Regulatory Roundup: Connecticut Auto Fraud, Arizona Moves CE to SBS, Washington Annuity Training

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. 

Connecticut issues auto-related consumer fraud alerts

Inflation has left consumers in a bind, making insurance less affordable and creating an atmosphere where fraud and chicanery can thrive.

Connecticut Insurance Department (CID) officials issued an alert to consumers in December 2023 to make people aware of the proliferation of counterfeit insurance cards.

“Due to financial challenges and the state’s mandatory automobile insurance requirement, some drivers are turning to fake insurance identification cards to show insurance coverage for their vehicles,” the alert said. 

Aside from the inherent risk of being held personally responsible for the financial repercussions of a car crash, the department emphasizes that police who encounter fake insurance cards can easily verify them, exposing users to fraud charges. 

However, the CID also acknowledged that some people who have fraudulent insurance cards purchased the coverage in good faith from sheisters posing as insurance agents. These criminals pretend to offer very inexpensive coverage and often issue cards in order to continue billing their unsuspecting customers (just one of many types of insurance fraud to look out for). To prevent this, CID officials advise anyone purchasing auto insurance to verify their agent’s insurance license number through the National Association of Insurance Commissioners (NAIC) resources.

The state also noted Kia and Hyundai owners need to take extra precautions to protect themselves from the ongoing threat of theft. After a viral TikTok series made the public aware of security gaps in certain Kia and Hyundai models, auto thefts of these models skyrocketed. 

“The recent surge in auto thefts demands a united effort to protect the safety and security of Connecticut residents. We strongly urge all vehicle owners to adhere to the recommended security measures and remain vigilant in safeguarding their valuable assets,” said CID Commissioner Andrew N. Mais in the state’s news release.

Arizona transitions CE services to SBS 

Effective Jan. 17, 2024, Arizona transitioned its continuing education services to the NAIC’s State Based Systems (SBS). 

The continued pilot of SBS CE management is one of the biggest initiatives of the NAIC for the next year. In addition to receiving services through a reliable, known entity, this arrangement will also allow producers to print their CE transcripts and check their credits – for free – prior to license renewal, democratizing producers’ data and making it easier for everyone in the industry to maintain compliant business practices.

And you should know by now how we at AgentSync feel about that. ???? 

The alert to the industry includes instructions for producers and CE providers, including how course providers can engage with the SBS tools, so feel free to download the PDF and get started if that applies to you.

Washington law extends CE and training requirements to nonresident producers

Washington state legislators adopted new annuity legislation that aligns annuity sales with a best interest as opposed to suitability standard of care (if you need to brush up on the difference, check out our professional standards primer).

If you’ve been keeping up with the rolling adoptions of the NAIC’s Annuity Suitability & Best Interest Standard, this isn’t a surprise at all. But what is a tad unusual is that the state is applying CE and carrier training requirements to both resident and nonresident producers.

As you may recall from our other coverage of CE, it’s very unusual for producers to have to complete CE requirements beyond those of their own state – states generally are reciprocal for CE and resident licensing. Yet, by July 1, 2024, residents and nonresidents selling annuities in Washington will need to get right with the state’s best interest CE requirements.

Insurance carriers that traffic annuities products will also be held responsible for ensuring their appointed producers are current on these requirements (including producers who are appointed vicariously through their agency affiliation). 

According to the Washington Office of the Insurance Commissioner’s notice:

“Insurers are required to verify the following:

• Verify the Producer has completed annuity suitability training with best interest standards prior to allowing producer to sell.
• Insurer can obtain training course completion certificates, reports provided by Commissioner-sponsored database systems or vendors
• Or can also obtain reports from a reasonably reliable commercial vendor with a reporting arrangement with approved insurance CE providers.”

Of course, if a Washington nonresident holds a resident license in a state that’s implemented the NAIC’s Annuity Suitability & Best Interest Standard, then they may already have taken a course that meets the statutory requirements. But it’s worth noting that producers, variable lines brokers, and investment advisors who’re working in the annuity space will do well to tread lightly on compliance moving forward. 

Other state regulatory changes

Colorado Division of Insurance officials released information on a program, effective Jan. 1, 2024, to provide more affordable epinephrine autoinjectors to consumers based on new state laws.

Kansas Commissioner Vicki Schmidt issued guidance on the state’s reduced surplus lines tax. Any E&S policy and endorsements sold prior to Jan. 1, 2024, the state will tax at the old 6 percent rate, even upon renewal. New E&S business will owe taxes at the new 3 percent rate.

Louisiana officials clarified that, regardless of property location, a tax of 4.85 percent on the gross premium is due to the state for all surplus and excess lines policies.

Maryland is hiring, and their newsletter links to a solid list of positions. Feel free to pass it along – take it from us, the insurance industry is great for careers!

Nebraska has added surplus lines broker mapping to NIPR. The state is seeking to enforce a rule that nonresident surplus lines brokers seeking a Nebraska E&S license maintain a license in their resident states. Mapping will enable easier reciprocity for licensed surplus lines brokers and will ensure regulation.

New Mexico is in the early stages of changing adjuster and producer licensing rules and continuing education requirements, which they opened with a virtual roundtable before they moved to the more formal processes of rulemaking. The state also notified pharmacy benefits managers (PBMs) they should file license and renewal applications via the state’s company licensing procedures and not through the NAIC’s System for Electronic Rates and Form Filing (SERFF). PBM compliance documentation will still go through SERFF, however. 

North Carolina Department of Insurance offices moved to 3200 Beechleaf Ct, Raleigh, NC 27604, so, if you have business to conduct in person or if, goodness gracious, you have physical mail to send, make sure to update your contact card.

North Dakota announced the state’s carrier appointment renewal dates, with invoices posted to NIPR and open March 1 to April 30, 2024. The state’s reminder included an ominous statement that there’s no grace period: All appointments unpaid by April 30 will be terminated.

Oklahoma added a link to the DOI page for state-approved exam study materials and vendors for licensing exams.

Utah Insurance Department officials alerted industry participants that the state’s update to its Suitability in Annuity Transactions regulations went into effect Dec. 8, 2023. 

Washington Insurance Commissioner Mike Kreidler issued a technical assistance advisory to help health insurers understand how to comply with the next step in the state’s modernization standards for prior authorizations.

While these points of interest aren’t comprehensive, our knowledge of insurance producer and variable lines broker 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.