News In Brief

COVID LITIGATION

According to a published report, a federal district court in Alabama denied Cincinnati Insurance Company’s motion to dismiss a Covid-19 business interruption lawsuit, saying physical damage is not necessarily visible to the eye. The three restaurant companies had argued that the terms concerning loss under Cincinnati Insurance Company’s coverage were ambiguous. The insurer had argued that the restaurants had not identified the physical loss or damage to the property needed to trigger coverage. The ruling left room for the restaurants to proceed by allowing that the facts alleged by the restaurants may constitute actual physical loss of their buildings and furniture during the pandemic, even though the impact is not visible. The court said, “…Policy language indicates that the insurer understands that an insured may suffer physical loss without physical alteration of property because the policy excludes from coverage some expenses incurred because of invisible substances like vapor and fumes…. Cincinnati could have excluded invisible substances like viruses but did not.”

JOB LOSSES

As the pandemic continues to crumple the U.S. economy, the insurance industry lost 7,000 jobs in April with businesses struggling to reverse the Covid-19 impact and engage in a long anticipated recovery, BestWire reported May 7, citing the U.S. Bureau of Labor Statistics. The unemployment rate inched upward to 6.1 percent. For the insurance industry, jobs shrunk by 0.24 percent over March’s numbers. The Department of Labor employment numbers for the industry have ping-ponged between gains and losses. In March, the industry gained 11,200 jobs; in February the industry lost 2,900 jobs and in January posted job losses of 9,300 positions. The insurance industry employment numbers showed growth year-to-date, with a 0.77 percent increase of jobs to 2.88 million, compared with 2.85 million in April 2020, according to the report, which is scheduled to be released June 4.

TDI

By rule, the Texas Department of Insurance requires individuals, agencies and companies regulated by the TDI to designate an email address for official communications from the agency. The requirement becomes effective Jan. 1, 2022. The rule also allows electronic submissions to TDI in most cases where a paper method was previously required. Regulated entities must notify TDI and designate a new email address within 10 business days when communication can no longer be received at the address previously provided.

The Texas Division of Workers’ Compensation (DWC) seeks comments on a proposed plan to update notices as it prepares to move its headquarters from Metro Center Drive to the Capitol Complex at 1601 Congress Ave., Austin, in the summer of 2022. According to DWC, the move will require updating notices and forms to use new letterhead and a mailing address. In some cases, DWC also plans to modernize forms and notices for content or formatting. DWC has organized forms and notices into three groups depending on whether it’s planning significant updates, limited updates, or no changes. DWC accepted comments on the form revision plan through May 24.

SLTX

In April, the Surplus Lines Stamping Office of Texas recorded $747.99 million in premium, the fifth highest monthly premium in stamping office history, and a 0.8 percent increase over April 2020. Cumulatively, SLTX reports $2.75 billion in premium year-to-date, a 14.2 percent increase compared to the same period in 2020. Several lines of business demonstrated notable increases over April 2020, with the largest increase being attributed to Property Package (residential, commercial, and historical codes), which rose almost $27 million, or 131.8 percent. Due to SLTX’s re-categorization of coverage codes in the beginning of the year, some of this increase likely shifted from Homeowners coverage. The second-highest premium increase in April is associated with Allied Lines coverage (residential, commercial, and historical codes), which gained $13 million, or 135.4 percent. These calculations do not represent a market trend, as they are for a single-month period only. For the second consecutive month, the overall number of transactions and policies filed increased over the same period in 2020. Year-to-date, 223,204 policies have been filed, a 5.3 percent decrease in the number of policies filed. Continuing with the year-to-date trend, the majority of the premium reported in April can be attributed to renewal policies, 61 percent. Secondarily, 34 percent of premium reported is for new business, and the remaining five percent is a result of other transactions such as endorsements, cancellations, audits, and installments. As of the end of April, SLTX has posted $2.69 million in stamping fee collections.

The stamping office offers the infographic Best Practices to Avoid Late Filings on its website. In infographic, SLTX reminds filers to enter policy issue dates along with effective dates, as a filing is considered late after 60 days of the later of the two dates. Other tips are to replace binders with policies whenever a binder is filed, review the policy checklist to make certain no required data items are missed, and correct errors timely, as filings with errors are not considered filed until corrected. Finally, in the event a surplus lines agent has issues with online filings, the items should be sent by U.S. mail for filing. The infographic includes the rule changes affecting late filings that became effective Dec. 20, 2018.