Insurance Litigation Law Blog | Regulatory Law | Bad Faith | California | Lawyer | Attorney | Barger & Wolen

Robert H. Hogeboom, Senior Regulatory Attorney at Barger & Wolen LLP, testified on May 17, 2010, that the California Department of Insurance (“CDI”) should withdraw its proposed regulations on standards and training for estimating replacement value on homeowners’ insurance (“Proposed Regulations”). 

Representing the Insurance Agents and Brokers Association of California, Hogeboom criticized the CDI for proposing draconian regulations with no proper authority and creating a new “unfair practice” violation applicable to producers and insurers. Specifically, the Proposed Regulations provide that an estimate not conforming to the new CDI standards set forth in the Proposed Regulations is a misleading statement within California Insurance Code § 790.03, which identifies certain prohibited acts in the business of insurance.

For Hogeboom’s full analysis of the Proposed Regulations, click here.

For Hogeboom’s filed comments and objections to the Proposed Regulations, click here.

For a copy of the Proposed Regulations, click here.

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Few firms can claim that they’ve written the book of law on a specific legal topic, such as California insurance law. Barger & Wolen, however, is proud to announce that we are in the process of updating, revising, and writing new chapters for the Matthew Bender California Insurance Law & Practice book published by LexisNexis.

Recently released revisions of California Insurance Law & Practice include:

Chapter 1: Overview of California Insurance Law, revised by Steven H. Weinstein and Marina M. Karvelas. Discusses the nature of insurance, including the elements of the insurance contract, the “Assumption of Risk of Loss” and the “Principal Object and Purpose” tests and examples of what qualified and doesn’t qualify as insurance, including the current issue of whether credit default swaps qualify as insurance.

Chapter 6A: Property-Casualty Insurance Ratemaking and Rate Regulation, revised by Steven H. Weinstein and Richard G. De La Mora. Addresses the basic actuarial concepts underlying the property-casualty insurance rate making process.

Chapter 42: Workers’ Compensation Insurance, revised by Steven H. Weinstein, James C. Castle and Peter Sindhuphak. Provides an overview of the governing law of workers’ compensation insurance in California.

Chapter 60: Licensing of Agents and Brokers, revised by Christophe H. Burusco and Dennis C. Quinn. Discusses numerous types of agents and brokers, license applications, license examinations, certificates of convenience, license issuance, procedural rules applicable to licenses, application fees, and the termination of licenses.

Upcoming chapters for 2010 include a new submission on Subrogation, along with revisions and updates on The California Insurance Holding Company Act, Reinsurance, Claims Processing and Investigation and Marine Insurance.

Future updates (through 2011) will include:

• The Regulation of Insurer Investments
• The Insurance Contract
• Issuance of Insurance policies
• Nature and Types of Life Insurance
• The Life Insurance Contract
• Nature and Types of Disability Insurance
• Group Life and Disability Insurance
• Operating Requirements of Agents and Brokers
• Surplus Line Brokers
• Disciplinary Actions Against Agents and Brokers
• Insurance Considerations in Business Planning

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Earlier today, California Insurance Commissioner Steve Poizner issued a press release advising that more than 1000 insurers licensed to do business in California have agreed to a voluntary moratorium as to future investments in companies that do business in Iran. 

At the same time, Commissioner Poizner released a list of 296 insurers doing business in California that would not agree to the voluntary moratorium. The list of those 296 insurance companies is attached here, and the list of the 50 “Iran-related” companies, as found on the Department’s website, is also attached here.

Our blog previously reported on this issue after Commissioner Poizner first announced his Terror Financing Probe back in June 2009, and shortly thereafter issued a Data Call on July 2, 2009, to all insurers admitted in California seeking information on their investments in or related to Iran. As stated in the press release issued today:

100 percent of the 1,306 insurance companies licensed in California responded to his request to provide data on their investments with companies doing business with Iran’s, nuclear, defense, and energy sectors.

This has been a controversial issue in California over the past year, and it is unclear, now that this list of 296 has been generated, how far Commissioner Poizner, who is currently running for the Republican nomination for Governor, will pursue matters with respect to insurance companies that have refused to agree they will not make any future investments in companies that do business with Iran. 

Today’s press release provides no clue, other than to note that as of March 31, 2010, the California Department of Insurance “disqualified an estimated $6 billion in holdings in the 50 Iran-related companies” (based on 2008 data). 

Among the questions facing insurers are the following: 

• Will the Department seek to have any future investments “disallowed” as part of an insurer’s surplus? 
• Will the Department order insurers to dispose of such investments? 
• Does the Department have any legal ability to take any further action? 

Barger & Wolen will continue to follow the Commissioner's activities on this matter.

For more information, please contact Larry Golub at (213) 614-7312 (lgolub@bargerwolen.com).

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Efforts in Sacramento to put a cap on the recovery of punitive damages were stomped out on May 4, 2010, as a party-line vote killed pending tort reform legislation in the Assembly’s Judiciary Committee.

As reported previously, Assembly Bill 2740, authored by Assemblyman Roger Niello (R-Fair Oaks) sought to limit punitive damages to three times the amount of compensatory damages. Because plaintiff’s attorneys routinely work on a contingency basis, this legislation was strongly opposed by plaintiff’s attorneys – arguing it was unnecessary. The bill would have also capped “pain and suffering” awards to $250,000.

Kim Stone, Vice President of the Civil Justice Association of California, testified that these “common-sense reforms would go a really long way towards making California more friendly to business while at the same time protecting the truly injured to make sure they receive their just compensation.”

Niello, a strong-backer of business interests in California, argued that tort reform is necessary to reinvigorate the state as a place for businesses to make their home.

“It's been stated by (the trial lawyers) that there’s no need, there isn’t a problem. There is a need, there is a problem. The problem is the reputation of California as a place to do business in is in the tank, and part of the reason for that is our civil justice system,” Niello told the committee.

Unfortunately, these justifications were not persuasive – or perhaps more pessimistically, not considered – as the bill was defeated on a party-line vote. Democrats unanimously voted against the reform, Republicans unanimously voted for reform. Given the toxicity and divisiveness of California state politics, perhaps little less should have been expected.

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