State legislatures were fast out of the gate in the first quarter of 2017 with bills on auto insurance for ride-sharing companies, Medicaid revisions, and public pension plans, as reported in this issue of the American Academy of Actuaries’ StateScan Quarterly, which highlights state legislative and regulatory activities.
All 50 state legislatures will be in session this year, and most expect to wrap up their business before June 30. In fact, legislatures in New Mexico, Utah, Virginia, and Wyoming have already adjourned for the year. Several states are considering legislation that would require insurers to conduct an own risk and solvency assessment (ORSA). Wyoming adopted the National Association of Insurance Commissioners’ (NAIC) Valuation Manual that enables state insurers to begin using principle-based reserving for life policies, joining 46 other states that have adopted substantially similar legislation.
The following includes some recent practice-specific and cross-practice state activities. For a more comprehensive review of legislation and regulations, log in to access StateScan.
Several state legislatures are considering proposals related to ride-sharing, autonomous vehicles, and transportation network companies (TNCs). An Alaska House bill filed in March would prescribe minimum auto insurance coverage amounts for TNC drivers and require that personal automobile insurance policies cover drivers while they are logged into the TNC network and using their personal vehicle to earn compensation. AB 69, a Nevada Assembly bill prefiled in 2016, would set insurance requirements for autonomous vehicles operating in the state, and establish operating requirements for autonomous vehicles used as taxis or for personal use. The Iowa Transportation Department finalized a regulation in March to implement permitting and insurance coverage requirements for TNCs and their drivers doing business in that state.
House Bill 80, a Delaware bill introduced in March and backed by the state insurance commissioner, would require insurers to base auto insurance rates solely on a policyholder’s driving record. Rates would be based on a set list of ratings factors, such as at-fault accident history, instead of non-driving-related factors such as credit history or income.
In New York, new cybersecurity regulatory requirements took effect March 1 that require insurers and financial institutions to meet certain cybersecurity standards, such as maintaining a written cybersecurity policy and performing frequent risk assessments. The NAIC currently is working on a model cybersecurity law.
In Florida, a Senate bill filed in January would let private insurers set flood insurance rates until 2025 and give surplus lines insurers more opportunities to do business in the state.
Connecticut lawmakers are considering House Bill 7024, which was filed in January and would implement the recommendations of the National Conference of Insurance Legislators for the regulation of travel insurance and allow travel retailers to offer travel insurance under the supervision of a licensed producer.
Unfair Trade Practices
In Montana, a bill adopted by the legislature in March would prevent insurers from using a policyholder’s history of “$0 claims” that resulted in no payment as just cause for canceling a policy or raising the policyholder’s premiums.
In Utah, the governor signed into law SB 92, which transitions the state workers’ compensation fund to a mutual corporation starting Jan. 1, 2018.
Vermont lawmakers are considering H.85, a bill filed in January that would require captive insurance companies to submit a report of their financial condition to the state insurance commissioner and meet paid-in capital and surplus requirements in order to receive a license. Illinois legislators are considering a similar bill that was introduced in the Senate in February.
Credit for Reinsurance
Legislation has been introduced in several states, including Kansas and Minnesota, in the first quarter of 2017 related to the credit for reinsurance model law passed by the NAIC in late 2016. In Connecticut, a bill introduced in the Senate in January would allow the insurance commissioner to adopt regulations concerning credit for reinsurance. The governors of Iowa and South Dakota signed bills into law in March relating to licensing and minimum reserve requirements for accredited reinsurers.
Interstate Insurance Regulation Compact
New York lawmakers are considering a bill introduced in the Assembly in February to join the Interstate Insurance Product Regulation Compact, a 44-state public entity designed to modernize the filing and review process for insurance products.
The governor of South Dakota signed HB 1060 into law in March, which calls for insurers to conduct risk assessments by following the NAIC ORSA guidance manual. The governor of Mississippi signed a similar bill in March that also allows the insurance commissioner to participate in a supervisory college with other insurance regulators.
New Mexico legislators considered a bill to require insurers to conduct ORSA assessments and file annual summary reports; the bill passed the Senate but died in the House of Representatives when the legislature adjourned March 18. A similar bill was presented to the governor of Idaho for his signature in March. In February, the Oregon Department of Consumer and Business Services and Insurance Regulation finalized a rule requiring insurers to submit an ORSA and comply with the guidance manual.
Maryland lawmakers are considering Senate Bill 176, which would prohibit an insurance carrier from increasing renewal premium rates for a long-term care policy in years 2017 through 2019. House Bill 493, also in Maryland, would require the insurance commissioner to post information on its website about factors relating to premium rates for policies and prohibit an insurer from changing rates before being approved by the commissioner. New York legislators are considering a similar bill filed in the Assembly in January to require long-term care insurance carriers to receive approval from the state superintendent of financial services before raising premiums.
Numerous states have attempted to address expansion of Medicaid or revise their Medicaid eligibility requirements in the first quarter of 2017. The Arkansas House of Representatives passed a bill that would halt new enrollment in the state’s Medicaid expansion program after July 1, 2017. Individuals currently enrolled in Medicaid would be allowed to re-enroll in the program. Florida Senate Bill 682 would exempt long-term care nursing home residents from the state’s mandate that all Medicaid beneficiaries be placed in a managed care program.
Georgia lawmakers are considering a bill to create the Georgia Mental Health Treatment Task Force and authorize the task force to develop an application for Medicaid block grant funding for mental health services and substance abuse prevention and treatment. The Kansas House of Representatives passed a bill that would expand KanCare, the state’s privatized Medicaid program, to individuals under 65 making less than 133 percent of the federal poverty level (FPL). Senate Bill 290, a North Carolina bill filed in March, would expand Medicaid eligibility to all residents under the age of 65 with incomes equal to or below 133 percent of the FPL. In Tennessee, a bill filed in the Senate in January would facilitate the block granting of Medicaid funds to provide health insurance benefits to individuals with incomes below 138 percent of the FPL. A Utah resolution was passed by the legislature and presented to the governor in March that encourages the federal government to give states more flexibility to manage their own Medicaid funds via block grants with a “per capita allocation.”
State Health Care Exchanges
Several states introduced legislation to create, end, or modify state health insurance exchanges. In Minnesota, Gov. Mark Dayton signed a bill into law in January that creates state-funded health insurance premium assistance to 125,000 state residents facing large premium increases in 2017. The governor also proposed a plan in January to add MinnesotaCare to the state health exchange, allowing residents to purchase their health insurance through a public option.
The Connecticut Health Insurance Exchange filed a notice of intent in February regarding pre-enrollment verification of consumers’ eligibility for special enrollment periods (SEPs). Individuals who wish to buy health insurance coverage during a SEP would be required to verify their eligibility by submitting documentation verifying major events such as loss of minimum essential coverage or a permanent move to Connecticut. Vermont legislators are considering House Bill 248 introduced in January that would create universal and publicly financed primary care. The New York State Superintendent of Financial Services signed an emergency rule in March to establish a market stabilization pool for the individual and small group health insurance markets for the 2017 plan year.
Montana lawmakers are considering House Bill 145, which was prefiled in December 2016 and would adopt the NAIC’s Suitability in Annuities Transactions Model Regulation. In January, the Washington State Office of the Insurance Commissioner adopted the 2017 commissioner’s standard ordinary (CSO) mortality tables that provide a new minimum valuation standard of mortality for life insurance products. The tables were developed by the Academy’s Life Experience Committee and the Society of Actuaries’ Preferred Mortality Oversight Group at the request of the NAIC.
In March, the governor of Wyoming signed into law a bill that adopts the NAIC’s Valuation Manual and requires the use of certain mortality tables and interest rates under specified circumstances.
Massachusetts lawmakers are considering House Bill 476, which was filed in January and would require mandatory disclosures to retirees when their pensions are transferred from an Employee Retirement Income Security Act of 1974 (ERISA) protected plan to another pension provider, including insurance companies. Retirees would also have the opportunity to opt out within 90 days and take an upfront lump sum payment of the net present value of their pension. A New York bill introduced in the Senate in January would require employers with two or more workers that provide employee benefit pension plans to send mandatory annual disclosures to all retirees whose pension benefits are transferred to an insurance company or other provider, and inform them that they will no longer be protected under ERISA and the Pension Benefit Guaranty Corporation (PBGC).
Public Pension Plans
Several states have introduced legislation to modify public sector state retirement plans. In Minnesota, lawmakers are considering a bill introduced in the House in January that would make administrative changes to several state public pension plans, including modifying economic actuarial assumptions. Montana lawmakers are considering House Bill 499, which was introduced in February and would require the Public Employees’ Retirement Board and Teachers’ Retirement Board to publish actuarial reports on the soundness of the system using alternative assumptions for investment earnings.
The Washington Insurance Department proposed a rule in January that would reduce the current pension discount rate from 6.3 percent to 6.2 percent in 2017, and lower the discount rate annually until it reaches 4.5 percent in 2022.
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