This past May, the Ninth Circuit Court of Appeals affirmed a district court’s order granting summary judgment in favor of a life insurance company, finding that California’s lapse statute applies only to life insurance policies initially “issued or delivered” in California.

In Elmore v. Hartford Life and Accident Insurance Co., the insured alleged that the company improperly terminated his policy under California’s lapse statute, sections 10113.71 and 10113.72 of the California Insurance Code, which outlines procedural notice requirements that insurers must follow before they can terminate a policy. Despite receiving termination notices sent to his work address, which was the current address on file, the insured did not timely pay his premiums, and his policy lapsed in May 2017.

The insured, a California resident, filed suit alleging that the insurer violated California’s lapse statute “by failing to notify him of his right to designate an additional party to receive lapse-of-payment notices and to send these notices to that designee before terminating his policy.” The insurer moved for summary judgment, contending that the notice provisions of the 2013 statute did not apply retroactively and did not extend to the policy in question, which was originally issued in Illinois. The district court agreed and entered summary judgment for the insurer.

On appeal to the Ninth Circuit, the first ground for summary judgment (that California’s lapse statute did not apply retroactively) was foreclosed by the ruling in McHugh v. Protective Life Insurance Co., in which the California Supreme Court ruled in favor of retroactivity. Nonetheless, the insurer prevailed on the second point: that the California law did not apply. Although the policyholder had moved to California after buying the policy, California’s lapse statute applies only to policies “issued or delivered” in California. The insured argued that the relevant provisions of the statute did not expressly include the condition that policies must be “issued or delivered in this state,” suggesting that it should apply to his Illinois-issued policy. The Ninth Circuit, however, construed the statute and concluded that the plain language of the law limits its reach only to policies “issued or delivered” in California, and affirmed the district court’s ruling.

Life insurers should take note of the new Elmore decision, which should limit McHugh’s expansion of the California lapse statute for a subset of policies not originally issued in California.

Source : JD Supra

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ORLANDO, Fla. — Home owners insurance has been a hot and pressing topic for the past two years in the Sunshine State, and recent communications from the state-backed insurer of last resort indicate that trend will likely continue.

Many property owners say property insurance rate increases have led them to Citizens Property Insurance, but it appears the company is looking to trim its list of policy holders.

Roughly 300,000 Citizens customers have received a letter in the mail from the company explaining how their coverage could be changing in the future.

In the letter, Citizens explains that a private-market insurance company has expressed interest in assuming control of their policy. Policy holders have the option to decline the offer and stay with Citizens, but “future offers with a premium of no more than 20% greater than Citizens’ premium will render you ineligible to renew with Citizens.”

Central Florida resident Mary Dees received the letter and said it caught her by surprise.

“I was confused on what it was stating as being great news,” she said. “I was being switched from Citizens to a different company I had never heard of.”

For roughly 20 years, Dees has lived on Lake Daniel. She says she is not in a flood zone and does not have an older roof, but that didn’t stop State Farm from dropping her and several neighbors. Like many do, she shopped around for a new policy.

“It was going from $4,000 to $9,000,” she said. “And then they would tell me even at $9,000 they wouldn’t insure me.”

Citizens’ move to transfer policies to other insurers has opened the door for other companies.

“The private companies get to choose who they want,” said Steve Gensolin, of the Little Star Insurance Agency. “So if your home has a newer roof, if your home is in an area that maybe has capacity, that’s important to know.”

The company looking to acquire Mary’s policy is Slide insurance, a new company offering a rate that is $1,500 more than what she pays now.

But Dees said shopping around yet again is not a task she is looking forward to.

“Ones that I would go with were out-priced, I wasn’t able to afford,” she said. “Or they wouldn’t accept me, or both.”

Dees has already opted back in for Citizen’s for the next year, but knows she will have to find new coverage soon. 

Citizen’s has also informed her that she will continue to receive future offers from private-market companies.

It’s important to note for many Citizen policy holders they are getting their letters late because the printer who was in charge of the letters could not get them all out in time. Policy holders have until Oct. 10 to respond to Citizens.

Source : Spectrum News 13

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