(Sacramento, CA – Insurance News 360) – On June 28, the California Department of Insurance announced that four bills sponsored by Insurance Commissioner Dave Jones had passed the state’s Senate Insurance Committee.

AB 1875 clarifies issues regarding extended replacement coverage (ERC) for wildfire survivors. ERC is offered by most insurance companies; it allows property owners to purchase coverage above replacement cost policy limits, typically based upon the insurance company’s estimated cost of replacement. ERC limits can vary dramatically, from 20 percent to 50, 75, even 100 percent. AB 1875 would require an insurer who does not provide at least 50 percent ERC to help direct the consumer to an insurer that does. This will give consumers reasonable options against underinsurance.

AB 2594 gives a consumer the right to sue their insurer after a declared disaster for up to  24 months, given that it now takes longer to rebuild after California’s significant fires in 2015 and 2017. Current law provides a policy holder at least two years to rebuild their property and reecieve replacement cost coverage they paid for, after losing a home or business due to fire. However, two years  is often insufficient time for families to rebuild the insured property. Some insurers have refused consumer claims, citing the lack of a lawsuit within the 12-month timeframe.

AB 2634 requires insurers to disclose upcoming increases to the cost of administrative expenses charges or cost of insurance charges in a flexible premium life insurance policy. The notification is meant to allow the consumer to make an informed decision about whether they should pay the increase or not.  Some increases from insurance companies have been as high as 67 percent of the previous amount the consumer had been paying. This bill improves the quantity and quality of information about how premium increases will affect premium increases on their life insurance policies. This bill would require an insurer to inform the policy owner of a flexible premium life insurance policy 90 days before the policy is subject to an increase in the cost of insurance charge or administrative expense charge and require the notice to include specified information about the increase.

Finally, AB 2802 strengthens consumer protections and addresses critical issues like

wildfire recovery, life insurance and child support. It creates the Insurance Payment Intercept Program to require insurance companies to participate in a program matching individuals behind on child support payments with their insurance claims to verify any insurance payments are used to pay past-due child support. It is expected to lead to payments in the tens of millions of dollars to parents across the state. In California alone, the total amount of unpaid child support is nearly $18 billion and over $116 billion in unpaid child support is due to families across the country.

“As Insurance Commissioner, my main priority is protecting California consumers while ensuring a healthy and vibrant insurance market,” said Commissioner Jones. “These bills strengthen laws to protect wildfire survivors and resolve other critical issues throughout the state. I thank Assemblymembers Wood, Friedman and Chau for authoring these consumer protection bills that will improve the lives of many Californians.”

Source: California Department of Insurance.

(Sacramento, CA – Insurance News 360) – On June 19, the Appellate Court of Illinois issued a decision that denied Lumbermens’ Mutual Casualty Company the ability to use California workers compensation funds to reimburse overhead and administrative expenses connected to the company’s liquidation. Insurance Commissioner Dave Jones and the California Insurance Guarantee Association (CIGA) had a stated position that the company could not use workers’ compensation deposits for this purpose.

“As regulator of largest insurance market in the country, I am committed to making sure California workers are protected and insurance companies keep their promises to policyholders,” said Insurance Commissioner Dave Jones. “The court’s ruling upholds my position that Lumbermens Mutual Casualty Company must use funds reserved for workers’ compensation claims on actual claims-and not other expenses. This ruling preserves financial protections for California’s workers and businesses that rely on workers’ compensation insurance.”

According to the insurance department, the California Insurance Code plainly states special deposit proceeds must be used solely for the payment of compensable workers’ compensation claims.General administrative expenses are not related to the payment of specific workers’ compensation claims, so it is improper for Lumbermens to require CIGA to pay general administrative expenses such as rent, postage, telephone, lighting, cleaning, heating and electricity with funds held in a special deposit.

The court agreed and determined the special California workers’ compensation deposit is security for the payment of workers’ compensation claims in California and must be used exclusively to protect policyholders from insolvent insurers by providing an asset from which to pay compensable workers’ compensation claims.

Source: California Department of Insurance.

(Salem, OR – Insurance News 360) – Oregon residents can look at the state’s  preliminary rate decisions for 2019 individual and small employer health insurance plans; official decisions on rates will come July 20.

The preliminary rate decisions affect small businesses and individuals who buy their own coverage rather than getting it through an employer.

Preliminary decisions have come for seven companies in the individual market; the  market, average rate changes range from a 9.6 percent decrease to a 10.6 percent increase. Under the preliminary decisions, Silver Standard Plan premiums for a 40-year-old in Portland would range from $414 to $486 a month.

“Although rates are still rising for many consumers, the Oregon Reinsurance Program is continuing to provide some stability and relief,” Insurance Commissioner Andrew Stolfi said. “Without this program, Oregonians who buy their own insurance would see much larger rate increases. Actions taken at the federal level have injected instability into the market and resulted in rate increases, and we are committed to protecting Oregonians’ access to affordable, comprehensive coverage.”

In the small group market, the division has reviewed each of company’s rate request and plans to approve the rates as filed. The average rate increases range from 4 percent decrease to a 9.4 percent increase. Under the preliminary decisions, Silver Standard Plan premiums for a 40-year-old in Portland would range from $295 to $387 a month.

See the chart at https://dfr.oregon.gov/healthrates/Documents/2019-pre-prop-rates.pdf for the full list of preliminary decisions.

These preliminary decisions will undergo continued review and discussion through public hearings being held in Salem and streamed online July 9-11. The public comment period also will remain open through Wednesday, July 11. There will be a dedicated public comment period during each public rate hearing. For a schedule of hearings and to submit comments online, visit www.oregonhealthrates.org .

Final decisions are expected to be announced Friday, July 20.

Source: Oregon Division of Financial Regulation.

(Oklahoma City, OK – Insurance News 360) – Oklahoma’s small business owners will now have more access to quality and affordable healthcare options. Insurance Commissioner John D. Doak is applauding the actions of the Trump Administration.

“Under Obamacare, small business owners in our state have struggled to find affordable health insurance choices for their employees and their employees’ families,” Doak said. “I believe now Oklahomans will have more variety and more access to plans which don’t require all the ‘essential benefits’ of the Affordable Care Act. This makes the plans more affordable.”

The U.S. Department of Labor finalized a rule on June 19 that allows more employers to form Association Health Plans (AHPs). AHPs are group health plans that employer groups and associations offer to provide health coverage for their members’ employees.

Under the new rule, employers can form AHPs by city, county, state, or multi-state metropolitan areas. Employers can continue to form nationwide AHPs for businesses in their specific industry. The new rule also allows small business owners without other employees, including sole proprietors and their families, to join AHPs.

“There have been numerous challenges created by Obamacare for Oklahomans trying to obtain healthcare,” Doak said. “This most recent ruling was a much-needed improvement to a broken system.”

These organizations will be regulated in the same way large employer policies are regulated. For example, AHPs cannot deny coverage or charge higher premiums to people with a pre-existing health condition or cancel coverage because an employee is ill.

“We are pleased that the Trump Administration is allowing state regulators to maintain consumer safeguards,” Doak said. “It’s important for us to be able to work to protect Oklahomans on a state level.”

Plans can be offered September 1.

Source: Oklahoma Department of Insurance.

(Oklahoma City, OK – Insurance News 360) – The Oklahoma Office of Management and Enterprise Services (OMES) has awarded a contract for the new Oklahoma Compulsory Insurance Verification System (OCIVS). The new system, hosted by MV Solutions, Inc., will be overseen by the Oklahoma Insurance Department (OID). Senate Bill 115 gave OID authority over the system in 2017.

“This will go a long way toward solving Oklahoma’s uninsured driver problem,” said Oklahoma Insurance Commissioner John D. Doak. “This brings us one step closer to creating a real-time, reliable database for law enforcement officers, court clerks, district attorneys and tag agents to verify auto insurance coverage. Those trying to drive without insurance are about to get a rude awakening.”

All  private passenger auto insurance companies in Oklahoma will be notified that they are required to participate in OCIVS using a web service allowing access to the insurer’s real-time book of business. The previous system allowed companies to upload data on a weekly or monthly basis, making it difficult for OCIVS users to access current policy information. Commissioner Doak will use every regulatory tool available to him to  create an efficient system and that insurance companies comply.

Sen. Ron Sharp, R-Shawnee, was the principal Senate author of SB 115, and Rep. Lewis Moore, R-Arcadia, was a co-author.

“Oklahoma has one of the highest rates of uninsured drivers in the nation,” said Sharp. “We have to change that. A better verification system can make a big difference. OID has the resources and regulatory authority to ensure compliance and manage the system efficiently.”

The new law authorizes the insurance commissioner to initiate an administrative proceeding against an insurance company that is not providing vehicle insurance policy information to the online verification system. It also allows for license plate numbers to be used for verification.

Source: Oklahoma Department of Insurance.

(Raleigh, NC – Insurance News 360) – North Carolina Insurance Commissioner Mike Causey announced on June 27 that  legal dispute with between the state’s  Department of insurance and the North Carolina Rate Bureau has ended. The dispute centered on a proposal for an 18.9 percent dwelling insurance rate increase. Commissioner Causey has negotiated an almost 14 percent lower rate for an overall statewide average increase of 4.8 percent.

“This settlement means consumers will save approximately $41 million a year compared to what they would have paid had the Rate Bureau’s request been approved,” said Commissioner Causey “The agreement also keeps insurance companies on firm financial footing, which is good for North Carolina’s economy,” the Commissioner added.

Dwelling policies are offered to non-owner-occupied residences of no more than four units, including rental properties, investment properties, and other properties that are not occupied full-time by the property owner.

Made up of insurance industry representatives, the NCRB is not a state agency. It filed for the proposed 18.9 percent rate increase Feb. 7. On March 12, Commissioner Causey issued a notice of hearing on the filing and set a hearing date for Aug. 20. The settlement means that the Aug. 20 hearing will no longer be necessary.

The new rates will take effect Feb. 1, 2019.

• Settlement by territories and corresponding maps

Source: North Carolina Department of Insurance.

(Raleigh, NC – Insurance News 360) – On June 27, North Carolina Insurance Commissioner Mike Causey announced that the state’s flourishing captive insurance program had an estimated $30 million impact on the state last year.

“North Carolina’s captive insurance law, while providing for appropriate regulation, allows companies to form and operate their own insurance companies without getting tangled up in unnecessary red tape,” Commissioner Causey said. “Other businesses and organizations may want to check out our business-friendly environment and form or relocate their own captive insurance company in North Carolina.”

Captive insurance is a form of self-insurance through which a business may form its own insurance company to manage its risks. Captive insurance allows businesses to obtain insurance coverage not readily available or too costly in the commercial market; it also reduces insurance costs, stabilizes pricing and customizes terms and conditions to meet the insured’s needs.

A study by the North Carolina Department of Insurnace revealed an estimate of economic impact aroun $30 million. This impact was generated by premium taxes paid to the state by licensed captive insurers as well as service provider and hospitality revenues generated by North Carolina businesses for services they provide to the captive insurance industry.

North Carolina’s captive insurance program has grown since 2013.

The 2017 impact of $30 million is significantly greater than the 2016 economic impact of $23 million, the 2015 economic impact of $15.3 million, and the 2014 economic impact of $2.5 million. That’s nearly a $71 million impact in the four years since the N.C. General Assembly established the captive insurance program.

Learn more about the N.C. captive insurance program at www.nccaptives.com.

Source: North Carolina Department of Insurance.

(New York, NY – Insurance News 360) – Euifax has signed consent orders with eight state banking commissioners which require the ompany to conduct risk assessment and implement board oversight of information security program audit and other functions.

Financial Services Superintendent Maria T. Vullo today announced on June 27 that Equifax Inc. will to take corrective actions after the company’s massive 2017 data breach. This is thanks to a  consent order with the New York State Department of Financial Services (DFS) and the commissioners of seven other state banking regulators.

The order requires Equifax to take corrective actions like developing a proper risk assessment program,and improving the Board’s oversight of information security information, audit, patch management, information technology operations, vendor management, and other functions. The company must submit  list of their remediation efforts, whether in planning, in proess or implemented; they must explain their prioritization and provide regular written reports showing progress of compliance with provisions of the  consent order.

“DFS continues to take aggressive action in holding Equifax Inc. accountable for the massive data breach that exposed the sensitive and private information of millions of Americans,” said Financial Services Superintendent Vullo. “The consent order announced today between Equifax and the commissioners of eight state banking departments demonstrates the necessity of continued state oversight of financial services companies, through measures such as examinations and actions such as DFS’s recently finalized credit reporting agency registration regulation. In an era of weakened federal government oversight, strong state regulation is essential in order to safeguard our markets, ensure strong consumer protections and hold regulated entities accountable for their actions. New York will continue to lead in supporting a robust state financial services regulatory regime. New York will also continue in its efforts to obtain relief for consumers who were harmed by the Equifax breach.”

In addition to DFS, the multi-state team of regulators was comprised of the Alabama State Banking Department, the California Department of Business Oversight, the Georgia Department of Banking and Finance, the Maine Bureau of Consumer Credit Protection, the Massachusetts Division of Banks, the North Carolina Office of Commissioner of Banks, and the Texas Department of Banking.

These corrective actions are included in the order:

Information Technology: The Equifax board must review and approve a written risk assessment that identifies foreseeable threats and vulnerabilities to the confidentiality of personally identifiable information; the likelihood of threats; the potential damage to the company’s business operations; and the safeguards and mitigating controls that address each threat and vulnerability.

Audit: The Equifax board or Audit Committee must improve the oversight of the audit function. Accordingly, the Audit Committee must oversee the establishment of a formal and documented internal audit program that is capable of effectively evaluating IT controls and that complies with the internal audit charter.

Board and Management Oversight: The company shall improve the oversight of the Information Security Program. Accordingly, the board or, if appropriately authorized, the Technology Committee of the board shall:

Approve a consolidated written Information Security Program and Information Security Policy and annually thereafter;

Review an annual report from management on the adequacy of the company’s Information Security Program;

Enhance the level of detail within the Technology Committee and board minutes, or respective meeting package, by documenting relevant internal management reports (i.e. approval of a formal, written information security risk assessment).

Review and approve IT and information security policies and ensure they are up-to-date and applicable;

Ensure that the company’s Security Incident Handling Procedure Guide includes up-to-date incident-related procedures and clarifies the roles and relationships of the groups involved in the incident response.

Vendor Management: The company must improve oversight and documentation of critical vendors and ensure that sufficient controls are developed to safeguard information.

Patch Management: The company must improve standards and controls for supporting the patch management function. An effective patch management program must be implemented to reduce the number of unpatched systems and instances of extended patching time frames.

Information Technology Operations: The company must enhance oversight of IT operations as it relates to disaster recovery and business continuity function.

A copy of the consent order can be found here.

 Source: New York Department of Financial Services.

(New York, NY – Insurance News 360) – Governor Andrew M. Cuomo announced that credit reporting companies are now required to register with the Department of Financial Services to comply with the state’s cybersecurity regulations.

To protect New York residents from data breaches at credit reporting agencies, a new regulation will require these agencies to register with the Department of Financial Services and to comply with annual reporting obligations. The  DFS Superintendent will have  the authority to deny, suspend and potentially revoke a consumer credit reporting agency’s authorization to do business with New York’s regulated financial institutions and consumers if the agency is not in compliance, if they are engaging in prohibited practices, like engaging in unfair, deceptive or predatory practices.

“As the federal government weakens consumer protections, New York is strengthening them with these new standards,” Governor Cuomo said. “Oversight of credit reporting agencies ensures that the personal private information of New Yorkers is less vulnerable to the threat of cyber-attacks, providing them with peace of mind about their financial future.”

The new regulation requires all consumer credit reporting agencies that reported on 1,000 or more New York consumers in the preceding year must register annually with DFS beginning on or before September 1, 2018, and by February 1 of each successive year for the calendar year thereafter. The registration form must include an agency’s officers and directors who will be responsible for compliance with the financial services, banking, and insurance laws, and regulations.

“The data breach at Equifax demonstrated the absolute necessity of strong state regulation, such as New York’s first-in-the-nation cybersecurity regulation, to safeguard New York’s markets, consumers and sensitive information from cyberattacks. DFS’s oversight of credit reporting agencies will help to ensure that the personal data of New York consumers is less vulnerable to cyberattacks in this digital world, in order to prevent further breaches of consumer financial information,” said Financial Services Superintendent Maria T. Vullo.

The DFS Superintendent may refuse to renew a consumer credit reporting agency’s registration if the Superintendent finds that the applicant or any member, principal, officer or director of the applicant, has, among other things:

Violated any insurance, financial service, or banking laws or violated any regulation, subpoena or order of the Superintendent or of another state’s insurance or banking commissioner or of any other state or federal agency with authority to regulate consumer credit reporting agencies, or has violated any law in the course of his or her dealings in such capacity;

Failed to comply with the requirements of the regulation, including but not limited to, section 201.07 concerning cybersecurity;

Used fraudulent, coercive or dishonest practices; or

Provided materially incorrect, materially misleading, materially incomplete or materially untrue information in the registration application.

Consumer reporting agencies are also subjected to examinations by DFS as often as the Superintendent determines is necessary, and prohibits agencies from the following, unless preempted by federal law:

Directly or indirectly employing any scheme, device or artifice to defraud or mislead a consumer;

Engaging in any unfair, deceptive or predatory act or practice toward any consumer;

Misrepresenting or omitting any material information in connection with the assembly, evaluation, or maintenance of a credit report for a New York consumer;

Engaging in any unfair, deceptive, or abusive act or practice in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act;

Failing to comply with the provisions of federal law relating to the accuracy of the information in any consumer report relating to a New York consumer;

Refusing to communicate with an authorized representative of a New York consumer who provides a written authorization signed by the consumer, with certain provisions;

Making any false statement or making any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any investigation conducted by the Superintendent or another governmental agency.

A copy of the final regulation can be found here

Source: New York Department of Financial Services.

(Trenton, NJ – Insurance News 360) – The Department of Banking and Insurance has released figures that show a drop of more than 10 percent in health insurance enrollment for the individual market in the first quarter of 2018.  Commissioner Marlene Caride connects the decline in enrollment in the state’s individual market to action in Washington aimed at dismantling the Affordable Care Act, and demonstrates the importance of the state’s work to stabilize the market and improve access to coverage for residents.

“Federal actions to undermine the Affordable Care Act, including the failure to fund Cost Sharing Reduction payments and the elimination of the individual mandate, created enormous uncertainty in the market and had a significant negative effect on health insurance enrollment in New Jersey,” said Commissioner Caride. “This is troubling because it means fewer New Jerseyans have access to care and the protections they were afforded under the landmark federal law. Under the leadership of Governor Murphy, New Jersey is working to stabilize the market, to reduce premiums and to increase enrollment in health coverage in the state. The Department is committed to its work to ensure that New Jersey residents have access to quality and affordable coverage.”

For the first time since 2014, the number of New Jersey residents enrolled in individual health plans in the first quarter of the calendar year, was down from the previous year. In the first uarter of 2018, approximately 328,761 residents were enrolled in Marketplace and off-Marketplace plans; this is down from 369,761 in the first uarter of 2017,  a 10.8 percent decline.

Two bills recently signed by Governor Murphy aim to continue an individual mandate in January 2019, and to allow creation of a reinsurance program, contingent upon approval of a 1332 state innovation waiver application to the federal government. This application would help stabilize the insurance market and lower anticipated premium increases
The first quarter 2018 report for the Individual Health Coverage Program may be found here:
www.state.nj.us/dobi/division_insurance/ihcseh/enroll/2018_1q_ihc_market.pdf

The first quarter 2018 report for the Small Employer Health Benefits Program may be found here:
www.state.nj.us/dobi/division_insurance/ihcseh/enroll/2018_1q_seh_totalplans.pdf

Source: New Jersey Department of Banking and Insurance.