NCOIL Summer 2009 Meeting Summary

The National Conference of Insurance Legislators (“NCOIL”) issued a summary of actions taken during its 2009 Summer Meeting, which was held from July 9-12, 2009, in Philadelphia. 

The NCOIL Summer Meeting Report is reprinted below.  For more information on specific topics discussed during the meeting, click here.

 

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

 

NCOIL Summer Meeting Report

This memo presents a brief synopsis and then a more detailed report of action taken at the National Conference of Insurance Legislators (NCOIL) Summer Meeting in Philadelphia, Pennsylvania, held from July 9 through 12, 2009.  More than 270 state legislators, insurance regulators, federal officials, and industry, consumer, and media representatives attended.

 

SYNOPSIS

At the Summer Meeting legislators, among other things:

 

Adopted:

• in concept, a letter to congressional committees apprising them of NCOIL credit default insurance (CDI) activity
• a Resolution in Support of Recognizing September 2009 as Life Insurance Awareness Month
• a letter to state insurance committee chairs regarding uniform crop adjuster licensing
• an extraordinary life circumstances amendment to an NCOIL Model Act Regarding Use of Credit Information in Personal Insurance
• a Resolution Favoring Continued State-Based Insurance Consumer Protection
• a Resolution Opposing the Creation of a Federal Commission to Examine State Workers’ Compensation Laws

Created:

• an NCOIL Subcommittee on Employee Misclassification in Workers’ Compensation

Considered and deferred until the NCOIL Annual Meeting:

• Credit Default Insurance Model Legislation
• a Model Act Regarding Auto Airbag Fraud
• a Model Act Regarding Motor Vehicle Crash Parts and Repair
• a Market Conduct Annual Statement Model Act
• a public-private natural catastrophe financing proposal
• an Employee Misclassification Workers’ Compensation Coverage Model Act

Determined to further address:

• reinsurance collateral/modernization activity
• healthcare balance billing regulation

In addition, legislators:

• participated in a keynote luncheon with NYS Banking Superintendent and federal COP member Richard H. Neiman on financial services regulatory reform
• participated in roundtables on the impact of the federal American Recovery and Reinvestment Act of 2009 on healthcare and state budgets, and on systemic risk regulation and a role for the states

 

DETAILED REPORT

 

EXECUTIVE COMMITTEE

REINSURANCE COLLATERAL

On July 12, the Committee determined to further address a National Association of Insurance Commissioners (NAIC) reinsurance collateral effort at the 2009 Annual Meeting-specifically, NAIC implementation of a Reinsurance Regulatory Modernization Framework and development of federal enabling legislation.  The Framework, NAIC has reported, creates two classes of reinsurers in the United States:  U.S.-domiciled national reinsurers and non-U.S.-based port of entry (POE) reinsurers, and it introduces modified collateral requirements for eligible reinsurers. 

NCOIL endorsed transparent, publicly accountable governance of the Framework’s Reinsurance Supervision Review Department (RSRD) in a December 2008 letter to the NAIC.  The letter also conveyed NCOIL concerns with proposed federal involvement.  NCOIL has supported, since 2002, reassessing collateral rules in light of changes in global markets and accounting standards.  A 2005 NCOIL resolution encouraged the NAIC to make tangible progress on reform. 

 

 

FINANCIAL SERVICES & INVESTEMTN PRODUCTS COMMITTEE

CREDIT DEFAULT INSURANCE

on July 9, the Committee deferred until the NCOIL Annual Meeting consideration of Credit Default Insurance Model Legislation to allow for further review of the issue.  Later, on July 12, the Executive Committee voted in concept to send a letter to key congressional committees apprising them of NCOIL activity relating to regulation of credit default swaps (CDS).  The draft NCOIL model bill-which is based on New York State financial guaranty insurance law-would include a first-of-its kind definition of credit default insurance (CDI), establish a state regulatory regime to oversee the CDI market, and would ban so-called “naked” swaps.  Amendments offered after the 30-day deadline for the Summer Meeting, which legislators also deferred, would address transition to the proposed CDI regime. 

Prior to the Summer Meeting, an NCOIL Task Force on Credit Default Swaps (CDS) Regulation-appointed at the NCOIL Spring Meeting-convened six conference calls to develop the model act and to receive input from interested parties. 

 

 

HEALTH, LONG-TERM CARE & HEALTH RETIREMENT ISSUES COMMITTEE

BALANCE BILLING REGULATION

On July 9, the Committee held a roundtable on balance billing oversight and later determined on July 12 to review state approaches to the issue and consider language at the NCOIL Annual Meeting.  The July 9 roundtable explored out-of-network reimbursement, balance billing bans, provider participation in rural and other healthcare networks, and a need for transparency and disclosure, among other things.  Participants included Dr. Michael Gerardi of the American College of Emergency Physicians (ACEP), Catherine Hanson of the American Medical Association (AMA), Ellen Kuhn of the Maryland Attorney General’s Office, Dianne Longley of the Texas Department of Insurance, Rick Ramsay of America’s Health Insurance Plans (AHIP), and Kevin Wrege of the Council for Affordable Health Insurance (CAHI).

 

 

LIFE INSURANCE & FINANCIAL PLANNING COMMITTEE

LIFE INSURANCE AWARENESS

On July 9, the Committee unanimously adopted a Resolution in Support of Recognizing September 2009 as Life Insurance Awareness Month.  The resolution, among other things, emphasizes the importance of life insurance products.  The Executive Committee adopted the resolution on July 12.

 

 

PROPERTY-CASUALTY INSURANCE COMMITTEE

CROP INSURANCE

On July 12, the Committee unanimously approved a letter to select insurance committee chairs regarding federal Risk Management Agency (RMA) preemption of crop adjuster licensing standards.  The letter encourages the 14 states in which legislative action is critical to amend their laws effective July 1, 2011.  The amendments, the letter says, should let the states accept the results of third-party, crop-specific licensing tests.  The letter notes that the 14 states either have no licensing requirements now or mandate passage of only a general property-casualty exam.  The Executive Committee approved the letter on July 12.

 

AFTERMARKET CRASH PARTS/AUTO BODY STEERING

During a special session on July 11, the Committee deferred until the NCOIL Annual Meeting a Model Act Regarding Motor Vehicle Crash Parts and Repair and determined to hold interim conference calls with interested parties to develop a revised draft for Annual Meeting consideration. 

The aftermarket crash parts model law would apply to personal lines motor vehicle insurance policies and would 1) require disclosure and consent prior to crash part repair or replacement; 2) establish conditions whereby insurers could require use of aftermarket crash parts, including provisions regarding new vehicles and those under original car-company warranty; 3) mandate permanent, transparent identification of crash parts; 4) provide for consumer choice in selection of an auto repair facility; and 5) promote accountability, among other things. 

 

AIRBAG FRAUD

During a special session on July 11, the Committee deferred until the NCOIL Annual Meeting a Model Act Regarding Auto Airbag Fraud-and determined to hold interim conference calls with interested parties to develop a revised draft for Annual Meeting consideration.  The Committee acted during a special meeting in which the group also considered a Model Act Regarding Motor Vehicle Crash Parts and Repair.

The airbag model law would 1) establish criminal penalties for fraudulent installation or reinstallation of an airbag, with more severe penalties for persons whose airbag fraud results in serious injury or death; 2) require that auto repair facilities maintain detailed records of airbags they purchase, sell, or install; 3) mandate that a repair facility submit an affidavit to a vehicle owner saying that an airbag was installed and calibrated properly; 4) establish that police accident reports must note whether an airbag deployed; and 5) provide that a person trading or selling a motor vehicle must disclose whether an airbag is inoperable.

 

INSURANCE SCORING EXTRAORDINARY LIFE CIRCUMSTANCES

On July 12, the Committee adopted an amendment to a 2002 NCOIL Model Act Regarding Use of Credit Information in Personal Lines Insurance.  The amendment-which responds to the ongoing financial crisis-would require insurers to give rating/underwriting relief to consumers whose credit has suffered from an ELC-such as federal or state-declared catastrophes; serious illness or injury to a consumer or his/her immediate family; death of a spouse, child, or parent; divorce or involuntary interruption of legally owed alimony or support payments; identity theft; temporary and involuntary loss of employment for three months or more; and military deployment overseas, among other items.   

The amendment would allow an insurer to require written proof of the event and its impact on the consumer’s credit.  The amendment also would address methods and timeframes for requesting and granting ELC exemptions, granting multiple exemptions for the same event, and consumer disclosure.  The revision would move an extraordinary life circumstances (ELC) drafting note into the body of the model and expand upon the note’s provisions. 

 

 

STATE-FEDERAL RELATIONS COMMITTEE

INSURANCE CONSUMER PROTECTION

On July 10, the Committee unanimously adopted a Resolution Favoring Continued State-Based Insurance Consumer Protection.  The resolution affirms state regulation over insurance; asserts that insurance consumer protection should remain with the states; and declares that any new Financial Product Safety Commission or Consumer Financial Protection Agency-which would be established under pending federal legislation-should not have direct or indirect jurisdiction over insurance-related products and/or matters.  The resolution also reaffirms NCOIL opposition to Congressional proposals that would establish a federal insurance regulator or an optional federal charter (OFC).  The Executive Committee adopted the resolution on July 12.   

 

MARKET CONDUCT ANNUAL STATEMENT

On July 10, the Committee deferred until the NCOIL Annual Meeting a proposed Market Conduct Annual Statement Model Act-and proposed friendly amendments to the model act-to allow for presence of the bill sponsor.  The model would require that market conduct annual statement (MCAS) data and analysis be kept confidential and privileged, and would establish a system whereby state insurance commissioners could collect, analyze, and share MCAS data with other entities, including the National Association of Insurance Commissioners (NAIC).  The amendments would clarify provisions related to a Commissioner’s designee and to confidentiality protections afforded under state law.

 

 

SUBCOMMITTEE ON NATURAL DISASTER INSURANCE LEGISLATION

CATASTROPHE FINANCING

On July 9, the Subcommittee deferred until the NCOIL Annual Meeting a public-private financing plan in order to allow for further review of the issue.  The proposal, which seeks to extend long-standing NCOIL efforts to enact comprehensive catastrophe reform, would create an optional state catastrophe pool linked with adherence to NCOIL-endorsed statewide building codes and land-use strategies.  The system would address insurer premium tax credits and would tie participation in the pool to an insurer’s market share. 

The plan would set a pool’s targeted level at 70 percent of the state’s total insured loss exposure-calculated by averaging insured losses from the state’s three largest and most recent catastrophes-and would each year readjust that total amount for inflation.  Under the proposal, federal financing would be triggered once the state pool had covered its 70 percent.

 

 

WORKERS’ COMPENSATION INSURANCE COMMITTEE

FEDERAL WORKERS’ COMPENSATION COMMISSION

On July 10, the Committee unanimously adopted a Resolution Opposing the Creation of a Federal Commission to Examine State Workers’ Compensation Laws.  The resolution reiterates NCOIL support for the state-based workers’ compensation system, opposes any legislation that would create a broader federal role in workers’ compensation, and specifically opposes federal H.R. 635, The National Commission on State Workers’ Compensation Laws Act of 2009.  It contends that a federal 1972 Nixon Commission made broad recommendations, including higher disability benefits, compulsory coverage, and unlimited medical care, while ignoring cost impacts.  It says that many states incorporated these cost drivers into their systems without proper controls but notes that, since the Commission report, states have instituted cost-containment reforms. 

 

EMPLOYEE MISCLASSIFICATION / INDEPENDENT CONTRACTORS

On July 10, the Committee deferred until the NCOIL Annual Meeting an Employee Misclassification Workers’ Compensation Coverage Model Act.  The Committee appointed a subcommittee to hold interim conference calls and produce a revised draft for Annual Meeting consideration.  The model-which is based on Florida and Wisconsin statutes-targets transparency, disclosure, and accountability in workers’ compensation insurance.  It defines an employee, sets up a strict nine-point test to clearly define an independent contractor, and mandates workers’ compensation coverage in the construction industry with certain exceptions.  It creates clear procedures for insurer application, disclosure, and auditing and provides civil and criminal penalties for employee misclassification and insurance fraud.  It also establishes strict enforcement authority including, among other items, power to temporarily shut down job sites when employers do not comply.

The Subcommittee on Employee Misclassification, appointed by Committee Chair Rep. Susan Westrom (KY), will include Rep. Westrom, Rep. Barbara Byrum (MI), Assem. Nancy Calhoun (NY), Rep. Charles Curtiss (TN), Rep. Dan Dodd (OH), Sen. Ralph Hudgens (GA), Rep. Kathleen Keenan (VT), Rep. George Keiser (ND), and Rep. Frank Wald (ND).  Additional Committee members, who did not attend the July meeting, will be invited to join the Subcommittee. 

 

 

KEYNOTE ADDRESS

On July 9, legislators participated in a keynote luncheon address delivered by Richard H. Neiman, Superintendent of Banks for the State of New York and Member of the Congressional Oversight Panel (COP).  Superintendent Neiman discussed COP developments and recommendations for financial services reform, including a role for states.

 

 

ROUNDTABLES

STIMULUS PACKAGE AND HEALTHCARE REFORM

On July 10, legislators participated in a roundtable entitled Follow the Money:  How Will the Stimulus Package Impact Healthcare and State Budgets?  Speakers discussed how states are using new federal stimulus money, issues regarding healthcare delivery and health information technology, whether better state-federal coordination is needed, and what happens when the money runs out, among other things.

Panelists represented the Center on Budget and Policy Priorities (CBPP), Heritage Foundation, New Jersey General Assembly, and Utah Health Information Exchange Network.

 

SYSTEMIC RISK OVERSIGHT

On July 11, legislators participated in a roundtable entitled Systemic Risk Oversight and the Shape of State Authority.  Speakers gave their perspectives on lessons learned from the financial crisis, how governmental entities should interact to address financial services regulation, and how states can preserve their regulatory authority.  They also discussed Congressional and Administration reform proposals, among other things.    

Panelists represented the American Insurance Association (AIA), National Association of Insurance Commissioners (NAIC), and the North American Securities Administrators Association (NASAA)/Alabama Securities Commission. 

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In addition, legislators considered the following issues, among others:

• life insurance capital & surplus relief
• national flood insurance developments
• SEC indexed annuity activity
• health insurance rescissions
• international accounting standards
• state efforts regarding life settlements legislation
• mutual municipal bond insurance proposals
• federal natural catastrophe legislation
• principles-based reserving for life insurance
• producer licensing state and federal initiatives
• federal overseas tax treatment
• international Solvency II concerns

 

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