Ethics and Compliance - Going Above the Bottom Line

Maine Bulletin 355 says special accounting practices approved in a Maine-licensed insurer’s home state will not be automatically approved for use in Maine. The insurer’s financial statement is required to include a reconciliation to codified statutory accounting practices, and Maine will follow those common standards in evaluating the insurer’s assets, liabilities, and surplus requirements unless the insurer can demonstrate with particularity why an exception should be made, consistent with the same standards used for granting permitted practices in exceptional cases in prior years.

New York Circular Letter 4 (2009) addresses insurers whose home state regulator or domiciliary regulator has prescribed or permitted accounting practices that differ from the requirements of the New York Insurance Law. For the New York annual statement supplement, they should adjust the insurer’s assets, liabilities and surplus for New York only.

Virginia Administrative Letter 2009-02 says the state will be “closely monitoring” Footnote 1 of insurers’ annual statements. It requires insurers to disclose if they use accounting practices that depart from the NAIC’s Accounting Practices and Procedures Manual. The state says it can require an insurer to refile its annual statement if a permitted accounting practice is determined to be material and, in the sole discretion of the Bureau of Insurance, not justified.

Massachusetts rule 211 CMR 97.00 establishes requirements for canceling and nonrenewing motor vehicle insurance policies, the content of notices of cancellation or non-renewal, and the requirements for providing that notice.

• An insurer can issue a denial of a claim for failing to provide timely written notice within 30 days of an accident, but a denial cannot be issued on the grounds that the claimant failed to return a completed Form NF-2 to the insurer when the claimant has otherwise submitted a written notice within 30 days.

• Written notice can be made using means other than a Form NF-2. Among other acceptable methods: a Department of Motor Vehicles Accident Report 104 (MV-104) or other accident report indicating injuries to an eligible injured person and a completed hospital facility form (NYS Form NF-5).

• The 30-day written notice requirement must be excused if the claimant submits written proof of clear and reasonable justification for the failure to comply. Insurers must also have standards to review determinations when an applicant has provided late notice of claim.

Oregon HB 2791 would allow anyone to sue for triple damages plus attorney’s fees if they are the victim of a practice prohibited under Oregon’s unfair claim settlement practices law, rule ORS 746.230. Oregon currently doesn’t allow provide a private right of action under those circumstances.

Texas Bulletin B-0011-09 says the Insurance Department has determined the weather-related events of Feb. 10-11 affecting a number of counties are a catastrophe and are subject to the additional time periods for claims handling.

Delaware has two data calls for certain personal lines insurers to complete an annual survey of insurance rates. Insurance companies with more than 0.01 percent of the personal auto insurance market, and those with 0.01 percent of the market share in homeowner multiple peril line must complete the surveys. Instructions, provisions for rating, hypothetical consumer profiles and a list of companies required to complete the survey to be used in the 2009 survey is now available at www.delawareinsurance.gov/survey.

New Mexico Bulletin 2009-001 requires health care insurers to submit information about the a grievance register they are required to maintain for all grievances received and handled during the calendar year. Information from the registers is due to the department by May 1 in the Excel spreadsheet posted on the department’s Web site.

Arkansas HB 1363 clarifies standards for insurance coverage of cancer medications and says certain standard reference compendia, as well as other authoritative compendia as identified by the Department of Health and Human Services or the insurance commissioner, may be used to provide coverage by an insurer at the insurer's discretion.

Connecticut says it intends to adopt regulations to establish the minimum standards for benefits in specified disease policies, certificates, riders, and endorsements. The purpose regulation would specify the minimum standards for group specified disease policies and related forms. Rule 38a-505-13 would apply to individual policies; Rule 38a-513 would apply to group policies.

• An Arkansas trial lawyer is pushing to limit access to accident reports as well. SB 251 passed the Senate and is in the House. The Senate version would restrict access for 90 days, but the House Judiciary Committee reduced that to 30 days.

• In Texas, HB 1634 would limit access for 30 days after a crash and HB 1747 and SB 375 would maintain the confidentiality of certain personal information on the reports, such as a phone numbers and addresses. The measures failed in 2007, when the legislature last met.

The Coalition Against Insurance Fraud is telling Maryland to create a state whistleblower law as a way to fight health insurance fraud. HB 304 and SB 272 would create a false claims act that lets the state sue shady health operations. Private citizens could sue on behalf of the state, in exchange for a portion of any court-ordered recoveries.

The Rhode Island House is debating strengthening the state's insurance fraud laws. HB 5775 would require fraud warnings on certain insurance documents. Insurers also would have to create anti-fraud initiatives, including creating an SIU or fraud plan. A House committee plans to hold a hearing this week.

Utah Bulletin 2009-2 tells of the state’s about-face on how the Insurance Department will review of life insurance policies with return-of-premium benefits. It previous considered them in violation of the state’s standard non-forfeiture law for life insurance. It now will accept filings for such products when they meet, and can show compliance with, NAIC Actuarial Guideline XLV.

Colorado is proposing changes to Amended Regulation 4-3-1. The would affect benefits standards for policies issued through June 1, 2010; another set of minimum benefit standards for policies issued after June 1, 2010. A hearing is set for April 7.

Kansas is proposing to adopt its Policy and Procedure to Implement Medicare Supplement Insurance Minimum Standards document (including the appendices but excluding sections 1, 2, 25 and 26). A hearing is schedule for May 13.

• Flood insurance coverage disclosure bill (HB 1564 and SB 5417) would ensure that consumers understand that flood insurance is not included in homeowners' policies and tell them where to get it.

• Emergency powers bill (HB 1566 and SB 5669) would require insurers to make reasonable exceptions, such as grace periods for payments and access to out-of-network medical care, in the event of an emergency.

Kansas Proposed Regulation KAR 40-4-37v is being proposed to specify the training required for licensed agents selling long-term care partnership program policies. The proposed regulation requires agents to initially receive four hours of certified training and at least one hour of training every two years thereafter. It also permits the long-term care training to be used to satisfy general continuing education requirements. A notice gives details of the May 1 hearing on the matter.

New York Circular Letter 9 (2009) describes the kinds of services (often referred to as “value-added” services) that may be provided to insureds or potential insureds without running afoul of the rebating and inducement provisions of the state’s insurance law. The guidance contains myriad (but not all-inclusive) examples of permitted practices, as well as those that should be given “careful consideration.”

North Carolina annual appointment renewal invoices for insurance companies are now available for payment electronically through the National Insurance Producer Registry. The invoices reflect the new fee of $10 for individual agent appointment per line of authority. Renewal fees are due April 1 for every appointment list on the renewal detail report. Notice 1-29-09 has complete details.

Rhode Island Bulletin 2009-2 announces the state will stop mailing printed copies of licenses issued to insurance producers, adjusters, appraisers and surplus line brokers. Starting March 15, check www.statebasedsystems.com or the Department’s website at www.dbr.state.ri.us (insurance licensee verification look-up service) to determine the current status of any licensee. The screen print from these databases will include the date of the report and a statement “This document may serve in lieu of a Letter of Certification.” Insurers may rely upon the screen printout for license status. The Insurance Department will continue to send renewal notices by mail, and it remains the licensee’s responsibility to verify and keep track of his/her license expiration date and renew the license as required.

South Dakota HB 1100 directs producers to maintain business records at their place of business for at least five years after completion of such transactions. Such records shall show, as to each policy, the name and address of the insured, the form, number, and term of the policy, the general subject of the insurance, and the general nature of the coverage. A home, zone, or regional office of the insurer can maintain those business records, provided the producer receives a salary or produces 75 percent or more of his or her insurance business, based on gross premiums written, with one insurer or group of insurers subject to common management or ownership.

Colorado Bulletin B-5.26 provides guidelines to insurers when a policyholder has invoked his or her right to the appraisal clause found in most property policies. The Insurance Division’s main concern expressed in the bulletin is that a fair and impartial appraiser or umpire be selected using this standard:

An individual who has a known, direct and material interest in the outcome of the arbitration proceeding, or a known, existing and substantial relationship with a party, may not serve as an arbitrator if the agreement requires the arbitrator to be neutral.

Iowa is telling insurers that it is suspending their ability to cancel or nonrenew property insurance policies in the counties declared state or presidential disaster areas due to flooding when the reason is the condition of the property due to flooding. This suspension shall be in effect until a substantial portion of the repairs and/or reconstruction of the property have been completed or until Bulletin 09-02 is terminated. Companies are further requested to rescind any previous cancellation or non-renewal of policies covered by this Bulletin.

Louisiana Bulletin 09-05 reminds title insurers and producers that examinations of title must be conducted by an attorney licensed to practice in Louisiana. The Insurance Department calls that requirement “strict, unequivocal and mandatory.”

Texas Bulletin B-0007-09 says the Insurance Department is concerned that the language in pollution exclusions could be interpreted by a court or insurer to apply to situations and claims that are not intended to be excluded. It is working with insurers and others to develop a uniform policy. It is also reviewing previously approved policy forms and endorsements with pollution exclusions to make sure they are consistent with public policy.

South Dakota HB 1099 says residential property that is destroyed while being constructed shall be valued according to the portion of the construction that was completed at the time of the loss.

• Amended Regulation 5-1-10, to provide more guidance on the requirement for electronic rate, rule and loss cost filings for property/casualty insurance. They would apply to homeowner and personal auto lines of business, but would not apply to policies for exempt commercial policyholders. A hearing is set for April 7.

Georgia will soon require the payment of all filing fees to be made using electronic fund transfer payments. EFT payments are currently optional, but will be required for all SERFF filing submitted on or after May 1. Further details are in Bulletin 09-P&C-1 and Bulletin 09-L&H-1.

Hawaii has two new online certification forms – one for life & annuity products and Medicare supplements products, and another for property/casualty filers – that must be used for rate and form filings.

New York Circular Letter 5 (2009) advises insurers about filing procedures when using SERFF, a new paper transmittal document for property/casualty insurance products submitted using paper, and revisions to the Rate Filing Sequence Checklist, which has been substantially revised and reformatted.

The Oregon Insurance Division is no longer targeting April 1 as the date for mandatory SERFF filings. SERFF filings will continue to be reviewed first and other filings will be reviewed in the order they are received. The Insurance Division told ICI that some smaller insurance companies that only file a handful of annual filings didn’t want to incur the cost for setting up SERFF and workers’ compensation filers weren’t able to accommodate SERFF. That would have meant creating an exception process; rather than to do that it decided to take the mandate off the table.

• It observes in a Feb. 11 notice that Administrative Order 11822, dated July 21, 2008, approves certain revised commercial automobile standard forms for use by all insurers in writing policies effective on or after Sept. 1. No insurer may use any form providing substantially the same coverage provided by a standard form unless it is in the precise language of the standard form. The notice tells insurers to review their currently approved independent commercial auto endorsements to determine they are compatible with the new standard forms, and to submit any necessary revisions for approval no later than Aug. 1 – and, preferably, well in advance of that date so they can meet their policy-processing requirements. Continued use of incompatible independent endorsements will not be permitted, regulators warn. A list of the standard forms to be used for commercial auto insurance on and after Sept. 1 is on the Insurance Bureau’s Web site.

Nevada Bulletin 09-001 requires that all payments to the state of Nevada that exceed 10,000 dollars must be made electronically or by using the automated clearing house accompanied by the Incoming Funds Deposit Notification Form.