Regulatory Roundup: ‘Depreciation of Labor,’ PBM Reviews, and EV Battery Fires

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 ends “depreciation of labor” calculations

The largest state called out property insurers with a recent bulletin decrying the practice of applying a depreciation calculation to labor values when assessing a property’s actual cash value (ACV).

The state specifies that, beginning Jan. 1, 2025, all policies with “depreciation of labor” language will need to amend the language in new and renewing policies.

“The basic objective in property insurance claims is to restore an insured to the same financial position after the loss… Labor does not physically deteriorate and cannot be subject to depreciation,” the bulletin states.

While this practice for calculating ACV is creative, the Department of Commerce, Community, and Economic Development notes it unfairly shifts the burden of repair costs to consumers.

Florida CFO takes on EV batteries

Florida Chief Financial Officer Jimmy Patronis has kicked off the rulemaking process aimed at electric vehicle (EV) batteries, and is pushing the state legislature and U.S. Congress to step up regulation.

“Lithium-ion batteries are the energy sources of our time and it’s an amazing technology. Unfortunately, while there are benefits to Lithium-ion batteries, there are dangerous drawbacks too. During Hurricane Ian, we witnessed about 20 occasions where EVs that had been flooded by saltwater, caught fire,” Patronis said in a news release. “Once these fires begin, they can spread quickly and become extremely difficult for firefighters to put out. The danger is known, it is real, and the time to act is now.” 

The statement includes approbation from the Florida Professional Firefighters President, Florida Fire Chief Association President, and Orlando Fire Chief, all of whom echo Patronis’s concerns about the growing number of EV-battery-related fires. The statement also references New York as having had 268 lithium-ion-battery fires, which it credits for 150 injuries and 18 fatalities. 

Delaware scrutinizing PBMs

In 2021, Delaware passed laws requiring pharmacy benefits managers (PBMs) in the state to report their data to the DOI for state review.

The first of those anticipated reviews is complete, according to a news release from Delaware Insurance Commissioner Trinidad Navarro. The review found recurring issues common to several PBMs, including the practice of restricting certain medications to only the PBMs’ affiliated pharmacies, making it more difficult and expensive for consumers to obtain their medications.

“Protecting consumers from unjustified pharmaceutical costs and pharmacy monopolies is a key method of addressing the rising total cost of care in Delaware, and across the country. Creating transparency and accountability around PBMs is vital, and we are working hard to investigate and improve compliance with Delaware law,” said Navarro in the news release.

Other state regulatory changes

Alabama is revamping several bulletins. The majority of changes are ticky-tacky word or citation changes, but the state is also planning to increase licensing fees and tighten requirements for contractors hoping to qualify to administer the FORTIFIED homes program. 

Colorado has proposed a bulletin aimed at clarifying reporting requirements for life insurers that use external consumer data for any reason. Currently, the relevant text of the proposed bulletin reads: “The Division has not prescribed a specific format for the interim report. Life insurers may submit the report in a format that suits their documentation preferences…” This interim report would be due June 1, 2024.

Georgia rescinded its cease and desist order against a home mortgage company after the company made an effort to get current with the state’s bond and compliance requirements.

Iowa has updated its state regulations to include that a carrier may terminate a producer for cause if the producer is subject to action from a state securities commissioner, FINRA, or the SEC (so, not just for insurance stuffs). The state also updated its P&C regulations to include that county or state mutual insurance associations have to give insureds a minimum of 60 days’ notice before nonrenewing coverage. 

Kansas will broaden the scope of its fingerprinting and background checks to include federal databases for those seeking insurance licenses in the state. So, as a reminder, honesty in your application is by far the best policy.

Louisiana Commissioner Tim Temple issued a news release in May to trumpet a series of bills the Louisiana DOI supported that Gov. Jeff Landry signed into law. The package establishes clear claims processing timelines, allows carriers to file and use new rates without the DOI’s prior approval, broadens nonrenewal allowances, and removes sunset deadlines for the state’s Fortify Homes program.

Maryland announced the renewal period for the appointments it requires carriers to report. (Maryland is a Registry state and doesn’t require proactive reporting for most appointments.) The state requires carriers to report terminations by May 24, 2024, and will open invoices from June 3 to Aug. 30, 2024, payable via NIPR.

Michigan has issued a bulletin noting the Property and Casualty Guaranty Association’s 2024 limit on unearned premium refunds for insureds. From July 1, 2024, to June 30, 2025, the limit is $1,951.

Mississippi approved a new law that’ll exempt would-be life insurance producers from the state’s prelicensing requirements, and puts stiffer definitions in place to prevent public adjusters from providing services where their adjustment numbers could present a conflict of interest, such as if they will benefit from the assessment of the property via sale, salvage, or other association with the property’s owner. (State summary is here.)

Nebraska has added to its list of procedures that are exempt from cost-sharing by state mandate. Now, health carriers cannot bill cost-sharing when polyps are removed at the same time as each other or during a biopsy in the course of cancer screening.

New York is joining the states that’ll allow individuals to submit primary name changes along with their other personal information via NIPR. The state has also put the kibosh on health carriers charging consumers deductibles, copayments, coinsurance, or any other cost sharing for insulin under state law.

Oklahoma has opened emergency adjuster licensing from May 10 to Aug. 8, 2024, to help process claims from the May tornadoes. Applicants should submit applications online and provide the catastrophe number, 24-0267-EMG, the catastrophe date, May 10, 2024, and the resident sponsoring adjuster’s full legal name and Oklahoma license number: https://www.oid.ok.gov/licensing-and-education/emergency-adjuster-license/. Commissioner Glen Mulready announced the governor also signed a law implementing a grant program to help Oklahomans with home-hardening projects.

Washington’s Office of the Insurance Commissioner is still dripping sick climate videos as part of the 2024 Climate Summit Series. Check them out here.

NIPR has retired the Company Specialized Report (CSR) effective June 1, 2024. If you’re struggling with replacing the CSR in your system, see how AgentSync can help. 

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.