A Transformation in Residual Market Management

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Louisiana Citizens Property Insurance Company is the state’s residual market providing property insurance to homeowners and businesses that have been unable to procure insurance in the private market. Louisiana Citizens came out of the 2005 hurricane season nearly $1 billion in debt from Hurricane Katrina and Rita losses.

Since then, Louisiana Citizens appears to have transformed itself into a leaner, financially disciplined, and well governed organization. While it has yet to publish estimated losses from Hurricane Ida, there appears little chance of a similar financial hole opening in Louisiana Citizens’ balance sheet this year.


Reinforcing transparency in captive registrations and fairness in captive practices

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In the United States, insurance is largely regulated at the state level. In most cases, property and casualty insurance is provided by “admitted insurers” which are insurance companies licensed to do business in the state in which the policyholder resides or the insured risk is located. The insurer is responsible to remit the premium tax due from the sale of an admitted insurer’s policy.

In some instances, a policyholder may procure insurance from an “unauthorized” insurer though a surplus lines broker. Surplus lines insurers are typically approved (but not licensed)…


Federal appeals court makes short work of dental practice’s claim for COVID-19 business interruption insurance under Georgia law.

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During the Spring of 2020, the Governor of Georgia ordered residents and visitors to “shelter in place” where they lived. People could leave their homes to attend to essential services, including necessary medical care. The Centers for Disease Control (CDC) issued guidance around that time that healthcare providers, including dentists, should postpone elective and non-emergency procedures.

Gilreath Family & Cosmetic Dentistry followed the CDC’s guidance. …


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Executive Summary

California’s Commissioner of Insurance convened a Working Group to explore the role innovative insurance solutions may be able to play in helping communities and families manage the risk of climate change. One of the Working Group’s recommendations is to promote parametric insurance. While traditional insurance indemnifies the policyholder for actual loss, parametric insurance pays out a pre-set amount if a disaster such as a flood, wildfire or heat wave exceeds specified parameters.

There is just one hitch: Parametric insurance is not insurance. After the 2008 financial crisis, Congress enacted Dodd-Frank to, among other things, sweep parametric and other…


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Executive Summary

Parametric insurance proposals have emerged as potential solutions for managing a growing list of cutting-edge risks including pandemic, climate change, and even urban crime. For example, Chubb has proposed a $750 billion Pandemic Business Interruption Program through which insurance companies would sell parametric pandemic insurance contracts to small businesses.[1] Similarly, the major property and casualty insurance trade associations have jointly proposed the Business Continuity Protection Program which would employ a “[s]traightforward, objective parametric trigger”.[2]

These proposals each leap to the conclusion that parametric insurance is … insurance. …


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The National Council on Compensation Insurance (NCCI) is the main rating bureau for workers compensation insurance. NCCI develops recommended loss costs (that part of an insurance rate associated with claims) for 38 jurisdictions. Most other U.S. jurisdictions use independent bureaus which are significantly influenced by NCCI’s rating framework.

Each year NCCI revises its jurisdiction-specific loss cost filings by incorporating claims data from the last experience period. In plain-speak, NCCI updates the amount of expected claim payouts for the next year based on updated claims loss data from prior years. …


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The Terrorism Risk Insurance Act requires participating insurers to provide “clear and conspicuous disclosure to the policyholder of the premium charged for insured losses covered by the Program.”[1] An insurer that fails to disclose the terrorism premium charged forfeits its right to reimbursement from the program’s backstop.

In its recently released Study of Small Insurer Competitiveness in the Terrorism Risk Insurance Marketplace (June 2021), U.S. Treasury addresses the common practice among insurers (especially smaller insurers) of disclosing $0 terrorism premium.

Overall, Treasury’s analysis of small insurer data found that 35% of small insurer policies (by premium) provide terrorism coverage at…


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On June 9, U.S. Treasury released updated regulations reflecting the extension of the Terrorism Risk Insurance Program through 2027. While many of the changes are straight-forward, Treasury’s reactions to public comments offer a few valuable insights.

Economic Loss to Drive Calculation of $5 Million Threshold for Certification

Under the program, the Secretary of Treasury cannot consider an event for certification as an act of terrorism unless “property and casualty insurance losses” resulting from the event exceed $5 million.[1] Treasury has now adopted a definition of “property and casualty insurance losses” as:[2]

[A]ny amounts subject to payment under a property and…


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Earlier today the United States Court of Appeals for the 8th Circuit released the first federal appellate decision considering a business interruption claim arising out of COVID-19.

In this case, the policyholder is an oral surgery practice with four offices in and around Des Moines, Iowa. The practice “suspended non-emergency procedures due to the COVID-19 pandemic and the related government-imposed restrictions” from late March until May 2020.

The insurance policy covered business interruption due to “accidental physical loss or accidental physical damage” to property. The policyholder argued that “physical loss” and “physical damage” should be read to have different meanings:


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The Terrorism Risk Insurance Act requires the Federal Insurance Office (FIO) to conduct a study of the program’s impact on small insurers. We have suggested FIO focus its upcoming report on two heighten program risks facing small insurers:

  • Compliance with the separate line-item disclosure of terrorism premium; and
  • A disproportionate burden of post-event policyholder surcharges.

Separate Line-Item Disclosure

TRIA requires participating insurers to include a “clear and conspicuous disclosure to the policyholder of the premium charged for insured losses covered by the Program . . . on a separate line item in the policy, at the time of offer and…

Jason Schupp

Founder and Managing Member of Centers for Better Insurance, LLC

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