Legislation

South Carolina became the first state to have a cyber security law requiring insurers to establish a “strong and aggressive” program to protect companies and their consumers from a data breach, with Gov. Henry McMaster’s signing of legislation this week, according to the state insurance department. “South Carolina is now the first in the nation to pass a comprehensive data security insurance law. This sets South Carolina apart and shows we are dedicated to keeping insurance information safe,” said South Carolina Insurance Director Raymond G. Farmer in the statement issued by the department. The statement said Gov. McMaster signed the South Carolina Department of Insurance Data Security Bill into law Tuesday. Mr. Farmer chaired the National Association of Insurance Commissioners’ Cybersecurity (EX) Working Group that drafted the law. The department said the law creates rules for insurers, agents and other licensed entities covering data security, investigation and notification of breach, including maintaining an information security program based on ongoing risk assessment; overseeing third-party service providers; investigating data breaches and notifying regulators of a cyber security event. http://www.businessinsurance.com/article/20180511/NEWS06/912321232/South-Carolina-governor-signs-insurer-cyber-security-law

ACE American Insurance Co., rather than the state workers’ compensation trust fund, is required to pay benefits to an injured worker pursuant to a reinsurance policy that covered a self-insurer’s surety bond, a Massachusetts appeals court has held. In a May 2 opinion, the Massachusetts Court of Appeals affirmed that G. L. c. 152, § 25A(2)(c), of the Workers’ Compensation Act requires ACE as a reinsurer to pay benefits in the event of exhaustion of a self-insurer’s surety bond. Read More … https://harrismartin.com/article/23444/reinsurer-must-assume-payments-of-workers-compensation-benefits-mass-court-says/

Recently, the President of the APESEG (Peruvian Association of Insurance Companies), Eduardo Moron, expressed his concern regarding the harmful impact that Emergency Decree N ° 003-2017 would have on the insurance market for bond letters and surety bonds that guaranteed the obligations of various members of the so-called construction club (Odebrecht and those associated) before the State. The potential amount that would be the subject of such a demand is estimated at approximately S / 3,800 million, of which 97% would be taken on by foreign reinsurance companies, since national insurers only retained 3% The aforementioned Decree was issued to guarantee payment to the State of civil liabilities generated by acts of corruption linked mainly to the Odebrecht mega corruption case. However, this disrupted the payment chain to suppliers and with it brought state works to a standstill, thus resulting in the State being able to execute the bonds or guarantees at any time. The Project for Law 2408, which will replace the Emergency Decree, remains in discussion and limits the extension of the application of the regulation. However, it is not clear if this new law will eliminate the risk of the aforementioned execution of the surety bonds, as there is still concern over whether it is possible to safeguard the onslaught of a massive claim on these insurances, on the basis of force majeure (or acts by the principal), given that the poor legislative technique employed by the State is one of the main causes of this situation. This article is written by Pedro Richter at Torres Carpio Portocarrero & Richter Abogados in partnership with DAC Beachcroft LLP. https://www.lexology.com/library/detail.aspx?g=dc0ade3c-35c5-43e6-8be6-17f75913dc91

Some insurers have left the marijuana insurance market after a warning memo sent by Attorney General Jeff Sessions earlier this year, but others are staying and even planning to increase their involvement in the sector, say observers. Insurers who have left the business include Glen Allen, Virginia-based Markel Corp. and Munich Reinsurance Co. unit Hartford Steam Boiler & Inspection Co., observers say. Mr. Sessions referred in his Jan. 2 memo to a memo issued in 2013 by then-Deputy Attorney General James M. Cole, which said law enforcement should focus on certain priorities with respect to marijuana, including preventing its distribution to minors. Mr. Sessions said, “previous nationwide guidance specific to marijuana enforcement is unnecessary and is rescinded, effective immediately.” “There’s been a mixed reaction,” said Ian A. Stewart, a partner with Wilson Elser Moskowitz Edelman & Dicker L.L.P. in Los Angeles. “On the insurance side, we saw a couple of carriers leave the space,” but “there are other carriers thinking about getting in, in 2018, who have taken a pause to see how things play out,” while others already in the business see this as an opportunity, he said. Justin Lehtonen, assistant vice president at Los Angeles-based wholesaler Worldwide Facilities Inc., said “probably one of the most severely handicapped areas at the moment” is coverage for equipment breakdown. A spokeswoman for Hamilton, Bermuda-based XL Group Ltd., which does business as XL Catlin, said it has not withdrawn from this market. “We review submissions on a risk-by-risk basis,” she said. Hartford Steam and Markel did not respond to queries on reports they had withdrawn from this market. “There have been markets that have pulled out, and some are just kind of tightening up,” said Ronnie Cabral, cannabis group practice leader at San Francisco-based wholesaler Crouse & Associates Insurance Co. The Cole memo’s withdrawal created “a little bit of a skittish marketplace that’s unsure about what they’re getting into,” said Rafael Haciski, a producer with Philadelphia-based broker The Graham Co. However, Stephen Pate, a member of law firm Cozen O’Connor P.C. in Houston, said despite the Cole memo’s withdrawal, “to date I haven’t seen anything that indicates to me they’ve done anything to try to enforce the federal marijuana laws.” Mr. Pate said insurers “right now are in a wait-and-see status, to see whether, in fact, the Trump administration is really, really going to do anything about this.” Seth A. Goldberg, a partner with Duane Morris L.L.P. in Philadelphia, said the memo has caused most industry participants to “pause and consider their involvement. But that said, the space has continued to grow and flourish,” and “the opportunity for insurers to profit from the space also remains.” Read More … http://www.businessinsurance.com/article/20180417/NEWS06/912320625/Marijuana-insurers-in-holding-pattern-after-Sessions-warning-memo

As of June 2018, Pennsylvania non-bank mortgage loan servicers have to get licensed in order to operate in the state. The changes are introduced by Senate Bill 751, which makes alterations to the Pennsylvania Mortgage Licensing Act (MLA) The bill sets licensing requirements for mortgage servicers, such as meeting surety bond requirements, as well as posting a fidelity bond. Licensees will also need to meet fixed level of net worth criteria. The changes with the new bill In most states across the country, mortgage servicers have to obtain a license prior to conducting their activities. With Senate Bill 751, Pennsylvania becomes the next state that introduces a regulatory procedure for this type of mortgage professionals. In this way, it aims to guarantee better compliance of mortgage servicers with federal and state laws. By amending the state’s Mortgage Licensing Act, legislators aim to bring legal clarity and ensure higher safety standards for the general public. The new legislation comes as a legal answer to cases of consumer complaints from servicers in Pennsylvania. For offences committed by servicers, the current MLA fines of $10,000 per occurrence apply as well. Servicers’ licenses can also be revoked and suspended, if deemed necessary. Besides the licensing criteria, the new bill also introduces important definitions of key terms and sets disclosure rules. It creates a wholesome legal framework for mortgage servicers in Pennsylvania. The licensing requirement for PA mortgage servicers With the introduction of the bill, the Department of Banking and Securities becomes the regulatory body that oversees non-bank mortgage loan servicers in the state. It takes over the responsibility to ensure that mortgage servicers comply with the Consumer Financial Protection Bureau’s regulations at 12 CFR, Pt. 1024. License applicants will have to submit their documents through the Nationwide Multistate Licensing System (NMLS), similarly to most other mortgage professionals in the U.S. You will be able to file your application starting April 1, 2018. The licensing process for non-bank mortgage servicers will entail obtaining a $500,000 surety bond. You will also need to get a fidelity bond in a sufficient amount set by the authorities, and the bond should be approved by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. Mortgage servicers will also need to maintain a minimum of $250,000 net worth at all times during the licensing period. You will have to cover licensing fees as well. Initial licenses cost $2,500 for the first office and $1,250 for each additional branch. For renewals, the fees are $1,000 for the principal office and $500 for additional ones. Meeting the bonding criteria One of the major licensing requirements you have to comply with if you want to run a mortgage servicing business in Pennsylvania is to obtain a $500,000 surety bond. The bonding functions as an extra layer of security for the state and consumers. For example, if a customer is subjected to any damages as a result of your actions as a mortgage servicer, they can file a claim against you. On proven claims, affected parties can receive a compensation that is up to the bond amount you have posted. In the case of Pennsylvania mortgage servicer bonds, this is $500,000. In order to get bonded, you don’t need to cover the whole required amount. You only have to pay a small percentage of it, which is often between 1% and 5%. This is called the bond premium and is determined on the basis of your personal and business finances. The better your overall profile is, the lower your bond cost is likely to be. https://nationalmortgageprofessional.com/news/66526/pennsylvania-mortgage-servicers-required-licensed-bonded