1. Insurer Withdrawal: What You Need to Know
Emily A. Vlasich, Senior Counsel,
Allianz Global Corporate & Specialty
This presentation does not constitute legal advice. Please consult you own counsel for guidance on any legal matters.

2. What is withdrawal?
Most people think of a total withdrawal from the market.
E.g. Hawaii 431:3-215
(a) “No insurer other than a life insurer shall withdraw from this state until its direct liability to its policyholders and obligees under all its insurance contracts then in force in this State has been assumed by another authorized insurer under an agreement approved by the commissioner.”
Assuming insurer must replace policy contracts with its own
Prior to withdrawal, insurer must give notice to DOI and publish withdrawal in local newspaper
Insurer must surrender certificate of authority

3. Do all states have withdrawal filing requirements?
About half of the states have some kind of formal notice/review/approval requirement
CA, CT, FL, GA, HI, ID, IL, KS, LA, ME, MD, MS, MO, NV, NJ, NY, NC, ND, OK, OR, PA, SD, TX, UT
Other states do not require approval for withdrawal, but insurers are still bound by cancel/nonrenewal requirements, obligations under the insurance contract, etc.

4. Why do states care about withdrawal?
Availability of insurance in the marketplace
Effect on agents
Other consumer protection issues (confusion, uncertainty, comparable coverage, etc.)

5. Other actions can trigger “withdrawal” statutes.
Depending on the state:
Exiting a line of business
Exiting a sub-line of business
Exiting a “class” of business
Terminating a program
A block nonrenewal
Transferring to an affiliated underwriting company

6. Examples:
California : (a) No insurer shall cease to offer any particular class of commercial liability insurance without prior notification to the commissioner.
an insurer shall notify the department at least 60 days prior to the date it intends to withdraw wholly or substantially from certain lines of insurance, including most commercial and personal lines. Upon receipt of the notice, the commissioner may request and review additional information, as deemed necessary, and investigate the market conditions to determine whether that insurance may become not readily available in the voluntary insurance market as a result of the withdrawal.
"intent to substantially withdraw" means an insurer's intent to nonrenew in excess of 50 percent of its current policyholders in the line of coverage upon their next renewal.

7. Examples: North Carolina 58-41-45
Terminating Line of Business: Except as provided in G.S , no insurer may terminate, by nonrenewals, an entire book of business of any kind of insurance without 60 days prior written notice to the Commissioner; unless the Commissioner determines that continuation of the line of business would impair the solvency of the insurer or unless the Commissioner determines that such termination is effected under a plan that minimizes disruption in the marketplace or that makes provisions for alternative coverage at comparable rates and terms.
: “kind of insurance” = line of insurance

8. Examples Connecticut 34a-44
Any insurer licensed to do business in this state, or authorized to do business on a nonadmitted basis, which intends to discontinue offering or substantially reduce its writings in a line or subline of insurance in this state shall send, by registered or certified mail, or deliver to the Insurance Commissioner written notice of its intent to take such action at least sixty days before the initial notice of cancellation or nonrenewal is delivered or mailed to the insureds. This section shall not apply to life insurance policies or annuity contracts.

9. Examples: Connecticut Bulletin PC-34
The term "subline of insurance" means major classes of a line of business. Such categories identify a particular type of risk or operation. For example: liquor liability, products, and daycare are sublines of "Other Liability"; garages, school buses, taxis or sublines of "Automobile."
The term "substantially reduce" is interpreted as follows. If an insurer has been writing a line or subline of insurance and it nonrenews or cancels some of its risks in that line or subline of insurance then it is reducing its writings. For example, when an insurer nonrenews or cancels some of its auto body repairer accounts, then there has been a reduction in writings for the subline of garage insurance. Whether there has been a substantial reduction in writings is dependent upon factors such as the number of risks written by the insurer, impact on the market, etc.

10. Examples: New Jersey NJAC 11:2-29.2
"Withdraw" or "withdrawal" means the nonrenewal, cancellation, or termination of policies, or surrender of authority to transact the business of insurance in this State, or any insurer action that is equivalent to a withdrawal from the business of insurance in this State which may include, but is not limited to, the elimination of a rating system, termination of agency contracts, reduction in agency commissions, restrictions on agency solicitation or binding authority, insurer refusal of applications or declaration of a dividend to an affiliate, when such action or actions exceed those occurring in the ordinary course of business. Whether the above activities are equivalent to a withdrawal shall be determined by the Commissioner on a case-by- case basis.
"Withdraw" or "withdrawal" also means the transfer to another insurer of insurance business pursuant to an assumption agreement as defined herein or a portfolio reinsurance agreement as defined herein.

11. Examples:
New Jersey NJAC 11: prohibits block nonrenewing entire lines or classes of insurance, except pursuant to a plan filed and approved by the commissioner
NJAC 11: defines "block" and "class" as any group of insureds, however defined or designated, to which a common plan or program of cancellation or nonrenewal applies.

12. Framework for determining whether withdrawal requirements are triggered
Are there any formal withdrawal requirements?
What is the statutory line? Statutory line definitions vary by state and do not always match up with the annual statement line.
E.g. Homeowners vs. professional liability
What action are you taking? Review against withdrawal requirements.

13. Statutory Line: TX Example
Ins s
Kinds of insurance authorized
(a) A general casualty company may:
(1) insure a person against:
(A) bodily injury, disability, or death that results from an accident; or
(B) disability that results from disease;
(2) insure against loss or damage that results from an accident or injury sustained by an employee or other person, for which accident or injury the insured is liable;
(3) insure against loss or damage that results from an accident to or injury sustained by a person, for which loss the insured is liable, other than employers liability insurance under Subdivision (2);
(4) insure against loss or damage by burglary, theft, or housebreaking;
(5) insure glass against breakage;
(6) insure a steam boiler, elevator, electrical device, or engine and any machinery or appliance used or operated in connection with a steam boiler, elevator, electrical device, or engine;

14. Statutory line: TX Example (cont.)
(7) insure against loss or damage from injury to a person or property that results accidentally from an item described by Subdivision (6);
(8) insure against loss or damage by water to goods or premises that arises from the breakage or leakage of a sprinkler or water pipe;
(9) insure against loss that:
(A) results from accidental damage to an automobile; or
(B) is caused accidentally by an automobile;
(10) insure a person, association, or corporation against loss or damage that results from giving or extending credit;
(11) insure against loss that results from the nonpayment of the principal of or interest on a bond, mortgage, or other evidence of indebtedness;
(12) write marine insurance, which may include insurance against the hazards and perils incident to war; or
(13) insure against any other casualty or insurance risk, other than fire or life insurance, specified in the company's articles of incorporation that:
(A) may be lawfully made the subject of insurance; and
(B) is not otherwise provided for by this chapter.
(b) A general casualty company may engage in one or more of the activities specified by Subsection (a).

15. Pop Quiz: Is a filing needed?
Ceasing to write home and auto insurance
Terminating a renters insurance program
Ceasing to write medical malpractice insurance
Ceasing to write taverns and bars
Moving business to new property product filed in affiliated company
Ceasing to write surplus lines liability
Selling an underwriting company

16. What is in a withdrawal filing?
Varies by state
Generally, lines, policy count, premium, agents affected, whether there is a replacement carrier.
Communications to insureds, including nonrenewal notices
Notice can range from 30 days to 13 months

17. Other Considerations Nonrenewal requirements State notice requirements
Additional requirements in policy contract
There may be an offer by a replacement carrier

18. Other Considerations Agent relationships
If a program termination or withdrawal effectively terminates an agent relationship, need to consider the laws effecting agent terminations
Often there are exceptions in agent termination restrictions for withdrawals that are filed and approved.
Laws and agent contract address notice obligation to agents
MGA – need to terminate underwriting authority or claims handling agreements, per contract

19. Other Considerations
Certificate of Authority – some states require the surrender of the certificate of authority for some period of time
Withdrawal of product filings – some state require filings to be withdrawn once all business is nonrenewed.
Brand risk – leaving a line where there is a market availability problem can be high profile. E.g. med mal; coastal property

20. Questions?