Ethics and Compliance - Going Above the Bottom Line

Arkansas HB 1895 bans local governments from billing motorists, insurers or any other person for accident response services performed by police departments. The law does not affect ambulance services. Arkansas joins five other states – Tennessee, Missouri, Georgia, Pennsylvania, and Indiana – that have banned the practice and legislation to prohibit the fees. Legislation is pending in Florida and Alabama.

Oklahoma SB 533 specifies that a motorist’s refusal of uninsured motorist coverage will stay in effect for the life of a policy. Until now, policyholders were required to make the uninsured motorist declination at every renewal. Insurers said that just created confusion and administrative overhead. Under the new law, the declaration will remain in effect until the customer reinstates the coverage.

• Bulletin 2009-05 says the state is changing how it wants auto insurers to tell the Insurance Division who is authorized to sign motor vehicle registration certificates. It had required that information to be provided in printed form on a rolling basis. Now it says in that companies will be required to file one comprehensive electronic submission of individual authorization forms annually by Jan. 15. The bulletin provides other submission details.

• Bulletin 2009-06 says the state will permit commercial auto insurers to offer higher deductibles for commercial motor vehicle liability policyholders than those that are provided to private passenger motor vehicle liability policyholders. Deductibles must be based on actuarially supported data filed with the insurance division. Also, the insurer will have to pay third-party claimants in the first instance, including any applicable deductible and seek recovery of the deductible amount from the commercial policyholder later.

Mississippi HB 1307 requires an insurer paying a claim for certain damages under a policy of automobile insurance to add the name of any lien holder shown on the vehicle title as a payee on the check.

Virginia HB 1982 says forms for commercial automobile insurance policies that are written to large commercial risks may not have to be filed with, and approved by, the State Corporation Commission.

Weather events during March in several Texas counties have been declared a disaster, for the purpose of claims processing. Such claims are subject to the additional time periods provided for by state law. Details are in Bulletin B-0016-09.

Massachusetts rule 201 CMR 17.00 extends the compliance date May 1. It also extends, to Jan. 1, 2010, the deadline for obtaining certifications from third-party service providers, and for encrypting data records containing personal information that are stored on portable devices other than laptops.

Texas Bulletin B-0018-09 asks companies writing property, residential, medical malpractice, other general liability, products liability, fidelity, surety and automobile insurance to submit information relating to disallowed expenses. The bulletin gives complete details, including an Excel spreadsheet to be used for the filing. Data is due by May 15.

Acting as an unlicensed public adjuster would be insurance fraud in Maryland under a bill the legislature has sent to the governor. The governor is expected to sign it HB 160 shortly.

The New York Assembly insurance committee is considering a hearing on a bill restricting insurers from requesting personal info from insureds, such as banking and tax data, as standard practice in ordinary theft claims. Insurers are concerned AB 534 could have a chilling effect on fraud investigations. The bill doesn’t appear to define the difference between an ordinary theft claim and suspicious claim.

Iowa Bulletin 09-04 reminds insurers about the laws and administrative rules that govern sales practices and replacement activity of life insurance policies and annuity contracts. It also includes a request for filing of a report by insurers of certain replacement activity.

Virginia SB 1480 establishes permissible methods to deliver a life insurance policy insurers can use to determine the start date of the free-look period. That can be either:

• the date of the signed receipt of delivery if the life insurance policy is delivered by mail or other postal delivery system, or physically delivered to the owner by a representative of the insurer; or

• the date of electronic transmission of the policy, provided the electronic transmission has been effected in accordance with this title and any other state or federal laws governing the electronic transmission of documents and information. The insurer must retain evidence of electronic transmittal for the entire period of the life insurance policy.

Using any other means puts the burden of proof on the insurer to establish that the policy was delivered, in the event of a dispute with the owner of the policy.

Texas is proposing changes to 28 TAC 3.3.3303, -3306, -3308, -3319, -3322 and -3326 that would incorporate the latest revisions to NAIC model rules into the Department’s existing Medicare supplement insurance rules. Also proposed is a new benefit chart of Medicare supplement plans with effective dates on or after June 1, 2010.

Alabama Bulletin 2009-04 says that anyone representing a risk retention group must be licensed and appointed to do so. Using anyone else could result in a fine of up to three times the premium received.

Indiana Bulletin 169 says producers will be able to print their own licenses online starting June 1. The Insurance Department will continue to mail printed copies of new and renewal licenses only to resident producers. Under the new system, producers can print an unlimited number of copies of their license(s) within the first 30 days after the approval and issuance of an new or renewed license; there will be a $5.50 charge for each license printed after that.

Mississippi Bulletin 2009-2 highlights some of the more significant changes implemented by HB 777, signed into law last month, which implemented the NAIC’s uniform standards for producer licensing. The changes go into effect later this year.

Rhode Island has issued Bulletin 2008-8, Surplus Line Affidavit by Broker Filings. It was first issued Aug. 15, 2008 and amended April 10, 2009. Rhode Island General Laws § 27-3-38 was amended to eliminate the filing of surplus line affidavit by broker forms. The affidavits are still required to be executed by the insured and surplus line broker – the change is only with regard to the filing of those affidavits. Instead, all surplus line licensees must file an annual report showing the business procured under the surplus line license for the preceding calendar year. The first Surplus Line Broker Annual Report filing is due April 1, 2010. There is no annual filing for 2009. The Department also amended Insurance Regulation 11 to address the 2008 statutory amendments to R.I. Gen. Laws § 27-3-38.

New Jersey has adopted substantive and technical amendments to rules governing medical malpractice liability insurance corporate governance. Details are in NJAC 11:27-12.

• HB 2057 expands the list of expressions of sympathy that are not admissible in medical malpractice actions and wrongful death actions brought against a health care provider. They include commiseration, condolence or compassion, as well as apologies or explanations made to a patient or relative.

• SB 1379 requires an attorney who is found to have engaged in any unlawful or unethical activity resulting in loss of a client’s property to maintain professional malpractice insurance.

Virginia HB 1887 authorizes cancellation of a property insurance policy for an owner-occupied dwelling on grounds that the property secured by the policy has been sold due to foreclosure.

Washington’s SB 5417 insurers to provide written notice that the policy does not cover damage caused by flooding. It must be made at policy issuance and annually thereafter for homeowner, condominium unit owner, residential tenant and residential fire insurance policies.

Arkansas HB 2112 broadens the insurance commissioner’s cease and desist powers to include sufficient grounds that any person has engaged in or is about to engage in any act or practice that violates an insurance law, rule, or order.

Indiana Bulletin 170 says a certificate of insurance cannot amend, alter, modify or misrepresent the actual coverage provided by an insured’s policy certificates of insurance. Louisiana put out similar guidance earlier this year in Bulletin 09-02 (ICI, Feb. 16, 2009).

Kentucky allows local governments to impose and collect license fees or taxes upon insurance companies for the privilege of engaging in the business of insurance. Bulletin 2009-01 tells of recent legislative changes to HB 524, and discusses changes to various tax rates imposed by local governments on premium receipts in accordance with KRS 91A.080.

• Virginia HB 2430 authorizes property/casualty, life and certain other types of insurers to electronically transmit notices to insureds if the insured consents.