Regulatory Roundup: Wisconsin License Revocations, Florida Fights ESG Standards, Delaware Announces 1332 Assessments

State by state variations of laws, compliance protocols, industry transparency, and general regulatory cultures can lend one the impression that keeping up with industry changes is a little bit like herding cats. So, what better way to wrangle some of the more localized insurance news than in a Regulatory Roundup?

On an ongoing basis, in no particular order or rank, we’re wrestling the various regulatory changes, compliance actions, and commissioner decisions into our roundup. As a disclaimer: There’s a lot going on at any given time in these here United States, so this isn’t a comprehensive picture of state-level action by any means. Think of it as, instead, a sample platter of regulation. 

Also important to note: If we’re recapping interpretations of legal decisions, this is some armchair insurance speculation and not at all legal advice. If you need legal advice, get a lawyer. 

Wisconsin’s OCI administrative actions largely boring and tax-related

California Insurance Commissioner Ricardo Lara issued a news release in early February 2023 detailing the exploits of Robert Meseer, who pleaded guilty in court to 55 felony counts of grand theft, insurance fraud, and forgery. Meseer took over a legitimate insurance business from an ill relative and, without an insurance license, issued fake insurance certificates to small business owners, stole premiums, and solicited new insurance business. 

Obviously, that’s an eye-popping insurance news bulletin. Perhaps less eye-popping are news releases like this out of Wisconsin, where 24 out of the 32 insurance agents whose licenses were denied or revoked were penalized because of delinquent state taxes. 

Sure, some of these resident and nonresident insurance producers were in trouble for failing to disclose past legal issues (hint: if that’s you, this 1033 waiver explainer is for you!). And some of them were in trouble for shenanigans (Improper annuity sales? Borrowing from clients? Stealing premiums? All a big “no!”). But the majority – 75 percent! – lost their licenses for boring things. Delinquent taxes? So very, very mundane. Not a cool story to tell at a cocktail party.

So, why would Agentsync write about it? Because, while AgentSync can’t make sure your producers and agents stay current on their tax liabilities, we can help in two ways. One, we can help you avoid other stupid boring license dings (like missed renewal deadlines). Two, we can help you stop agents who have lost their licenses from submitting new business and spare you the expense and risk of paying commissions for invalid business.

Don’t let stupid boring license violations steal your joy. Get AgentSync.

Florida CFO takes aim at ESG standards

Jimmy Patronis, the Florida Chief Financial Officer, barred asset managers who direct Florida’s supplemental retirement funds from investing in securities linked to environmental, societal, and governance (ESG) standards.

The Florida Deferred Compensation Plan serves more than 93,000 state employees, and has assets equaling $5.1 billion. Patronis’s directive is in line with Gov. Ron DeSantis’s prohibitions on using state funds in ESG investments.

According to the news release, the Florida Department of Financial Services has engaged fund managers to specifically identify ESG funds to remove the state’s investments from. 

“The State of Florida has taken a hard stand that ESG is undemocratic, it constrains companies’ ability to pursue the best returns possible, and many of its values run counter to the values of everyday Floridians. As ESG has gone unchecked throughout the financial services sector for too many years, fiduciaries who believe ESG is bad for returns need to take steps in redirecting dollars away from these funds, and into ones that are more focused on the bottom line. We’ve been boiled like a frog for too long, and it’s time to hop out of the pot,” said Patronis.

ESG investing is a set of voluntary financial standards that evaluate a publicly traded company’s risk exposure in environmental, societal, or governmental behaviors. For instance, a company’s failure to mitigate its environmental pollution poses the risk of litigation or regulatory backlash. A corporate history of racial or gender-based discrimination, too, can pose a liability for investors. A company’s governance has to do with its internal controls, shareholder rights, and other corporate policies.

Investment funds that take a proactive approach to ESG standards may champion companies that are founded by women or racial minorities, or which lift up renewable energy companies or other businesses that innovate for sustainability. Companies that commit to transparency in governance may have more internal controls or have more transparency around pay and merit-based compensation. 

While Global ESG Disclosure Standards for Investment Products are voluntary, about 80 percent of property and casualty insurers submit a version of the National Association of Insurance Commissioners’ Climate Risk Disclosure Survey. Further, the Securities and Exchange Commission’s required climate risk disclosure will likely be finalized before May 2023, and has been widely seen as the first step of a broader ESG reporting requirement from the SEC.

Delaware 1332 reinsurance assessments on health insurance carriers

Delaware Commissioner of Insurance Trinidad Navarro issued a bulletin notifying health insurance carriers that offer plans – individual, group, or otherwise – in Delaware of this year’s assessment for the state’s reinsurance program.

Under the Affordable Care Act, Delaware has a 1332 waiver, which gives the state some wiggle room to try innovative strategies to extend consumer health care coverage. Since 2019, Delaware has used the waiver to establish a reinsurance program that collects assessments from the health insurance market of the state. The DOI uses those funds to reimburse carriers that offer individual market plans for a percentage of their annual claims.

The idea behind the Delaware Reinsurance Program is that it incentivizes more people – even those who don’t qualify for federal premium tax credits – to participate in the health insurance marketplace, spreading risk, and decreasing premiums for the market as a whole.

“All consumers in the individual market are expected to continue to benefit from increased stability due to an expectation that overall membership in the single risk pool would continue to increase due to lower premium rates,” said the bulletin.

Health insurance carriers’ assessment is 2.75 percent of its net total premium in Delaware.

The state also issued a bulletin encouraging carriers and pharmacy benefits managers to waive prior authorization requirements for brand-name drugs in an effort to open access for patients whose generic drugs are currently in short supply. 

Other state changes

Alabama Department of Insurance deployed staff to disaster relief centers in Prattville, Rockford, Selma, and Wetumpka to help those affected by the Jan. 12, 2023, tornadoes to file claims and understand their insurance coverage rights. The state also announced 65 homes have retrofitted their roofs to be more storm-resilient through a state fortification program, with another 100 scheduled for new roofs in Birmingham in 2023.

Connecticut Insurance Department Commissioner Andrew Mais named Jane Callanan as the department’s new general counsel.

Colorado Division of Insurance officials released the bulletin explaining the DOI’s methodology for how the state will calculate hospital and provider reimbursement guidelines in light of the Colorado Option’s mandate that premium rates reduce over the next few years. The state DOI has also adopted a regulation to define the scope of “small group” provisions the state recently enacted.

The District of Columbia has announced it will post carrier appointment renewals payable from March 3 to May 31, 2023, with the National Insurance Producer Registry. For more appointment renewal timelines, check out AgentSync’s blog on carrier appointment renewal and terminations deadlines.

Indiana has posted its retaliatory fees for nonresident licenses. For more on retaliatory fees, check out AgentSync’s other coverage.

Maryland Insurance Commissioner Kathleen Birrane has named Erica Bailey as the new chief hearings officer for the Maryland Insurance Administration. Bailey will preside over complex cases and oversee her peers as they work through a caseload that included 90 evidentiary hearings in 2022.

New Jersey is adding third-party administrator and third-party billing service licenses. They aren’t the kind that will require an exam or coursework, but presumably they will allow the state to better track the activity of TPAs and other third-party services that take on carrier duties.

Nevada has announced that, effective March 10, 2023, the DOI is removing re-application fees from resident and nonresident insurance licenses and nonresident adjuster licenses.

While these points of interest aren’t comprehensive, our knowledge of producer license and compliance maintenance is. See how AgentSync can help make you look smarter today.