Annual Statements & Financial Reporting
    North Carolina Bulletin 09-B-02 reminds insurers of the requirement that independent certified public accountants retained for any financial audits must be knowledgeable of the provisions of Chapter 58 of the North Carolina General Statutes and the applicable provisions of the North Carolina Administrative Code.
 
    Tennessee TAC 0780-1-65-.1 to -.20 changes the state’s rules for annual financial reporting. The new rules have not yet been posted to the Tennessee secretary of state’s Web site.
 
 
Automobile Insurance
    New York Legal Opinion 09-07-04 says an automobile dealer may offer its customers an automotive replacement coverage plan, provided that the credit or discount from the dealer for the replacement vehicle does not exceed the cost of the replacement vehicle to the dealer, plus any labor or material cost borne by the dealer and reasonable overhead expenses. However, an insurer cannot indemnify an automobile dealer under a contractual indemnification policy for the replacement vehicle because that form of insurance is not authorized in New York.
 
    New Jersey has amended the state’s Commercial Auto Insurance Buyer’s Guide to clarify the text and examples in the guide and to update the last page of the document which indicates where consumers can obtain more information. Bulletin 09-25 instructs insurers to begin distributing the amended guide as soon as practicable.
 
    South Dakota Bulletin 09-03 reminds insurers that no provision in any personal automobile policy may treat medical payments coverage as secondary or excess coverage. Medical payments are primary over any other coverage whether that coverage is another provision of the same policy, coverage under another personal automobile policy or any other type of insurance providing medical coverage, the guidance states.
 
    Wisconsin has posted a list of questions and answers telling how it will implement a recent law that raises minimum auto liability insurance limits. The minimum limits have been raised, from Jan. 1, 2010, to Dec. 31, 2016, to $50,000/$100,000/$15,000. The Qs&As note, for example, that a renewal-with-altered-terms notice is not required because the renewal is not “on less favorable terms.” However, a renewal with altered terms notice is required if the changes increase the premium 25 percent or more. The notice is required even though the basis for the increase in premiums is the statutory changes that are not “on less favorable terms.”
 
    Washington rules RCW 48.22.085 to .100 make it mandatory for insurance companies to offer personal injury protection coverage when they issue an automobile liability insurance policy. Proposed rule changes seek to eliminate confusion about the amount of PIP coverage that must be offered, how this is to be done and to what extent the statutes apply to commercial auto liability insurance policies. A public hearing is set for Sept. 22.
 
 
Data Calls
    Colorado is requesting health insurers provide information for its General Health Insurance Information Survey. The Insurance Department wants Colorado-specific information and expects to conduct the data call annually. Data must be submitted using the online form by Aug. 31.
 
    Pennsylvania is conducting a study of title insurance agents, the effect of technology on their operations and the impact, if any, on operating practices and costs of their marketing activities, including affiliated business arrangements. The study will begin with a request for agent information from underwriter companies. Once the study sample of agents has been determined, the consultants conducting the study will communicate directly with the selected agents to collect information relating to their revenue, operations, expenses and profitability. An Excel spreadsheet is to be used to provide the producer data. More information is in the Aug. 20 notice about the survey.
 
    There is an Aug. 31 deadline for property/casualty insurers to provide data for the South Carolina Wind Pool data call. Bulletin 2009-14 has instructions and the form to complete.
 
    South Dakota Bulletin 09-04 establishes new deadlines for reporting medical malpractice claims data. The report for claims filed or disposition of any claims from Jan. 1 to June 30 needs to be submitted by Sept. 30; reports for claims from July 1 to Dec. 31 will be due by March 31.
 
 
Insurance Fraud
    Florida is asking title insurance agents to take a more active role in deterring mortgage insurance fraud and has produced a booklet showing how they can make a difference.
 
 
Life Insurance & Annuities
    Alaska Bulletin B 09-07 notes that regulations for suitability in annuity transactions, life insurance and annuity replacements, and annuity disclosures went into effect July 25, 2008. Insurers should review the regulations in their entirety and verify that each requirement is documented in the insurer’s or producer’s records in a manner that allows the director to determine that the insurer or producer has complied with the regulations. Of particular importance, the department says, is that each producer and insurer must include in the records for each life insurance or annuity transaction:
   • detailed documentation of an insurer’s and/or insurance producer’s analysis and grounds for believing that a recommendation is suitable;
    • detailed documentation that the insurer and/or producer have made reasonable efforts to obtain the necessary information to make a suitable recommendation; and
    • documentation that the required disclosures have been provided, such as the annuity disclosure document, the applicable annuity buyer’s guide, replacement notice, copy of sales materials used in replacement, the right to receive information regarding existing life insurance policy or annuity contract values, and the required policyholder notice advising the owner that borrowing, surrendering or withdrawing policy values may affect the guaranteed and non-guaranteed elements, face amount or surrender value of the policy.
 
    The NAIC is seeking public comments about proposed rules for setting reserves for some types of optional benefits sold with annuity contracts. The draft would revise an existing actuarial guidelines, which deals with the rules for applying the “Commissioners’ Annuity Reserve Valuation Method” to valuing reserves for benefits that come with annuities. The proposed revisions would apply to benefit types involving multiple payments, such as a guaranteed lifetime income benefit.
 
    As noted in an Aug. 13 bulletin, there will be a new line of insurance – variable life/variable annuity authority – in Wisconsin starting Sept. 1. Therefore, after March 31, 2010, agents will only be able to sell variable life/variable annuity products if they hold the variable life/variable annuity line of authority and have been appointed by their insurer for that line. Agents who satisfy the current requirements for selling variable life insurance and variable annuities can continue selling under their existing license and appointment until March 31, 2010. Agents can apply online on or after Sept. 1 at sircon.com/wisconsin. The application fee is $75, and agents will be required to provide proof they hold a Series 6 or Series 7 registration. No test is required for the variable life/variable annuity line of authority. Insurers, meanwhile, will have to appoint each agent for the variable life/variable annuity line of authority at a cost of $16 for residents and $50 for nonresidents. After March 31, 2010, insurers will be permitted to accept variable life/variable annuity business only from an agent with the new appointment.
 
 
Long-Term Care
    An Iowa notice says the state intends to revise elements of IAC 191-39, Long-Term Care Insurance, and IAC 131-72, Long-Term Care Asset Preservation Program. The changes establish a long-term care partnership program and would end the sale of policies under the asset preservation program. The changes would go into effect Nov. 25 and have a compliance date of Jan. 1, 2010.
 
 
Medicare Supplement Insurance
    Missouri’s amendments to 20 CSR 400-3.650 bring the state’s Medicare supplement minimum standards in line with the requirements of the NAIC model. The same is true of New Jersey NJAC 11:4-23 (along with its amendments and an exhibit) and changes to Tennessee rules in Chapter 0780-01-58. Additionally, Utah is proposing changes to its Medicare supplement rules, R590-146.
 
 
Producers
    Arkansas Bulletin 11-2009 discusses the requirements in revised Rule 82 that producers complete four hours of training each year about the suitability of annuity products, as well as the mechanics of annuity products. The bulletin notes that insurers must design and adopt a procedure enabling them to certify that the producers to whom they entrust the sales of their products have the necessary knowledge prior to marketing annuities to the public. Should a producer be appointed with two or more insurance companies offering annuities, the insurer may accept, in lieu of administering its own training program, a certified statement from the producer affirming that he or she has completed four training hours with another company. The annual training is not a requirement for a license, but failing to complete annual training could result in sanctions against both the producer and insurer. The training must be completed by July 15, 2010.
 
    Iowa is proposing to adopt a new regulation, IAC 191-13, Consent for Prohibited Persons to Engage in the Business of Insurance. Federal law bars anyone who has been convicted of a felony involving dishonesty or breach of trust from the business of insurance without having first obtained the consent of the insurance commissioner of the person’s resident state. The proposed regulation sets out the relevant requirements, procedures and fees to obtain that consent in Iowa.
 
    New Jersey is proposing new rules in NJAC 11:17B-4 that would govern disclosure of producer compensation for the sale of health benefit plans. Comments will be accepted through Oct. 16.
 
 
Property/Casualty Insurance
    Arkansas Directive 2-2009 addresses cancellations, nonrenewals, new policies and discriminatory underwriting practices in property/casualty insurance. It contains a list of 13 items of interest to the Insurance Department. Insurers are to provide copies of the directive to their producers.
 
    Connecticut Bulletin PC-42-09 discusses the cancellation or nonrenewal of insurance policies. It supersedes Bulletin PC-42-04. The Insurance Department wants the document distributed to all areas of the company involved with decisions to terminate or continue to insure risks.
 
    Kansas has amended Regulation KAR 40-4-36 pertaining to accident and sickness insurance, conversion policies and reasonable notice of right to convert. The new rules go into effect Sept. 4.
 
    Mississippi Bulletin 2009-7 provides guidance for rating so-called Mississippi Cottages, provided as shelter following Hurricane Katrina, as either manufactured homes or modular homes. The determination will depend on whether they meet the structure foundation requirements of a particular jurisdiction.
 
    Texas Bulletin B-0032-009 tells of changes that have been adopted to title insurance, specifically minerals coverage. Effective Nov. 1, title policies may contain general exceptions to minerals coverage under prescribed circumstances.
 
    Washington is proposing changes to WAC 284-30-590 to clarify the methods by which insureds may cancel property and casualty insurance policies. Use the online form to submit comments by Sept. 8.
 
 
Rates, Forms & Filings
    Hawai’i has revised its rate and form filing requirements for several lines of insurance.
 
    Maine says in Bulletin 360 that it will stop accepting paper filings Sept. 12. All rate, rule and form filings will have to be made through SERFF and all fees will have to be paid electronically.
 
    Minnesota has new rate and form filing instructions. Some went into effect Aug. 1, but another, effective Jan. 1, 2010, requires insurance applications to state:
    The insurer may elect to cancel coverage at any time during the first 60 days following issuance of the coverage for any reason which is not specifically prohibited by statute.
    Here are other filing requirements:
    • If the notice is communicated directly in writing, file it as part of the homeowner application or as a stand-alone notice. 
    • If the notice is communicated on a company Web site, file a written copy of the wording as it appears on the Web site with a copy of either:
        ◊ a written advisory given to applicants informing them of the availability of the notice on the Web site; or
        ◊ a written copy of the oral advisory given to applicants in lieu of a written advisory.
 
    New York has provided filing guidance for a number of areas:
    • It updated its guidance for SERFF filings.
    • The state also said in an Aug. 12 notice that guaranteed separate account products utilizing one or more non-pooled separate accounts or unallocated group annuity or funding agreement products with an initial deposit in excess of $50 million may not be filed under the Circular Letter 6 (2004) procedure without the department’s permission.
    • The disclosure discussed in Supplement 1 to Circular Letter 27 (2008) must be added to new issues of annuity contracts, certificates and applications starting Nov. 1. That’s according to an Aug. 10 notice. For in-force contracts, the disclosure must be provided to the contract or certificate holder on or before Nov. 1 or to the beneficiary following the death of the holder. The supplement, also issued Aug. 10, deals with the rights and benefits given to same-sex spouses in marriages legally performed outside New York as they pertain to annuity contracts.
    • New York has also revised instructions for its Rate Filing Sequence Checklist that is required to be submitted with all rate, rating rule and rating plan filings. More details are on the department’s Web site.
 
    South Carolina Bulletins 2009-11, 2009-12 and 2009-13 have the tentative rates for accident and health insurance, credit accident and health insurance, and credit property insurance policies, as well as details about how to request a rate hearing.
 
    South Dakota said in Bulletin 09-05 that all insurance certificates must state “This certificate of insurance does not affirmatively or negatively amend, extend, or alter the coverage afforded by the insurance policy.” A follow-up bulletin, 09-06, noted that language in ACORD Form 24, ACORD Form 25 and ISO form IL C 001 09 03 will suffice and the issuer does not need to include the disclosure contained in the bulletin. But it noted that those forms also are problematic because they have cancellation language that in most instances will not comply with state requirements. A follow-up memorandum gives ACORD and ISO until Nov. 1 to have their forms compliant.
 
 
    State Regulation of Insurance
    Arizona Bulletin 2009-03 summarizes major, newly enacted legislation affecting insurance.
 
    Connecticut has revised Regulations 38a-8-33, -38, -60 and -61 dealing with appearing and representing parties during proceedings at the Insurance Department, pre-hearing conferences, complaints and replies to complaints. 
 
    An Iowa notice says the state intends to update IAC 191-58, Managing General Agents and Third-Party Administrators. The proposed amendment would replace Chapter 58 with a new version, based on an NAIC model regulation. The new rules would go into effect Jan. 1, 2010.  
 
    Maryland proposed Regulation 31-04-20 would establish procedures for the review of market conduct actions.
 
 
(RR&B is produced with the assistance of The CLEAR Report and the Coalition Against Insurance Fraud.)
 
Copyright 2009 ProBusiness Publishing LLC

Publish date Aug 24 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.