Insurance Law

2013 in Review: 10 Most Important Insurance Regulatory Developments

Fred E. Karlinsky, Richard J. Fidei, Trevor B. Mask, and Benjamin J. Zellner of the law firm of Colodny, Fass, Talenfeld, Karlinsky, Abate & Webb have written an in-depth commentary comprised of a round-up of the ten most important developments in federal and state insurance regulation of 2013. Highlights include:

1) The Federal Insurance Office (“FIO”) released a report on how to modernize the insurance regulatory system in the U.S., wherein the FIO concluded that “federal involvement of some kind in insurance regulation is necessary,” but that “the proper formulation of the debate at present is not whether insurance regulation should be state or federal, but whether there are areas in which federal involvement in regulation under the state-based system is warranted.” The report included many recommendations for modernizing the U.S. insurance regulatory system. The commentary analyzes these recommendations as well as reports on recent legal and regulatory developments, current issues, and emerging trends concerning the U.S. insurance regulatory system.

2) The Biggert-Waters Flood Insurance Reform Act was implemented in 2013, and many homeowners saw their National Flood Insurance Program rates increase dramatically. This section of the commentary examines the key components of the Act and provides an update of material developments in 2013 on the legislative and legal fronts regarding the implementation of the Act. Interested parties have called on Congress to act, and the 2014 spending bill provides a temporary delay of rate increases for some properties. Florida has also attempted to mitigate rate increases by proposing  a statute that would  liberalize the flood insurance market, and Mississippi recently filed a lawsuit seeking to enjoin the federal government from implementing portions of the Act. The commentary explains the positions of the proponents of these actions.

3) In the wake of the recent financial crisis and discussions regarding group supervision that have been taking place in the international regulatory community, U.S. state insurance regulators decided to enhance supervision of insurance holding company systems. The National Association of Insurance Commissioners (“NAIC”) adopted the Insurance Holding Company System Regulatory Act in 2010, and nearly half the states have enacted substantially similar legislation since that time, including several in 2013. A key provision of the Model Act is the filing of a Form F which requires an insurer to disclose information regarding its affiliates, including anything that may have a “material adverse effect” on the insurer. The commentary delineates the provisions of the Model Act and the requirements of Form F. As of January 13, 2014, 24 states have fully or substantially adopted the Model Act and another nine states had legislation under consideration in 2013. The commentary identifies those states.

4) The NAIC continued to monitor implementation of the Risk Management and Own Risk and Solvency Assessment Model Act in 2013, which requires insurers to submit Own Risk and Solvency Assessment (“ORSA”) summary reports regularly to the appropriate regulator. The NAIC reviewed a number of these reports in a voluntary pilot program, and released their findings along with some proposed changes to the previously adopted ORSA Guidance Manual. This commentary reviews ORSA's requirements and the NAIC's findings. It also identifies the states that have fully or substantially adopted the ORSA Model Act as of mid-January 2014.

5) Historically, reinsurance companies located outside the United States were required to post one hundred percent collateral to write reinsurance in the United States. Loosening this requirement became an important international issue. In 2011, the National Association of Insurance Commissioners ("NAIC") adopted important changes to its Credit for Reinsurance Model Law (#785) and Regulation (#786) (collectively "Model Laws"). This commentary analyzes the provisions of the Model Laws. In 2013, the NAIC designated four foreign jurisdictions “qualified” for purposes of reducing the collateral of certified reinsurers domiciled in those jurisdictions. Since then, several states have certified reinsurers for reduced collateral, and other states are reviewing applications. The commentary reports on the actions of Florida, Connecticut and New York in that regard.

6) Issues regarding unclaimed property continued to evolve in 2013. Several court cases involving insurers’ use of the Social Security Administration’s Death Master File (“DMF”) were resolved, and some states reached multi-million dollar settlements with life insurers regarding use of the DMF in locating deceased persons. The commentary analyzes key litigation on this issue. A bill was also introduced in Congress that is meant to improve the accuracy of the DMF and the commentary reports on the provisions of that bill.

7) Major provisions of the Patient Protection and Affordable Care Act (“ACA”) were implemented in 2013. The commentary identifies the new standards under the ACA that conflict with the laws of many states. The commentary reports on the rocky rollout of the federal exchange, but also points to important developments in the state exchanges. Health care insurance plans sold inside and outside the exchanges must cover "essential health benefits." This commentary delineates these essential requirements. Additionally, due to many people having lost their insurance because their policies did not comply with the ACA, the Obama Administration introduced a plan to provide some transitional relief to affected individuals. Each state was able to determine whether it would permit its insurers to offer to renew health plans that are not compliant with the ACA, although the states could not require insurers to offer to renew noncompliant plans. In states that permitted the renewal of noncompliant policies, insurers were required by the President's transitional plan to send a notice to all individuals and small businesses that had received a cancellation or termination notice. The commentary reviews the required components of that notice.

8) 2013 saw many attempts and calls for the reauthorization of the Terrorism Risk Insurance Act (“TRIA”), which expires on December 31, 2014. Three bills were introduced in the House in 2013 that would have renewed TRIA. The provisions of those bills are examined in this commentary as such reauthorization attempts may be renewed in 2014. As of now, Congress’s failure to reauthorize TRIA in 2013 will create increasing uncertainty in 2014, as policies written this year will extend into 2015. The commentary reports on why many in the insurance industry fear that a severe disruption will result if TRIA is not reauthorized.

9) The commentary identifies the many states that have enacted laws regarding the use of electronic documents in the business of insurance in 2013, as well as the states that are considering such legislation. Many states’ insurance laws were written before widespread use of the internet, and did not anticipate electronic delivery or signature. Because consumers increasingly prefer to transact business online, states are changing their laws to reflect consumer expectations, with implications for how insurers may conduct business. The commentary examines California's, Florida's, and Wisconsin's new laws on e-delivery. Many states have recently adopted legislation allowing drivers to show proof of insurance by accessing their policy information on a portable electronic device. The commentary looks at such a law enacted in Illinois in 2013.  In addition, there are court cases that are starting to arise on the subjects of electronic notices and transactions in insurance. The commentary discusses notable cases on point.

10) International developments continued to have an effect on insurance regulation in 2013. Efforts to properly supervise “too big to fail” entities, including some insurers, had a major impact in 2013, and will likely continue to be an evolving issue through 2014. The commentary notes that the activities of the international Financial Stability Board ("FSB") had a major impact on international insurance supervision in 2013. It released a report questioning the effectiveness of U.S. insurance supervision on the U.S. financial system, in August. The commentary examines the FSB's recommendations and the NAIC's responses to them. It further reports on the FSB's involvement in efforts to introduce more international conformity in insurance regulation. In addition, the commentary explores the International Association of Insurance Supervisors ("IAIS") efforts at addressing global risks involving insurance and the NAIC's responses to those efforts. The commentary concludes, "Clearly, further efforts to establish international convergence in insurance supervisory standards and efforts, at least with regard to systemically important and/or internationally active institutions will serve to focus heightened attention on the ongoing roles of the federal government and states in regulating insurance in the U.S."

    Fred Karlinsky, a Shareholder in Colodny, Fass, Talenfeld, Karlinsky, Abate & Webb, represents insurers and reinsurers throughout the United States and internationally in a wide variety of business, operational, regulatory, transactional and governmental matters. Recognized as one of the top insurance lawyers by Chambers and Partners, a global attorney ranking organization, Mr. Karlinsky has an in-depth knowledge of insurance compliance matters and has established substantial relationships with insurance commissioners and their respective staff members throughout the country. Prominent in his role as the Florida lobbyist for the Property and Casualty Insurers Association of America, lead lobbyist and General Counsel to the Florida Property and Casualty Association, and General Counsel of Regulatory Affairs to the Florida Surplus Lines Service Office, he has been a primary strategist in all types of Florida insurance-related legislative initiatives, including homeowners, automobile, workers' compensation, medical malpractice and other lines of property and casualty, and life and health. Mr. Karlinsky is a member of Florida State University's Florida Catastrophic Storm Risk Management Center Advisory Council and the national Federation of Regulatory Counsel. Mr. Karlinsky is admitted to practice in all Florida state and federal trial and appellate courts, the U.S. Supreme Court, U.S. Tax Court and the U.S. Court of Compensation Claims, as well as the Roll of Solicitors of the Senior Courts of England and Wales. Earlier this year, he was elected Chair of the Seventeenth Circuit Judicial Nominating Commission, to which he was appointed by Florida Governor Rick Scott in 2011. Mr. Karlinsky is an Adjunct Professor of Law at the Florida State University College of Law, where he earned his Juris Doctor. He received his Bachelor of Science from the University of Miami. Mr. Karlinsky can be contacted at (954)-332-1749 or

    Rich Fidei, a Shareholder at Colodny, Fass, Talenfeld, Karlinsky, Abate & Webb, is a leader of the Firm's Insurance Regulatory Law Division. Licensed in both Florida and Pennsylvania, Mr. Fidei focuses his practice on insurance regulatory, compliance, administrative and transactional issues. He represents insurance companies, agents, brokers and a variety of other insurance-related entities in all lines of business and in all elements of insurance and reinsurance, as well as in operational issues. Mr. Fidei handles matters such as company formation and licensure, expansion activities, financing, reinsurance, market conduct, financial and solvency matters, rate and form filings, claim and dispute resolution and administrative and court proceedings, including administrative supervision and insolvency issues. In addition, he negotiates, prepares and closes a wide variety of commercial transaction documents, merger and acquisition agreements, and handles other contractual matters. Mr. Fidei, who holds the highest rating of "AV" from Martindale-Hubbell, serves as National General Counsel to the Association of Insurance Compliance Professionals and is a contributing member of the American Bar Association and Federation of Regulatory Council. An experienced legal instructor and lecturer, he delivers insurance and reinsurance presentations nationwide. Mr. Fidei can be contacted at (954)-332-1758 or

    Trevor B. Mask, an Associate in Colodny, Fass, Talenfeld, Karlinsky, Abate & Webb's Lobbying and Governmental Consulting Division, is based in the Firm's Tallahassee Office. He specializes in advocacy on behalf of clients before Florida's Legislature, Executive Branch and regulatory agencies. A member of the Florida Bar, as well as the Florida Association of Professional Lobbyists, Mr. Mask represents a variety of corporate clients. Experienced in a variety of public policy areas, he works frequently with insurance, criminal justice, education and health care issues. He has worked extensively with legislative appropriations and the budgeting process, through which he has drafted bills and facilitated the passage or defeat of legislation. He represents clients before Florida's regulatory agencies, providing testimony at regulatory hearings, rulemaking workshops and statewide hearings. Mr. Mask can be contacted at (850)-701-3105 or

Benjamin J. Zellner, a recent law school graduate, joined Colodny, Fass, Talenfeld, Karlinsky, Abate & Webb's Insurance Regulatory and Transactional Law Division in 2013. Mr. Zellner, who is pending admission to the New York State Bar, formerly worked in the New York City Police Department Commissioner's Office. A cum laude graduate of New York Law School, Mr. Zellner has published several articles on various international law issues, including a piece on some of the legal issues surrounding the Osama bin Laden killing. Mr. Zellner can be contacted at (954)-332-7507 or

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