Currently, seven state legislatures and the Council of the District of Columbia remain in session, while lawmakers in 15 other states are prefiling legislation to be considered next year. Legislation that has been passed or introduced in state legislatures this quarter include bills relating to automobile insurance, credit for reinsurance, health insurance coverage, and disclosure requirements for public pension plans. State regulatory agencies also remained active this past quarter, with proposed and adopted rules relating to, among other issues, valuation methods for automobile loss settlements, long-term care, and regulations for life insurers. In addition, this quarter saw several judicial rulings on medical professional liability.
For a more comprehensive review of state legislation and regulations that may be of interest to Academy members, log in to access StateScan.
A bill (H.B. 5013) that would have allowed auto insurance plans with lower personal injury benefits than are currently available under the state’s no-fault system failed in the Michigan House of Representatives. The Nevada Department of Insurance proposed an amendment to a rule in October that establishes the use of a price guide for used vehicles, approved by the Commissioner of Insurance to determine the valuation of a used automobile. Two auto insurance bills were prefiled in the Florida Senate in October. S.B. 410 prohibits the use of a zip code or collection of zip codes in determining auto insurance rates. S.B. 414 prohibits the use of credit scores in auto insurers’ decisions regarding policyholders and applicants, and in the determination of auto insurance rates.
Medical Professional Liability
The U.S. Supreme Court in December declined to hear an appeal to a ruling by the U.S. Court of Appeals for the Eighth Circuit upholding a law in Nebraska that caps damage awards for medical malpractice suits. A ruling by the Supreme Court of New Mexico in November clarifies that individuals who discover medical malpractice injuries in the final year of the state’s three-year statutory period will still have a full 12 months to file claims. The Supreme Court of Oklahoma ruled in October that a state law concerning medical negligence suits is unconstitutional. The law required the dismissal of medical negligence cases by plaintiffs who fail to file expert affidavits attesting to the merits of their cases. A bill was introduced in the Pennsylvania Senate in September that establishes a Health Care Provider Rate Stabilization Fund to be used for purposes including the payment of claims for medical liability actions and the payment of health insurance premiums and assessments.
H.B. 4165, introduced in the Illinois House in November, prohibits the state from applying for any federal waivers that would reduce or eliminate coverage mandated by the Affordable Care Act (ACA). A bill was introduced in the Pennsylvania Senate in November that prohibits insurers from denying or excluding coverage for individuals with pre-existing conditions. S.B. 913, introduced in the Pennsylvania Senate in October, prohibits health insurers from imposing cost-sharing on covered prescription drugs that exceed the average of all rebates and discounts negotiated among manufacturers, pharmacy benefit managers, and insurers. A bill was introduced in the Ohio House in October that requires health insurers to establish shared savings incentives.
A rule was proposed by the Alaska Department of Health and Social Services in October that changes Medicaid coverage regulations to: (1) establish the Community First Choice program and targeted long-term care case management services; and (2) make changes related to Medicaid payment rates.
States have exhausted, or are beginning to exhaust, their Children’s Health Insurance Program (CHIP) funds following the expiration of federal funding for the program on Sept. 30. While specific bills and regulations addressing CHIP have not been introduced in states this quarter, many states will be faced with the decision to terminate coverage, close enrollments, or find other solutions if Congress does not take action to reauthorize the program. Some states, including Arizona, West Virginia, and Colorado already have laws in place requiring them to freeze, close, or reduce their programs if federal funds decrease. In contrast, states that have CHIP-funded Medicaid expansions, such as California, are required to continue CHIP coverage even without additional federal funding. Other states may be required to take legislative and regulatory action in the next quarter in the event that Congress fails to reauthorize the program.
The New York Department of Financial Services adopted a rule in September to establish standards for determining and readjusting non-guaranteed elements for life insurance and annuities.
Principle-based Reserving (PBR)
Several states, including Virginia and Iowa, have proposed rules to adopt Model Regulation 787—Term and Universal Life Insurance Reserve Financing, which would establish uniform, national standards for reserve financing arrangements for life insurance policies with guaranteed nonlevel gross premiums, guaranteed nonlevel benefits, and universal life insurance policies with secondary guarantees.
Public Pension Plans
S.B. 980, prefiled in the Florida Senate in November, would revise minimum requirements for actuarial reports for publicly funded retirement plans; require governing bodies of retirement plans to review the enrolled actuary’s statement within a specified timeframe; and require the unfunded liability of retirement plans established on or after a certain date to be amortized within a specified timeframe. Two pension-related bills were introduced in the New Jersey Senate in November. S. 3473 restricts compensation on a performance basis for external managers of the state’s pension and annuity funds, and requires external mangers to disclose their rates and fees. S. 3504 requires the State Investment Council to analyze and report on the investment performance of state pension funds, and requires the disclosure of fees paid to managers of funds in which the state’s pension funds are invested.
Credit for Reinsurance
S.B. 638, introduced in the Michigan Senate in October, revises requirements for reinsurance credit. Among other things, the bill allows the Director of the Department of Insurance and Financial Services to suspend or revoke reinsurers’ accreditation, and requires a ceding insurer to manage its reinsurance recoverable assets proportionate to its own book of business, and to diversify its reinsurance program. A rule adopted by the Idaho Department of Insurance and awaiting review by the 2018 state legislature adopts NAIC Credit for Reinsurance Model Regulation #786 provisions supporting the modernization of reinsurance regulation.
The Delaware Department of Insurance proposed a new rule in December that requires insurers to file a Corporate Governance Annual Disclosure that details, among other things, the structure of an insurer’s Board and the Board’s reporting requirements for critical risk areas. H.B. 5274, introduced in the Michigan House in November, prohibits insurers from disclosing personal, nonpublic financial information about consumers without their consent, except when required by law. A bill was prefiled in the Florida House in November that would revise several provisions affecting insurers, including: valuation rules for stocks in subsidiaries for certain foreign insurers, the surplus lines tax, and capital and surplus required for insurers to waive a requirement to be an eligible surplus lines insurer. A companion bill has also been prefiled in the Florida Senate.