Regulatory Roundup: More States Adopt NAIC Annuity Model, Delaware DOI Asks to Stop Blame Game, Washington Tackles Healthcare Administration

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. 

States still rolling out NAIC Annuity Suitability and Best Interest Standard Model Act

If you’re tired of reading about annuity regulation, it’s gonna be a bad year, because states are continuing to adopt the NAIC’s Annuity Suitability and Best Interest Standard Model Act or draft versions of their own.

Oklahoma is joining the wave, and has adopted the model for regulating its securities market. New standards were effective Sept. 1, 2023. While the state’s previous continuing education (CE) requirement for annuity producers was to take a one-time four-hour course, the changes to the law mean producers who took annuity CE before Nov. 1, 2023, will need to take either a new four-hour course or a special one-hour course to fulfill their annuity compliance obligations. 

Washington, too, has adopted the best interest standard, and noted in its own state bulletin that the switch will necessitate revisions to many other laws and regulations as they ensure all the administrative aspects of the state’s insurance industry are aligned. Thus, the state is undergoing a listening and rulemaking process to get it right.

Remember, under the new annuity rule insurers have increased responsibilities, such as:

• Verifying suitability. An insurance carrier is bound to not issue an annuity unless they have reasonable information to believe it fits the client’s circumstances and meets their needs.
• Supervisory system. Insurers must establish and maintain a system for ensuring producers are fully trained, complying with procedures, and documenting their sales information and justifications.
• Taking corrective action. While the law clarifies this doesn’t prevent insurers from contracting with anyone, it does obligate insurers to do something about it in the case that they discover a producer or agency is acting out of compliance with state law.
• Insurers aren’t responsible for products that aren’t theirs.

If you’re looking for more on the specifics of the model, check out the redux we did on Mississippi’s adoption of it.

Washington going hard in the paint on health care regulation

Washington Insurance Commissioner Mike Kreidler may not be seeking re-election, but he’s not resting on his laurels, either.

The state has passed not one, not two, but seven substantial bills related to insurance regulation (plus several minor bills that touch on the subject), and the Office of the Insurance Commissioner will be overhauling the Washington Administrative Code to match. Most of the bills are related to health care regulation, so there’s plenty to run with as far as regulating prior authorizations, telemedicine timeframes, hearing aid coverage, abortion, and breast exams. 

The OIC also has decided the health care benefit manager (HCBM) registration process “requires a significant amount of documentation that has been determined to be excessive and does not assist with the registration process.” So the OIC took commentary through part of August on how administrators can improve and streamline that process.

The state also announced a plan for a health care provider to reprocess 670 ground ambulance claims after the company allowed third parties to bill consumers hundreds of dollars in unexpected bills. The company is acting to correct this prohibited “balance billing” practice.

And finally, the Washington Office of the Insurance Commissioner (OIC) is also considering a new rule that would allow the OIC to communicate with people and businesses via email instead of snail mail under certain circumstances.

Delaware issues notice to industry: Stop blaming the DOI for raising consumer rates

Delaware has issued several communications to the insurance industry reminding carriers and agencies to be clear about reasons they have raised premium rates, and to not try to foist responsibility onto the state’s DOI.

While one of Delaware’s newly inked laws does increase the annual assessment for admitted insurance companies from $900 to $1,050, the DOI’s bulletin on the matter notes that it’s the first increase in this fee since 2019. The new fee will be due in March 2024. 

Yet, the state alleges, many insurance professionals keep telling consumers that rising fees and arduous rules are the reasons for all premium increases. The state re-issued an older bulletin reminding insurance pros that they can’t make false or misleading statements to consumers, saying:

“This bulletin is being reissued because the Department continues to regularly receive complaints advising that various members of the insurance industry, including insurers and brokers, have been responding to consumer inquiries related to premium rate increases by claiming that the Department has required an insurer to raise the premium rates.”

Delaware Insurance Commissioner Trinidad Novarro doubled down on the statement, saying in a news release:

“In order to adjust rates in our state, insurers go through a robust regulatory process during which they have to justify their rates to our team before they are approved,” said Navarro. “Consumers deserve understandable and accurate explanations too. And insurers, producers, and agents are required to provide that information by law. We will continue to enforce these provisions that ensure Delawareans are treated honestly and fairly in both the rates they experience, and the explanations they are afforded.”

Other state regulatory changes

Colorado is drafting a rule to make Epinephrine Auto-Injectors (EpiPens) more affordable. Under the current draft of the rule, starting Jan. 1, 2024, people who apply and qualify for an affordability program would be able to get a two-pack of EpiPens for a $60 copay.

Connecticut laws place new restrictions on P&C providers of professional liability coverage to protect Connecticut health care workers from other states’ laws. A new law effective June 27, 2023, protects professionals who offer “reproductive health care services that are permitted under Connecticut law and were provided in accordance with the standard of care for such services” from having their insurers raise their premiums for providing those services, and also protects them from rate raises in the case that another state takes issue with them.

Georgia Commissioner of Insurance and Safety Fire John F. King issued a directive saying, as of Aug. 1, 2023, producers holding life, accident and sickness, property and casualty, or personal lines of authority can now sell pet insurance. 

Michigan issued its list of recent final regulatory decisions, and on the list were six agencies that the Department of Insurance and Financial Services had revoked the licenses of. All six were revoked for failing to register someone as their designated responsible licensed producer (DRLP). Michigan requires a DRLP, as do many other states – if only there were some sort of free tool to flag these variances in state law. Oh, wait…

New Hampshire issued a bulletin to remind insurers that terminations must be reported to the state within 15 days of the termination effective date, and, if the appointment is terminated with cause (meaning the carrier terminated the relationship because the producer did something wrong), the carrier has to report that as well. The bulletin asks carriers to review their records for all terminations “for cause” in the last three years stretching back to Aug. 1, 2020, to report the reasons behind those two little words to the state. The state has also revised the reasons a producer or business entity license may be suspended or revoked, making it more important than ever that an insurance agency keeps up on their licensed producers’ business.

Oklahoma has passed several bills addressing health benefit plans use of step therapy protocols. Step therapy protocols are insurance cost-saving strategies that require insureds to exhaust less expensive forms of medication and treatment before moving to more expensive therapies. Beginning Nov. 1, 2023, Oklahoma requires health benefit plans to give patients with chronic respiratory failure resulting from chronic obstructive pulmonary disease (CRF-COPD) and advanced metastatic cancer options to skip or be exempt from step therapy protocols. 

South Carolina added a late appointment renewal fee. Now, carriers that miss the initial appointment period of Sept. 1-30 will have  to pay $250 per appointment to appoint in Oct. 1 – Dec. 1, 2023.

Wisconsin has issued its list of agents, agencies, and carriers that were subject to state action in July. Once again, in Wisconsin, the primary reason the state revoked an agent’s license was for unpaid taxes, followed by the failure to disclose administrative actions in other states. While we can’t do much for that first reason (just pay your taxes, people!), that second reason makes us wonder, “What if you had data from a source-of-truth that flagged this kind of data to help your producers stay in compliance in not just their resident states but in other states they’re licensed in, as well?” Schedule a demo to see if we 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.