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New Jersey's Supreme Court ruled Wednesday that an Atlantic City casino is not entitled to payouts from business interruption insurance for losses during the COVID-19 outbreak, determining that the presence of the virus did not constitute the kind of “direct physical loss or damage” required for such a payout, the Associated Press reported. The case involved the Ocean Casino Resort's claims against three insurance companies — AIG Specialty Insurance Co., American Guarantee & Liability Insurance Co. and Interstate Fire & Casualty Co. Those insurers largely denied payouts to the casino, saying it did not suffer direct physical loss or damage because of the virus. The casino sued and defeated an attempt by the insurers to dismiss the case. But that decision was reversed by an appellate court. The high court agreed to take the case in order to resolve the legal question of what constituted loss or damage. “Based on the plain terms of the policies, we conclude that in order to show a ‘direct physical loss’ of its property or ‘direct physical . . . damage’ to its property under the policy language at issue, (parent company AC Ocean Walk LLC) was required to demonstrate that its property was destroyed or altered in a manner that rendered it unusable or uninhabitable,” the court wrote in a unanimous decision. “At most, it has alleged that it sustained a loss of business during the COVID-19 government-mandated suspension of business operations because it was not permitted to use its property as it would otherwise have done,” the opinion read.

Florida is planning to borrow as much as $3.8 billion to infuse a state fund that reimburses property insurers for losses when homes are damaged or destroyed by hurricanes, Bloomberg News reported. The Florida State Board of Administration Finance Corporation expects to sell at least $1.5 billion of municipal bonds to raise money for the Florida Hurricane Catastrophe Fund, according to a securities filing dated Jan. 19. It marks the state’s latest effort to ensure that it can backstop its increasingly fragile insurance industry, which has been grappling with a surge of claims and lawsuits in recent years. In June, the Florida Insurance Guaranty Association, which handles the claims of insolvent insurers, sold debt for the first time in three decades to help support insurance claims. The state agency faced higher costs after Hurricane Ian in 2022 and a deluge of lawsuits forced property insurers to close. The latest bond sale wasn’t prompted by a specific hurricane. Proceeds will replenish funds from debt issued in 2020 that will mature in 2025, and give the fund “additional capital at an established interest rate and the ability to access funds quickly in the event of a significant storm event,” said Gina Wilson, chief operating officer of the Florida Hurricane Catastrophe Fund, in an emailed statement.

Final payments from a trust funded by utility PG&E to compensate victims of wildfires caused by its power lines will soon be distributed, but none will make the victims whole for their losses, the Wall Street Journal reported. The trust was created in 2020 after PG&E reached a $13.5 billion settlement with roughly 70,000 people who suffered losses and damages. The company, which had sought bankruptcy protection after the fires, used equal parts cash and stock to fund it. The trust this month sold its last block of shares, finalizing the amount of money available for distribution to victims. Its assets are worth just over $14 billion, more than the nominal value of the settlement. Victims’ claims, though, are expected to top $19 billion. They have so far received about 60% of their value, and the final percentage will likely be much lower than what some attorneys touted at the time the settlement was negotiated. “I understand and I’m very sympathetic to the fact that people had the impression they were going to get 100%, but that was never true,” said Cathy Yanni, an attorney who serves as trustee of the trust. “In bankruptcy, no one gets 100%.” PG&E, as part of its plan to exit bankruptcy, agreed to pay more than $25 billion overall to compensate for wildfire-related losses, but two other major settlements — with California governments and insurance companies — paid those parties entirely in cash. Fire victims were the only class of claimants to be compensated with shares in the company.

Hawaii lawmakers say the state must change how it oversees vacant lands, staffs its fire departments and deals with property owners who fail to adequately prevent wildfires, months after a deadly blaze on Maui destroyed the town of Lahaina, the Wall Street Journal reported. The recommendations, laid out in a legislative report released Friday, call for an overhaul of the state’s fire-prevention and emergency-response policies. A special committee of more than a dozen state representatives was asked by Hawaii House Speaker Scott Saiki to come up with specific wildfire-prevention proposals shortly after the Aug. 8 fire that killed 100 people. A preliminary draft of the report was made public last month. The final recommendations seek to address many of the most severe shortcomings identified after the Lahaina blaze. They are expected to be turned into legislation and take priority during the coming January session, though specifics still need to be worked out. Among the recommendations is a proposal to raise taxes on lands that aren’t being used for public purposes or don’t have a sufficient conservation plan. Another would create new requirements for landowners to create and maintain “defensible space” around their land and tighten enforcement. Some Hawaiian municipalities already have ordinances related to clearing flammable brush, but they have been difficult to enforce, wildfire experts said.

Major life insurers are accessing cheap funding at record levels from a U.S. government-backed financing system, sapping billions of dollars meant to help increase affordable housing, interviews with industry executives and regulatory disclosures show, Reuters reported. When Federal Home Loan Banks (FHLBs) were created in 1932 in the aftermath of the Great Depression to finance firms that offer home loans, insurers were granted access to this system because they provided mortgages. They stopped providing mortgages in the following decades as they became an industry distinct from banking. Starting in 2008, they have been aggressively drawing on FHLBs, arguing they support housing because they invest in residential mortgages and related securities. The extent to which FHLBs finance insurers has not been previously reported. Reuters interviews with more than a dozen industry executives and regulators, a review of regulatory disclosures and data show this borrowing has not been matched by a rise in home loan affordability, with the cost of mortgages soaring to its highest in 23 years.

Eight months after a pair of brothers in rural North Carolina pleaded guilty to charges tied to a multi-million dollar Ponzi scheme, they’ve both been sentenced by a federal judge, the Triangle Business Journal reported. Joseph Floyd IV last week was handed a three-and-a-half-year sentence in federal prison for conspiracy to sell and deliver unregistered securities. Floyd’s brother and co-conspirator, William Floyd, was previously sentenced to just over a year in prison for his role in the scheme. Both Floyds were ordered to pay more than $10.6 million in restitution. They could have faced up to five years in prison for orchestrating a situation described as a “mess” by one of their victims. The Floyds owned and operated Floyd’s Insurance Agency in Whiteville, North Carolina, offering what they described as a “loan program.” More than 150 people and businesses invested funds in exchange for interest-bearing promissory notes, thinking they were conservative investments with high interest rates – to the tune of 6 to 10 percent. When profit checks came, they considered it proof that the business was legitimate. But in actuality, by 2012, the company had borrowed more than $20 million from investors and did not have the means to service the debt through legitimate means. And the notes were never registered with the U.S. Securities Exchange Commission, a regulatory requirement meant to prevent misrepresentations and forms of fraud. To forestall bankruptcy, the Floyds ran the loan program as a Ponzi scheme, where principal and profits were paid to existing investors with funds raised from more recent investors — all without disclosing the situation to their investors. They also controlled a Chapel Hill company called Monthly Payment Plan Inc., that would provide loans to enable consumers to finance a portion of their annual insurance premiums. The promissory notes were entered into by the insurance company and individual investors, but Floyd’s Insurance Agency did not use the borrowed funds to finance insurance premiums. Instead, it loaned the funds to Monthly Payment Plan on an “as-needed” basis for this purpose. Monthly Payment Plan was to repay the principal balance with interest.