Following the devastation wrought in several Midwestern states by recent floods, the insurance departments of Illinois, Indiana, Iowa, and Wisconsin issued bulletins requesting, imposing, or reminding insurers of certain protections for insureds in their respective states. These bulletins are summarized in the article, and links to the complete bulletins are provided. Several important questions about the applicability of these bulletins remain.
Regulatory Action in Affected States
For Illinois policyholders affected by the disaster, the Illinois Division of Insurance has (among other actions) issued the following directives to all insurers licensed or authorized to transact business in Illinois:
For policyholders in the impacted areas, Indiana has (among other actions) issued the following directives:
View the complete Indiana bulletin here: http://www.state.in.us/idoi/files/Bulletin_163.pdf
Iowa has “requested” that all insurance companies authorized to transact business in Iowa, regardless of the line of insurance, implement the following with regard to their insureds who have been affected by the recent flooding:
While Wisconsin has yet to issue any type of moratorium on cancellation or non-renewal of insurance policies, it has issued a stern and detailed reminder of the statutory notice requirements for non-renewal or renewal with altered terms. This perhaps signals that the Commissioner of Insurance will closely scrutinize post-flood renewals and strictly enforce the statutory notice requirements.
View the complete Wisconsin bulletin here: http://oci.wi.gov/bulletin/0608renew.htm
Viewed collectively, the actions taken by the Illinois, Indiana, Iowa, and Wisconsin insurance authorities reveal a shared concern that insureds may be unable to make their required premium payments (whether due to logistical or financial reasons) and/or that insurers may take action to cancel or not renew coverage because of new concerns over the nature and location of the risk.
Nothing in the directives or bulletins draws a distinction between property/casualty and life/health insurers. Indeed, concern about the logistic or financial ability to make premium payments would be equally applicable in all contexts.
There is perhaps some ambiguity as to whether the bulletins and directives apply only to “licensed” insurers transacting business in these states. Illinois asserts that its directive applies to entities “licensed or authorized” to transact insurance business in the state. Such language may bring surplus lines and reinsurers into the mix. Indiana states that its directive applies to “all insurance companies,” drawing no distinction between licensed and unlicensed entities. Iowa states that its bulletin pertains to all insurance companies “authorized” to transact business in the state. This typically would be interpreted to mean all licensed companies, but we query whether this is the Iowa department’s intention.
Finally, it appears from the language of these bulletins that they are intended to apply to both commercial and personal lines insurers. While this is clear in the bulletins issued by Indiana, Iowa, and Wisconsin, it is perhaps less clear in Illinois, where the bulletin’s protections are said to benefit insurance “consumers.” Some may read this as Illinois’ intent to target individual, personal lines consumers as opposed to commercial lines consumers. However, the principal concerns of these departments (i.e., the insured’s inability to pay premiums and/or policy cancellation due to the nature and location of the risk) are equally applicable in both the personal lines and commercial lines setting, and thus it seems Illinois intends for its bulletin to apply to both.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our insurance clients and our colleagues.
Please contact your Foley attorney if you have any questions about these issues or want additional information regarding insurance matters:
Authors and editors:
Thomas R. Hrdlick
A. John Richter