID-19, including executive orders issued at the state and national level.

Florida also issued a memorandum directing all insurers to review and update their business continuity and/or continuity of operations plans. It also asked insurers to immediately notify OIR should they have to activate their plan in response to COVID-19.

California

California Insurance Commissioner Ricardo Lara has asked insurers for a grace period on paying premiums. His notice requested that all insurance companies provide their policyholders with at least a 60-day grace period to pay insurance premiums to ensure policies are not cancelled for nonpayment of premium due to the novel coronavirus (COVID-19) public health emergency.

In a separate notice, Lara requested the assistance of all automobile insurers, producers, and other licensees transacting automobile insurance in California. The Department of Motor Vehicles recently asked law enforcement to exercise discretion for 60 days in their enforcement of driver license and vehicle registration expirations beginning March 16 in order to have at-risk populations, including seniors and those with underlying conditions, avoid required visits to DMV field offices.

Lara called on auto insurers to refrain from using the expiration of policyholders’ drivers licenses or vehicle registrations for 60 days from March 16 to affect their ability to secure and maintain auto insurance coverage or obtain good driver discounts.

California’s State Compensation Insurance Fund announced several steps to support policyholders during the COVID-19 crisis, including a moratorium on policy cancellations and late payment penalties. State Fund also said it will extend credit to any business negatively impacted by COVID-19 events and offer businesses the ability to adjust their payroll reporting. Additionally, State Fund is postponing all site visits and has implemented a work-at-home program that is allowing the vast majority of its employees to work remotely.

Indiana

In response to apparent concerns regarding liability insurance coverage for facilities providing childcare and meals to the community, the Indiana Department of Insurance warned insurers that it will “aggressively support those facilities if their commercial insurance carrier attempts to deny their liability insurance without approval.”

Washington

The state of Washington is making workers’ compensation benefits available to healthcare workers and first responders who are quarantined after being exposed to COVID-19 while on the job. These healthcare workers and first responders who are quarantined will qualify for workers’ comp benefits regardless of their employer, private or public. Employers in the state get their workers’ comp through the State Fund, which will pay the benefits. Prior to this change, these workers qualified for workers’ comp if they got sick, but not for being quarantined over the coronavirus.

Georgia

Georgia directed all P/C insurers to refrain from canceling any commercial policies, including business interruption or business income coverage, for the cause of non-payment for the next 60 days. That prohibition could be extended should the pandemic last longer than expected. The department said it would offer immediate and expedited review for any products that are critical due to the COVID-19 outbreak.

West Virginia

On March 16, West Virginia Insurance Commissioner James Dodrill asked insurers to be flexible in the collection of premiums, cancellations, non-renewals, claim or other documentation. He also asked workers’ compensation insurers to conduct audits to determine if insureds are entitled to any adjustment in premium due to the furloughing, laying off or other dismissal of workers. Insurers and other regulated entities must not issue a cancellation notice or non-renewal notice pertaining to any insurance policy, plan or contract if related to circumstances from the COVID-19 pandemic.

West Virginia also requested that insurers submit continuity of operations and preparedness plans.

Insurance Journal Editors Amy O’Connor, Elizabeth Blosfield, Don Jergler and Stephanie Jones contributed to this report.