Top 10 West Insurance Journal Stories of 2021

December 30, 2021 by

Wildfires dominated headlines once again in Insurance Journal’s West region.

Stories on wildfires in California, as well as efforts to aid homeowners affected by the fallout of several years of severe drought and massive wildfires, were among the most read in the region.

Stories on COVID-19, of course, were among the most read, as were numerous stories on quirky lawsuits, and several stories on arrests and convictions for various types of fraud were well read.

Following are the region’s top 10 articles for the year.

This was the most read articles of the year, and it chronicled a showdown between Washington Insurance Commissioner Mike Kreidler and the insurance industry. In fact, three articles on this matter made the list of the region’s 20 most read articles.

Kreidler earlier in the year had issued an emergency order that prohibited insurers from using a consumer’s credit score to price auto, renters and homeowners coverage. In October a judge in Washington ruled in favor of the insurance industry’s argument against his emergency rule temporarily banning use of credit scoring.

Kreidler has been working to eliminate credit scores from insurer consideration for some time. His most recent effort failed when a bill he backed, Senate Bill 5010, was gutted by an insurance industry amendment in the Senate Business, Financial Services & Trade Committee on Feb. 15.

The American Property Casualty Insurance Association, the National Association of Mutual Insurance Cos. and the Northwest Insurance Council argued that Kriedler’s emergency order exceeded his statutory authority, violate the separation of powers between the executive and legislative branches of government and could be in direct conflict with the existing statutes.

In April, the groups filed a petition for declaratory and injunctive relief in Superior Court in Thurston County, which asked the court to declare the commissioner’s action invalid and enjoin its enforcement.

California Insurance Commissioner Ricardo Lara in September ordered insurance companies to preserve residential insurance coverage for more than 325,000 policyholders who have been affected by Northern California wildfires across 22 counties.

That wasn’t the first Lara had done something like that. He did it four times during the year. In early September, he issued similar orders following emergency declarations by California Gov. Gavin Newsom.

The September order protected 325,000 policyholders and was in addition to 25,000 policyholders who were protected in the moratorium order following the July 23 wildfire emergency in Lassen, Plumas, and Siskiyou counties.

Washington Commissioner Vs. Insurance Industry

Washington Judge Shoots Down Insurance Commissioner’s Credit Scoring Ban

Insurers Don’t Like New New Credit Scoring Ban in Washington, But Say They’ll Follow the Law

Judged Rules for Washington Insurance Commissioner on Credit Scoring Ban

Insurer Group Sues to Stop Washington Insurance Commissioner’s Credit Scoring Ban

Wildfire

California Issues 1-Year Moratorium on Homeowner Insurance Cancellations And Non-Renewals

Three Dozen California Bills Focus on Wildfire, Others Are Concerning for Insurance Industry

California Wildfire Threatens Lake Tahoe Area

California Alerts Residents in Burn Areas About Flood And Mudslide Coverage

COVID

California’s Harsh EPLI Landscape Made Worse by COVID

California Commissioner Says Insurers Overcharged Drivers During Pandemic

Auto Insurers Slam Nevada Pandemic Lawsuits

California Orders 3 Insurers to Give Refunds for Those Who Drove Less During Pandemic
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The commissioner’s ability to issue moratoriums is a result of a California law he authored in 2018 while a state senator to provide temporary relief from non-renewals to residents living within or adjacent to a declared wildfire disaster.

Roughly three dozen pieces of California legislation at one point during the legislative year were directly related to wildfire.

Several of those bills included mitigation incentives, penalties for failure to prevent fires, funding for fire prevention and firefighting, and a bill to prohibit cancellations in high wildfire risk areas.

The nature of the legislation included:

  • A bill to prohibit an insurer from canceling or refusing to renew a residential property insurance or commercial insurance policy based solely on the fact that the insured property is located in a high-risk wildfire area.
  • A bill stating that the intent of the Legislature was to enact legislation that would increase California’s capacity to prevent and reduce the impact of wildfires, and would make related findings and declarations.
  • A bill to impose a civil penalty of up to $100,000 for violations of certain fire-reducing provisions in state law, and impose an additional civil penalties for each acre burned by a fire.
  • A bill to require each electrical corporation to also submit a wildfire mitigation plan to the appropriate policy committees of the Legislature.

Cannabis legalization is a national story, considering the focus is on federally legalizing, but the subject was highly popular in the West region, where many of the nation’s legal states can be found.

The aforementioned article was an extensive recap of Insurance Journal’s bimonthly Insuring Cannabis podcast.

The episode featured Paul Armentano, deputy director of the cannabis advocacy group NORML, and Morgan Fox with the National Cannabis Industry Association.

The two talked about federal legalization and other efforts to enable safe banking for the cannabis industry.

A sweeping legalization bill known as the Cannabis Administration and Opportunity Act held some promise of passing before year’s end. The drafters of CAOA, primarily Senate Majority Leader Schumer, and Senators Booker and Wyden, were well engaged with stakeholders.

Among the things not to like about CAOA were the tax structure, which starts at 10% and then it moves up to 25%, on top of state and local taxes.

Another bill Fox and Armentano addressed was the Marijuana Opportunity Reinvestment and Expungement Act of 2021, or MORE Act, which would remove marijuana from the list of scheduled substances under the Controlled Substances Act.

Several stories covering the battle between the state’s insurance commissioner at the FAIR Plan drew great reader interest.

A Superior Court judge in July upheld the California Insurance Commissioner’s authority to order the California FAIR Plan to offer broader coverage options to consumers.

Los Angeles Superior Court Judge Mary Strobel upheld California Insurance Commissioner Ricardo Lara’s authority to order broader coverage options to consumers and she directed the commissioner to remove “some liability coverages that have no relationship, nexus, or connection to the insured property” and to resubmit his order to the FAIR Plan for immediate implementation.

Lara in 2019 ordered the FAIR Plan to offer a comprehensive policy more akin to a traditional homeowners policy, in addition to its current fire-only coverage, so a homeowner who was non-renewed or could not obtain similar coverage from a standard insurer could get this comprehensive coverage from the FAIR Plan.

The FAIR Plan in late 2019 sued the commissioner, arguing he had exceeded his authority.

One of the final articles of the year referencing the FAIR Plan covered a new report out from the California Department of Insurance showing the number of policies written by the FAIR Plan rose for the second year to a new high.

The Enhance Law Enforcement Integrity Act, a police reform law passed last June following protests over racial injustice in 2020, meant officers can be held financially liable for any judgement awarded in the case.

The new Colorado law allowing individual police officers to be sued wasn’t out long before a test case came along.

Four Black girls who were mistakenly detained by Colorado police at gunpoint over a suspected stolen car filed a civil lawsuit against police and the city of Aurora in February in the Arapahoe County District Court. One of the girls’ mother, the driver of car that turned out not to be stolen, is also a plaintiff in the case.

The incident in August 2020 attracted national attention after a video of the four girls being detained was posted on social media.

Aurora police apologized after the video taken by a bystander showed the girls in a parking lot with the 17-year-old and a 12-year-old lying on their stomachs with their hands cuffed behind their backs. A 14-year-old girl was lying next to the 6-year-old also on their stomachs next to the car.

The traffic stop occurred in Aurora, where officers were also being investigated following the death of 23-year-old Elijah McClain after he was placed in a chokehold last year.

How private insurance may come into all of this isn’t yet clear. It was not immediately known if the individual officers named in the lawsuit have insurance, and Aurora is self-insured and is not part of an insurance pool.

State Farm announced in March it was returning $400 million to California mutual auto insurance customers due to better than anticipated claim results.

The announcement came as the California Insurance Commissioner Ricardo Lara said insurers in California continued to overcharge drivers despite reduced risk of accidents during the pandemic.

The State Farm dividend applies to roughly 3.5 million private passenger auto policies in California. Through the dividend, customers can expect to receive a check of 18% of premium, or averaging about $100 per policy, for the time period from June 1 to Dec. 31, 2020.

“State Farm is once again returning value to our California customers while remaining financially strong to keep our promises now and in the future,” Tom Conley, senior vice president of State Farm said in a statement. “This additional dividend is another way we’re making adjustments based on driving behaviors to minimize impacts and help our customers.”

Insurers faced pressure by regulators across the nation to return premium dollars to drivers who were likely doing less driving during lockdowns – and it wasn’t limited to auto.

Lara issued a commissioner’s bulletin in April that covered premiums paid for at least the months of March and April in at least six different insurance lines: private passenger automobile, commercial automobile; workers’ compensation; commercial multi-peril; commercial liability; medical malpractice; and any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.

COVID was, as previously mentioned, a part of numerous top stories.

An article on the state’s difficult employment liability practices insurance arena included interviews with experts on EPLI who portrayed it as the most difficult market for that line in recent memory.

Tyie Moore, area senior vice president in executive lines for Risk Placement Services, who has been writing EPLI for 20-plus years, said the last two or three years have caused her and her clients a lot of pain and anguish.

Moore, who is based in Los Angeles, said problem No. 1 is that claims in California are bigger and there are more of them.

In years past, many claims she saw in California were small nuisance claims that would often get settled quickly, with about one out of every 40 accounts having an EPL claim it. Now, she estimates, three to four out of 10 of her accounts have EPL claim.

It costs about 260% more to resolve a claim in California than it does outside of the state, and according to a recent report from Kaufman Borgeest & Ryan, 21% of reported settlements in excess of $2 million were brought in California, as were four out of the top 10 settlements.

Uber Technologies Inc. lost an early round in a lawsuit filed by the relatives of a university student who was run over and killed on a San Diego freeway after one of the company’s drivers allegedly ordered her out of his car and a second driver failed to pick her up.

A state court judge in San Francisco in Aprl issued a tentative ruling Wednesday that rejected the ridesharing company’s claim that it had no responsibility for the death of 19-year-old Stella Yeh.

The sophomore at University of California at San Diego had been drinking with friends one night in May 2018 when one of them summoned an Uber to drive her to her dorm. During the ride, she vomited on the dashboard. The driver got off the freeway and ordered her out of the car, according to court records.

Yeh summoned a second Uber and was stumbling along the freeway ramp when it arrived. Rather than take her home, the second driver “abandoned her,” according to the complaint.

A few minutes later, Yeh wandered onto the freeway, where she was hit by two cars and killed.

Uber has argued that it shouldn’t be held liable for the actions or inactions of the drivers because they’re independent contractors, not company employees.

A scarcity of directors and officers coverage for cannabis companies was much covered in the media in the past few years.

D&O was given an even bigger spotlight following a Colorado lawsuit in which two large cannabis operators and several executives were accused of illegally transporting marijuana to Arkansas.

The lawsuit also invoked the Racketeer Influenced and Corrupt Organizations Act, or RICO, which seeks increased damages for the plaintiff.

Among the firms named was Chicago, Ill.-based Verano Holdings, which was accused in the lawsuit of illegally transporting marijuana from its home state of Illinois to Arkansas.

While medical marijuana is legal in Arkansas, cultivation, sale, and possession of the drug remains federal offenses in Arkansas. Cannabis also remains a controlled substance in the eyes of the federal government.

The allegations of illegal interstate marijuana shipments stem from the attempted acquisition of Verano by Phoenix, Ariz.-based Harvest Health & Recreation in a deal that fell through last year.

Verano (VRNOF: OTCMKTS) is a vertically integrated, multi-state cannabis operator that designs, builds, and operates dispensaries under retail brands Zen Leaf and MÜV. Harvest (HRVSF: OTCMKTS) is a vertically integrated cannabis company and multi-state operator that has been expanding its retail and wholesale presence throughout the U.S. by acquiring, manufacturing, and selling cannabis products for patients and consumers in addition to providing services to retail dispensaries.

The lawsuit was filed on March 8 in Colorado District Court. It also names dozens of executives from the cannabis companies.

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