This issue of the American Academy of Actuaries’ StateScan Quarterly highlights state legislative and regulatory activity in the third quarter of the year, including actions on principle-based reserving, risk-based capital, and workers’ compensation insurance.
State legislative sessions are winding down for the year as fewer than 10 statehouses are still in session or have special sessions scheduled for 2016. However, nearly all states and the District of Columbia allow prefiling of bills for the next state legislative session, and prefiling has already begun in some states.
Of note, Pennsylvania—one of the few states where its legislature is still in session—in June became the 46th state to enact changes to its Standard Valuation Law (SVL) for life insurance that would allow life insurers to start utilizing principle-based reserving (PBR) methodology beginning Jan. 1, 2017.
For a more comprehensive review of legislation and regulations in these and other issue areas, log in to access StateScan.
Following are practice-specific overviews of other recent legislative and regulatory activity in the states.
Over a dozen state bills relating to ride-sharing and transportation network companies (TNC) have been signed into law in 2016. The Delaware governor signed a bill in August that sets minimum automobile liability insurance requirements on rides provided by TNC drivers. Also, the governor of Rhode Island signed legislation into law in July that establishes minimum insurance requirements for operators and drivers of TNCs.
Medical Professional Liability
Pennsylvania lawmakers are considering a bill introduced in July that would require health care practitioners providing service to state residents through telemedicine to maintain professional liability insurance.
The governor of Hawaii signed HB2715 into law in July. The law requires the state auditor to use an actuarial firm that has experience with workers’ compensation closed claims studies to study Hawaii’s workers’ compensation system.
The Massachusetts State Insurance Department finalized a comprehensive regulation in August that governs the formation, operation, and oversight of workers’ compensation self-insurance groups in the state.
Affordable Care Act Market Reforms
In 2016, over a dozen states proposed regulations related to various Affordable Care Act (ACA) provisions and reforms. In New York, an emergency regulation issued in September established a market stabilization pool for the small group health insurance market and Medicare supplement insurance market for the 2017 plan year to mitigate instability in the health insurance market and address the potential impact that federal risk adjustment may have on insurers and HMOs.
A New York regulation proposed in July would amend the Medicaid state plan for institutional and long-term care related to temporary rate adjustments for providers that are undergoing closures, mergers, or restructuring. In July, Washington state issued a “preproposal statement of inquiry,” in advance of a notice of proposed rulemaking, relating to Medicaid. According to the preproposal, the changes may be needed, among other reasons, to define the benefit packages for Medicaid alternative care (MAC).
The Massachusetts House of Representatives is considering SB 2450, a bill already approved by the state Senate, which would adopt the National Association of Insurance Commissioners’ Standard Valuation Law to allow for principle-based reserving (PBR) by life insurers.
Retirement Savings Program
Following action by the California Assembly, the California Senate passed SB 1234 in August to implement the California Secure Choice Retirement Savings Program for private-sector workers who do not have access to a workplace retirement plan. The program requires that employers with five or more employees automatically enroll participants in an individual retirement account. The bill is currently awaiting signature by the governor.
The Nevada Division of Insurance issued a proposed regulation in July regarding captives that updates certain forms, and financial reporting and audit requirements, and revises requirements for disclosure on conflicts of interest.
Credit for Reinsurance
The Massachusetts Division of Insurance proposed a rule in July that modifies regulations regarding credit for reinsurers, including provisions on concentration of risk and reinsurers ceasing to qualify as accredited or certified reinsurers.
The governor of Hawaii signed a bill that adopts the NAIC’s Risk Management and Own Risk and Solvency Assessment (ORSA) Model Act. The legislation requires risk retention captive insurance companies to maintain a risk management framework and provides guidance for filing an annual ORSA report with the Hawaii Insurance Commissioner.
The Massachusetts Division of Insurance finalized a regulation in August concerning reporting risk-based capital (RBC) requirements and regulatory action trigger levels for insurers. The agency finalized another regulation in August on RBC requirements for domestic health organizations—nonprofit hospital or dental service corporations—but does not include life or health insurers.
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