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State legislatures spent part of their spring legislative season on bills such as Medicaid revisions, pension de-risking, and auto insurance for ride-sharing companies, items included in this issue of the American Academy of Actuaries’ StateScan Quarterly, which highlights state legislative and regulatory activities. Additionally, state regulators adopted or proposed rules on captives, reinsurance, and long-term care insurance.
While most state legislatures wrapped up their business by the end of June, about a dozen remain in session or have convened special sessions. Bills have been introduced in several states to create single-payer health systems, and the Nevada legislature passed a bill to allow citizens to purchase a Medicaid-style insurance plan, which was vetoed by Gov. Brian Sandoval in June. The legislatures in New York and Massachusetts are considering bills to adopt the National Association of Insurance Commissioners’ (NAIC) Valuation Manual that enables insurers to begin using principle-based reserving (PBR) for life insurance products, joining 47 other states that have adopted substantially similar legislation.
For a more comprehensive review of legislation and regulations, log in to access StateScan.
CASUALTY
Auto Insurance
Legislation has been introduced in several states that prescribes insurance requirements for transportation network companies (TNC) such as Uber and Lyft. Connecticut Gov. Dannel Malloy signed a bill in June that requires minimum insurance coverage by TNC companies or their drivers, and allows insurers to offer personal insurance that excludes coverage while drivers are working for TNC companies. A similar bill in Louisiana passed the Senate in May. The Kentucky Department of Vehicle Regulations proposed rules in June that mandates insurance requirements on TNCs and their drivers when carrying passengers or logged into the TNC’s network.
In New York, a bill introduced in April would prohibit the use of price optimization techniques by auto insurers.
Flood Insurance
The Florida legislature passed a bill that now goes to the governor for his signature to revise the state’s flood insurance laws, including requiring the Florida Commission on Hurricane Loss Projection to change the schedule for actuarial methods, principles, standards, and output ranges for hurricane-loss and flood-loss projections. Legislation introduced in Louisiana in April would provide for state tax credits for premiums paid into the National Flood Insurance Program.
Workers’ Comp
In late May, the Illinois legislature passed a bill that would create an independent public corporation to insure employers against workers’ compensation liability claims. The Florida legislature sent a bill in June to Gov. Rick Scott’s desk for his signature that would adopt the NAIC model law on large-deductible workers’ compensation policies.
CROSS-PRACTICE
Captives
The Connecticut Senate is considering a bill that would increase tax incentives for captive insurance companies and require the insurance commissioner to study the issues involving micro-captive insurers. Georgia Gov. Nathan Deal signed a bill in May and the Delaware Senate passed legislation in June to change requirements on captive insurance companies. The Vermont Insurance Commission issued final regulations in May on captives, which include credits for reserves on risks ceded to reinsurers.
ORSA
South Carolina Gov. Henry McMaster signed legislation in May that requires insurers to complete Own Risk and Solvency Assessments (ORSA) and file an ORSA summary report with the state insurance commissioner.
Reinsurance
Connecticut Gov. Malloy signed a bill in June that allows the insurance commissioner to adopt regulations that provide for credits for reinsurance. Rules adopted by the North Dakota Insurance Department went into effect in April that modify credit for reinsurance ceded by a domestic insurer to an assuming reinsurer based on the rating assigned to that reinsurer.
HEALTH
Long-Term Care
A bill was introduced in April in the Maryland Senate that would prohibit increases in long-term care premiums through 2019. The Arizona Department of Insurance issued final rules in May on long-term care insurance, including a provision that prohibits insurers from denying claims because services are provided in a state other than the state in which the policy was issued, under certain conditions.
Marketplace Changes
The Hawaii legislature passed in May a bill that would explore ways to mitigate adverse effects if Congress repeals the Affordable Care Act. Legislation has been introduced in New Jersey, Oregon, Massachusetts, and California to create single-payer health insurance systems within those states.
Medicaid
A bill introduced in the North Carolina House in April would expand Medicaid eligibility to all people with incomes at or below 133 percent of the federal poverty level. Legislation offered in the Alabama Senate in April would expand Medicaid to all individuals who would qualify for federal matching funds under the ACA. The Louisiana Senate in June passed a bill that requires the state health department to provide certain data on all “able-bodied” Medicaid recipients.
LIFE
Annuities
Montana Gov. Steve Bullock in May signed into law a bill that adopts the NAIC’s model law on suitability in annuity transactions. The Missouri Department of Insurance issued final regulations (page 399) in April on insurers with respect to replacing existing life insurance and annuity policies, including establishing minimum standards of conduct.
Nebraska Gov. Pete Ricketts signed legislation in April that would require insurers to compare unclaimed in-force policies against the Social Security Administration’s Death Master List to determine claims. Similar bills were introduced in the spring in New Jersey and Texas.
PBR
A bill was introduced in the New York Senate that would allow insurers to use the Valuation Manual for PBR in 2018.
PENSION
Pension De-Risking
Legislation was introduced in the New York Assembly in April that would add requirements on pension risk transfers, including mandatory disclosures to beneficiaries.
Public Pension Plans
A bill was introduced in the California Assembly in May that would prohibit a government employer from raising certain public employee pension benefits without the approval of voters of that jurisdiction. A bill was introduced in the North Carolina General Assembly in April to create an unfunded liability solvency reserve for the State Employees’ Retirement System of North Carolina and Retiree Health Benefit Fund.
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