Governor signed Insurance Bad Faith Statute into law some legislation to allow policyholders to sue their auto insurers for as much as 3xs the applicable coverage amount. Last week you were reading Reinsurance Renewals Vary Significantly By Line. This week we’re bringing you:
How to combat the ‘bullwhip effect’*
Remember when we were bulk buying toilet rolls and other simple items as the COVID-19 pandemic sprang into life? It may seem a long time ago now, but supply chains across various industries are continuing to deal with the consequences of mass hoarding materials.
Where this impacts the insurance industry is that brokers are unable to accurately assess the size of a client’s inventory as bulk-buying supplies has become the new normal. Clients are going to multiple suppliers and placing the same order four to five times because the unpredictability of the market has left them scared.
This trend has curated false demand in the supply chain marketplace. There is fast growth, sharp downturn, then a little bubble at the end for the snap which is known as the ‘bullwhip effect’.
Nick Kohlhof, account executive of property and casualty (P&C) at Holmes Murphy, spoke to Insurance Business about how supply chain volatility is leading to gaps in clients’ coverage.
For example, a client could be on the latter half a delivery schedule with an eight month wait time, then suddenly, they could get a call the next day as the companies at the top of the list drop off as they fulfilled their orders somewhere else.
“All of a sudden you have very unpredictable and inaccurate wait times,” he said.
Lloyd’s Weighs Future of Headquarters as Market Embraces Flexible Working*
Lloyd’s of London is reviewing its real estate needs as the historic insurance market embraces flexible working.
“As we adapt to new structures and flexible ways of working, we are continuing to carefully think about the future requirements for the spaces and services our marketplace needs,” according to an emailed statement. React News reported the review earlier.
The Lloyd’s insurance market has been a historic focal point in the City of London since it moved into the building in 1986 and dozens of insurers have based themselves in the towers immediately surrounding the historically protected building. Any move away from the so-called inside out building, which is named for its external elevator shafts, plant and machinery, could shift the center of gravity in the district.
A move would also create a headache for China’s Ping An Insurance Group Co., which owns the building on Leadenhall Street. It was specifically designed for Lloyd’s by architect Richard Rogers and its historic protections limit the scope for major modifications to make it suitable for a new occupier.
It is not the first time Lloyd’s has reviewed its real estate plans. In 2014, the group considered a move to a nearby development at 40 Leadenhall Street that is now under construction, the Sunday Times reported at the time.
Governor signs insurance bad faith statute for auto insurers*
New Jersey Governor Phil Murphy, who has been sworn in for a second term, has signed into law some legislation to allow policyholders to sue their auto insurers for as much as three times the applicable coverage amount.
SB 1559, also known as the New Jersey Insurance Fair Conduct Act (IFCA), will allow injured parties to file lawsuits against their insurer for “an unreasonable delay or unreasonable denial” of an insurance claim. It also allows policyholders to sue their insurer if they believe the company violated the New Jersey Unfair Claims Settlement Practices Act (UCSPA), which governs “unfair methods of competition and unfair and deceptive acts or practices in the business of insurance.”
Prior to the bill, the state previously required multiple violations before any legal enforcement would be allowed. Also under previous rules, it was the responsibility of the Commissioner of Banking and Insurance to file the lawsuits, not the policyholders.
Policyholders who can prove a violation of the ICFA are entitled to recover actual damages, including trial verdicts and up to three times the applicable coverage – on top of pre-and post-judgment interest, litigation costs, and attorney’s fees.
A blog post on the website of law firm Troutman Pepper said that New Jersey joins other states such as Pennsylvania that have established statutory bad faith regimes for policyholders, enabling them to sue insurers. The legal firm has noted that while the IFCA looks to punish “unreasonable” conduct by insurers, it does not elaborate on which specific types of conduct are unreasonable. Troutman Pepper also raised questions over certain specifics – or lack thereof – of the law, such as how much time amounts to an “unreasonable delay,” or what is an “unreasonable denial of a claim for benefits” when the facts of the law are unsettled.
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