At the close of the year, the majority of states had adjourned their 2020 legislative sessions. Seven state legislatures were still in session in late December. Three states (Oregon, Wisconsin, and Delaware) were holding special sessions. Thirty-six state legislatures had adjourned sine die or as regularly scheduled, and one state (Illinois) adjourned its session early due to COVID-19. Three states (Texas, Montana, and North Dakota) did not convene in 2020 as they hold off-year legislative sessions. Many states had begun the process of prefiling legislation for the 2021 legislative session.
While many legislatures finished the year with business as usual, much of the legislation and regulations of note are a direct result of the COVID-19 pandemic such as business liability shields, workers’ compensation, and telehealth.
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Maryland Gov. Larry Hogan signed a bill into law May 8 that prevents auto insurers from “requiring an applicant or a policyholder to participate in a certain insurance program on vehicle operation as a condition for underwriting a private passenger motor vehicle insurance risk except under certain circumstances.” Tennessee Gov. Bill Lee signed a bill into law on July 22 that codifies requirements and definitions related to peer-to-peer car-sharing and details specifications on insurance coverage during a car-sharing period or when the owner would be liable for damages. Washington, D.C., Mayor Muriel Bowser signed into law a bill on Dec. 1 that makes an electric scooter operator better able to recoup losses from medical bills and other expenses in the event of a collision.
California Gov. Gavin Newsom signed three pieces of legislation on Sept 29, all related to wildfires and property insurance. Senate Bill 872 makes certain additional provision for additional living expenses, expands minimum time periods to collect replacement cost value to commercial properties, and expands rules pertaining to relocation. Assembly Bill 2756 improves the notice provided to policyholders when an insurer’s offer to renew the policy involves a reduction in coverage including a requirement for the insurer toto obtain a signed statement from the policyholder to acknowledge they understand the policy removes fire as a peril. The bill also requires for a policy of residential property insurance that provides replacement cost coverage “shall not be issued or renewed unless it provides additional building code upgrade coverage of no less than 10 percent of the dwelling coverage policy limit.” Assembly Bill 3012 includes a number of protections for consumers, such as a prohibition on insurers subtracting land value when policyholders choose to rebuild at a different location, extending coverage for living expenses when utilities don’t work after a wildfire, and a “minimum ratio, 30 percent of coverage limits, for contents replacement value insureds can collect without submitting an itemized claim if the loss occurred.”
Flood Insurance and Climate Risk
South Carolina Gov. Henry McMaster signed a bill into law Sept. 28 that recognizes private flood insurance policies that meet National Flood Insurance Program (NFIP) standards, incentivizes carriers to offer flood insurance coverage, and requires a 45-day notice when a private flood insurance policy is canceled so policyholders have time to find new coverage.
Florida Gov. Ron DeSantis signed a bill into law on June 20 that addresses certain state guaranty association provisions, including clarifying that the assessment due from the Florida Workers’ Compensation Insurance Guaranty Association (FWCIGA) member insurers will be a uniform percentage of premium collected instead of a proportion of the total net direct written premium for the prior calendar year and clarifying the method by which assessments are levied against insurers and collected by FWCIGA related to policy deductibles and to retrospectively rated policies. Tennessee Gov. Bill Lee signed a bill into law on June 15 that requires companies performing construction work in the state to carry and maintain workers’ compensation insurance while working in the state. Any company that does not will be penalized $1,000 or “one and one half times the average yearly workers’ compensation premium for the construction services provider based on the appropriate assigned risk plan advisory prospective loss cost and multiplier for the construction services provider.” Vermont Gov. Phil Scott signed a bill into law on July 13 that expands access to workers’ compensation during a declared state of emergency related to COVID-19. It also extends deadlines and temporarily waives specific requirements in current law. New Jersey Gov. Phil Murphy signed a bill into law on Sept. 14 that, among other provisions, “creates a presumption that [COVID-19] infections contracted by essential employees, including but not limited to, health care workers and public safety workers, are work-related for the purpose of employment benefits provided for work-related injuries and illnesses, including but not limited to, workers’ compensation benefits.” California Gov. Gavin Newsom signed a bill into law Sept 29 that would expand covered claims under the California Insurance Guarantee Association to include workers’ compensation benefits to employees working in any state if the injured worker is a California resident and not covered by another guarantee organization. Pennsylvania Gov. Tom Wolf signed a bill into law Nov. 3 that clarifies workers’ compensation coverage requirements for members of volunteer fire department, volunteer ambulance corps, and volunteer rescue squads by expanding the definition of those covered.
Business Liability Protection
Pennsylvania Gov. Tom Wolf on Nov. 30 vetoed a bill that would have provided COVID-19 liability immunity to businesses. Wolf argued that the bill “invites the potential for carelessness and a disregard for public safety.” Michigan Gov. Gretchen Whitmer signed a package of legislation on Oct. 22 related to business liability. House Bill 6030 establishes hospitalization as a minimum threshold for suing a business when a worker is exposed to the novel coronavirus. House Bill 6031 shields businesses from liability as long as they did not willfully expose their employee to the COVID-19 virus. House Bill 6032 holds employees liable if they go to work after a positive COVID-19 test or if they are showing COVID-19 symptoms and prevents employers from firing employees due to their concerns about violating public health protocols. House Bill 6159 does not hold workers liable for injuries to patients under their care, except in instances of gross negligence. Many of the provisions in these bills were intended to replace EO 2020-36 and EO 2020-175, which the Michigan Supreme Court struck down as unconstitutional on Oct. 2. In addition to Michigan, a number of other states such as Alabama, Arkansas, Georgia, Idaho, Iowa, Kansas, Louisiana, Mississippi, Nevada, North Carolina, Ohio, Oklahoma, Tennessee, Utah, and Wyoming have all enacted liability shield laws, regulations, or guidelines, through bills or executive orders, in an effort to protect businesses from COVID-19 liability claims brought by employees and/or customers.
Kansas Gov. Laura Kelly signed a bill into law on June 1 that, among other matters, updates the definition of long-term care insurance in the state’s Long-Term Insurance Act by removing the qualifier that long-term insurance should be offered or designed to last no more than 12 consecutive months. Georgia Gov. Brian Kemp signed a bill into law on June 1 that revises the assessment formula on long-term care insurance written by impaired or insolvent insurers. The Rhode Island Executive Office of Health and Human Services released a proposed rule on Dec. 10 (public comment deadline 1/11/2021) that would determine the eligibility determination process for Medicaid long-term services and supports for the medically needy. The bill also describes allowable, medically necessary expenses for individuals labeled medically needy and are using Medicaid long-term services and support.
Medicare and Medicaid
North Carolina Gov. Roy Cooper signed a bill into law on July 2 that, among other measures, contains changes to the start date for North Carolina’s Medicaid Transformation to July 1, 2021, when standard plans will become available. Medicaid Transformation is the transition of the state’s current Medicaid and NC Health Choice plans from a fee-for-service into managed care plans. Colorado Gov. Jared Polis signed a bill into law July 6 that allows working adults with disabilities aged 65 and older to continue participating in the existing Medicaid buy-in program. The Colorado Division of Insurance released an amended proposed rule on Nov. 30 that would replace Emergency Regulation 20-E-13. The original emergency regulation simplified terms and benefits, eliminated misleading or confusing policies, provided full disclosure of the terms of accident or sickness insurance coverage, and made an effort to make Medicare more understandable for participants. The amended regulation keeps the content in place but would remove the language making this an emergency regulation and changes the date it goes into effect to March 15, 2021.
New Hampshire Gov. Chris Sununu signed a bill into law July 17 establishing a wholesale prescription drug importation program as well as a New Hampshire prescription drug affordability board. Additionally, the bill requires insurers to cap the total amount paid for insulin for covered persons. Pennsylvania Gov. Tom Wolf signed a bill into law July 23 that provides for consumer prescription drug pricing disclosure and pharmacy freedom to communicate. Utah Gov. Gary Herbert signed a bill into law Aug. 31 that amends certain reporting requirements to the Prescription Drug Price Transparency Act, including that drug manufacturers must report certain standards no more than 30 days after the day of which a wholesale acquisition prescription drug cost is increased. California Gov. Gavin Newsom signed a bill into law on Sept. 28 that requires the California Health and Human Services Agency (CHHSA) to enter into partnerships to increase patient access to affordable drugs. The law requires CHHSA to enter into partnerships to produce or distribute generic prescription drugs and at least one form of insulin, provided that a viable pathway for manufacturing a more affordable form of insulin exists at a price that results in savings.
Other Health Issues
Georgia Gov. Brian Kemp signed a bill into law July 16 that provides for certain consumer protections against surprise billing, including the creation of a surprise bill rating system based upon the number of certain physician specialty groups contracted with a hospital within a health insurer’s network. The bill requires that insurers include hospital surprise bill ratings online and as well as in printed provider directories. Gov. Kemp also signed a bill into law on July 16 that provides mechanisms for resolving payment disputes between insurers and out-of-network healthcare providers as well as establishing an arbitration process. Virginia Gov. Ralph Northam signed a bill into law Nov. 9 that directs the Board of Medical Assistance Services to amend the state plan for medical assistance services to provide for payment of medical assistance for medically necessary health care services provided through telemedicine services. The bill also requires any insurer or company providing individual or group accident and sickness insurance policies to provide access to telemedicine services. The Oregon Health Authority released a final rule on Dec. 12 to ensure Oregon Health Plan members are allowed continued access to telehealth. The regulation is intended to mitigate financial harm to providers and reduces barriers on providing access to telehealth services.
Principle-Based Reserving (PBR)
The Nevada Commissioner of Insurance released a draft proposed rule Sept. 9 that establishes uniform standards for reserve financing arrangements for life insurance policies that have non-level gross premiums, guaranteed non-level benefits, and universal life policies with secondary guarantees. The Texas Department of Insurance released a proposed rule Nov. 6 to update the state insurance code to adopt the National Association of Insurance Commissioners (NAIC) valuation model, which includes a provision that allows companies to use different credibility methods for different blocks of the life principle-based reserving business.
Other Life Issues
Arizona Gov. Doug Ducey signed a bill into law June 5 that amends state requirements of annuity suitability and best interest standard. Florida Gov. Ron DeSantis signed a bill into law July 1 that prohibits life insurers and long-term care insurers from canceling or denying coverage based on an individual’s genetic information. In addition, the bill prevents establishing differentials in premium rates based on an individual’s genetic information. California Gov. Gavin Newsom signed a bill into law Sept. 26 that provides procedural flexibility to the State Department of Insurance when it holds a hearing on revoking or suspending licensing because of alleged misconduct against seniors. The legislation also clarifies when a life insurer can restrict access to policy withdrawals and prohibits life insurance discrimination against HIV-positive applicants. Mississippi Gov. Tate Reeves signed a bill into law Sept. 26 that amends The Mississippi Life And Health Insurance Guaranty Association Act. The bill also removes maximum limitations on certain assessments by the association and defines “Member Insurer” to include a Health Maintenance Organization that holds a certificate of authority to transact Health Maintenance Organization business. New York Gov. Andrew Cuomo signed a bill into law Oct. 7 that prohibits life insurers from denying coverage or adjusting premiums or rates solely due to an individual’s use of medication prescribed to block the effects of opioids. Pennsylvania Gov. Tom Wolf signed a bill into law on Nov. 3 that amends the Life and Health Guaranty Association Act to bring it into compliance with the NAIC guaranty association model act and certain other operational changes.
Public Pension Plans
Missouri Gov. Mike Parson signed a bill into law July 13 that repeals a number of public pension plan provisions, and creates the “Members Deposit Fund,” which will be the fund that will accumulate contributions made by members into the system. California Gov. Gavin Newsom signed a bill into law Aug. 6 that makes a number of changes to the state employee bargaining units, but notably makes adjustments to the employee and state required pension contribution rates. Gov. Newsom also signed a bill into law Sept. 29 that builds on the existing Teachers’ Retirement Law by requiring employers to retain a copy of the election form for a defined benefit (DB) plan removing certain provisions for the enrollee, defines “leave of absence” to include employer-approved leave to be creditable towards retirement, changes the definition of sick leave, raises the age for required distributions, and raises the age of continuation of benefits of children aged 21 to the 22nd birthday of the children. Pennsylvania Gov. Tom Wolf signed into law Oct. 29 legislation affecting the state employees’ defined contribution plan that provides for individual investment accounts, and provisions regarding participant contributions, employer defined contributions, vesting, powers and duties of the plan’s board, investments allocation choices and other measures The State Employees’ Retirement System of Illinois released a proposed amendment (see page 53) on Nov. 30 to address Illinois law that violates the Pension Protection Clause of the Illinois Constitution. The proposed rule extends the “highest 4 consecutive years within the last 10 years” final average compensation condition to those alternative formula members who first became members before January 1, 1998, thus avoiding violation of the Pension Protection Clause.
Other Pension Issues
The Louisiana Legislature enacted a concurrent resolution on June 1 to “memorialize” the U.S. Congress to support the Social Security Fairness Act, which would eliminate the Windfall Elimination Provision and the Government Pension Offset Social Security benefit reductions.
Louisiana Gov. John Bel Edwards signed a bill on June 11 that provides additional requirements for foreign insurers to receive credit for reinsurance and provide recognition for reciprocal jurisdictions. Mississippi Gov. Tate Reeves signed a bill into law June 22 that defines reciprocal jurisdiction and provides requirements for credit for reinsurance. Georgia Gov. Brian Kemp signed a bill into law July 1 that provides additional requirements to foreign insurers in regards to reinsurance credits. Nebraska Gov. Pete Ricketts signed a bill into law Aug. 6 that changes the state requirements for credit for reinsurance. California Gov. Gavin Newsom signed a bill into law Sept. 11 that extends reinsurance credit if solvency requirements are met, and additionally would require the insurance commissioner to create and publish a list of reciprocal jurisdictions and a list of insurers receiving the credit in the jurisdictions. South Carolina Gov. Henry McMaster signed a bill into law Sept. 28 that adopted the Reciprocal Jurisdiction Amendment from the NAIC Credit for Reinsurance Model Law. The New York State Register published a proposed rule on Dec. 9 to also implement the NAIC model law.
Regulatory Reporting Requirements
The Florida Department of Financial Services, Office of Insurance Regulation (FLOIR) released a proposed rule on Nov. 4 that would change the way insurers are responsible for reporting information to the FLOIR following a hurricane or natural disaster. The Oregon Department of Consumer and Business Services, Financial Regulation division, approved a final rule Dec. 16 that amends requirements for an insurer when filing registration statements and proposed transactions. The Oregon Department of Consumer and Business Services, Financial Regulation division, approved a final rule Dec. 16 that changes the reporting years on the annual statement blanks and instructions applicable to every insurer to submit.
Other Cross-Practice Issues
Louisiana Gov. John Bel Edwards signed a bill into law establishing standards for applicable state insurance licensees for data security, the investigation of a cybersecurity event, and notification to the commissioner of insurance. Vermont Gov. Phil Scott signed a bill into law on June 15 that amends state code regarding qualified captive insurance companies pertaining to reinsurance or other risk-sharing agreements with an agency or brokerage and lowering the minimum capital surplus amount with separate accounts. The Texas Department of Insurance released a final rule Dec. 25 that would allow the state insurance commissioner to adjust the rates of assessment for maintenance taxes and fees every year based on gross premium receipts from the year prior to maintain transparency in how the rates are calculated each year and help avoid delays from the rulemaking process. The rates this change would apply to include but are not limited to life insurance, health insurance, motor vehicle insurance, casualty insurance, fire insurance, workers’ compensation insurance, and health maintenance organizations.