Annual Statements & Financial Regulation
    New York is reminding its domestic property/casualty insurers to file a statement of actuarial opinion with the state Insurance Department, as well as with the NAIC. Companies can request that trade secrets be protected from public disclosure. Details are in Supplement 2 to Circular Letter 22 (2005). 
 
   
Automobile Insurance
    California is amending regulations proposed last summer that would allow insurers to offer pay-by-the-mile automobile insurance. Companies would be allowed to continue to offer traditional insurance based on estimated mileage. However, they would also be permitted to offer a verified mileage program instead of, or in addition to, traditional coverage. One significant change in the amended proposed rules is a pay-as-you-drive option that would allow consumers to purchase a block of miles at a specified price for a set time period. The proposed rule would also allow insurers to offer discounts to drivers who opt to purchase a mileage verification policy. Under that plan, an insurer would verify the driver's miles through odometer readings taken by the insurer or its agents or vendors, auto repair dealers, smog check stations, self-reporting by the policyholder or a device placed in the consumer's vehicle. The amended regulations explicitly prohibit insurers from gathering location data from consumers through the device.
 
    Some personal auto insurers in New Jersey are continuing to send nonrenewal notices indicating that New Jersey law provides that an insurer may only deny coverage to individuals who are not eligible persons. The notices say the policyholders can appeal Insurance Department pursuant to NJAC 11:3-33. Bulletin 09-20 points out that the rule became inoperative Jan. 1 and insurers should use cancellation and nonrenewal language that meets the requirements of NJAC 11:3-8.5(b).
 
    Legislation introduced in Congress, HR 3059/S 1368, would give consumers the option to choose third-party collision replacement parts when repairing their vehicles. It would also amend current patent law to counter efforts by automakers to obtain design patents on visible crash parts and block competitors from producing affordable alternatives. “Decreased competition in the replacement parts market will likely lead to an increase in costs for consumers across the board,” says Kathy Mitchell, director of federal affairs for the National Association of Mutual Insurance Companies. Last Congress, Rep. Zoe Lofgren, D-Calif., introduced similar repair clause legislation, HR 5638, which enjoyed broad support from a coalition of consumer and business groups.
 
   
Claims
    An insurance trade group is warning that a proposed law being debated for the District of Columbia could dramatically increase litigation costs and subject insurers to increased attorney’s fees and punitive damages. B18-103, James Whittle, assistant general counsel and chief claims counsel for American Insurance Association, says the Insurance Claims Consumer Protection Act, is faulty because it:
    • has an unclear definition of an “insurance claimant,” which opens litigation opportunities for third-party bad faith claimants;
    • would allow for triple damages for innocent mistakes or reasonable disagreements; and
    • will penalize any professional that works with insurers on claims, including engineers, doctors and auto repair shops.
    The city council needs to consider whether B103 is worth increased litigation, unwarranted settlement demands, and coerced inflated settlements. Given its punishment of even innocent or reasonable behaviors, B103 goes further than any other legislation of this type,” Whittle said.
 
    Washington has clarified and recoded a number of sections of WAC 284-300 dealing with unfair claims settlement practices. The amendments refine or clarify current rules but do not make substantive changes to these rules. Further, insurance commissioner’s office states, the changes aren’t intended to, and do not, create any new unfair settlement or trade practice rules subject to the state’s Insurance Fair Conduct Act.
 
   
General Business Practices
    Maine Bulletin 358 reminds insurers they need to have business continuity plans that ensure policyholder access to insurance benefits during and after a disaster, including a public health emergency. The plans should be drafted to help the company:
    • minimize financial loss;
    • continue to serve policyholders and financial market participants; and
    • mitigate the negative effects that disruptions can have on a carrier’s strategic plans, reputation, operations, liquidity, credit ratings, market position and ability to remain in compliance with laws and regulations.
 
   
Health Insurance
    The Colorado Division of Insurance has posted a corrected version of Bulletin B-4.32, Health Reimbursement Arrangements and Small Group Health Plans.
 
    An Illinois notice reminds insurers and HMOs they must tell certain individuals about the availability of premium reductions for group continuation coverage. That mandate is in the federal American Recovery and Reinvestment Act and a related state law signed into law June 18. The requirement applies to three groups of persons, and the communication provides model notices that can be used for each group. Notification deadlines are July 2, July 18 and within 10 days of the change in employment status, depending on the group.
 
    Iowa IAC 191-70.10 tells insurers they must make retrospective payments for the claims of credentialed physicians for services performed during the credentialing period, subject to certain conditions. 
 
    Maryland Bulletin 09-16 reminds insurers and HMOs that they can only do business with pharmacy benefit managers that are registered with the Insurance Administration. PBMs have been permitted to operate without registering, but that provision of state law expires July 1. Registered entities are listed on the administration’s Web site.
 
    Oregon said in a June 29 email announcement that it has withdrawn the Health Advertising Bulletin 2009-1. “We will not require the check off list for advertising that is self-certified, but we will continue to rely on an annual certification,” the message said. “Rather than issuing a new health advertising bulletin, the Oregon Insurance Division will include any revisions in filing requirements on our web site under General Filing Tips and revise the Transmittal and Standards to reflect the changes.” Advertisements attached to an application (tear or cut off), Medicare Supplement, direct mailings or solicitation to seniors, new products for insurers, and Long Term Care advertisement will continue to require prior authorization. For assistance, send an email message to e-mailsupport@govdelivery.com.
 
    A second comment period is in effect until July 31 for Utah proposed rule R590-175-3 dealing with general requirements for basic health care plans.
 
   
Insurance Fraud
    Connecticut will have a new law restricting attorneys and health providers from using so-called runners to recruit clients or patients for insurance claims. HB 6642 also sets criminal penalties for acting as a runner. Anti-runner laws usually target insurance staged-accident rings that bilk auto insurers with fake injury claims from setup or phantom crashes. The new law is broader: It targets runners for any insurance scheme, such as health cons. Some advertising or other marketing would be exempt under the law, which takes effect Oct. 1.
 
    Hawaii HB 262 expands the fraud bureau’s jurisdiction to address all lines of insurance except workers’ compensation. The unit previously had tackled only auto schemes. Similar bills had failed amid debate over including workers comp fraud. The Coalition Against Insurance Fraud told legislators that “insurance fraud in the islands is not solely committed against automobile insurance, and the state’s effort should not be restricted to a single line of insurance.”
 
    The Pennsylvania House is debating five fraud bills:
    • HB 1734 make staging an auto accident an act of insurance fraud, revokes driver licenses of persons who commit insurance fraud, and restricts outsider access to police accident reports for 60 days;
    • HB 1737 gives forfeited funds to the Pennsylvania Insurance Fraud Prevention Authority and requires health facilities to display a poster offering a reward for reporting fraud;
    • HB 1739 requires insurers to file anti-fraud plans with the insurance department;
    • HB 1740 allows authorities to seize assets of people convicted of insurance fraud;
    • HB 1750 makes application and insurer scams acts of insurance fraud. Application fraud also would rise to a felony.
 
    Texas HB 148 makes it a crime for attorneys and health providers to contact auto accident victims by telephone or in person within 31 days of the accident. The new law takes effect Sept. 1.
 
    The U.S. Senate’s Health, Education, Labor & Pensions Committee has given the green light to crack down on health care fraud. It approved provisions in a health care reform bill that would create a permanent structure in the federal government to coordinate anti-fraud activities within the government and with states and private insurers.
 
   
Life Insurance
    Arkansas has published a number of new life insurance regulations. Details are in:
    • Rule 17, Life Insurance Disclosure (there is also a new buyer’s guide);
    • Rule 82, Suitability in Annuity Transactions;
    • Rule 96, Guidelines for the Use of Senior Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities; and
    • Rule 98, Annuity Disclosure (there is also a new buyer’s guide).
 
    Delaware has extended an emergency order for proposed changes to Rule 1212, Valuation of Life Insurance Policies. It has also extended an emergency order for proposed changes to Rule 1215 dealing with mortality tables and minimum reserve liabilities. Both rules expired June 26 and were extended until Aug. 25 or the date when the proposed amendments are adopted in final form.
 
    Idaho Bulletin 09-07 says that, starting July 1, insurers must pay a minimum of 5.625 percent of deferred payment of cash surrender values. The new rate is in effect until June 30, 2010. Bulletin 08-07 is rescinded.
 
    Changes to Utah rule R590-222 dealing with life settlements went into effect June 25 and enforcement begins 30 days after that.
 
   
Long-Term Care Insurance
    Iowa Bulletin 09-05 reminds insurers and producers that Iowa currently has regulations permitting long-term care asset protection policies, but that the program is not yet final and companies are not certified to sell such plans. Even so, the Insurance Division says it has reports that some companies and producers are attempting to sell certain LTC insurance policies as though they have been or will be approved as partnership-qualified plans. Just to be clear, no company or producer selling long-term care insurance should make any comparisons about their plans with Long-Term Care Partnership plans. Regulators will consider that to be misrepresentation under insurance advertising laws.
 
    Vermont has published a new long-term care regulation, Rule H-2009-01, that will replace the old rule, Regulation 91-1, next year.
 
   
Medicare Supplement Insurance
    Arkansas has issued Rule 27, Minimum Standards for Medicare Supplement Policies.
 
    Iowa Bulletin 09-05 tells insurers and producers to be careful not to be misleading about selling Medicare supplement insurance policies. Of particular concern are plans E, H, I and J that will not be offered after June 1, 2010 when new standards for Medicare supplement plans and an NAIC model go into effect. The Insurance Division says some producers are telling consumers not to buy plans now if they won’t be available after June 1, 2010. In addition, some producers are apparently telling consumers who currently hold plans E, H, I and J that they won’t be honored after June 1, 2010, which regulators say is not true. Some producers may also be selling plans E, H, I and J without disclosing the June 1, 2010 changes and explaining those changes to planholders. Insurers and producers are reminded they should not make unfair or incomplete comparisons of policies or benefits, disparage other insurers or their policies, or disparage or unfairly minimize competing methods of marketing insurance.
 
    Mississippi Regulation 96-103 implements the NAIC’s Medicare Supplement Insurance Minimum Standards Model. It goes into effect June 30.
 
    Nebraska has amended two insurance rules dealing with Medicare supplement insurance:
    • According to the notice of adoption, changes in Chapter 71, Valuation of Life Insurance Polices Regulation, remove the artificial “X factor” restrictions (20-percent floor and non-decreasing requirements) from the deficiency reserve calculation, and correct numbering and typographical errors.
    • In Chapter 36, Regulation to Implement the Medicare Supplement Insurance Minimum Standards Act,changes conform the state’s minimum standards to federal laws and NAIC standards. They also create two new Medicare supplement plans and phase out the prescription drug benefit for the Medicare supplement plans.
    Both changes went into effect June 23.
 
   
Producers
    Hawaii has updated two forms that producers use to voluntarily surrender their insurance license and to apply for a letter of certification or clearance.
 
    Illinois Bulletin 2009-04 outlines the licensing requirements for producers who want to sell group credit insurance. No license is required when no commission is paid to a person who enrolls others for a company, but the company that employs the enroller must have a producer’s license and at least one individual who is an officer or director must also be licensed if the company is compensated for the policies it sells.
 
    A Michigan notice says insurance licenses will no longer include pictures. Additionally, licensees will not automatically receive a new license until January 2010 when a new continuing education review date will replace the photo on the license. 
 
    Washington is repealing WAC 284-17-228, What is Required for a Self-Study Course?, because it would have conflicted with rules that go into effect July 1. Details are in the rule-making order.
 
    Wisconsin is renumbering, amending, repealing and writing a number of rules relating to the licensing, prelicensing and continuing education for insurance agents. Detail are in a rule proposal affecting rules Ins 6, 26 and 28.
 
   
Property/Casualty Insurance
    Louisiana Gov. Bobby Jindal is expected to sign two property/casualty bills:
    • SB 130 establishes a new formula for Louisiana Citizens Property Insurance Corp. to create rates. Citizens would add 10 percent to the highest rate charged by companies with at least a 2-percent market share in each parish.
    • HB 333 limits named-storm deductibles to no more than one hurricane deductible for a named storm in a calendar year. However, if a second storm strikes, and the first storm caused damage than was less than the deductible, the insurer will be able to apply the remainder of the hurricane deductible to the second claim.
 
(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 29 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.