Regulatory Roundup: Big Data, Health Care Billing Reforms, and Premium Thefts Lead Regulation Concerns

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. 

Premium thefts in California

A California county court sentenced former insurance professional Narek “Erik” Harutyunyan at the close of April. Harutyunyan used his business, First and Last Insurance Services in Camarillo, California, to collect commercial premium payments from clients and use them for his own funds as opposed to paying their insurance policies from 2016 to 2017.

“As a direct result of Harutyunyan misappropriating premium payments, one client’s commercial policy for a truck was not valid when it was involved in an accident, leaving the business owner with an uninsured loss of more than $6,398 and a third-party claim of $107,764,” said a news release from California Insurance Commissioner Ricardo Lara’s office.

While he was initially charged with two felony counts of grand theft, the Ventura County District Attorney reduced charges to misdemeanors because Harutyunyan paid $8,085 in restitution. In 2021, the California Department of Insurance revoked his personal insurance license as well as his business entity’s license.

In addition to the restitution and loss of license, Harutyunyan was ordered to pay $150 to the California restitution fund, barred from participating in an insurance business in the future, placed on a yearlong probation, and ordered to serve a day in jail.

Washington working on comprehensive health care billing consumer protections 

As part of the Consolidated Appropriations Act of 2021 (passed in December 2020), Congress enacted the No Surprises Act, which aimed to limit surprise bills for health insureds. 

If you’ve been in the American healthcare system for any length of time, you may be familiar with the common processes that led to the demand for legislation like the No Surprises Act. Sometimes surprise bills come from emergency care, and sometimes they come from standard healthcare procedures, but regardless, the process of surprise billing often looks something like:

1. Your doctor orders a routine or emergency procedure.
2. You get prior approval from your healthcare company and verify that all the things are covered by your policy – you’re no rube, you’re savvy, and you have your stuff together!
3. You go and do the thing – perhaps it’s something as “simple” as a blood draw. You are at an in-network facility, and you are using an in-network lab. However, unbeknownst to you, one of the technicians reading your blood work page is actually a contractor for a third party not covered by your insurance.
4. You get a bill three months later charging hundreds of dollars for out-of-network care. Surprise!
5. Maybe you dispute the bill, and maybe your insurer agrees. Regardless, your life-saving or quality-of-life sustaining standard care has turned into an endless hole of disputed payments and follow-on contracted providers.

Ultimately, the No Surprises Act seeks to remove consumers from being caught in the middle when these circumstances and disputes arise, in part by creating authorized dispute resolution centers that specifically work to resolve these situations.

Washington, however, already had legislation in place for their state to protect consumers from these circumstances with the Surprise/Balance Billing law. Go Washington!

At the end of March, Governor Jay Inslee signed HB 1688 2021-22, which brought Washington’s existing state protections into greater agreement with the federal government’s standards. Further, the state issued a consumer notice to explain what insureds should know about this evolving area of patient care and what they can expect moving forward. 

Connecticut and Big Data

Connecticut Insurance Commissioner Andrew Mais reminded all entities and people licensed by the Connecticut Insurance Department to fill out their data certification by Sept. 1, 2022.

The certification is meant to ensure compliance with anti-discrimination practices, and to help the industry use Big Data responsibly.

The commissioner noted that technology options such as artificial intelligence (AI), algorithms, and Big Data together all present enormous opportunities for the insurance industry to transform the way it does business. From better compliance to claims-paying to customer service, many aspects of Big Data can be an objective good in the industry. But by default or design, other aspects may discriminate against vulnerable populations.

The Connecticut data certification speaks to the nature of the data inputs used for “algorithms, predictive models, and analytic processes,” and warns industry professionals: “Insurers continue to be responsible and accountable for ensuring that the utilization of Big Data either internally or with vendors, is in compliance with Federal and State anti-discrimination laws.”

(If you want to be sure you’re working with a vendor who is ALL ABOUT that compliance, you should totally check out AgentSync.) 

In brief

• North Carolina released a bulletin reminding motor vehicle damage (MVD) appraisers of the procedures of a catastrophic event, including a notice that employers must provide their MVD appraisers with identifying badges for them to be allowed on scene to appraise claims. 
• Colorado closed its comment period regarding adoption of Best Interest Obligations and Supervision in Annuity Transactions (which would be in alignment with the NAIC’s model regulation, Suitability in Annuity Transactions) May 13, 2022. The state has also updated its emergency regulations to provide guidance on extending claims periods for certain disasters, prompted by the Marshall and Middle Fork Fires of 2021. 
• Delaware’s Commissioner of the Department of Insurance, Trinidad Navarro, issued a bulletin to casualty insurers writing private auto insurance business to inform them of a bill signed by the Delaware governor that is going into effect. The law requires insurers to reinstate policies that are paid within 30 days after the end of the policy period or cancellation date. The bill also contains processes for insureds to appeal non renewed or canceled policies.
• In Vermont, the governor announced Commissioner Mike Pieciak is leaving Vermont Department of Financial Regulation (DFR) effective May 16, 2022. Among Pieciak’s crowning achievements: pioneering regulations for online securities and cryptocurrencies, including the “multi-state $100 million settlement” this year resulting from the DFR’s probe of digital asset company BlockFi. In the interim, DFR Deputy Commissioner Kevin Gaffney will serve in the vacant commissioner spot. Additionally, Vermont announced its appointment renewal season for carriers not domiciled in the state.
• Maryland has proposed changes to its title insurance producer continuing education regulations; while the substance isn’t changing much, the state is accepting comments about the proposed verbiage changes through June 6, 2022. Additionally, the state has updated the standard annuity training, so life insurance producers will need to take the updated annuity course between October 8, 2022, and May 8, 2023. Maryland also has announced an appointment renewal period for Motor Club appointments – the state’s termination deadline is May 25, 2022, and carriers can pay invoices from June 1, 2022, to Aug. 31, 2022. We don’t reflect Maryland on our terminations and appointments list, because for all other lines, Maryland is a Registry state and doesn’t require carriers to notify the state of active appointments.
• Michigan’s Director of the Department of Insurance and Financial Services, Anita G. Fox, announced the maximum unearned premium refund for the Property and Casualty Guaranty Association there through June 30, 2023, to be $1,780. They also facelifted their website, so feel free to give that a peep (looking cute feeling cute in Michigan, amirite?).

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.