National Conference of Insurance Legislators 2010 Annual Meeting Report

 

Approximately 350 state legislators, insurance regulators, federal officials and insurance industry and consumer representatives attended the National Conference of Insurance Legislators (“NCOIL”) Annual Meeting in Austin, Texas, which was held from November 18 through 21, 2010.  

A synopsis of NCOIL actions is reprinted below, followed by additional detailed reports and hyperlinks to corresponding documentation.

 

Should you have any questions or comments, please contact Colodny Fass.

 

NCOIL 2010 ANNUAL MEETING SYNOPSIS

Legislators at the 2010 NCOIL Annual Meeting:

Adopted

• A Model Act Banning Fee Schedules for Uncovered Dental Services
• A letter to HHS urging exclusion of agent commissions from proposed medical loss ratio rules
• A Life Insurance Consumer Disclosure Model Act
• A Beneficiaries’ Bill of Rights
• A Market Conduct Annual Statement Model Act
• A Resolution Urging Opposition to Optional Federal Charter Proposals
• A Surplus Lines Insurance Multi-State Compliance Compact proposal
• A Resolution in Support of Amending the Insurance Law to Conform to the Nonadmitted and Reinsurance Reform Act (“NRRA”)
  
• A Resolution Urging States to Implement a System to Monitor and Analyze Workers’ Compensation System Performance

 

Re-adopted

• NCOIL model acts on anti-runners auto insurance fraud, domestic violence, exhaustion of administrative remedies and producer compensation/disclosure

 

Deferred to the NCOIL 2011 Spring Meeting

• A Healthcare Balance Billing Disclosure Model Act
• A Healthcare Sharing Ministries Freedom to Share Act
• A Resolution Opposing Commitments on Pharmaceutical Reimbursement and Insurance Regulation in Free Trade Agreements
• A Resolution to Protect Consumers’ Rights in Annuity Contracts
• A Model Act Regarding Motor Vehicle Crash Parts and Repair
• A Trucking and Messenger Courier Industries Workers’ Compensation Model Act
• A review of NCOIL catastrophe fund, claims history data and flex-rating model acts

 

Postponed indefinitely

• a Model Act Regarding Insurer Auto-Body Steering

 

Also participated in

• A roundtable on federal healthcare reform and employers
• A special session on implementation of H.R. 4173, the Dodd-Frank Wall Street Reform Act
• A special session on state responsibilities to create health insurance exchanges
• An inaugural State Leader Summit: Working Session on Financial Modernization

 

DETAILED REPORT

 

HEALTH, LONG-TERM CARE & HEALTH RETIREMENT ISSUES

FEES FOR UNCOVERED DENTAL SERVICES

On November 20 and 21, respectively, the Health, Long-Term Care and Health Retirement Issues and Executive Committees adopted a Model Act Banning Fee Schedules for Uncovered Dental Services.  The model would prohibit dental insurers from mandating fees within their plans for uncovered services.  It also restricts any healthcare service contractor or other third-party plan administrator from renting or leasing their network to a plan that sets fees for any services except covered services.

The model contains a drafting note that warns against possible dental plan strategies to circumvent the model’s intent and impose fee schedules on all services by deeming them “covered” and charging a nominal fee.

 

AGENT/BROKER COMMISSIONS AND MEDICAL LOSS RATIOS

On November 20 and 21, respectively, the Health, Long-Term Care and Health Retirement Issues and Executive Committees unanimously endorsed sending of a letter to the U.S. Department of Health & Human Services (“HHS”) expressing concern with how proposed medical loss ratio (“MLR”) rules would apply to agent/broker commissions.  The letter, which was submitted during an open HHS comment period, asks HHS to exempt from an insurer’s MLR calculations any agent/broker fees or commissions.

 

BALANCE BILLING DISCLOSURE

On November 20, the Committee unanimously approved Subcommittee changes to a proposed Healthcare Balance Billing Disclosure Model Act but deferred final consideration until the Spring Meeting to allow time for further discussion.  The proposed model law would require transparency, accountability, and disclosure among facility-based providers, healthcare facilities, and health benefit plans regarding network benefits and financial responsibilities in the delivery of non-emergency care.

 

HEALTHCARE SHARING MINISTRIES

On November 20, due to time constraints, the Committee deferred until the Spring Meeting a proposed Healthcare Sharing Ministries Freedom to Share Act.  The proposed model law would exempt faith-based healthcare sharing ministries from state insurance codes.

 

INTERNATIONAL INSURANCE ISSUES

U.S. TRADE POLICY AND STATE PREFERRED DRUG LISTS

On November 18, the Committee deferred until the Spring Meeting a proposed Resolution Opposing Commitments on Pharmaceutical Reimbursement and Insurance Regulation in Free Trade Agreements in order to allow for further debate.  The resolution urges the U.S. Trade Representative (“USTR”) to desist from activity that may endanger state preferred drug lists (“PDLs”).

 

LIFE INSURANCE AND FINANCIAL PLANNING

CONSUMER DISCLOSURES

On November 19 and 21, respectively, the Life Insurance and Financial Planning and Executive Committees adopted a proposed Life Insurance Consumer Disclosure Model Act.  Based on a 2010 Kentucky law, the model would require insurers to notify people who are over age 60 or are terminally/ chronically ill of alternatives to giving up their policy and would advise policy owners to contact a financial advisor or other expert to obtain advice or assistance.

 

RETAINED-ASSET ACCOUNTS

On November 19 and 21, respectively, the Life Insurance and Financial Planning and Executive Committees unanimously adopted a proposed Beneficiaries’ Bill of Rights, which addresses the insurer practice of holding claims payments through retained asset accounts (“RAAs”).  The model law would require extensive written insurer disclosures to consumers about, among other things, RAA features when payment options other than a lump-sum payment are offered as well as interest rates, fees, limitations, and delays tied to the account and Federal Deposit Insurance Corporation (“FDIC”) coverage, if any.  The model would also require insurers to file all RAA materials/disclosures with insurance regulators prior to their use and to report annually on RAA details, and the model requires insurers to return RAA balances to beneficiaries under certain circumstances. 

 

IIPRC ANNUITY STANDARDS

On November 19, due to time constraints, the Committee deferred until the Spring Meeting consideration of a proposed Resolution to Protect Consumers’ Rights in Annuity Contracts.  The resolution would oppose Interstate Insurance Product Regulation Commission (“IIPRC”) restrictions on the sale, transfer, or assignment of certain guaranteed living and minimum death benefits for individual deferred variable and non-variable annuities. 

 

PROPERTY-CASUALTY INSURANCE

AFTERMARKET CRASH PARTS 

On November 18, the Committee deferred until the Spring Meeting a proposed Model Act Regarding Motor Vehicle Crash Parts and Repair in order to consider possible unintended consequences of certain model language, including regarding equivalency of aftermarket and original equipment manufacturer (“OEM”) crash parts/warranties, as well as language regarding responsibility for part modifications.  In general, the proposed model act would require disclosure and consent before a crash part is repaired or replaced; set ground rules for insurers to specify aftermarket crash parts; require lasting, visible labels on crash parts; and promote accountability.

 

AUTO BODY STEERING

On November 20, the Committee indefinitely postponed a substitute amendment to a proposed Model Act Regarding Insurer Auto-Body Steering in light of wide-ranging interested-party concerns.  It also voted to consider the possibility of alternate language in 2011.

 

STATE-FEDERAL RELATIONS

Market Conduct Annual Statement (“MCAS”)

On November 19 and 21, respectively, the State-Federal Relations and Executive Committees unanimously approved an amended Market Conduct Annual Statement Model Act.  The model act would authorize a regulator to annually collect MCAS data and would provide a framework of confidentiality for the collection and sharing of such information, among other things. 

 

OPTIONAL FEDERAL CHARTER (“OFC”)

On November 19 and 21, respectively, the State-Federal Relations and Executive Committees unanimously approved a Resolution Urging Opposition to Optional Federal Charter Proposals.  The resolution asserts that U.S. states have successfully regulated the insurance industry for more than 135 years and continue to modernize oversight as conditions warrant.  The resolution also calls on state leaders, including state regulators, attorneys general, and governors to reinforce their strong opposition to OFC legislation and urges Members of Congress to oppose forthcoming OFC proposals.  

 

SLIMPACT-LITE

On November 19 and 21, respectively, the State-Federal Relations and Executive Committees adopted a revised Surplus Lines Insurance Multi-State Compliance Compact (“SLIMPACT-Lite”) as the most appropriate response to the NRRA.  SLIMPACT-Lite would authorize a governing commission to establish allocation formulas to help states share premium tax dollars and would establish uniform payment methods and reporting requirements, national foreign insurer eligibility standards and a single policyholder notice to replace the various forms used across the country.  It would require a state to create a single tax rate for surplus lines insurance, allow states to charge their own rates on multi-state risks and set uniform payment dates, among other provisions.     

 

NRRA IMPLEMENTATION

On November 19 and 21, respectively, the State-Federal Relations and Executive Committees unanimously approved a Resolution in Support of Amending the Insurance Law to Conform to the NRRA.  The resolution urges states to promptly develop legislation to implement the NRRA, which goes into effect in July 2011 and includes NRRA mandatory provisions and definitions.          

 

WORKERS’ COMPENSATION INSURANCE

DATA COLLECTION AND ANALYSIS

On November 18 and 21, respectively, the Workers’ Compensation Insurance and Executive Committees unanimously adopted a Resolution Urging States to Implement a System to Monitor and Analyze Workers’ Compensation System Performance.  The resolution asserts that a data collection system could improve the performance of state workers’ comp systems and benefit both employers and injured workers. 

 

TRUCKING AND MESSENGER COURIER COVERAGE

On November 18, the Committee voted to move forward with a proposed Trucking and Messenger Courier Industries Workers’ Compensation Model Act and affirmed use of a seven-point test to determine employee and independent contract status for workers’ compensation coverage.

 

MODELS FOR SUNSET/RE-ADOPTION

Legislators reviewed and unanimously readopted the following NCOIL models:

• Exhaustion of Administrative Remedies Model Legislation
• Producer Compensation Disclosure Model Amendment to the Producer Licensing Model Act
• Property and Casualty Insurance Domestic Violence Model Act
• Model Anti-Runners Fraud Bill

In addition, due to time constraints on November 20, the Property-Casualty Insurance Committee deferred until the Spring Meeting its review of an NCOIL Natural Disaster Catastrophe Fund Model Act, the Model Act Regarding the Use of Insurance Claims History Information in Homeowners and Personal Lines Residential Property Insurance and the Property/Casualty Flex-Rating Regulatory Improvement Model Act.

 

OTHER MEETINGS

STATE LEADER SUMMIT

On November 18, legislators participated in an inaugural State Leader Summit: Working Session on Financial Modernization.  The session, which convened leaders of NCOIL, the Council of State Governments, the National Association of Insurance Commissioners, the North American Securities Administrators Association and the National Conference of State Legislatures, was created to promote national uniformity and forestall federal preemptive measures.  Key issues included exploration of annuity suitability and surplus lines insurance reform. 

Legislators also participated in special sessions on:

• Employers and healthcare reform
• Federal financial services reform
• Health insurance exchanges

In addition, legislators considered the following issues:

• Annuity suitability regulation
• Insurance impacts of BP oil spill
• Federal life settlement activity
• State public pension reforms