Annual Statements & Financial Reporting
    The Mississippi Insurance Department is proposing to adopt Regulation 2009-2 that would set standards and establish the commissioner’s authority to deal with companies in a hazardous financial condition. There will be a hearing June 18 and the rule would go into effect July 1.
 
    South Carolina Bulletin 2009-06 has details about the state’s new regulation  requiring annual audits of financial statements. The state has also posted:
    • Exhibit 1, Regulation 69-70, Annual Audited Financial Reporting;
    • Exhibit 2, Annual Audited Financial Reports, Premium and Policyholders or Certificateholder’s Exemption Affidavit;
    • Exhibit 3, Annual Audited Financial Reports, Financial or Organizational Hardship Exemption Affidavit; and
    • Exhibit 4, Implementation Guide for the NAIC’s Annual Financial Reporting Model Regulation.
 
    Several other states have also revised their annual statement requirements. Details are in Illinois 50 IAC 925.120, .130 and .170, Maryland COMAR 31.05.01-.06 and West Virginia Title 114, Series 41.
 
 
Automobile Insurance
    Connecticut SB 895 requires consumers be told about the benefits of underinsured motorist conversion coverage at the time of sale or when a policy is issued. It also allows insurers, in the case of an uninsured motorist claim, to seek payment under a subrogation action for a physical damage deductible paid by an insured.
 
    Nebraska LB 152 prohibits uninsured and underinsured motorist policies from excluding any person occupying the insured motor vehicle with the express or implied permission of an insured.
 
    New York Circular Letter 14 (2009) supersedes and withdraws previous guidance about the state’s point and insurance reduction program. New York now allows, and has approved, four online courses; previously, all instruction had to be done in the classroom. The circular letter tells auto insurers to revise notices they give insureds to reflect the addition of the approved courses, including the names, addresses and telephone numbers of the organizations sponsoring the courses. The literature also should include a reference to the DMV webpage, www.nysdmv.com/pirp.htm, for current listings of approved course providers.  The revised notice should be given to insureds with new policies by Aug. 1, and to all other insureds with their renewal or billing notice on or after Sept. 1. Companies must also review the DMV list of approved providers at least annually and update the notices furnished to insureds accordingly.
 
    Oklahoma HB 2013 requires motor vehicle insurers to comply with certain requirements for an online verification system for motor vehicle insurance policies. It also prohibits imposing fees for the response or investigation of a motor vehicle accident by law enforcement.
 
    Utah Bulletin 2009-4 suggests automobile insurance companies pay certain vehicle registration fees, taxes and the cost to transfer ownership in total loss claims. The bulletin provides a not-all-inclusive list and suggests insurers itemize such fees and add them to the actual cash value so claimants can determine how the carrier determined the settlement offer.
 
 
Claims
    The District of Columbia has posted a new notice telling public adjusters how to apply for a license. The notice states that company and independent adjusters are not required to obtain a District insurance license.
 
    Maine LD 979 requires an insurer to disclose the liability coverage limits of its insured to a claimant or the claimant’s attorney. There is a $500 penalty, plus attorney fees, for failing to do so.
 
    New York Legal Opinion 09-04-08 says stop-lossinsurers aren’t subject to the prompt-pay rules of Insurance Law section 3224-a, but are subject to the general requirements of the New York insurance law regulating accident and health insurance policies.
 
 
Consumer Privacy
    Insurers have the right to review a physician’s patient records without violating the physician-patient privilege if the patient had validly signed a waiver, the Ohio Supreme Court has ruled in Medical Mutual of Ohio v. Schlotterer. The decision overturned a lower court ruling that had stopped Med Mutual from reviewing medical records in their fraud investigation of the provider. The insurer had sued the physician, arguing he’d fraudulently billed for more-expensive treatments than performed. The insurer had sought access to a patient’s records to verify their charge against the doctor, but lower courts said the physician-patient privilege blocked access. The Coalition Against Insurance Fraud and other anti-fraud organizations had filed an amicus brief supporting the insurer’s access to patient records.
 
    Tennessee SB 582 prohibits a business from printing a consumer’s Social Security number on a card or badge if the consumer has to display it to obtain a benefit, goods or services.
 
 
Health Insurance
    Georgia Bulletin 09-L&H-02 discusses SB 94, which provides certain unemployed persons with state continuation coverage of health insurance. The bulletin tells insurers how to comply, particularly with notice requirements, and provides a model notice insurers can use to fulfill the law’s requirements.
 
    New York issued May 22 guidance for companies participating in its Healthy New York Program:
    • Completed applications received by the 20thof the month must have coverage begin by the first day of the next month. Applications received after the 20th must begin no later than the first of the month following the next month, but can begin the next month at the insurer’s option.
    • The 2009 Healthy NY wage level for small employers is $40,000. This means that at least 30 percent of a small employer’s eligible employees must earn $40,000 or less in annual wages, and that small employers must offer Healthy NY to all employees who work 20 or more hours per week and earn $40,000 or less in annual wages. Additionally, at least one employee who earns $40,000 or less annually must enroll in Healthy NY. Health plans can start using the $40,000 figure immediately, but must start using it by July 1.
 
    New York Legal Opinion 09-04-12 permits a health insurer to have policy language limiting benefits provided under a workers’ compensation policy. But if a policy doesn’t include such limitations, then the health insurer must pay the claim, regardless of any possible benefits under workers’ compensation law.
 
    Oklahoma HB 1055 says failing to pay, or requesting a refund, for health care services covered under a health benefit plan that has provided a preauthorization of eligibility is an unfair claims settlement practice.
 
    Utah is providing a second public comment period for proposed rule R590-175-3, Basic Health Care Plan Rule. The comment period ends July 31.
 
 
Insurance Fraud
    Nebraska LB 2084 defines misclassifying workers and lowballing payroll as insurance fraud.
 
    The Texas legislature has passed HB 148 restricting attorneys and health providers from contacting auto-accident victims in person or by telephone within 31 days of the accident. Gov. Rick Perry vetoed a similar bill two years ago, but there’s hope he will sign this one, according to the Coalition Against Insurance Fraud and the Texas Committee on Insurance Fraud.
 
 
Life Insurance
    Utah is proposing to adopt two rules impacting life insurers:
    • Proposed Rule R590-72, Life Insurance Disclosures, would establish standards for life insurance buyer’s guides and disclosures; and
    • Proposed Rule R590-177, Life Insurance Illustrations Rule, would establish standards for illustrations and define unfair methods of competition and unfair or deceptive acts or practices.
 
 
Litigation
    Insurers are commending Oklahoma Gov. Brad Henry for signing a comprehensive lawsuit reform bill said to be a compromise between the industry and trial lawyers. Henry signed HB 1603, which caps noneconomic damages, eliminates joint and several liability, caps appeal bonds at $25 million and contains asbestos/silicosis reforms while safeguarding residents with legitimate claims. “This bill will enable Oklahoma to recruit and retain doctors as well as businesses,” said John Marlow, assistant vice president of state affairs with the American Insurance Association. “It retains the ability of plaintiffs to file legitimate claims while greatly curbing the number of frivolous lawsuits that have clogged Oklahoma courts for years.” The industry was not so lucky with another bill it supported, HB 1021. Henry vetoed the measure, according to the governor’s office. Known as the “no pay/no play bill,” AIA said it was meant to get uninsured motorists to comply with Oklahoma law and purchase insurance. Uninsured motorists wouldn’t have been able to file a lawsuit for noneconomic damages, but Henry said the bill “goes too far in its penalties” by taking away one’s legal rights to sue when an accident isn’t their fault.
 
 
Medicare Supplement Insurance
    Utah rule R590-146-20, Medicare Supplement Insurance Standards, sets marketing standards for those products by requiring compliance with the federal Genetic Nondiscrimination Act of 2008. The amended rule went into effect June 2.
 
 
Producers
    Two states are taking action on senior-specific designations.
    • Alaska has added several new sections of Regulation 3 AAC 26 to provide information about the use of senior-specific certifications and designations.
    • Utah will hold a July 6 public hearing about proposed rule Ins. 6.90, which deals with the use of designations or certifications purporting to demonstrate special expertise in the financial or retirement needs of seniors.
 
    Florida chief financial officer Alex Sink has issued a new notice reminding insurance agencies that Florida law requires all licensed agencies to renew their license every three years but that it doesn’t require registered agencies to renew their registrations. The notice has instructions for the no-fee renewal process.
 
    Two states have adjusted producer continuing education requirements:
    • A Michigan June 2 memorandum tells of changes to CE review dates that will go into effect Jan. 1, 2010. The new date will be based on the month and year of a producer’s birth. Licensees with dates of birth in odd years will have CE due the first day of their birth month every two years in all odd-numbered years; those born in even years will have CE due in all even-numbered years.
    • West Virginia has new continuing education requirements for producers in Title 114, Series 42. They went into effect May 14.
 
    New York has issued several legal opinions impacting producers, agencies and the way they sell insurance:
    • Legal Opinion 09-04-10 says a licensed insurance agent or broker cannot offer its employer clients free access to a third-party online employee benefits vendor as a package if certain of the services offered can be considered illegal rebates and inducements.
    • Legal Opinion 09-04-11 says this about paying referral fees to unlicensed employees of credit unions:
        ◊ A broker may compensate an unlicensed employee for referrals and for referrals that are contingent on the broker being given the opportunity to present the prospect with a quote – provided that the unlicensed employee doesn’t discuss policy terms and conditions, and the fee isn’t contingent upon the purchase of a policy.
        ◊ State law allows the broker to pay different referral fees based on the number of prospects referred. However, the National Credit Union Administration has rules governing referral compensation to employees at federal credit unions.
 
    Louisiana Directive 202 provides requirements and procedures for issuing a temporary license to sell life insurance. The document describes the program as an “on-the-job training approach to the business of life insurance.” Such licensees would have to work under the direct supervision of a licensed producer.
 
 
Property/Casualty Insurance
    Iowa SF 379 deals with dram shop liability coverage when an insurer provides that insurance at a new location selling alcohol to a business with a positive loss experience at other locations, and bases premiums for the new location on the negative loss history of the previous location. In those cases, the insurer shall examine and consider adjusting the premium for the new location not less than 30 months after the insurance is issued, based on the loss experience at the new location during that period of time.
 
    New Jersey has adopted NJAC 11:27-13, dealing with biannual reporting of rate modifiers by medical malpractice liability insurers. It became effective June 1 and remains in effect until June 6, 2010.
 
    Utah is proposing to adopt rule R592-2, Title Insurance Administrative Hearings and Penalty Imposition, to provide the process for conducting or delegating a title administrative hearing, and imposing penalties.
 
 
Rates, Forms & Filings
    Connecticut HB 6280 would extend the personal lines flex-rating law to July 1, 2011.
 
(RR&B is produced with the assistance of The CLEAR Report and the Coalition Against Insurance Fraud.)
 
Copyright 2009 ProBusiness Publishing LLC

Publish date Jun 08 2009
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Reprinted with permission from Insurance Compliance Insight.
Copyright © 2009 ProBusiness Publishing LLC
Licensed from ProBusiness Publishing LLC. All rights reserved.