Regulatory Roundup: AI in Alaska, Delaware by the Numbers, and a Minnesota Fraudster

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. 

Alaska addresses risks of AI in insurance

The officials at the Alaska Division of Insurance (DOI) are facing down the looming AI dragon with a bulletin to carriers, reminding them that any artificial intelligence (AI) or algorithmic systems that make decisions about underwriting or claims must still follow current state law.

In the background, the state acknowledges the transformative potential of AI, saying “the DOI encourages the development and use of innovation and AI Systems that contribute to safe and stable insurance markets.” Yet, the Division is concerned AI-led practices will have their share of drawbacks.

“AI may facilitate the development of innovative products, improve consumer interface and service, simplify and automate processes, and promote efficiency and accuracy. However, AI, including AI Systems, can present unique risks to consumers, including the potential for inaccuracy, unfair discrimination, data vulnerability, and lack of transparency and explainability. Insurers should take actions to minimize these risks.”

Among the actions carriers should take, the DOI advises, is to review the NAIC’s Principles of Artificial Intelligence. 

The bulletin also includes a good list of state laws the Alaska DOI wants carriers to remember to not violate in their quest to automate. As a reminder, if you want to automate the sucky parts of producer management, we know of this amazing company that can help you do that without running afoul of state laws!

Delaware releases summary of 2023 by the numbers

The Delaware Department of Insurance released its department by-the-numbers report.

“Each year, our team gathers and reports data on our efforts to give residents a look at our daily work,” said Insurance Commissioner Trinidad Navarro. “And while the numbers themselves are impressive, within them are tens of thousands of stories. Stories of finding affordable coverage for the first time, stories of storms and fires, stories of injustice, investigation, and resolution, and above all, a story of change. Our state is changing, and our department is changing with it to ensure we continue to protect our consumers and offer them a robust, affordable, competitive insurance market.”

Some of the impressive numbers to take away from the state’s report:

• Delaware Health Insurance Marketplace moved from having a single insurer in 2022 to four carriers offering more than 50 plans in 2023.
• Consumer Services staff processed 4,228 complaints and inquiries
• Medicare beneficiaries saved $2.08 million with free department assistance
• Market Conduct staff completed 61 insurer “interrogatories” and 72 “Level 1” market analyses
• The move to new offices increased consumer accessibility while saving the department $200,000
• Delaware reached a total insurance licensees count of 253,438

Rubbernecking: A Minnesota fraud case that has it all ????

OK, this one may not be strictly insurance-related, but, since we became aware of it through the Minnesota Department of Commerce’s newsletter, we’re counting it.

A 70-year-old Minnesota woman was sentenced to prison and community service after getting wrapped up in romance scams. The woman and her co-conspirators used dating apps to convince lonely Americans to part with their pandemic-era state and federal benefits. Scammers would then convert the money into cryptocurrency and deposit it overseas in accounts in Egypt, South Africa, and other countries.

Aside from raising an eyebrow at the perpetrator’s age, the biggest plot twist here is that the woman began as a victim. She was scammed in 2016 by someone posing as a person she considered an actual potential romantic partner after her spouse had died. But, after diving from being scammed to being the scammer, she was committed. A report from the StarTribune said the Minnesota Commerce Fraud Bureau notified her they were investigating her suspicious bank activity in 2020. Far from slowing down the schemes, she alerted her fellow fraudsters and continued to cash checks and solicit money from unsuspecting victims into 2023.

She should have known, crime doesn’t pay. But you know what does? A career in insurance.

Other state regulatory changes

Alaska is accepting data from health insurers and stop loss insurers as part of its Annual Survey on Health Insurance.

Colorado Division of Insurance officials issued a draft of a bulletin to give insurance carriers a timeline for when they must properly credential the physicians in their health insurance provider networks. Credentialing is the process of ensuring the physicians and other care providers are fully qualified and up to the task of protecting and healing patients. The commissioner is also accepting comments on a draft bulletin for calculating fair hospital and provider reimbursement rates under the Colorado Option Standardized Health Benefit Plan.

Delaware has alerted the industry that, beginning Jan. 1, 2024, under state law, health insurance carriers must cover annual behavioral health well checks.

District of Columbia carriers should be aware the capital’s appointment renewal season is coming. Carriers must submit terminations by Feb. 24, 2024, and the appointment renewal invoice will be open from March 4 to May 31.

Georgia Insurance and Safety Fire Commissioner John King has issued an annual data call for health insurers that cover mental health or substance use disorders. Insurers will need to report data relevant to verifying mental health parity. Carriers have until May 8, 2024, to reach out to the state and initiate the reporting process, and all reporting will be completed by May 15. The state has also issued a bulletin clarifying the definitions of policy nonrenewals and the circumstances under which a P&C carrier can nonrenew or reduce coverage for residential property holders.

Guam appointment season is upon us. Carriers will need to terminate any producers they don’t want to renew by March 25, 2024, and will be able to pay the territory’s invoice April 1 through June 30.

Kansas surplus lines brokers will have less time to renew their licenses after March 1, 2024. The state is tightening the renewal period from 90 days to 45 days.

Maryland has proposed a change to state regulation of disability benefit claims to include provisions that mandate claims decisions are made by people who are impartial. New verbiage prohibits claims adjudicators from having any inducement or incentive to deny the claim. Carriers will also need to provide reasons for claims denials in writing.

Michigan updated laws for surplus licensing in the state, clarifying that an agency selling surplus lines must have at least one active surplus lines producer affiliated with the agency as a DRLP. For nonresident producers and agencies, they must hold nonresident P&C licenses in the state. The state also updated renewal fees to $100 plus a $5 transaction fee.

New Hampshire officials issued a bulletin to remind all property and casualty producers that anyone who gets a P&C producer license must take a state-approved flood course within the first year of receiving their license.

North Dakota company appointment deadlines are out – any producers carriers didn’t terminate by Feb. 16, 2024, will be on the appointment invoice list from the state, open March 1 to April 30. The state doesn’t have a grace period, so all invoices unpaid at that point will result in automatic termination of the appointed producers. A situation like this, where a producer’s appointment is automatically terminated, could be a nightmare for an unaware agency. It wouldn’t be if they have AgentSync!

Oklahoma Insurance Commissioner Glen Mulready announced the National Association of Insurance Commissioners (NAIC) reappointed him to be Chair for the American Indian and Alaska Native Liaison Committee for 2024. The state’s proud of the number of Oklahoma regulators with NAIC roles, as it should be.

Pennsylvania Insurance Commissioner Michael Humphreys announced in early February 2024 that, after a review, the state’s export list will remain as it was on July 15, 2023. The export list is a list of coverages insurance carriers don’t need to submit a “diligent search requirement” for, because the state is aware these are gaps in the admitted market.

Tennessee has upgraded its Comprehensive Online Regulatory and Enforcement (CORE) licensing system, where the Tennessee Department of Commerce and Insurance (TDCI) manages state licensing. TDCI’s notice alerts licensees to log in or re-enroll in the CORE system to link your licenses or permits.

Wisconsin Commissioner Nathan Houdek marked the beginning of February as Flood Insurance Awareness Week, encouraging renters and homeowners to sign up while they aren’t underwater. The state also released its list of administrative actions, and, as per usual, the vast majority of people who lost their Wisconsin licenses did so thanks to delinquent and unpaid taxes. Pay your taxes, people.
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.