Commissioner Lara invites public input on latest major step to expand insurance coverage in California

SACRAMENTO, Calif. — Insurance Commissioner Ricardo Lara invited public input on a proposal to increase the writing of insurance in parts of the state most affected by wildfires and other extreme weather catastrophes. The public notice outlines the Department’s approach to a new regulation incorporating the net costs of reinsurance in ratemaking and invites feedback at a public meeting on Thursday, December 5, at 10AM.

The proposed regulation is part of Commissioner Lara’s Sustainable Insurance Strategy aimed at stabilizing California’s property insurance market and expanding coverage options for homeowners, businesses, and other consumers. He previously announced on November 14 that the Department had submitted a related regulation on catastrophe modeling for final approval and remains on track for completing its regulatory reforms by the end of the year. These two regulatory efforts work together to increase the availability of homeowners and commercial insurance policies in wildfire distressed areas.

Reinsurance is a financial product that has existed since the 14th century, when merchants and traders sought ways to mitigate the risks of ocean voyages and often found they could cover only part of their risks through a single insurer. Today, reinsurance is a cost of doing business in states with increasing climate risks across the nation, enabling insurance companies to write more policies in areas of higher risk. In 2023, the first systematic review of climate risk strategies by Ceres and the California Department of Insurance revealed that reinsurance is the primary strategy most insurance companies use to continue to write and expand coverage in higher risk parts of California and across the country.

According to the Department’s public notice, “Because reinsurance costs can vary between companies, the Department proposes to create a standard Net Cost of Reinsurance that establishes a benchmark for all insurance companies. This is similar to how the Department reviews other allowable expenses in rate filings currently reflected in the efficiency standard. Companies that seek to utilize the NCOR would have to demonstrate an increased commitment of policies written in higher risk areas.”

The notice requests public input to inform the final drafting of regulatory text.

Source: California Department of Insurance

https://www.insurance.ca.gov/0400-news/0100-press-releases/2024/release059-2024.cfm

Helena, Mont.—Troy Downing, the Montana Commissioner of Securities and Insurance (CSI), is pleased to report that State Farm Mutual Automobile Insurance Co. (State Farm) has reviewed an additional 18,000 claims after being fined $4 million in a CSI administrative action for unfair claims settlement practices. These reviews resulted in an additional $5.2 million paid to Montanans impacted by State Farm’s improper settling of comparative negligence and loss of use claims.

“We applaud State Farm for diligently reviewing the claims and working with our agency to make good on the February 2024 consent agreement,” said Commissioner Downing. “We will continue to work together to ensure the money is rightfully being returned to Montana consumers.”

In February 2024, the CSI announced the settlement, in which State Farm agreed to pay a $2 million fine and to be subject to an additional suspended fine of $2 million, which will be discharged upon State Farm satisfactorily implementing corrective actions. (Click HERE to view the initial press release.)

“I am proud of the work of our agency, which continues to hold companies accountable on behalf of Montana consumers,” said Commissioner Downing.

Source: CSI

[CARSON CITY, NV] — The Nevada Division of Insurance (Division) is pleased to announce the approval and filing of Proposed Regulation R109-23- Annuity Suitability and Best Interest Standard. Adopted by Insurance Commissioner Scott Kipper on September 4, 2024, the regulation was subsequently approved by the Legislative Commission and filed with the Nevada Secretary of State on November 15, 2024. A copy of the regulation can be found on the Division’s website at https://doi.nv.gov/News-Notices/Regulations/

Proposed Regulation R109-23 introduces mandatory training for insurance producers who sell annuities, ensuring they possess comprehensive knowledge about annuity products and prioritize consumer interests. This includes a minimum of four hours of instruction on essential topics such as suitable sales practices, the financial exploitation of vulnerable adults, and clear disclosure requirements.

“With this regulation, we are reinforcing the Division’s commitment to consumer protection and industry accountability,” said Insurance Commissioner Scott Kipper. “By aligning Nevada’s standards with those of the majority of the country, we are ensuring consistency in the marketplace while prioritizing the needs of Nevadans.”

Historical Timeline of R109-23

The journey of R109-23 reflects the Division’s steadfast dedication to regulatory excellence. This regulation originated as R165-18, proposed on June 22, 2018. A workshop held on November 14, 2018, led to amendments submitted to the Legislative Counsel Bureau (LCB). However, no action was taken by LCB until September 9, 2020, when the regulation was withdrawn and refiled as R152-20.

During this time, the National Association of Insurance Commissioners (NAIC) updated its model regulation, prompting the Division to file revised language with the LCB on January 19, 2022. The LCB replied on November 1, 2023, when the regulation was renumbered as R109-23 and returned to the Division.

On December 18, 2023, the Division held a public hearing on R109-23, where stakeholders highlighted significant deviations from the NAIC model. The Division promptly amended the language and resubmitted it to LCB. Corrected language was received on May 13, 2024, and another hearing was conducted on July 11, 2024. During this session, the Division proposed non-substantive changes, which were accepted, and the Commissioner officially adopted the regulation.

The Legislative Commission reviewed and approved R109-23 by consent on November 15, 2024, marking the culmination of a rigorous and transparent regulatory process.

The regulation became effective upon approval and the Division is currently working with Nevada continuing education providers to launch their new education courses that meet the Best Interest education requirements. These courses are projected to become available December 13, 2024.

Enforcement and Resources

Insurance producers who obtained the lifeline of authority prior to November 15, 2024, and wish to sell annuities are required to complete the updated 4-hour training within six months. Producers who previously completed an annuity training course can complete either of two new courses; a 4-hour course, or an additional 1-hour course that covers the Best Interest Standard.

Producers who obtained the lifeline of authority on or after November 15, 2024, must complete the updated 4-hour training before engaging in the sale of annuities.

The training requirements of this regulation can be satisfied by successfully completing the training requirements of another state that shares substantial similarities to the provisions of this regulation.

Insurers are tasked with verifying producer compliance and maintaining robust supervisory systems, including annual reporting to senior management. This measure strengthens accountability and supports the Division’s mission to safeguard Nevada consumers.

Source: Nevada Division of Insurance

https://doi.nv.gov/News_Notices/Press_Releases/DECEMBER_6,_2024_-_Nevada_Division_of_Insurance_Announces_Approval_Filing_of_Proposed_Regulation_R109-23-_Annuity_Suitability/

(LANSING, MICH) The Michigan Department of Insurance and Financial Services (DIFS) is urging residents to review their auto, home, and renters’ insurance policies to ensure they fully understand their coverage and have a plan to pay policy deductibles in the event of an emergency. Additionally, taking proactive steps to prevent winter-related damage can help reduce repair costs and minimize disruptions when severe weather hits.

“Winter weather can bring heavy snow, high winds, and freezing temperatures, so taking precautions to reduce property damage should be part of everyone’s winter preparedness checklist,” said DIFS Director Anita Fox. “Being prepared also means making sure you have the insurance coverage you need. Before a storm hits, review your insurance policies and contact your agent or insurance company with any coverage questions. For additional help, DIFS is available at 877-999-6442, Monday through Friday, 8 a.m. to 5 p.m.”

Winter-related damage can lead to expensive repairs, sometimes costing up to thousands of dollars. Knowing how your insurance policies apply and what they cover is key to a smooth recovery if you experience a loss. Here are a few tips to keep in mind this winter:

Tips for Automobile Owners:

Winter driving comes with additional risks, so it is important to check your auto insurance policy to ensure that you have the coverage you need. Coverages you may consider purchasing or confirming you currently have include:

Collision Coverage provides coverage for damage to your vehicle while driving, should your vehicle collide with another vehicle or object, like a tree or utility pole, from loss of traction due to ice and snow.

Comprehensive Coverage provides coverage for non-collision incidents where damage is still sustained. Examples include damage from falling tree limbs, hitting a deer, hail, or vandalism.

Property Protection is one of the three mandatory coverages required to drive legally in Michigan. It provides coverage for damage unintentionally caused to another person’s property, such as sliding off the road or damaging someone’s mailbox.

Tips for Homeowners:

Homeowners insurance policies usually cover damages resulting from sudden events like burst pipes, ice dams, wind damage, or a building collapse caused by the weight of ice or snow. However, coverage for power outages may only apply if the outage results from a covered event, such as wind or snow damage. Having a plan to pay policy deductibles in the event of an emergency allows you to take advantage of your coverage without affecting your finances.

Homeowners should review their policies and consider these steps to help prevent winter damage:

Keep your home heated to at least 65 degrees to prevent frozen pipes. If you’re travelling, have someone check your home to catch any burst pipes as soon as possible.

Keep gutters clean to prevent ice dams, which occur when melting ice refreezes under roof shingles.

Remove any dead or rotting trees to prevent branch breakage under the weight of snow or ice.

Source: Department of Insurance and Financial Services

https://www.michigan.gov/difs/news-and-outreach/press-releases/2024/12/03/difs-urges-michiganders-to-check-insurance-policies-before-winter-storm-season

Today Superintendent of Financial Services Adrienne A. Harris issued for public comment a proposed circular letter addressing the use of artificial intelligence by licensed insurers.

“Technological advances that allow for greater efficiency in underwriting and pricing should never come at the expense of consumer protection,” said Superintendent Harris. “DFS has a responsibility to ensure that the use of AI in insurance will be conducted in a way that does not replicate or expand existing systemic biases that have historically led to unlawful or unfair discrimination.” 

The circular letter outlines DFS’s expectations for how insurers develop and manage the integration of external consumer data and information sources (“ECDIS”), artificial intelligence systems (“AIS”), and other predictive models to mitigate potential harm to consumers. Insurers are expected to: 

• analyze ECDIS and AIS for unfair and unlawful discrimination;
• demonstrate the actuarial validity of ECDIS and AIS;
• maintain a corporate governance framework that provides appropriate oversight of the insurer’s use of ECDIS and AIS; 
• and maintain appropriate transparency, risk management, and internal controls.

DFS recognizes that AIS and ECDIS can simplify underwriting and pricing and potentially make them more accurate. However, the self-learning behavior of AIS may also increase the risks of unfair or unlawful discrimination in violation of the Insurance Law, which may disproportionately impact vulnerable communities or otherwise undermine the New York insurance market.

Today’s announcement builds upon Governor Hochul’s first-ever statewide policy governing AI and commitment to making New York a leader in cutting-edge technology development and use.

DFS is soliciting comments from the industry and the public on today’s proposed circular letter until March 17, 2024.  A copy of the AI circular letter is available on the DFS website.

Source: Department of Financial Services

https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202401171

Division releases annual Complaint and Recoveries Report.

DENVER – Today the Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), released its FY 2023-24 Annual Complaint and Recoveries Report(opens in new window). The report not only details the $26.4 million the DOI recovered for Coloradans, but also breaks down the number of complaints taken, while providing actual consumers’ stories on how the DOI helped with their insurance issues.

The DOI recovered $26,487,192 for Coloradans in the last fiscal year – FY 2023-24 (July 2023 – June 2024) – – increasing by $5 million or approximately 20% over last year. This included:

• $19,253,299 Total Recovered on Property & Casualty Insurance Complaints
• $10,601,710 recovered on homeowners insurance complaints
• $4,995,340 recovered on auto insurance complaints 
• $7,232,430 Total Recovered on Life & Health Insurance Complaints
• $4,080,002 recovered on health insurance complaints 
• $3,152,428 recovered on life insurance and annuity complaints

“Our Consumer Services Team works tirelessly to get the people of Colorado the support they need,” said Colorado Insurance Commissioner Michael Conway. “Improper delays, poor service and incorrectly denied claims cause unnecessary stress for consumers, and I encourage anyone who has questions about their insurance to contact our Consumer Services Team.”

The report illustrates some of the actual stories behind these recoveries. 

Apartment Complex Owners Received $2,657,730 in Hail Damage Claims – The owners of an apartment complex filed a complaint after an extensive delay. The DOI was able to get the insurance company to pay the settlement quickly, resulting in $2.6 million to repair the complex. 

Policy Holder Receives Additional $122,197 in Coverage – A consumer who had been impacted by the Marshall Fire filed a complaint as their insurance company had not remediated smoke damage to their home. The DOI’s involvement prompted the company to pay an additional $122,197 to properly clean the home.

$2,000,000 Delayed Life Insurance Payout Secured – The DOI’s investigation led to an immediate payout from the insurance company of $2,000,000, plus over $14,000 in interest for the delay.

Recoveries are important, but the DOI’s Consumer Services Team also works to answer people’s questions and help Coloradans better understand their insurance and help them file complaints when something goes wrong. The Team received nearly 7,000 complaints and inquiries last year, while fielding over 14,000 calls from consumers ranging from simple questions about claims and policies to more involved topics about insurance laws and regulations. The Team also helps consumers with questions about submitting formal complaints.

The Consumer Services Team is often the first point of contact for consumers looking for help. The Team investigates each individual complaint, but they also work to identify trends and systemic issues facing consumers, allowing them to dig deeper into the problems at hand. Top identified issues included:

Homeowner Education – About 35% of homeowners insurance related calls were about affordability, availability and non-renewals of homeowners insurance. The Team educates each consumer about factors that lead to premium increases and offers suggestions on ways to lower premiums. 

Out-of-Network Labs – The Team has seen an uptick in complaints about physicians sending blood draws and other lab work to out-of-network labs. The DOI is currently working with insurance companies to address this challenge and ensure members’ labs are being sent to in-network providers by their contracted care teams.

Long-Term Care Insurance – Our Team has received many questions about Long-Term Care (LTC) and has worked to educate consumers in interpreting  their policies and determining payouts.

Source: Colorado Division of Insurance

https://doi.colorado.gov/news-releases-consumer-advisories/report-colorado-division-of-insurance-puts-264-million-back-in

The Oregon Division of Financial Regulation (DFR), through its consumer advocates, recovered nearly $1.6 million for Oregonians in the third quarter of 2024.

DFR’s consumer advocates field calls every day from concerned and confused Oregonians over insurance and financial issues from institutions that are regulated by the division. Advocates have extensive industry knowledge and they analyze complex issues.

In the third quarter of this year, advocates have helped recover $1,599,299. The first two quarters of 2024 saw $5,397,613 in recoveries, bringing the year-to-date total to nearly $7 million.

“This is money that goes directly back into the pockets of Oregonians,” said Andrew R. Stolfi, Oregon insurance commissioner and director of the Oregon Department of Consumer and Business Services. “Consumers don’t have to work alone in trying to fix an error by an insurance company or financial institution. Our consumer advocates are here to help.”

Here are a few examples of work DFR advocates did during the third quarter:

• A consumer filed a complaint as they were being charged for a hernia repaired while they were under anesthesia for another surgery. Upon receipt of the complaint, it was found that during the provider appeal, an agent accidentally denied the claim in error as the consumer’s responsibility, resulting in an amount due for the consumer. The claim was then denied correctly as “provider responsibility” for not getting the appropriate authorization for a hernia that would heal on its own. This kept the consumer from being balance billed for $15,830.38.

• A consumer purchased travel insurance and suffered a medical event during the trip. A claim was filed, and the consumer provided the medical bills to the company and was reimbursed $453.80, which was the maximum coverage limit. The consumer then submitted additional bills that went above the maximum coverage limit, but the insurer did not communicate either acceptance or denial for about 11 months. The consumer submitted a complaint and the insurer acknowledged that there had been delays in communication, but there would be no further payments made as the maximum coverage limit was previously met. After a division consumer advocate had further discussion with the insurer, the company agreed to issue an additional $173.80 to satisfy the consumer’s expenses

• A consumer submitted a duplicate payment through a money transmitter, and the company returned the duplicate payment to that money transmitter. However, the consumer did not receive the payment from the money transmitter. After the division’s involvement, the consumer was refunded $1,068.65.

“Our consumer advocates are highly skilled professionals dedicated to solving consumer challenges,” said DFR Administrator TK Keen. “Their expertise and commitment ensure that consumers get the help they need, resulting in meaningful recoveries throughout the state.”

Anyone who may need a consumer advocate can call 1-888-877-4894 (toll-free) or email dfr.insurancehelp@dcbs.oregon.gov for insurance questions and dfr.financialserviceshelp@dcbs.oregon.gov for financial services questions.

Source: Division of Financial Regulation 

https://dfr.oregon.gov/news/news2024/Pages/20241126-dfr-recovers-millions-for-oregonians.aspx

Phoenix, AZ – Arizona Department of Insurance and Financial Institutions (DIFI) Director Barbara D. Richardson has established the Resiliency and Mitigation Council (Council) to investigate the availability and affordability of personal homeowners insurance in forested areas and wildland-urban interface (WUI) areas of Arizona. 

The Department is aware of the difficulties that Arizona homeowners in these areas face in finding coverage for their homes, and that they are increasingly turning to local, state, and national leaders to address the issue. Working through the Council, DIFI’s goal is to draft a report of the Council’s findings by the end of next year to equip state policymakers with the information they need to implement solutions, including risk mitigation strategies, to address the availability and affordability of homeowners insurance in wildfire-prone areas of the state. 

While the Council’s efforts will focus on mitigating the risk of losses in forested and WUI areas, its work will benefit all Arizona homeowners. By reducing the total amount of risk that is spread among all policyholders in the state, homeowners insurance premiums may begin to stabilize.  

The Council will be composed of the following representatives from cities, towns, and counties, firefighting authorities, the insurance industry, and federally recognized tribal nations within Arizona:

• Director Barbara D. Richardson, DIFI
• Director Thomas A. Torres, Arizona Department of Forestry and Fire Management
• Tom Savage, League of Arizona Cities and Towns
• Terri Edwards, Independent Insurance Agents and Brokers of Arizona
• Chief Jake Rhoades, Arizona Fire Chiefs Association
• Chief Randy Chevalier, Arizona Fire District Association
• Carmine DeBonis, Jr., Pima County
• Jacob Emnett, County Supervisors Association of Arizona
• Laura Curtis, American Property and Casualty Insurance Association
• Michael Newman, Insurance Institute for Business and Home Safety
• Vacant, Inter Tribal Council of Arizona
• Vacant, Navajo Nation

“I am optimistic that the Council’s work will provide an important resource for policymakers at the state and local level to begin addressing the risk of wildfire across the state,” said Director Richardson. “We understand that high insurance premiums are a financial burden for Arizona homeowners and an unfortunate symptom of the heightened risk from wildfires. The ultimate goal is to save people’s homes and make our communities more resilient to fires.”

The Council’s inaugural meeting is scheduled for December 11th at 1:00 P.M., with both in-person and virtual attendance options. Interested parties and members of the public are encouraged to attend.

Source: Department of Insurance and Financial Institutions

https://difi.az.gov/announcementnews/arizona-department-insurance-and-financial-institutions-establishes-resiliency-and

September is considered the peak of hurricane activity, but it’s important to remember hurricane season runs through November.

The Texas Department of Insurance (TDI) urges consumers to stay prepared and monitor conditions along the Gulf Coast. Severe weather can develop quickly.

Take steps to protect your family and property by preparing before the next storm arrives.

Review your insurance policies and understand what’s covered.

Make a home inventory. A list of the property in your home can be useful if you ever need to make an insurance claim.

Make an emergency kit in case you need to evacuate. Include water, non-perishable food, a can opener and utensils, a battery-powered radio, flashlight, and extra batteries. Don’t forget to include supplies for your pets.

Plan where you’ll go, and how your family will communicate if separated.

Check your home for potential dangers like overhanging branches or unsecured lawn furniture. These could become projectiles during strong winds.

Don’t forget about your auto insurance. Minimum liability doesn’t pay for damage to your vehicle. To be protected from weather related damage such as falling tree limbs or flooding, you’ll need comprehensive coverage.

If you have questions about your insurance call TDI’s Help Line at 800-252-3439 or visit our website at www.tdi.texas.gov.

Source: Texas Department of Insurance 

https://www.tdi.texas.gov/news/2024/tdi09102024.html

Labor productivity in the nonfarm business sector of the US increased by 2.2% in the third quarter of 2024, a figure that was unchanged from the previous projections. A 1.2% increase in hours worked and a 3.5% increase in output were the primary reasons for this productivity increase. Productivity increased by 2.0% in the previous year. After a 1.1 percentage point revision, unit labor costs— determined by comparing hourly compensation to productivity—now show a 0.8% increase, while compensation increased by 3.1%. In Q3 2024, real hourly payments increased by 1.8% after accounting for inflation.

The output per hour worked, or labor productivity has increased at an annualized pace of 1.8% since late 2019, which is a bit higher than the 1.5% rise that occurred throughout the last business cycle (2007-2019). Productivity increased by just 0.9% in the manufacturing sector, while output decreased by 0.4% and hours worked decreased by 1.3%. In the manufacture of durable items, productivity increased by 0.7%, but in the manufacturing of nondurable goods, productivity decreased by 0.6%. Manufacturing labor costs were lower per unit, with a 1.7% overall rise mostly attributable to lower compensation revisions.

In the current business cycle, manufacturing worker productivity has increased at an annualized pace of only 0.2%, while production has not increased, and hours worked have slightly decreased. Although this growth is better than the 0.1% growth of the previous cycle, it is still less than the 2.1% long-term average.

There were more notable improvements in the non-financial corporate sector, which is a vital sector of the economy. In Q3 2024, output grew 4.2%, which led to a 3.4% improvement in productivity. These companies’ unit profits increased by 0.5% over the same timeframe.

These figures are based on revised output and compensation data as well as data from other sources, including the Bureau of Economic Analysis. The most significant changes were made to the manufacturing sector, namely to its growth rate for the first quarter of 2020.

In the future, the Q4 2024 productivity and costs report will be published on February 6, 2025.

Source: U.S. Bureau of Labor Statistics

https://www.bls.gov/news.release/prod2.nr0.htm