Regulatory Roundup: Alabama DOI Grapples with P&C Coverage for Medical Cannabis, Michigan Sets Aside Criminal Convictions, Washington’s Kreidler Won’t Seek Re-Election

State by state variations of laws, compliance protocols, industry transparency, and general regulatory culture 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 sampler 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. 

Michigan Clean Slate law sets aside convictions, expunges records

In 2020, the Michigan governor signed the “Clean Slate” package into law. This group of bills created more paths for people who have past convictions to apply to have their convictions set aside. This means the conviction is dismissed, as are penalties, disabilities, and any ongoing legal consequences. The record of the conviction might not be expunged, but it will be reported differently. A background check may not return the criminal record, or, if it does, will report it as dismissed.

The Clean Slate package also gives parameters for certain misdemeanors and felonies that the state may automatically set aside, meaning someone with a prior conviction may have their record dismissed, or made irrelevant without their knowledge. (And yes, there are a lot of tricky implications for required self-disclosures on background checks.)

The laws went into effect in 2021, but the state had a two-year buffer to give the state police database time to update its protocols. So, effective April 11, 2023, the state is now notifying other government agencies of records that should be set aside.

The DOI has also added new convictions to its list of convictions that the state commissioner considers evidence of “a lack of good moral character.” Also outlined in the administrative code are provisions for how insurance applicants can rebut this mark against them by arguing that they have been rehabilitated or that their conviction isn’t evidence of poor character. (If this topic interests you, check out ways producers can lose their licenses, and how a 1033 waiver can help someone restore their ability to work in insurance.) 

Washington Commissioner Kreidler not seeking re-election

Washington Insurance Commissioner Mike Kreidler announced he won’t seek re-election. Commissioner Kreidler was first elected to the post in 2000, and is the current longest-serving commissioner. 

Kreidler was most recently re-elected in the 2020 election cycle. He’ll retire after his successor is elected in 2024. 

“Serving alongside you as Insurance Commissioner for Washington state has been, and continues to be, the greatest honor of my life,” Kreidler said in an email to OCI staff on May 1, 2023. “I’ve always said it was the best job I’ve ever had, and I still feel that way today.

“The list of issues we’ve tackled could go on and on, but at the end of the day, I think of the individual people we help – the thousands of families we’ve advocated for, day after day. That, above all else, is what makes me the most proud of this agency and of all of you.”

Kreidler has been elected to his post six times, and has been a pioneer of insurance regulation. 

For some perspective from Kreidler’s time in the industry, read the Commissioners’ Corner post he wrote for the AgentSync blog.

Alabama strengthens homes, considers how to embrace medical marijuana

Alabama celebrates FORTIFIED program

As the U.S. transitioned out of the winter disaster season and into the summer one, the Alabama Department of Insurance (DOI) celebrated a milestone state officials hope will reduce the impact and recovery time after storms and other natural disasters.

The state and the Insurance Institute for Business & Home Safety announced 50,000 Alabama homes have completed FORTIFIED designations. The FORTIFIED program uses voluntary construction and roofing methods that go beyond city or state requirements to make homes and businesses more resilient. 

A news release from the Alabama DOI said 80 percent of FORTIFIED structures are in the state, with more states adopting home fortification and damage prevention standards.

“The work of IBHS and Strengthen Alabama Homes is making our state a safer, more prosperous place to live and work,” Alabama Insurance Commissioner Mark Fowler said. “FORTIFIED homes not only provide families peace of mind that they’ll be safe from a storm, but they also provide a foundation for a faster recovery after the storm passes. By fortifying homes, we fortify the local economy and provide opportunities for Alabama and its citizens to thrive.”

Alabama considers how to insure medical marijuana

Alabama legalized medical marijuana in the state in 2021, with legal operations registering with the state at the end of 2022. With a weed market that is months old, Commissioner Fowler said there’s not enough historical data to properly regulate rate filings for insurers that wish to offer insurance policies for these businesses.

“At this date, the Alabama Department of Insurance has had difficulty determining whether such ‘liability and casualty insurance’ in the medical cannabis area is available in the Alabama market,” said the insurance bulletin. “The Department, however, is receptive to the creation of an insurance market that will aid in the implementation of the Darren Wesley ‘Ato’ Hall Compassion Act.”

The insurance bulletin asks that interested property and casualty (P&C) insurers submit rate filings with the department as they would a typical filing. The department will stick with preliminary filing and use rates for three years, or until the state’s actuaries can properly forecast rates.

Other state changes

Kansas’s state legislature enacted a bill that reduces the surplus lines premium tax in that state from 6 percent to 3 percent, effective in 2024, sets a $30 cap on the resident insurance agent license application fee, sets a $50 cap on the biennial renewal licensing fee, and sets an annual deadline of Dec. 1 for the insurance commissioner to announce the next year’s fees. 

Georgia announced to the industry that, under the direction of the Commissioner of Insurance and Safety Fire John F. King, the state’s insurance office is modernizing its education processes. They’re hoping to end paper filings and mailed-in application fees, as well as ensuring all stakeholders have current, accurate data. (We’re pretty jacked about that – we stan high operational standards.)

South Carolina announced a change in the state’s approved exam provider. On May 1, 2023, Pearson Vue became the exam vendor for the South Carolina Department of Insurance.

Maryland proposed an amendment to its insurance continuing education requirements that would require any property and casualty producer who sells homeowners insurance or commercial property insurance to take two hours of flood training as part of their continuing education requirements.

Delaware announced a state review of health care insurer data shows state insurers are making progress toward meeting the Department of Insurance goals for health care spending. The DOI mandates carriers in that state use at least 8.5 percent of their total spending toward primary care programs and limit price growth for non-professional service increases to 5.5 percent. 

Florida hosted a roundtable on April 25, 2023, including legislators, administrators, pharmacists, and seniors to discuss pharmacy benefit managers (PBMs). The roundtable discussed legislation that Florida Sen. Jason Brodeur and Florida Rep. Linda Chaney have proposed to the state legislature aimed at providing more transparency of PBMs, and ensuring PBMs don’t limit choices and accessibility for consumers.

Colorado has adopted the final drafts of regulations that standardize Colorado Option benefit plans and provide a methodology for insurers to calculate their mandatory premium reductions under the Colorado Option. Both regulations are effective June 15, 2023. The state has also ordered Medicare Supplement insurers to guarantee issue policies for consumers who are losing Medicaid coverage with the end of the COVID-19 public health emergency order.

Oklahoma announced all insurers that are members of the Oklahoma Market Assistance Plan (OK-MAP) have to pay a $150 assessment, which the state will send the first week of May and which is due Sept. 1, 2023. To be clear, all P&C insurers that write homeowners’ or liability insurance in the state are members of this program, which helps homeowners find coverage in lieu of a state insurer of last resort.

South Dakota is considering changes to the state’s regulations of Medicare Supplement plans that would adjust the acceptable limits for deductibles, copays, and coinsurance upward to address inflation.

Pennsylvania’s Acting Insurance Commissioner Michael Humphreys proposed to add commercial cyber insurance to the state’s export list of insurance coverages. Assuming the proposal goes into effect, surplus lines agents in Pennsylvania can then place commercial cyber insurance businesses in the nonadmitted market without an applicant first having to obtain declinations from the admitted market.

New York‘s Department of Financial Services has proposed an amendment to its cybersecurity requirements for financial services companies (including insurance businesses). From defining the scope of annual security audits to outlining what protocols for third-party users an entity must put in place, the new regulation adds to carriers’ and agencies’ existing security requirements.

West Virginia’s biennial adjuster renewal fees will be $50 for renewals on or after July 31, 2023.
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; head over to the Compliance Library and wrastle up some state-by-state regulation and more jurisdictional updates.