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Delaware Department of Insurance issues bulletin to insurance companies on regulatory filing requirements
On April 9, the Delaware Department of Insurance issued Bulletin No. 118 to insurance companies authorized to transact business in Delaware regarding compliance with regulatory filing requirements during Covid-19. The bulletin permits insurers to request an extension of certain filing deadlines by an additional 30 to 60 days, depending on the type of filing. Types of filings for which a 30-day or 60-day filing deadline extension may be requested are listed in the bulletin.
Arkansas suspends on-site audits by title insurers
On April 9, the Arkansas Insurance Department issued Bulletin 16-2020 suspending on-site audits by title insurers. All title insurers regulated by the department are directed to suspend onsite audits of agencies appointed with the insurer for 60 days from March 11, 2020.
Delaware Department of Insurance issues bulletin to insurance companies and licensed insurance producers
On April 3, the Delaware Department of Insurance issued Bulletin No. 117/33 to insurance companies authorized to transact business in Delaware and licensed insurance producers regarding compliance with regulatory requirements during Covid-19. Insurers are reminded that, without a court order, they may not suspend, cancel or refuse to renew certain defined policies due to nonpayment during the governor’s declared state of emergency. Among other things, the bulletin also: temporarily suspends notarization requirements for documents required to be filed under Title 18, relaxes requirements for in-person appraisals/inspections, suspends any on-site examination work that is non-essential or contrary to directives to limit gatherings, suspends administrative hearings and notes that the department will not schedule any arbitrations that are nonessential or contrary to directives to limit gatherings or practice social distancing or isolation, and provides additional information regarding regulatory filing deadlines, response deadlines, and requests for extensions.
California Department of Business Oversight issues guidance to finance lenders, PACE administrators, deferred deposit originators, and premium finance companies
On April 3, the California Department of Business Oversight (DBO) issued guidance to finance lenders, Property Assessed Clean Energy (PACE) administrators, deferred deposit originators, and premium finance companies requesting such licensees work with their customers by offering payment plans and extensions at no additional cost to the customer. The DBO also requests that premium finance companies grant a grace period similar to the grace periods being granted by many insurance companies in order to prevent insureds from experiencing an interruption in insurance coverage.
Michigan Department of Insurance and Financial Services issues FAQs for credit unions
On March 24, the Michigan Department of Insurance and Financial Services issued FAQs for credit unions. The FAQs provide responses to questions regarding continuation of examinations, credit union operations and annual meetings, working with credit union members experiencing hardship due to Covid-19, and reporting requirements.
Securities class action against bank pared down
On January 12, the U.S. District Court for the Northern District of California dismissed one of plaintiffs’ causes of action and concluded that only two of the 67 public statements the plaintiffs identified in support of their securities fraud causes of action against a large bank and its former CEO (defendants) related to the defendants “collateral protection insurance (CPI) … practices for auto loan customers” were actionable. The plaintiffs alleged that while, in July 2016, the defendants learned of irregularities with respect to the CPI and, by September 2016, discontinued the program, the defendants did not disclose information on the CPI program’s issues until July 2017, after which time, the defendants’ stock price dropped. The plaintiffs then filed suit based on 67 public statements made by the defendants prior to that time, which the plaintiffs alleged the defendants knew were “false or misleading” and resulted in the bank’s stockholders losing money.
Upon review, the court found that 65 of the 67 public statements, on which the plaintiffs’ causes of action were based were not actionable. The two statements that the court found may support the plaintiffs’ causes of action were those made by the defendants when they were specifically asked whether they knew about “potential misconduct outside of the already disclosed improper retail banking sales practices” and, each time, “failed to disclose the CPI issue….” With respect to the two statements, the court found that the plaintiffs had “met [their] burden under the PSLRA (private securities litigation reform act)” to show a “strong inference that the defendant acted with the required state of mind,” and that the plaintiffs “adequately pleaded loss causation.” According to the opinion, the defendants did not challenge the plaintiffs’ contentions about the two alleged misstatements’ connection to the purchase or sale of the defendants’ securities, or that the plaintiffs relied on the misstatements or omissions and experienced economic losses as a result.
Creditor collateral protection insurance disclosures required in New Jersey
On January 13, the New Jersey governor signed S 2998, which amends the state’s collateral protection insurance (CPI) disclosure requirements. The amendments provide that when CPI is required and provided by the creditor, the creditor must disclose to the consumer debtors that they will be responsible for interest on the CPI cost “at the same rate that is applied pursuant to [the debtor’s] credit agreement.” The creditor must also provide a “good faith estimate” of what the CPI coverage will cost the debtor. Additionally, the creditor must instruct the debtors how to provide evidence of the required insurance, so that in those instances where the debtor obtains CPI, the creditor-purchased CPI can be cancelled and the costs and interest fees can be recovered. The amendments take effect on April 12.
OFAC settles with travel insurance companies
On December 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a settlement with a U.S.-based property and casualty company for 6,474 alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, between August 2010 and January 2015, the company’s Canadian branch provided travel insurance policies to Canadian citizens traveling to Cuba, and continued to do so even though the company knew early on that that policies were being issued related to travel to Cuba but did not investigate it until 2014. In arriving at the settlement amount, OFAC considered various mitigating factors, including the fact that the company voluntarily self-disclosed the issue to OFAC, and that the company enhanced its OFAC compliance. OFAC also considered various aggravating factors, including that the company had knowledge of the violations as early as 2010, and that the travel policies “provided economic benefit to Cuba.”
Also on December 9, OFAC announced another settlement, this time with a Swiss worldwide insurance and reinsurance company, which formerly was a subsidiary of a U.S. company. The settlement resolves potential civil liability for 20,291 alleged violations of the CACR between January 2010 and December 2014 for issuing insurance policies for Cuba-related travel, because the policies, though global in scope, did not include an exclusionary clause “for risks that would violate U.S. sanctions law.” OFAC considered a number of mitigating factors in determining the settlement amount, including the fact that the company voluntarily self-disclosed the alleged violations and represented that it conducted a risk assessment of its offices and developed compliance policies and procedures. Additionally, OFAC considered several aggravating factors, including that the company issued global policies that did not contain exclusionary clauses, the activity resulted from a pattern or practice spanning several years, and the company is a large and commercially sophisticated financial institution.
Rhode Island says service contracts are not insurance
On July 15, the Rhode Island governor signed H 5674, which clarifies that service contracts, vehicle theft protection product warranties, and vehicle maintenance agreements are not considered insurance and are therefore exempt from the state’s insurance code. The bill also amends definitions under the law’s chapter relating to service contracts. The amendments take effect January 1, 2020.
FHA streamlines claim payment requirements for HECM program
On October 22, the Federal Housing Administration (FHA) issued Mortgagee Letter 2018-08, streamlining documentation requirements for Home Equity Conversion Mortgage (HECM) servicers when assigning FHA-insured reverse mortgages to HUD for claims payments. Effective immediately, servicers may now submit alternative supporting documentation, such as (i) documentation from a current hazard insurance provider in lieu of a declaration page; and (ii) alternative evidence of a borrower’s death, such as an obituary or healthcare documents in lieu of a death certificate. Servicers must now also submit evidence that any mobile home is “real property” under the laws of the particular state for which the home is located. FHA reminds servicers that claims for insurance benefits must be filed within 60 calendar days after receiving preliminary title approval, and notes that servicers must now provide a detailed explanation of all pre-due and payable corporate advances in the compliance package, including the date of the disbursement, the expense that was paid, and any information related to received repayments. According to a FHA’s press release, streamlining the requirements and reducing the documentation burden will help accelerate the claim payments process for servicers.