Most states convened their 2021 legislative sessions at the start of this year. Ten state legislatures are still in session as of early September (Alaska, California, Massachusetts, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Texas, and Wisconsin). Two of those states (Alaska and Texas) are currently holding special sessions. Seven states (Maine, Minnesota, Missouri, South Carolina, Tennessee, Virginia, and West Virginia) held special sessions in 2021 but have since adjourned. Thirty-three state legislatures have adjourned sine die or as regularly scheduled. Three of those states paused or canceled portions of their legislative sessions due to COVID-19 (Colorado, Illinois, and Wyoming), and another state (Oregon) pushed its legislative session start date to Jan. 21, 2021, due to security concerns.
Much of the legislation and regulations of note are in response to the COVID-19 pandemic, equity initiatives such as protecting consumers from potential unfair discrimination, and prescription drug prices and retirement benefits.
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Colorado Gov. Jared Polis signed Colorado Senate Bill 21-169, concerning protecting consumers from unfair discrimination in insurance practices. The law directs the state insurance commissioner to adopt rules to implement the law’s provisions requiring insurers to demonstrate that they have tested whether their use of data sources (external consumer data, algorithms, predictive models, etc.) unfairly discriminates based on an individual's race, color, national or ethnic origin, religion, sex, sexual orientation, or gender identity. The law stipulates that rules issued by the commissioner must require each insurer to provide information concerning the external data sources used, explanation of the manner in which the data sources were used, and establish risk management framework designed to determine whether the use of external data sources unfairly discriminates against individuals based on the aforementioned characteristics.
South Dakota Gov. Kristi Noem signed legislation, Senate Bill 178, to prohibit certain insurers from using genetic information in determining a person’s eligibility for coverage. In determining a person’s eligibility, health carriers, life insurers, and long-term care insurers are forbidden from requiring individuals to take a genetic test or taking into consideration the fact that a genetic test was refused by an individual or a blood relative when making underwriting decisions in determining eligibility for coverage.
Nebraska Gov. Pete Ricketts signed Legislative Bill 77, prohibiting insurers from conducting risk classifications and rate adjustments based solely on the fact that the insured person is deployed in the military.
Oklahoma Gov. Kevin Stitt signed Senate Bill 887, a law authorizing and making numerous provisions in the state’s insurance regulations. The law authorizes the insurance commissioner to fine insurance carriers for failing to file a market conduct statement with the state up to $1,000 for each occurrence. It also provides for a Business Character Report to contain data that is up to six months old instead of one year and authorizes insurance carriers to provide reasonable exceptions to the rate of the insurer, rating classifications, or underwriting rules or guidelines for a consumer whose credit information has been directly influenced by certain catastrophic events, among other provisions.
Indiana Gov. Eric Holcomb signed House Enrolled Act 1432. The law requires the Indiana Public Employers’ Plan (IPEP)—originally established as a nonprofit, self-funded workers’ compensation program for Indiana public employers—to apply for a certificate of authority to transact business as a domestic tax-exempt reciprocal insurance company. All powers, duties, and liabilities that IPEP had as a domestic nonprofit corporation are transferred to the domestic tax-exempt reciprocal insurance company as the successor entity.
Idaho Gov. Brad Little signed Idaho House Bill 79. The law adopts recent NAIC Model Regulation 275 regarding suitability of annuity transactions in statute, clarifying that it is the obligation of insurance producers and insurers to act in the best interest of the consumer when making a recommendation of an annuity. The law also establishes producer training expectations and requires insurers to maintain a system to supervise recommendations to effectively address the insurance needs of consumers.
Virginia Gov. Ralph Northam signed HB 1049. The law prohibits discrimination in employment, public accommodation, public contracting, apprenticeship programs, housing, banking, and insurance based on sexual orientation or gender identity. The law also adds discrimination based on sexual orientation or gender identity to the list of unlawful discriminatory housing practices.
Public Disclosure Requirements
Florida Gov. Ron DeSantis signed Florida Senate Bill 7014, regarding information relating to insurer reporting of certain proprietary business as exempt from public disclosure. Such proprietary information includes reports submitted by insurers, the own risk and solvency assessment (ORSA) summary report, and the corporate governance annual disclosure (CGAD).
Governors of numerous states signed legislation relating to credit for reinsurance. Alaska, Arizona, Colorado, Kansas, Maryland, North Dakota, Oregon, Virginia, and Wyoming all enacted laws similar to National Association of Insurance Commissioners (NAIC) Model Law 785, Credit for Reinsurance Model Law, relating to reinsurance collateral requirements. These statutes are necessary for states to maintain accreditation with the NAIC.
Texas Gov. Greg Abbott signed Texas House Bill 317, prohibiting discrimination against living organ donors by certain insurers. The law prohibits an insurer from denying coverage to an individual, refusing to renew an individual's coverage, or canceling an individual’s coverage based solely on the status of an individual as a living organ donor. The New Jersey General Assembly approved similar legislation, A 3199, a law prohibiting discrimination against living organ donors in relation to life, health, and long-term care insurance.
Mississippi Gov. Tate Reeves signed Senate Bill 2221. Sections 1 through 4 establish the Mississippi Dementia Care Program within the Mississippi Department of Human Services. The Dementia Care Program provides respite care services to individuals with Alzheimer’s and their informal caregivers. The law calls on the Mississippi Department of Health and the University of Mississippi Medical Center to help the Department of Human Services operate the program and seek federal funds for its operation.
Health Insurance Coverage
Louisiana Gov. John Bel Edwards signed Senate Bill 84 to provide for health insurance coverage of genetic testing for various cancer mutations. Specifically, any health coverage plan renewed or delivered in the state must include coverage for genetic or molecular testing for cancer. This includes tumor mutation testing, sequencing, hereditary germline mutation testing, and biomarker testing, among others. This coverage can be subject to annual deductibles and copayment provisions consistent with those of the current health coverage plan.
Texas Gov. Greg Abbott signed House Bill 3720. The law amends current Texas state code to add certain mandates for the Texas Long-Term Care Facilities Council, established by the Texas Health and Human Services Commission, to prepare recommendations for more consistent survey and dispute resolution processes for long-term care facilities in the state. The law stipulates that the council must include at least one member who is a community-based provider at an intermediate care facility for individuals with intellectual or developmental disabilities. The law also mandates the commission, in consultation with stakeholder groups, to develop a questionnaire for individuals who request to be placed on the state’s Medicaid waiver program, among other provisions.
Montana Gov. Greg Gianforte signed Montana House Bill 379, revising laws for nondiscriminatory rate setting in insurance. The law allows insurance companies to consider a person’s sex and marital status when rating insurance premiums. Prior to this bill becoming law, Montana prohibited this practice in all lines of insurance, and proponents of the law say this prohibition artificially inflated insurance premiums for women, particularly in life and auto insurance.
Montana Gov. Greg Gianforte singed Senate Bill 395, the “Montana Pharmacy Benefit Manager Oversight Act.” The law is intended to help address the high cost of prescription drug prices by better illustrating the cost of medications. The law authorizes the state auditor, who is also the commissioner of securities and insurance, to license and regulate pharmacy benefit managers. It also requires pharmacy benefit managers to disclose the aggregate amount of rebates received and related information on wholesale drug costs. Virginia Gov. Ralph Northam signed a similar Senate Bill 251, also stipulating rules and requirements for pharmacy benefit managers with the intention of controlling prescription medications.
Colorado Gov. Jared Polis signed Senate Bill 21-175. The law creates the Colorado Prescription Drug Affordability Review Board as an independent unit of state government and requires the board to perform affordability reviews of prescription drugs. The board is required to establish upper payment limits for prescription drugs it determines to be unaffordable for Colorado consumers. The board must determine the methodology for establishing an upper payment limit for prescription drugs. Any savings generated for a health benefit plan as a result of an upper payment limit established by the board must be used by the carrier that issued the health benefit plan to reduce costs to consumers, prioritizing the reduction of out-of-pocket costs for prescription drugs.
Texas Gov. Greg Abbott signed House Bill 18 to establish a prescription drug savings program for certain uninsured individuals in the state. The law requires the Texas Health and Human Services Commission (HHSC) to develop and design a prescription drug savings program that partners with a pharmacy benefit manager to offer prescription drugs at a discounted rate to uninsured individuals. This does not include prescription drugs used for the elective termination of a pregnancy. The law requires the HHSC to design the program to be cost-neutral by collecting prescription drug rebates after using money in the fund in amounts that are equal to the rebate amounts to purchase prescription drugs, among other requirements.
New Mexico Gov. Michelle Lujan Grisham signed House Bill 47. The law allows a prescribing health care provider to provide a prescription to an individual for medical aid-in-dying. This provision is subject to numerous requirements on behalf of health care providers. The law stipulates that before administering medical aid-in-dying, health care providers must determine that the individual has voluntarily made the request for a medical aid-in-dying, the individual is making an informed decision, and that the individual’s request does not arise from coercion or undue influence by another person. Numerous other stipulations for health care providers are listed in the law text. The law includes a 48-hour waiting period between writing the prescription and filling it, and a “right to know” requirement for health care providers, in which the provider is required to inform a terminally ill patient of all reasonable options related to the patient’s care that are legally available to them.
Public Option Health Plans
The governors of Colorado and Nevada each signed legislation relating to state-offered public options for health insurance. Colorado House Bill 21-1232 will require insurers operating in the state to offer a “Colorado Health Benefit Option.” This option will be available for the individual and small group marketplaces, which cover about 15% of Colorado residents. By 2025 its premiums will have to be 15% less than the rates insurers offered in 2021. The law also sets benchmarks for the types of care covered under the plan, including pediatric care and other essential benefits.
Nevada Senate Bill 420 requires insurers that bid to provide Medicaid coverage also offer a public option plan. Under the law state officials will select certain plans for approval and mandate that they charge 5% less in monthly premiums than the average plan on the state insurance marketplace and 15% less four years after it is first offered. The law also requires state officials to study the financial implications of the proposal before applying for permission from the federal government to offer plans on the state-based exchange, which would be available starting in 2026.
Georgia Gov. Brian Kemp signed Georgia House Bill 234. The law amends Title 33 of the Georgia State Code to provide an option for self-funded health care plans to opt in to Georgia’s Surprise Billing Consumer Protection Act. The Surprise Billing Consumer Protection Act requires insurers not exempt from the act to participate in an arbitration process if an out-of-network provider or facility concludes that payment received from an insurer is insufficient and initiates a request for arbitration with the state insurance commissioner. Self-funded health care plans are not required to comply with these provisions regarding surprise billing. The law provides that a self-funded health care plan may voluntarily agree to comply with the Surprise Billing Consumer Protection Act and be subject to its arbitration guidelines.
Texas Gov. Greg Abbott signed House Bill 1777 amending the Texas Insurance Code to incorporate a “best interest” standard of care for annuities. Under the previous law, there was disparity in the oversight of the sale of annuities, as variable annuities contain securities. Previously, annuities that contain securities operated under a “best interest” standard, while those that do not operated under a “suitability” standard. By incorporating a “best interest” standard of care for annuities, the law addresses this disparity and harmonizes the standard of care for annuities across regulatory platforms. This “best interest” standard for annuities is similar to the best interest standard of care for securities adopted by the Securities and Exchange Commission in 2019. Nebraska Gov. Pete Ricketts signed the similar Legislative Bill 22, as did North Dakota Gov. Doug Burgum with House Bill 1160.
Life Insurance Beneficiaries
Arkansas Gov. Asa Hutchinson signed House Bill 1801 to prohibit the change of a beneficiary of a life insurance policy through a will. The law specifies that the designated beneficiary of a given life insurance policy can be changed according to the terms of the policy but not changed in a will, and any changes regarding beneficiaries are ineffective if not made according to the policy terms.
Oklahoma Gov. Kevin Stitt signed Senate Bill 122. The law authorizes credit as either an asset or a reduction from liability on account of reinsurance if an insurer is domiciled and licensed or has its head office in a reciprocal jurisdiction, defined as a non-U.S. jurisdiction that is subject to an in-force, covered agreement with the United States. The measure requires the state insurance commissioner to publish a list of these reciprocal jurisdictions through the National Association of Insurance Commissioners (NAIC) Committee Process. The law also requires the state insurance commissioner to publish a list of assuming insurers that meet the requirements of the law. The commissioner is permitted to add insurers to the list if an NAIC-accredited jurisdiction added the insurer to the list of assuming insurers.
The law applies to reinsurance relating to life insurance policies with guaranteed nonlevel gross premiums or benefits, universal life insurance policies allowing policyholders to keep their policy over a secondary guarantee period, and variable annuities with guaranteed death or living benefits.
Louisiana Gov. John Bel Edwards signed House Bill 703, prohibiting insurers from using genetic information and genetic testing for life and long-term care insurance underwriting purposes. The law generally prohibits insurers that offer life and long-term care insurance policies from considering an individual’s participation in genetic research when making underwriting decisions. This is intended to prevent possible discrimination on behalf of insurers when underwriting individuals or families.
COVID-19 Death Benefit
Former New York Gov. Andrew Cuomo signed S 4681. The law amends the current state retirement and Social Security law to establish a public employee death benefit for beneficiaries of state employees who passed away due to COVID-19. The law stipulates that beneficiaries of the victim may convert the victim’s service or disability retirement benefit into an accidental death benefit.
Individual Retirement Accounts
Maine Gov. Janet Mills signed S.P. 515, legislation creating automatic Individual Retirement Accounts (IRAs) for workers whose employers don’t offer retirement plans. The measure automatically enrolls employees of a covered employer with 25 or more eligible employees in a payroll-deducted Roth IRA and allows those who wish to opt out. Employees who elect to opt out will be automatically reenrolled at regular intervals but will have the opportunity to opt out again should they choose to do so. Covered employees will automatically contribute 5% of their salary or wages initially and may elect to contribute at a higher or lower rate. The law also calls for an annual increase of contribution rates by 1 percentage point, up to a maximum of 8%.
The New York State Assembly passed legislation, A 3213, regarding a secure choice program. Similar to the Maine law, the New York state law would convert the existing New York state secure choice auto-IRA savings program from being voluntary to mandatory for private-sector employers. New York Gov. Kathy Hochul is expected to sign. While not state legislation, Mayor Bill de Blasio signed a New York City-specific bill mandating an auto IRA program for employers with five or more employees. Virginia Gov. Ralph Northam signed similar legislation, HB 2174, under which participation is mandatory for employers with at least 25 full-time employees without access to a workplace retirement plan.
Tennessee Gov. Bill Lee signed a pair of bills relating to pensions and retirement benefits. House Bill 531 amends current state code to clarify that, when members of the Tennessee Consolidated Retirement System elect to establish retirement service through monthly installments, the members can do so over the length of service being established. The law also revises various provisions governing the state retirement system. House Bill 161 stipulates that, should a state department or agency become a separate local governmental entity, its employees are not entitled to future membership in the state retirement system.
Indiana Gov. Eric Holcomb signed Senate Bill 94 to provide for various pension matters. These include a stipulation that the Indiana Public Retirement System (INPRS) will pay the governors’ retirement and surviving spouse pensions through the Public Employees’ Retirement Fund (this was previously the state auditors’ responsibility). The law also eliminates the requirement for INPRS to make an actuarial valuation of the assets and liabilities of the retiree health benefit trust fund at least every two years. Instead, INPRS is required to report the assets and liabilities of the retiree health benefit trust fund and make recommendations for employer contribution amounts each year. The law includes other provisions relating to pension matters.
State Employee Survivor Benefits
Louisiana Gov. John Bel Edwards signed House Bill 19, allowing members of the Louisiana State Employees’ Retirement System (LASERS) to select an optional survivor benefit in lieu of retirement benefits to be paid to a mentally disabled child(ren) should that member die prior to retirement.
Louisiana Gov. John Bel Edwards also signed Senate Bill 23, providing enhanced survivor benefits and retiree health insurance coverage for the spouses and children of Louisiana State Police members killed in the line of duty. The law provides for the spouse and children of deceased members to be eligible for the same retiree health care program and receive the same health care premium subsidy (75%) as state police retirees with at least 20 years of service. The law also provides for the benefit to increase by 3% each year on the anniversary of the member’s death.
State Retirement Commissions
Vermont Gov. Phil Scott signed H 449 to amend provisions relating to the Vermont Pension Investment Commission and to create a “Pension Benefits, Design, and Funding Task Force.” H 449 also charges the task force with reviewing and reporting on the benefits, design, and funding of retirement and retiree health benefit plans for the Vermont State Employees’ Retirement System and the Vermont State Teachers’ Retirement System. The task force will make recommendations about benefit provisions and appropriate funding sources consistent with actuarial and governmental accounting standards and set a pension stabilization target number for the state employee and teachers retirement systems.
Louisiana Gov. John Bel Edwards signed House Bill 576, which provides for definitional qualification of property and casualty independent actuaries. The new law changes the requirement of the independent qualified actuary from an individual who is a member in good standing of the American Academy of Actuaries or the Casualty Actuarial Society to an independent qualified actuary as defined in the NAIC’s Quarterly and Annual Statement Instructions.
Arizona, Nevada, Oklahoma, Kansas, and Virginia all passed legislation governing the operation of and insurance requirements for peer-to-peer car-sharing programs. The laws establish liability and insurance requirements for these programs, define underwriting requirements for insurers, and establish general guidelines regarding the operation of peer-to-peer car-sharing programs, among other provisions.
Louisiana Gov. John Bel Edwards signed Louisiana Senate Bill 42, requiring notices of casualty policy reinstatements to go to all relevant parties. Insurers reinstating an insurance policy providing casualty coverage after they cancel it are now required to issue notice of this reinstatement to every policyholder or person who received the notice of cancellation. The law takes effect on January 1, 2022.
North Dakota Senate Bill 2077 imposes a monetary penalty on insurance companies that fail to report data relating to premiums to the state insurance commissioner. An insurance company that fails to report fire, homeowner’s multiple peril, or commercial multiple peril insurance premium collections, among others, is subject to a penalty of $100 per day. Additionally, the state insurance commissioner may revoke or suspend the certificate of authority of an insurance company that does not file the premium collection form.
Maine Gov. Janet Mills signed Legislative Document 51 (House Paper 17), establishing standards for data security and the investigation of cybersecurity attacks. The law authorizes insurers licensed in the state to develop and maintain a security program to protect consumer information and their own information systems. The program must protect against reasonably foreseeable threats to insurer’s information, protect against unauthorized access to this information, and periodically reevaluate a schedule to retain consumer information and provide a mechanism for its destruction when it is no longer needed.
The new law also requires insurers to notify the Maine Bureau of Insurance Superintendent in the event of a cybersecurity breach of their information systems, and requires insurers to conduct an investigation into the nature and scope of the cybersecurity event, identify nonpublic information that may have been involved in breach, and take necessary steps to restore the security of the information systems compromised.
Iowa Gov. Kim Reynolds signed Iowa House File 583, a law relating to private flood insurance that included certain repeal provisions. Flood insurance rates will not be subject to prior approval by the state commissioner. Rather, insurer must attest that flood insurance rates are based on actuarial data, standards, and guidelines that are not excessive or inadequate.
New Jersey Gov. Phil Murphy signed Assembly Bill 21. The law legalizes possession and personal use of marijuana and requires those interested in operating a cannabis business to obtain liability insurance coverage. It also requires cannabis delivery companies to maintain current hired and non-owned automobile liability insurance sufficient to insure all vehicles used for delivery in the amount of not less than $1 million per occurrence or accident.
Medical Malpractice Insurance
New Mexico Gov. Michelle Grisham signed House Bill 75, eliminating hospitals from the list of providers eligible to obtain medical malpractice insurance coverage under the Medical Malpractice Act (MMA). Under current state law, the MMA pays a significant portion of hospitals’ medical malpractice liabilities through the “Patient’s Compensation Fund” but limits the number of times a provider can use the fund to three occurrences of malpractice per year. The law eliminates hospitals from the list of eligible providers because of numerous instances in which the New Mexico Office of the Superintendent permitted hospitals to use the fund for an unlimited number of malpractice occurrences each year.
Medical Professional Liability
Former New York Gov. Andrew Cuomo signed A03397 repealing Article 30-D of the Public Health Law (the Emergency or Disaster Treatment Protection Act). The article immunized nursing homes and other health care facilities from civil liability for negligent acts or omissions committed during the COVID-19 pandemic. COVID-19-related claims against health care providers will now be litigated as typical malpractice cases.
Virginia Gov. Ralph Northam signed Senate Bill 1241, relating to the disclosure of insurance policy limits with personal injury claims. The law provides that, in a civil action for personal injuries sustained from a motor vehicle accident, an insurance company must disclose the policy limits of an alleged tortfeasor who has been charged with an offense of driving under the influence within 30 days of a request for such disclosure.
Virginia Gov. Ralph Northam signed H 1824. The bill adds to the required disclosure statement directing a buyer to beware and exercise necessary due diligence in determining the condition of real property or any improvements advising the buyer to obtain a mold assessment conducted by a business that follows the guidelines provided by the U.S. Environmental Protection Agency.
Texas Gov. Greg Abbott signed SB 1367 exempting specialty business insurance products and most transactions negotiated by larger businesses from certain regulatory filing and review requirements. The Texas Legislature intends to encourage new market entrants and make it easier for existing competitors to develop new market entrants.
Risk Retention Groups
Oklahoma Gov. Kevin Stitt signed Senate Bill 1035, a law updating definitions for risk retention groups chartered in Oklahoma. The law requires all risk retention groups chartered in the state to file with the Oklahoma Insurance Department and the National Association of Insurance Commissioners (NAIC). Previously, chartered risk retention groups were only required to write liability insurance pursuant to the insurance laws of Oklahoma.
South Carolina Gov. Henry McMaster signed S 435 amending provisions related to travel insurance. The law authorizes the director of the Department of Insurance to issue a Limited Lines Travel Insurance Producer License, asses a premium tax on travel insurance premiums, and establishes certain requirements for travel protection plans, among other provisions. Gov. Brian Kemp signed the similar Georgia House Bill 205, a law amending Georgia State Code to provide a framework for regulating the offering or issuance of travel insurance.
Massachusetts H 90 provides for a program for improvements to the Massachusetts Unemployment Insurance Trust Fund and allocates $7 billion in funds toward relief to employers in the state. This sum is to be used to reduce the amount of the advance from the federal government or repay these federal advances made to the state for fiscal years 2020 to 2025.