Insurance department reports thousands of tornado claims, outlines rule changes and ongoing litigation

Rand Booth, general counsel for the Arkansas Insurance Department, told the Senate Insurance & Commerce Committee that the department has received thousands of claims tied to the March 31, 2023 tornado and is actively working through investigations and rule updates.

Booth said the department has recorded "over 9,000 claims reported in residential property damages" and reported total paid residential losses up through May 2023 of about $195,000,000, with roughly 60% of those claims closed. He also reported commercial-property claims from the tornado and said personal auto claims exceeded 3,360, including 1,115 total-loss claims; the transcript lists paid auto losses as about $2,727,000,000. Booth summarized department complaint handling: "In the insurance department, related to tornado complaints, we've got approximately 56 complaints," with about 30 open and under active investigation.

Committee members pressed Booth on the substance and causes of complaints. When asked what the principal dispute was, Booth said consumers and carriers frequently "argu[ing] over total value" and contesting depreciation allowances. Booth acknowledged frustration for policyholders confronted with multiple third-party adjusters after large storms and explained insurers commonly use independent adjusters when they lack local claim staff.

Booth described ongoing regulatory work. A working group—including industry representatives, agents and plaintiffs' attorneys—is reviewing Rule 43 (payments and practices for property and casualty claims) and considering adopting "matching" provisions that would require homeowners carriers to match damaged shingles visible from the same line of sight. Booth said the department has submitted comparative state laws to the legislature's Bureau of Legislative Research for study tied to a cochair request on minimum automobile liability limits. He summarized that raising minimum limits to a 50/100/50 structure could produce an estimated premium increase in the 4%–10% range based on the department's survey data.

Booth also outlined active litigation and rulemaking. The department is enforcing the temporary hospital facility act in a proceeding against Blue Cross and Blue Shield seeking comparable treatment for ambulatory surgical centers; briefs were submitted and a hearing officer will decide the matter. The department prevailed in federal district court defending "act 11 o 3" against the pharmaceutical industry, but the industry appealed to the Eighth Circuit, with appellate briefing and argument expected in the fall or winter. Separately, the department is drafting a consolidated practices-and-procedures rule and working on rules to implement PANDAS-related legislation and to update burial-insurance rules.

Booth offered to provide committee members with the department's underlying data. "I'd be glad to forward any of you, our data and loss data if you're interested," he said. The committee pressed for additional details on marketplace savings and PBM enforcement actions, and Booth said staff would supply requested statistics.

Next steps: the department's commissioner is expected to appear before the committee on a later date to brief members on a public-school insurance issue and staff will provide additional data about marketplace fee savings and other requested figures.