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.
California SB 1242 requiring insurance agents to take active role in fraud reporting
Many pixels have been spilled regarding California’s omnibus insurance legislation already, and we likely can’t add much to the discussion that hasn’t already been said. But we sure will try.
The legislation takes an all-encompassing approach to combating insurance fraud. Where previous state law required the state and insurance carriers to address fraudulent claims, California’s bill puts fraud prevention on everyone in the insurance sales distribution pipeline. From broker to agent to producer to agency to carrier, everyone now has an obligation to report what they spot as suspicious or fraudulent activity, such as suspected fraudulent insurance applications.
Additionally, California, which has long required insurance producers to put their license numbers on advertisements and solicitations from billboards to business cards, has extended the license number rule into the digital sphere, requiring a producer to include it in every email. Plus, when a firm’s information appears in digital communications, its insurance license number must also appear. As Insurance Commissioner Ricardo Lara clarified, this may mean a single email must bear both the firm and individual producer numbers.
This bill also gives the DOI explicit instructions to send standard insurance application fingerprints to the Department of Justice to validate state and federal criminal histories.
Other topics in the bill include updating disclosure requirements for bail bonds applications, adjusting procedures for carriers issuing accelerated death benefits on long-term care insurance policies, and adding audit reporting requirements for private insurance pools.
Maryland posts changes to rules governing insurance carrier appointment registries
Maryland posted a final rule announcement in November, alerting insurance carriers of changes to the requirements for appointments. Maryland is a Registry state, meaning insurance carriers don’t report most* producer appointments to the state but instead maintain an internal registry of appointments.
The state’s changes require carriers to record:
- The producer’s Maryland license number
- The producer’s first and last name
- The producer’s residential address or business address
If the appointment is for a business entity producer, the record must contain:
- Business tax identification number
- Business name
- Business address
Of course, if you weren’t aware, the law already maintained that “at least once every 31 days, the insurer must determine whether the license of any producer who currently holds an appointment by the insurer has been suspended or revoked and update the registry accordingly.”
If you’re not sure you’re checking all of your producer licenses for validity every 31 days, you could always see how AgentSync does that for you… every day. Go on, schedule a demo. You know you want to.
* Maybe you’re one of those smarties who remembers that Maryland does require appointments for motor club producers. Good job. Did you learn that from the Compliance Library?
Wyoming third-party administrator (TPA) changes
The Wyoming Department of Insurance (DOI) has given Insurance Regulation Chapter 4 a facelift.
TPAs can take on a number of duties on behalf of insurance carriers, which we get into elsewhere on the AgentSync blog, if you’re into that sort of thing.
The rules update the requirements for TPA licenses and applications, along with implementing changes to renewal dates and TPA renewal documentation.
According to the DOI’s Nov. 7, 2022 bulletin, new TPA applications require:
- Verification that the TPA is registered with the Wyoming Secretary of State
- Two fiscal year’s worth of audited financial statements demonstrating positive net worth
- A “Designation of Third Party Administrator Form” and accompanying “Entity/Third Party Administrator Contract Checklist” for each active contract in Wyoming
- A bond of whichever is greater: $100,000 or 10 percent of the funds handled within Wyoming up to a limit of $1 million
TPA licenses are due for renewal in Wyoming June 30 every two years based on the year of initial licensing, and the Wyoming DOI bulletin is very clear that the state won’t grant extensions for missing documentation, nor will it refund application fees for incomplete applications.
For more on Wyoming’s TPA regulations, including their TPA forms, check out the state’s TPA page.
Other state insurance regulation changes
Washington Insurance Commissioner Mike Kreidler issued a notice that the Office of the Insurance Commissioner (OIC) fined businesses and individuals $111,000 for insurance compliance violations in October 2022. That’s added to the total of $37 million Kreidler has levied in fines since 2001.
New Mexico will post insurance carrier appointment renewal invoices for payment from Jan. 1 to March 1, 2023, which must be paid via NIPR.
Alaska has adopted the new annuity best interest standards from the National Association of Insurance Commissioners, and issued a bulletin reminding insurers and producers of new annuity continuing education requirements and updated disclosure standards. Check out our coverage for more NAIC Suitability in Annuity Transactions Model Regulation information, or to learn more about professional standards for insurance sales.
Oregon’s Division of Financial Regulation reminded professional liability insurance producers and investment advisers that any errors and omissions policies for investment advisers must cover investment advice and other management services performed by the insured investment advisers.
Kansas will post insurance carrier appointment renewal invoices for payment from Jan. 2 to March 1, 2023, which must be paid via NIPR.
Kentucky will post insurance carrier appointment renewal invoices for payment from Jan. 6 to March 31, 2023, which must be paid via NIPR.
Michigan Department of Insurance and Financial Services (DIFS) has approved a contract for professionals serving as “adjuster for the insured” (aka public adjusters), although they are only approved to provide services as they pertain to physical damages of the covered vehicle.
Nebraska Department of Insurance Guidance Document IGD – F8 effective Dec. 1, 2022, outlines a situation where someone can get a temporary insurance producer license in the state if operating as an apprentice of a licensed producer. Temporary licenses are a point of variance across states, but generally cannot be used for reciprocity beyond the state that initially issued them.
Colorado has adopted two new regulations, one requiring health insurance carriers to cover COVID-19 vaccines without cost sharing and the other putting limitations on drug tiering and cost sharing for prescription drugs.
Delaware Insurance Commissioner Trinidad Navarro released a bulletin to alert health insurance carriers that all filings for plan year 2024 and beyond must include a fully covered behavioral health check up for each insured.
FINRA – the Financial INdustry Regulatory Authority – has reminded those in the industry of changes to continuing education (CE) requirements for securities professionals. New rules take effect Jan. 1, 2023, that will give registered individuals greater flexibility in maintaining their licensing even if they change jobs or leave the profession for a time. The intention, according to the guidance page, is to give minority populations and women (groups more likely to have periodic caregiving-related absences from the workforce) more options to retain professional licenses and rejoin the workforce.
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.