National Conference of Insurance Legislators 2010 Summer Meeting Recap

 

The National Conference of Insurance Legislators recently concluded its Summer 2010 meeting in Boston, Massachusetts, from July 7-11.  The event was attended by nearly 350 state legislators, insurance regulators, federal officials and various insurance industry and consumer representatives.

Among the actions taken at the five-day conference included:

• The July 8 Property and Casualty Committee’s (“Committee”) adoption of amendments to the proposed Model Act Regarding Motor Vehicle Crash Parts and Repair relating to insurer specification of aftermarket crash parts and penalties for disclosure/prior consent violations. In general, the proposed Model applies to personal lines motor vehicle insurance policies and would require disclosure and consent prior to crash part repair/replacement. It also would establish conditions in which insurers could specify the use of aftermarket crash parts and mandate permanent, transparent identification of crash parts. An amendment requiring insurers to confirm the equivalence of aftermarket and original equipment manufacturer (“OEM”) part warranties will be taken up at NCOIL’s November 18-24 Annual Meeting in lieu of language that would deem certified aftermarket parts equivalent to OEM alternatives.

• Deferral of the proposed Model Act Regarding Insurer Auto-Body Steering for consideration until the November Annual Meeting. The Model Act would ban an insurer from mandating the use of a specific repair shop; allow certain insurer recommendations; as well as prohibit insurer coercion, intimidation or interference with consumer choice in repair shops. The proposed legislation also would address payments to non-preferred body shops. As first introduced, the anti-steering model would have banned requiring or recommending the use of a facility, unless a consumer asked. To view a working draft of this document, click here.

At the Summer meeting, the Committee also resolved to complete the required review of the following NCOIL model laws at the Annual Meeting (to access the individual documents, click on the corresponding hyperlinks): 

• Model Anti-Runner Fraud Bill
• Natural Disaster Catastrophe Fund Model Act
• Model Act Regarding the Use of Insurance Claims History Information in Homeowners & Personal Lines Residential Property Insurance
• Property and Casualty Insurance Domestic Violence Model Act
• Property/Casualty Flex-Rating Regulatory Improvement Model Act

 

Market Conduct Data Rules Advanced

On July 11, the final day of NCOIL’s 2010 Summer meeting, the State-Federal Relations Committee advanced the Market Conduct Annual Statement Model Act, which is first-of-its-kind model legislation to regulate the use and collection of market conduct annual statement (“MCAS”) data.

Although several amendments were adopted to the Model, a final vote on the proposal was deferred to the Annual Meeting in response to requests by the National Association of Insurance Commissioners (“NAIC”) and other certain interested parties.

Sponsored by New York Senator James Seward, the Market Conduct Annual Statement Model Act would authorize regulators to collect MCAS data annually and provide a framework of confidentiality for the collection and sharing of this information with organizations such as the NAIC by insurance commissioners.   During discussion on the model, legislators clarified the Model’s definitions of “insurer” and “designee.”

Additional news emanating from the meeting is included below via corresponding hyperlink:

• State Legislators Gear Up for Health Reform Implementation >Details
• NCOIL Advances Market Conduct Data Rules >Details
• New NCOIL Subcommittee to Tackle Stranger-Initiated Annuities >Details
• NCOIL Moves Toward Final Vote on Aftermarket Crash Parts Model >Details
• NCOIL Defers Dental Fee Model to Seek Business, Labor Input >Details

NCOIL’s official synopsis of the 2010 Summer Meeting is reprinted below.

 

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

 

SYNOPSIS

 

Legislators at the 2010 NCOIL Summer Meeting:

adopted

• amendments to NCOIL Credit Default Insurance Model Legislation

worked to develop/deferred to the NCOIL Annual Meeting

• a Healthcare Balance Billing Disclosure Model Act
• a Model Act Banning Fee Schedules for Uncovered Dental Services
• a Resolution Protecting Consumers’ Rights in Annuity Contracts
• a Model Act Regarding Motor Vehicle Crash Parts and Repair
• a Model Act Regarding Insurer Auto-Body Steering
• a Market Conduct Annual Statement Model Act
• a Trucking and Messenger Courier Industries Workers’ Compensation Model Act
• a proposal concerning workers’ comp data collection and analysis

 

created

• a Subcommittee on Stranger-Initiated Annuity Transactions (STAT)

determined to further address

• disclosure of alternatives to lapsing/surrendering life insurance policies
• NCOIL model acts regarding auto insurance fraud, catastrophe funds, claims history data, domestic violence, and flex-rating (bylaws-required review)

 

also participated in

• a special meeting with U.S. Congressman Barney Frank (MA)
• special sessions on state and federal financial services regulatory reform
• a keynote luncheon with Vermont Governor Jim Douglas on healthcare initiatives

 

DETAILED REPORT

 

FINANCIAL SERVICES & INVESTMENT PRODUCTS

 

CREDIT DEFAULT INSURANCE

on July 8 and 11, respectively, the Financial Services & Investment Products and Executive Committees unanimously approved a sponsor’s amendment to NCOIL Credit Default Insurance Model Legislation.  The amendment would clarify the definition of credit default insurance (CDI) to exclude certain lines, including credit, mortgage, surety, and other guaranty products.  It would also add a definition of collateralized debt obligations-a previously undefined term used in the model bill. 

Though H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, would prevent states from regulating credit default swaps as insurance, NCOIL legislators felt obligated as state officials responsible for sound public policy to create a state solution.  The NCOIL model law-which was adopted at the 2009 Annual Meeting, eight months before H.R. 4173 was signed-would ban “naked” swaps, which have no material interest, and regulate covered swaps as insurance.  

 

HEALTH, LONG-TERM CARE & HEALTH RETIREMENT ISSUES

BALANCE BILLING DISCLOSURE

On July 10, the Committee approved amendments to a proposed Healthcare Balance Billing Disclosure Model Act regarding facility disclosure, consumer mediation processes, and payment estimates, among other items.  The Committee also directed a subcommittee to continue model development during conference calls prior to the Annual Meeting.

The model-which is based on Texas and Louisiana laws-would require transparency, accountability, and disclosure among facility-based providers, hospitals, and insurers regarding network benefits and financial responsibilities.  Among other things, it would allow consumers to seek information on facility-based providers.

 

FEES FOR UNCOVERED DENTAL SERVICES

On July 10, the Committee unanimously approved a new definition of “covered services” included in a substitute amendment to a proposed Model Act Banning Fee Schedules for Uncovered Dental Services.  The services would be defined-based on a pending California bill-as those that are or would be reimbursable under contract if not for application of certain limitations, such as deductibles, copayments, coinsurance, and annual or lifetime maximums, among other things.  The Committee then deferred the substitute amendment until the Annual Meeting in order to hear from employer and labor representatives regarding potential cost impacts. 

The amendment-which would replace a November 2009 draft based on a first-of-its-kind Rhode Island law-would ban dental insurers from requiring contracted dentists to accept fees set by a plan unless they are considered “covered services” under the contract.  It would also prohibit insurers from leasing their dental network providers to third-party administrators or other plans that set similar fee schedules.

 

LIFE INSURANCE AND FINANCIAL PLANNING

 

DISCLOSURE OF LIFE INSURANCE OPTIONS

On July 11, at the direction of Committee Chair Sen. Ralph Hudgens (GA), the Committee determined to explore development of a model law that would task state insurance commissioners-based on a recent Kentucky law-with providing disclosure forms to companies and producers.  The forms would notify consumers of alternatives to surrendering/lapsing their life insurance policies.  

 

IIPRC ANNUITY STANDARDS

On July 9, the Committee deferred until the Annual Meeting further consideration of a proposed Resolution Protecting Consumers’ Rights in Annuity Contracts.  Among other things, the resolution would oppose new 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 and would urge members to opt out of the standards.  The resolution would also support consideration of model legislation-either by amending an NCOIL Life Settlements Model Act or developing a separate model–to protect consumer property rights and prevent the illegal sale of annuities, including stranger-initiated annuity transactions (STAT).

 

STRANGER-INITIATED ANNUITIES

On July 9, the Committee formed an interim Subcommittee on Stranger-Initiated Annuity Transactions (STAT) and appointed Rep. Brian Kennedy (RI) and Sen. Mike Hall (WV) as co-chairs.  The Subcommittee determined to hold conference calls prior to the Annual Meeting to review STAT, explore consumer protections, and discuss next steps.

 

PROPERTY-CASUALTY INSURANCE

 

AFTERMARKET CRASH PARTS 

On July 8, the Committee adopted amendments to a proposed Model Act Regarding Motor Vehicle Crash Parts and Repair regarding insurer specification of aftermarket crash parts and penalties for disclosure/prior consent violations.  The Committee also determined to consider at the Annual Meeting-in lieu of language to deem certified aftermarket parts equivalent to original equipment manufacturer (OEM) alternatives-an amendment requiring insurers to confirm the equivalence of aftermarket and OEM part warranties.  

In general, the proposed model would require disclosure and consent prior to crash part repair/ replacement; establish conditions in which insurers could specify use of aftermarket crash parts; mandate permanent, transparent identification of crash parts; and promote accountability.

 

AUTO BODY STEERING

On July 10, the Committee determined to consider at the Annual Meeting a proposed Model Act Regarding Insurer Auto-Body Steering, including proposed interested-party amendments.  The bill-which would substitute a March 2010 draft-would ban an insurer from mandating use of a specific repair shop; allow certain insurer recommendations; prohibit insurer coercion, intimidation, or interference with consumer choice; and address payments to non-preferred body shops.  As first introduced, the anti-steering model would have banned requiring or recommending use of a facility, unless a consumer asked. 

 

MODELS FOR SUNSET/REVIEW   

On July 8, the Committee deferred until the Annual Meeting legislators’ bylaws-required review of the following NCOIL model laws:  Model Anti-Runner Fraud Bill, Natural Disaster Catastrophe Fund Model Act, Model Act Regarding the Use of Insurance Claims History Information in Homeowners &  Personal Lines Residential Property Insurance, Property and Casualty Insurance Domestic Violence Model Act, and Property/Casualty Flex-Rating Regulatory Improvement Model Act.

 

STATE-FEDERAL RELATIONS

 

MARKET CONDUCT ANNUAL STATEMENT

On July 9, the Committee approved remaining amendments to a Market Conduct Annual Statement Model Act but deferred a final vote on the bill to allow for further NAIC and other input.  Amendments approved at the meeting included a proposal to focus the scope of the model on the market conduct annual statement (MCAS) as it is adopted and modified by the NAIC, subject to approval by state legislators or insurance regulators.  Legislators also clarified definitions of “insurer” and “designee” and revised the bill’s purpose section to target data collection and sharing.  The Committee determined to continue discussing consumer access to company and market information in November.

The proposed model, which legislators will consider at the Annual Meeting, would authorize a regulator to annually collect MCAS data and provide a framework of confidentiality for the collection and sharing of the information.  It would base insurer participation on a nationwide $100,000 premium threshold.    

 

WORKERS’ COMPENSATION INSURANCE

 

TRUCKING AND MESSENGER COURIER COVERAGE

On July 8, the Committee considered a proposed Trucking and Messenger Courier Industries Workers’ Compensation Model Act and approved changes regarding vehicle registration requirements and responsibility for equipment maintenance and operating costs, among other items.  Legislators also determined to review other approaches, including an “ABC” test used in many state unemployment and workers’ compensation laws, during conference calls prior to the Annual Meeting.   

The proposed model-which is based on a 2009 Minnesota law-would establish a seven-point test to establish clear criteria to determine workers’ compensation coverage requirements to be deemed independent contractors and exempt from the law.    

 

DATA COLLECTION AND ANALYSIS

On July 8, due to time constraints, the Committee deferred until the Annual Meeting a draft letter to state legislators urging them to collect and analyze workers’ compensation data.  The letter would assert that building and maintaining a system for data collection could improve the performance of state systems.  The letter would recognize data’s usefulness in helping states to track costs and benefits, make informed policy decisions, measure the impact of legislative changes, adjust systems before crises occur, and draw comparisons with other states.

 

OTHER MEETINGS

 

AN HOUR WITH BARNEY FRANK

On July 8, legislators participated in a special meeting with U.S. House Financial Services Committee Chairman Barney Frank (D-MA).  Chairman Frank discussed federal financial services reform legislation and the Committee’s 2011 agenda, among other things. 

 

STATE/FEDERAL FINANCIAL SERVICES REFORM

On July 9, legislators participated in two sessions on financial services regulatory reform.  During a Special Meeting on Financial Regulatory Overhaul legislator, consumer advocate, and industry representatives explored origins of the nation’s financial crisis and provisions in H.R. 4173 reform legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Lawmakers and regulators then discussed, during a Special Regulatory Dialogue on Financial Reform, surplus lines and producer licensing uniformity initiatives, among other things, discussed working jointly on modernization efforts.

 

KEYNOTE ADDRESS

On July 8, legislators participated in a keynote luncheon address delivered by Vermont Governor Jim Douglas, chair of the National Governor’s Association (NGA).  Governor Douglas offered a state perspective on healthcare cost, delivery system, and other reforms. 

 

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In addition, legislators considered the following issues:

• annuities suitability activity
• insurance impacts of BP oil spill
• international accounting standards’ impact on states
• state efforts regarding life settlements legislation
• UK coalition government/prospects for insurance oversight