Regulatory Roundup: Maryland Increases License Penalty, Florida AOB Ban, Rhode Island Appointments

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, instead, as 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. 

Maryland increases fees for license violations

The Old Line state is reinforcing that it takes license violations seriously. The state issued a bulletin to notify the industry that several penalties have increased thanks to a Maryland law that takes effect Oct. 1, 2024.

Penalties for insurance carriers more than doubled. Beginning Oct. 1, carriers that sell policies outside of a valid certificate of authority could face up to $125,000 per violation as a civil penalty.

Insurance producers and public adjusters face penalties that have increased tenfold. Previously, operating without a license came with a maximum civil fine of $500. Now, the per-violation cost could be as high as $5,000 per violation. 

If only there was software that could keep track of producer and adjuster licenses and help ensure they don’t operate outside of their licensing… Oh wait! There is!

Florida reminds consumers and everybody else that assignment of benefits isn’t legal there anymore

Assignment of benefits is illegal in Florida. 

That’s the central message of a consumer and industry reminder from Florida CFO Jimmy Patronis. The sometimes-controversial practice of assignment of benefits essentially transfers the benefits of an insurance contract from the primary insured to an assigned third party. Historically, it’s been a convenient way for homeowners to get work done in the wake of a storm. 

A hurricane rips the roof off your house, you call a contractor, and you can spend the next few months acting as a go-between from your insurance carrier to your claims adjuster to your contractor (and risk having to pay for your new roof out-of-pocket and then wait for your insurance carrier to pay. OR you can sign an assignment of benefits that lets the contractor do the work and negotiate with all the parties in between on their own.

It’s a sweet setup when it works. But Florida made it illegal starting in 2023, thanks to some shyster contractors who made an artform out of benefits negotiations and sometimes walked away with sizable insurance checks without having actually done the work the check was supposed to cover.

“Avoid any contract that doesn’t include the total cost of the project and steer clear of high pressure sales tactics and vague contract terms. Your contractor should provide you with a good faith estimate of itemized and detailed costs for service and materials upfront. Obtain multiple estimates, read the fine print, and reach out to your insurer to find out what your policy covers before signing anything,” Patronis warned.

Rhode Island joining appointment states in 2025

If you hear cross-continental screaming, it’s either our team, which is so excited to implement Rhode Island’s upcoming appointment rule changes, or it’s all the compliance officers who handle appointments manually and have realized the work it’s going to take to get ready for this process change.

Previously, Rhode Island has been what we call a “Registry state,” meaning carriers were required to maintain their appointments as an internal registry. The state’s been a wierdie even among Registry states thanks to its requirement that a carrier file this registry once a year with the Department of Insurance. With new legislation, beginning in 2025, the state is going to accept appointments and terminations via the National Insurance Producer Registry (NIPR).

For insurance carriers, agencies, and MGAs that use AgentSync, this is a giant win – you’ll have even more functionality with your Manage product! For carriers, agencies, and MGAs that handle this manually, it might be a bumpy ride.

There will undoubtedly be more to come on this, but for now, we’ve got this bill text to pick over:

 (a) An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed. (b) To appoint a producer as its agent, the appointing insurer shall file, in a format approved  by the insurance commissioner, a notice of appointment within fifteen (15) days from the date the first insurance application is submitted. An insurer may also elect to appoint a producer to all or some insurers within the insurer’s holding company system or group by the filing of a single appointment request. 

We could be wrong, but, at first glance, it looks like the state may allow Just-in-Time appointments, and you know how we feel about those.

Other state regulatory changes

Alabama issued the list of carriers that have requested rate changes for their individual health plans on the federal insurance marketplace.

Arizona can now process updates to DRLPs and primary name changes via NIPR. Can I get a woop woop?

Colorado has issued a bulletin directing P&C and life and health providers about how to submit travel insurance filings to the state. One fun fact: The Division will accept P&C and L&H submissions in the same filing, if necessary. The Division of Insurance also issued a bulletin to all health insurance carriers about legislation that makes it mandatory to provide abortion services with no cost-sharing in all individual and small group market plans.

District of Columbia is also part of the in-crowd that can process DRLP and primary name changes via NIPR.

Georgia has gotten the greenlight from the Centers for Medicare and Medicaid Services to transition from the Affordable Care Act’s federal health insurance marketplace to its own state-based exchange, Georgia Access. After delays over various federal concerns, the state is moving forward and will begin enrollment Nov. 1, 2024.

Maryland Gov. Wes Moore has appointed Marie Grant as the next Maryland Insurance Commissioner. Grant comes with two decades of experience as an attorney and regulator, and will take office Oct. 1, 2024, pending approval by the state legislature.

Michigan Director of Insurance and Financial Services Anita Fox issued a bulletin directing insurers to develop artificial intelligence systems programs. The programs will (in theory, at least) formalize corporate governance that will protect both insurers and consumers from potential negative repercussions of overreliance on the new technology. Another news release announced some agency license revocations – the top reason was failure to file a DRLP. 👀 The state also took action against a producer whose license lapsed because of missing continuing education credits, and who accidentally continued selling. If only their agency and carrier had used software that prevents that from happening…

Missouri updated its law to reflect that insurance producers who only sell funeral and burial policies are exempt from CE requirements as long as they only sell contracts up to $20,000. The old exemption limited producers to a $15,000 face value.

North Carolina repealed a portion of the insurance law that previously prohibited insurance pros in the state from holding a producer and adjuster license simultaneously. These days, you can take a both/and approach! 

Oklahoma! legislative changes have made prepaid vision plan organizations subject to the state’s insurance carrier laws, meaning by Feb. 1, 2025, these organizations need to apply for certificates of authority and figure out the process of rate filing.

South Carolina Department of Insurance Director Michael Wise issued a bulletin to operationalize emergency adjuster licensing under the state regulation known as “Adjustment of Claims under Unusual Circumstances” in order to process the anticipated fallout of Hurricane Debby. The emergency adjustment period is in effect Aug. 5 to Dec. 3. 

Washington Office of the Insurance Commissioner comment periods have opened to allow public comment on the proposal to adopt the NAIC’s model Insurer Holder Company Act and make changes to producer and adjuster rules.

West Virginia is joining the states that can process primary name changes and DRLP updates via NIPR. Party time.

Securities and Exchange Commission (SEC) rules will be effective by the close of September adding “registered non-variable annuities” to the list of products that must comply with the federal guidelines for using illustrations in sales materials.
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.