National Conference of Insurance Legislators (NCOIL) 2013 Spring Meeting Highlights
Mar 25, 2013
The National Conference of Insurance Legislators (“NCOIL”) held its 2013 Spring Meeting in Washington, D.C., from March 8-10, 2013. More than 280 state legislators, insurance regulators, federal officials, media, and consumer and industry representatives attended.
Notably, by passage of a resolution during the meeting, NCOIL members called on the Federal Reserve to revisit its proposed regulations that would impose consolidated banking regulation on certain insurers, calling the regulations inconsistent with the express language of the Dodd-Frank Act and Congressional intent.
Various property and casualty insurance-related highlights of the meeting are listed below.
To access the full meeting recap, click here.
Should you . . .
PROPERTY-CASUALTY INSURANCE COMMITTEE
CONSUMER LEGAL FUNDING
On March 9, the Property-Casualty Insurance Committee deferred, due to time constraints, two proposals to regulate third-party lending to consumers engaged in legal action. A Consumer Legal Funding Model Act and a substitute Civil Justice Funding Model Act both would allow the use of legal funding subject to various contract disclosures-including of a consumer’s right of rescission; a ban on referral fees; guidelines for distributing proceeds; attorney requirements, including acknowledgement of the financing agreement; and penalties and enforcement.
The models differ regarding establishing a timeframe for assessing fees, requiring use of arbitration, and allowing simultaneous involvement of multiple funding companies, among other provisions.
INSURANCE BINDERS
During a special March 10 working session, the Committee set aside proposed amendments to a 2012 NCOIL Model Act Regarding Use of Insurance Binders as Evidence of Coverage and instead urged interested parties to finalize an enhanced ACORD binder form in time for the NCOIL Summer Meeting. Legislators, led by Committee Chair Rep. Matt Lehman (IN), suggested that the new document, which is tentatively called ACORD 875, could provide a compromise between lenders and the p-c industry regarding whether certificates of insurance are “for information only.” The proposed ACORD 875 would meld an ACORD 28 insurance certificate, which the p-c industry asserts is purely informational, with an ACORD 75 binder form, which is less detailed but does count as official proof of coverage before a policy is issued.
The NCOIL binder model requires insurance binders to remain in force until a policy is issued or cancelled by an insurer. The draft amendments would, among other things, (1) require a binder to include details regarding limits, sub-limits, exclusions, and deductibles; (2) require an agent or broker (or insurer if no agent or broker was involved) to deliver a policy or binder to both the insured and lender within five business days after an insured or lender request; and (3) provide that a lender is not prevented from requiring a borrower to provide a copy of the policy or proof of coverage as a condition of making the loan.
STATE-FEDERAL RELATIONS COMMITTEE
PRUDENTIAL REGULATION OF INSURANCE
On March 8, the State-Federal Relations Committee adopted a Resolution Regarding the Prudential Regulation of Insurance, which the NCOIL Executive Committee adopted on March 10. The resolution highlights the success of state-based financial oversight and calls on the Federal Reserve to revise proposed regulations that would apply banking regulation to insurers that are also savings and loan holding companies, bank holding companies, or designated as systemically important by the Financial Stability Oversight Council (FSOC). The resolution also urges the Board to avoid creating insurer requirements that impair, duplicate, or conflict with the existing state insurance requirements.
WORKERS’ COMPENSATION INSURANCE COMMITTEE
PHYSICIAN-DISPENSED REPACKAGED DRUGS
On March 9, the Workers’ Compensation Insurance Committee unanimously adopted a Model Act on Workers’ Compensation Repackaged Pharmaceutical Reimbursement Rates and, recognizing that there are other repackaged drug concerns, allowed that the Committee could consider amendments at the Summer Meeting that would broaden the model’s scope. The model currently ties reimbursement for a repackaged drug to the original manufacturer’s average wholesale price (AWP). Proposed amendments are expected to address the repackaging of over-the-counter products, as well as what happens when an original manufacturer’s NDC number is not available to a dispensing physician. The Executive Committee adopted the model law on March 10.
VOLUNTEER FIREFIGHTER COVERAGE
On March 9, the Committee deferred until the Summer Meeting a proposed Model Act on Workers’ Compensation Coverage for Volunteer Firefighters after agreeing to consider proposed amendments that would clarify and expand on provisions in the model. Amendments are likely to refine the definition of “volunteer” and address concerns regarding wage replacement. As currently drafted, the proposed model act would establish a state definition of “public employment” that affords eligibility for workers’ comp benefits when a volunteer firefighter performs firefighter-related duties that are not directly related to emergency response. The model also would include a drafting note that identifies state funding approaches.
FARM LABORER WORKERS’ COMP COVERAGE
On March 9, the Committee deferred-in the absence of Rep. Steve Riggs (KY), who has spearheaded the Committee’s consideration of the issue-further discussion of possible approaches to coverage for farm laborers. The Committee is exploring the issue in recognition that state requirements are inconsistent.
SPECIAL SESSION ON FINANCIAL SERVICES REGULATORY REFORM/GOVERNMENT ACCOUNTABILITY OFFICE REPORT
On March 8, legislators participated in a special session in which insurance industry representatives offered their perspectives on state, federal, and international activity. Among other things, speakers discussed the status of pending Federal Insurance Office reports; efforts at the National Association of Insurance Commissioners to promote solvency modernization and principles-based reserving; systemic risk designations; attempts to apply bank capital standards to U.S. insurers; and International Association of Insurance Supervisors activity to encourage a common framework for insurance oversight.
KEYNOTE ADDRESS
On March 8, legislators heard a keynote luncheon address delivered by Senator Ben Nelson of Nebraska, the newly appointed CEO of the NAIC. Senator Nelson discussed the Federal Insurance Office, principles-based reserving and global regulatory initiatives, among other points.
In addition, legislators considered the following issues:
- Federal tax proposals for life insurance/annuities
- Flood insurance developments
- Global insurance initiatives/U.S. impacts
- Group supervision of insurance companies
- Holding Company Act revisions/Own Risk & Solvency Assessment (ORSA)
- International accounting standards
- Market conduct surveillance reform
- A Multistate Tax Commission Non-Income Taxpayer Project
- Oral chemotherapy coverage
- Principles-based reserving for life insurers
- Producer licensing modernization
- Title insurance regulatory reform
- State activity on unclaimed benefits model act