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Top Story

National Law Review (01/05/21) Dawson, Thomas M.

The European Insurance and Occupational Pensions Authority has indicated that, among other things, it wants natural catastrophe modeling to include climate change, noting that future models will need to include new countries within the European Union, new perils (e.g., wildfire and drought as well as flood, quake, etc.), and new lines of business. Meanwhile, the International Association of Insurance Supervisors has opened its Application Paper on managing climate risk to a public consultation period for which the National Association of Insurance Commissioners and various industry trade associations will prepare comments by the Jan. 12, 2021, deadline. The New York Department of Financial Services also plans to host a series of short climate change "knowledge exchange" sessions and will continue to evaluate Task Force on Climate-Related Financial Disclosures (or equivalent) disclosures as to "governance, strategy, risks, and metrics," bearing in mind that insurers obviously are not all exposed to climate change risks to the same degree.

NAIC Newsmakers

ThinkAdvisor (01/05/21) Bell, Allison

The Arkansas Insurance Department has adopted the annuity sales standards update developed by the National Association of Insurance Commissioners (NAIC). Arkansas Insurance Commissioner Alan McClain issued a bulletin about the update adoption Dec. 28, 2020. McClain said insurers and annuity producers will have six months from the effective date to begin complying with the new rules. The NAIC's model update requires an agent or broker who sells an annuity to "act in the interest of the consumer under the circumstances known at the time of recommendation is made and without placing the producer's financial interest ahead of the consumers."

Hartford Business Journal (01/05/21) Klein, Liese

A merger between two Boston based insurers, Harvard Pilgrim Health Care and Tufts Health Plan, was finalized on Jan. 1, 2021, creating one of the nation's largest nonprofit insurers. Harvard Pilgrim entered the Connecticut market in the summer of 2014 and had 28,072 people enrolled in HMO and indemnity plans in 2019, according to state insurance department data, up slightly from the 26,276 enrolled in 2018. The companies received all necessary regulatory approvals and announced the finalized merger on Jan. 4. The new combined organization will be based in Boston, even though Harvard Pilgrim writes health insurance in Connecticut and has operations in downtown Hartford. The new insurer, which has yet to be named, will cover 2.4 million members and pledges $100 million in savings through "administrative synergies." Related Story: BestWire (subscription)

American Veterinary Medical Association (01/06/21) Mattson, Kaitlyn

The National Association of Insurance Commissioners' (NAIC) Pet Insurance Working Group is working on a model law on pet health insurance. The NAIC working group is currently developing the draft model, with the final version unlikely to be released to the public until later this year. According to NAIC Past President and South Carolina Insurance Director Ray Farmer, the pet insurance industry is an emerging one. "The goal of the model law is to establish clear rules for the sale of pet insurance and provide important disclosures to pet owners purchasing this product," Farmer said. "States would have to adopt the model law for this regulatory framework to apply to the industry in their state."

WorkCompCentral (01/06/21) Powell, Mark

Massachusetts Division of Insurance Commissioner Gary Anderson said in a bulletin that bars and restaurants that remain closed during the COVID-19 pandemic do not need to show proof of liquor liability or workers' compensation coverage to renew their liquor licenses. However, establishments that elect to remain open or to reopen under the governor's restricted hours order will need to show proof of coverage, he said. The Dec. 29 bulletin states, "Whenever the liquor licensees decide to reopen, they will be required to submit appropriate proof to the appropriate licensing authority of both a liquor liability and workers' compensation policy." Anderson also noted that insurers should not charge extra fees or penalties for coverage "obtained pursuant to the allowances outlined" in Gov. Charles Baker's order No. 53. The bulletin states, "Any violations of COVID-19 Order No. 53 will be subject to review by the division's Special Investigations Unit."
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Panama City News Herald (01/05/21) Simmons, Tony

Florida has two new arson dogs, one of which covers the Florida Panhandle with Detective Cody McIntyre at the state's Department of Financial Services, Division of Investigative & Forensic Services. The other works with Detective Michael Douglas in the Tampa Bay area. Both McIntyre and Douglas are agents of the Florida State Fire Marshal's Office. The arson dog training program is funded by State Farm, which Florida CFO Jimmy Patronis praises for its commitment to fighting fraud. Patronis notes that fraud "drives up insurance rates for hard-working men and women in our state," and that the Arson Dog Program "continues to be an outstanding resource for our arson detectives as they work to hold fraudsters accountable." The arson dog training program is available to fire departments and law enforcement agencies across the country. Arson dogs, or "accelerant detection canines," are trained to sniff out evidence at fire scenes.

Crawford County Now (OH) (01/05/21)

Ohio Mutual has reorganized its corporate structure to a mutual holding company, Ohio Mutual Insurance Group, Inc., effective Jan. 1, 2021. The mutual reorganization plan was unanimously approved by the company's Board of Directors in January 2020 and approved by the Ohio Mutual Insurance Company's mutual policyholders on July 21, 2020. It subsequently was reviewed and approved by the Ohio Department of Insurance and Ohio Attorney General. The reorganization has no impact on current insurance products, coverage, and service. Current policyholders with policies issued through United Ohio Insurance Company or Casco Indemnity Company will receive their mutual membership rights upon renewal of their current policies throughout 2021.

State News Releases

Alabama Department of Insurance (01/05/21)

An endorsement, also known as a rider, adds, deletes, excludes, or changes insurance coverage to increase coverage by way of an endorsement/rider. The endorsement/rider takes precedence over the standard limits of coverage over the original agreement or policy. You can have an endorsement/rider on your homeowners and renter's policy, life insurance, and auto insurance policies. Endorsements/riders are important because they address issues or items not included in the original contract or policy. An endorsement/rider alters the policy and becomes part of your legal insurance agreement, and it remains in force until the contract expires. An exception exists if the endorsement/rider has a specific or limited-term to which the endorsement is valid. Always keep a copy of the new document after making the policy change that specifies the new endorsement. When an endorsement reduces or increases coverage, that can have an impact on your premium.

Capital Markets News

Wall Street Journal (01/04/21) Hirtenstein, Anna

The S&P 500 index rose more than 15% last year, and the Bloomberg Barclays Global Aggregate bond index climbed 9.2% on a total return basis. That is significantly better than the performance of many alternative investments, such as hedge funds, private equity, and other more exotic investments. Investors typically put money into these riskier bets to boost their overall returns, but that strategy was turned on its head last year. The meltdown in markets in March pushed central banks around the world to unleash colossal amounts of monetary stimulus and a series of interest rate cuts, propelling many stocks and bonds to all-time highs. With all this new money in the financial system, some investors channeled more capital into alternatives. But on average, hedge funds returned 6.3% in 2020, according to PivotalPath, and global private equity declined nearly 9%, as industries such as retail and hospitality were hit by the pandemic and leveraged bets went sour.
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Regulatory & Legislation

CNN (01/06/21) Maxouris, Christina

On Jan. 5, 2021, the nation reported more than 3,770 American deaths, marking its highest ever daily COVID-19 death count. The country also exceeded 21 million infections and set a hospitalization record, with more than 131,100 COVID-19 hospitalized patients nationwide, according to the COVID Tracking Project. To get states' distributed vaccines into arms faster, governors are mobilizing National Guard members and training more volunteers to administer vaccines. California Gov. Gavin Newsom promised "aggressive action" to accelerate the process, including granting a waiver to allow dentists to administer the vaccine after undergoing training. Maryland Gov. Larry Hogan said the Maryland National Guard will begin dispatching emergency vaccination support teams to help local health departments in tasks including administering vaccines. North Carolina Gov. Roy Cooper also said he mobilized the state's National Guard to help speed the pace of vaccinations. Related Stories: The Hill; The Hill; Science; Wall Street Journal (subscription)

Life & Health Marketplace

Wall Street Journal (01/01/21) Hopkins, Jared S.

About 70 drugmakers raised prices in the United States on Jan. 1, 2021, by an average of 3.3%, according to an analysis from Rx Savings Solutions, which sells software to employers and health plans. This figure includes changes to different doses for the same drug, indicated the analysis, which also noted that inflation registered at 1.2% for the most recent 12 months. The largest price increase was at 31% for U.K.-based Advanz Pharma's hypertension product Dutoprol, the analysis revealed. The drug is a branded combination of two lower-cost generic medicines. New York-based Pfizer raised the prices on many of its products by 5% or less, including breast-cancer treatment Ibrance, rheumatoid arthritis therapy Xeljanz, and pneumococcal vaccine Prevnar, according to the analysis. Meanwhile, during the third quarter of 2020, net prices fell 2.3% versus a 4.7% drop in 2019, according to analysts at SSR Health LLC. Related Story: Kaiser Health News
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NBC News (01/01/21) Hampton, Deon

The number of life insurance applications from people under age 44 increased by more than 7% in 2020, according to the MIB Group, a data sharing service for insurance companies, which tracks life insurance applications. Life insurance applications for the age group had been mostly down over the last several years, so "for that young age group to be up that much is very impressive," said MIB COO Andrea Caruso. "That's a pretty significant climb." While several factors contributed to the spike, experts pointed to the pandemic and the insurance awareness it brought on. "People are looking at mortality like they've never looked at it before, especially that younger age group," said Faisa Stafford, president of the nonprofit Life Happens. "People were probably feeling invincible, but COVID made people realize that we're all mortal."

Property & Casualty Spotlight

The New York Times (01/06/21) Nir, Sarah Maslin

After years of declines, car thefts are surging in cities and suburbs all over the United States. As a result of the popularity of key fobs, vehicle thefts dropped more than 50% in recent years from a high of 1.7 million vehicle thefts per year in 1991, according to data compiled by the FBI. But from June through December 2020, monthly thefts increased 13% on average over the same period in 2019, reported the National Insurance Crime Bureau. Preliminary data suggests thefts will be about 9% higher in 2020 overall. Police say drivers have left fobs inside the vehicle or left their car running but taken the fob, allowing it to be driven away but not restarted later. In a smaller number of cases, criminals have reprogrammed keyless cars. The pandemic has worsened the problem, as delivery drivers have seen their cars stolen while they are making drop-offs.
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Business Insurance (01/05/21) Souter, Gavin

According to a MarketScout Corp. report, U.S. commercial insurance rates jumped 7.1% in the fourth quarter of 2020, which follows a 6.3% average increase in the third quarter. MarketScout's report says the largest increase in the fourth quarter was in the umbrella and excess liability sector, where rates rose by an average of 12.7%. The directors and officers liability, professional liability, commercial property, and commercial car sectors all saw large increases as well. Employment practices liability, general liability, and workers' compensation rates increased by 6.7%, 6%, and 0.7%, respectively. The report says jumbo accounts reported average rate increases of 8%. Large and medium accounts saw increases of 9.3% and 8.3%, respectively. Finally, small accounts saw rate increases average 6.7%.
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BestWire (01/04/21) Pilla, David

Allstate Corp. has acquired National General Holdings Corp. for $4 billion. The deal will make Allstate a top-five carrier in the independent agency sector, according to Allstate Chairman, President, and CEO Thomas Wilson. He said the primary reason Allstate pursued the deal was to put the company "squarely in front" of independent agents with good technology and a broad product portfolio. Wilson added, "The acquisition of National General advances our strategy of growing personal lines insurance with an increase of one percentage point in market share. Independent agents will now have more protection offerings for customers, with a strong technology platform creating growth opportunities for them and Allstate. National General's accident and health business will also further expand Allstate's circle of protection." Allstate will conduct a reverse merger of its independent agents business into National General's network.
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PropertyCasualty360 (01/04/21) Viner, Jonathan T.; Cassidy, Amy J.

With positive diagnoses for COVID-19 in the United States now regularly exceeding 200,000 per day, and daily fatalities attributed to the virus at times exceeding 3,000, experts suggest that it is only a matter of time before plaintiffs' attorneys start pursuing claims seeking damages on behalf of those who have experienced severe illness (or alleged wrongful death) because of the virus, in particular from business and premises owners. Experts also suggest that expensive hospital stays and symptoms lasting weeks or months, resulting in lost wages and other expenses, might be claimed. A significant issue that will be presented in almost every COVID-19 liability claim is whether the claim triggers a commercial general liability policy's so-called pollution exclusion. Other considerations include whether parties might seek coverage under other kinds of liability policies, including pollution liability and workers' compensation/employers liability policies.
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International Update

Wall Street Journal (01/04/21) Scism, Leslie; Ng, Serena

China Oceanwide Holdings Group Co.'s four-year-old agreement to buy Genworth Financial Inc. is petering out. Back in October 2016, Genworth agreed to sell itself to the private Chinese conglomerate for $2.7 billion in cash. But on Jan. 4, Genworth said a year-end 2020 deadline to complete the transaction with Beijing-based China Oceanwide wasn't extended — after 16 previous extensions. While the companies didn't cancel the merger agreement, the move indicates the long-running affair could end without a marriage. Genworth said one obstacle has been the deal's financing, which was to be partially supplied by Hony Capital, a Chinese private-equity firm. Genworth said the COVID-19 pandemic "and associated restrictions" also delayed the close. The absence of a deal will shine a spotlight on longstanding concerns about the adequacy of many insurers' reserves for paying long-term-care claims potentially over decades.
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Consumer News

CNBC (01/05/21) O’Brien, Sarah

A new price transparency rule that took effect Jan. 1, 2021, requires hospitals to post the rates they've negotiated with insurers for 300 common medical services. These rates must be posted online in a consumer-friendly format. Meanwhile, another finalized rule that takes effect in 2023 will require insurers to post their negotiated rates with providers, as well as patients' estimated out-of-pocket cost for a variety of services. There is currently little to no price regulation in the private insurance market, so the final cost to consumers for any given service can vary considerably. In Maryland, for example, where regulators set the prices that hospitals can charge for services, the average cost in Baltimore for inpatient admission for a full knee or hip replacement is about $25,000, compared to more than $55,000 in the greater New York area. The idea is that consumers can shop around for the best price.

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January 6, 2021
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