Regulatory Roundup: Healthcare Cybersecurity Fallout, AI Regulation, Storm Surges

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. 

Widespread healthcare cyberattack sees continued repercussions

One of the subsidiaries of America’s largest health insurance network suffered a major cybersecurity hack in February 2024, and states are still seeing the fallout as systems slowly come back online.

Alaska extended a bulletin directing pharmacies, carriers, and other health-adjacent companies to work with consumers to process prescriptions and services in a timely manner. The state asked carriers and pharmacies that work through the affected systems to be lenient on patients who use out-of-network pharmacies during this time to ensure the safe and timely processing of prescription meds.

Connecticut has also issued a notice to consumers, encouraging them to accept and explore the options the large insurer put forth for protecting their identities. From credit monitoring to identity theft protection services, the state is pushing consumers to engage with these services. 

Meanwhile, the insurance carrier that was the victim of the cyberhack has noted that they don’t yet have details of the full extent of the attack, but the breach “could cover a substantial portion of people in America.”

For consumers affected by the data breach, the carrier has set up a website to enroll in identity protection services for the next two years.

States continue tackling AI challenges

Washington and Maryland have joined the states that are tackling industry use of artificial intelligence (AI) in underwriting, claims processing, and other areas.

Maryland’s AI guidance bulletin is tailored to the healthcare industry, and is aimed at insurers, nonprofit health sharing plans, HMOs, and dental plans, and Washington’s technical assistance advisory is more broadly aimed at all insurance carriers. Yet, both states’ guidance is very similar to those issued by the other states that have joined the fray of AI regulation.

While the definitions, authorities, and suggestions are all useful and helpful, the largest point to note is that states will judge your AI tools based on their fruit: If an AI tool’s use results in measurable discrimination that has demonstrable harm among different demographics, you can expect the state DOI to take action. So, for all the effort put into upfront data accuracy and transparency, if the end result is that the ghost of the machine is still unfairly biased, your AI is broke.

Storm surge season is in full swing

If you live in the Midwest, or a coast, or anywhere near water or land, you’re probably aware that storm season is upon us.

While that undoubtedly means we expect plenty of adjuster-focused bulletins and P&C drama, it also means a season of fraudsters and scammers, people who hope to take advantage of chaotic times to prey upon the scared and desperate victims of storm surges.

Louisiana Department of Insurance authorities are getting ahead of the surge of scammers by partnering in advance of trouble with the St. Tammany Parish Sheriff’s Office.

“Unfortunately, insurance fraud is an all-too-common crime following storms in Louisiana, and consumers must remain vigilant—even if you didn’t sustain any damage,” said Insurance Commissioner Tim Temple. “I am committing LDI resources to monitor for and investigate fraud in the areas affected by the recent severe weather, and I am grateful that Sheriff Randy Smith and the St. Tammany Parish Sheriff’s Office are committed to working alongside us in our efforts.”

From outlining preventative measures to disseminating the fraud hotline number, Louisiana is hoping the partnership can tighten an already endangered P&C insurance market.

Meanwhile, Oklahoma is dealing with tornado fallout as towns in the state rebuild after a weekend that killed multiple people, canceled proms, and wrecked homes.

“Our hearts go out to the communities impacted by tornadoes and severe weather this past weekend,” said Insurance Commissioner Glen Mulready in a news release. “As second responders, we at the Oklahoma Insurance Department are ready to help with post-disaster recovery. If you have questions about your insurance policies and coverage or need assistance with filing a claim, please reach out to our Consumer Assistance Division.”

Other state regulatory changes

Alabama passed a law amending surplus lines requirements in the state. Many of the changes are aesthetic, but some, such as an explicit exemption from diligent search requirements for some lines, are rather important, so if you traffic surplus lines in Alabama, check it out.

California requires fingerprints from nonresident individual license applicants and insurance company directors and officers if they’re from states that don’t have an FBI-level fingerprint requirement. Their vendor has increased its fee from $10 to $26, raising fees for fingerprinting from $59 to $75 total – $17 for FBI processing, $32 for California’s Department of Justice processing, and the Accurate Biometric fingerprint submission fee of $26. 

Colorado Commissioner Michael Conway has issued a statement encouraging one of the state’s largest insurance carriers to negotiate with one of its largest healthcare networks to reconcile their differences and find a way to continue covering the network for the good of consumers in the state.

Delaware issued a bulletin to remind surplus lines carriers of how the state handles deposits, fees, and guaranty fund assessments when those carriers relocate to Delaware. For the background and clarification on how this domestic surplus (nonadmitted!) carrier use-case applies in the state, check out the bulletin. The state has also clarified responsibilities for health insurance carriers when it comes to covering annual screening and treatment for ovarian cancer in this bulletin. And (Delaware has been busy) the state also has a new requirement that insurers notify the state when their changes – even to administrative internal processes – “effectively result in the discontinuation or reduction of a line of business or product.”

Kansas has joined other states in allowing producers and adjusters to submit primary name changes via NIPR.

Louisiana has proposed new rules for surplus lines insurance refunds and credits for premium taxes. The state has also passed a series of property insurance reforms through the legislature, which Commissioner Timothy Temple was proud to trumpet in an April news release.

Michigan issued a consumer reminder that the Department of Insurance and Financial Services helps recover missing and lost insurance benefits. In 2023, the department recovered more than $10 million in unpaid life and annuity benefits. Mind, blown.

North Carolina Insurance Commissioner Mike Causey has issued a bulletin to make property and liability carriers aware of state rules for catastrophic adjusters. Among the things to know: Adjusters must carry identification that ties them to the carrier they’re representing, should take a North Carolina CAT Adjuster course, and carriers must report their emergency adjusters to the state.

Oklahoma Commissioner Glen Mulready wrote his most recent commissioner’s column about how consumers can take action to reduce their auto insurance bills. The state is also joining the cohort that allows producers to process individual primary name changes via NIPR. Oklahoma issued a reminder that all property and casualty insurers licensed in the state are to pay their assessments for the Oklahoma Market Assistance Program ($150) to the OK-MAP program by Sept. 1, 2024.

Oregon will offer producer licensing exams in Spanish beginning June 1, 2024. ¡Fantastico!

South Carolina has issued a catastrophe declaration, enabling temporary adjusters and motor vehicle appraisers to enter the state’s market in the wake of an April windstorm. The emergency order will remain in effect for 120 days after the state issued it April 22, 2024. (For those of you using your fingers at home, that means it’ll expire Aug. 20, 2024.) And, if you want to get your adjuster force emergency-ready with quick onboarding and offboarding, we know a guy who knows a guy. (That guy is AgentSync.)

South Dakota has updated its business rules to modernize producer reinstatement. Producers who’ve failed to renew on time have up to a year after their missed renewal to reinstate their license, but, previously, they had to wait until several days after expiration to request reinstatement. Starting May 10, 2024, producers may now apply for reinstatement on the first of the month following their license expiration.

Washington has kicked off its much-anticipated 2024 Climate Summit Series, an educational summit brought to insurance wonks by Washington’s Insurance Commissioner Mike Kreidler. With videos posted to the Washington Office of the Insurance Commissioner’s YouTube page, content is free to access, and promises an excellent discussion on the future of insurance.

Wisconsin has issued its list of administrative actions for April 2024, and this month has a load of people who had licenses revoked for failing to disclose actions taken by other states against them. People, get ahead of your bad news early. Additionally, Wisconsin Commissioner Nathan Houdek issued a summary of the state’s 2023 insurance omnibus bill. Among the changes, insurers are now on the hook for notifying their agents if the state revokes the insurer’s authority to do business.

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.