Regulatory Roundup: NAIC Priorities, Healthcare Cybersecurity Breach, Michigan Limits Price Optimization

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. 

Commissioner Mais releases NAIC strategic priorities for 2024

Andrew Mais, Commissioner of the Connecticut Insurance Department and President of the National Association of Insurance Commissioners (NAIC), announced the NAIC’s strategic priorities for 2024 via a news release in late February.

While state legislatures generally will do what they’re going to do, the NAIC aims to guide discussion and policy by bringing state insurance commissioners together to share goals and collaborate. By better aligning state commissioners, NAIC strategic priorities can help states speak a common language and more effectively regulate the business of insurance.

“The regulatory priorities for 2024 underscore the department’s dedication to developing innovative and impactful solutions that continue to protect Connecticut consumers, and directly address the changing needs of the insurance sector and our local markets,” said Mais in the news release.

The NAIC’s priorities for 2024 will center around the themes of:

• Climate risks, natural catastrophes, and resilience
• Insurer financial oversight and transparency
• Insurance product marketing
• Race, financial inclusion, and protection gaps in insurance
• AI and cyber risks

For more on the specific objectives under each key area, check out the NAIC’s Strategic Priorities page.

Major cybersecurity breach interrupts a third of the healthcare industry

Several state departments of insurance have issued notices to consumers and industry players alike in the wake of a major cybersecurity breach. 

According to a news release from the Delaware DOI, the health insurance carrier touches a third of all patient records, so a major security breach constitutes a massive problem for consumers and service providers up and down the healthcare pipeline.

States such as Alaska, Maryland, Delaware, and Michigan have alerted consumers to be extra diligent about monitoring their personal data in the coming months, as well as cautioning patience as the carrier’s contracted providers and partners work to re-establish secure communications and processes with them.

Alaska’s Division of Insurance has directed carriers to prioritize consumer access to healthcare, and has asked the affected health insurers to waive any fees or penalties they would typically assess for patients who go out of network to fill prescriptions during this time.

Michigan bulletin takes aim at “price optimization”

Michigan Department of Insurance and Financial Services (DIFS) Director Anita Fox issued a bulletin aimed at ending insurers’ use of “price optimization,” which the DIFS has deemed an unfair insurance premium practice.

Price optimization is when carriers use favorable rate changes to induce customers to retain or increase their coverage. For instance, if a carrier sees reasons to believe a long-time customer may be considering switching to a different carrier for the same coverage, they may offer a more attractive premium to keep the customer. Alternately, a carrier may use algorithmic data to determine how much they can increase a rate for certain customers before the customer will consider changing coverage or carriers, and then use that data to set the highest prices they can charge.

According to Fox, these practices unfairly punish or benefit customers in a discriminatory way, and lead to premiums that aren’t justified by the concrete underwriting data. 

“As part of DIFS’ regulatory responsibilities DIFS reviews all rate filings to ensure that price optimization is not occurring. In addition, companies making rate filings must also attest that they do not use this prohibited practice. DIFS will take appropriate regulatory action against any insurer that employs price optimization in any form,” a news release about the bulletin said.

Other state regulatory changes

Alabama announced Patsy Hughes would join the Department of Insurance in the role of Consumer Outreach Coordinator. Congratulations! The DOI also announced it has released a predetermination form. The form aims to help applicants for producer and adjuster licenses in the state who might have checkered pasts to determine the “likelihood” of being granted a license.

Arkansas announced the state’s appointment renewal invoices will be open June 1, 2024 until June 30, 2024, so get your producers renewed. As a reminder, agency appointments and individual producer appointments are now separated.

California issued its annual reminder that anyone who’s had a change in criminal history will need to report the change to the state within 30 days or face penalties. If you’re wondering about other states, we recently covered when and how each state requires criminal backgrounds to be updated. 

Colorado has adopted the final version of requirements for health care sharing arrangements to report their information for coverage, membership, and general arrangements to the state DOI.

Connecticut issued a bulletin regarding how carriers use artificial intelligence. It’s a reminder that “the robots made me do it” isn’t good enough to get around violating state laws regarding discrimination and unfair business practices, and includes links to the state’s Artificial Intelligence Certification for carriers that are required to complete certification by the end of September 2024.

Georgia issued a bulletin to remind insurance carriers that offer plans on the Georgia Access marketplace to pay their user fees or face late penalties of 1 percent interest on the principal per month.

Guam will allow DRLP and name change updates through NIPR beginning in April. We love to see it!

Michigan Department of Insurance and Financial Regulation Director Anita Fox announced Jeff Hayden is now Director of the Office of Appeals, Legal Research, and Market Regulation. Congrats! The state also issued a bulletin to remind auto insurance carriers the medical provider fee schedule is adjusted for inflation.

Mississippi is updating its backdating rules with NIPR. Effective April 12, 2024, the state will allow carriers to backdate appointments up to 15 days and terminations up to 30 days. Previously, the effective date was the date the transaction was processed.

New Jersey announced its deadline for appointment renewals. Terminations are due by March 27, 2024, and appointment invoices will remain posted for payment via NIPR from April 1 to June 5, 2024.

New Hampshire issued a bulletin to encourage consumers to use more children’s mental health services, and to encourage greater carrier coverage. A state review showed children are often accessing mental health services via community networks, but, “Despite the availability of coverage, a review of all-payer claims data by the Insurance Department reveals that these services are not commonly billed.”

Oklahoma has issued a directive to Medicare Supplement carriers to remind them that amendments to state regulations now allow MedSup users to apply for replacement supplement policies for the 60 days following their birthday. Thus, MedSup carriers are expected to allow consumers to apply for policies that have the same or lesser benefits as their previously held supplement policies with no medical underwriting requirements. The state also issued a bulletin capping pre-need funeral benefits at $20,000.

South Dakota enacted a new law in February that puts dates to producer response times. When a producer runs afoul of state regulation, they now have 60 days from the state’s notice to request a hearing over the matter. If the state doesn’t receive a response within that 60-day period, the director of the insurance department may revoke their license permanently.

Texas is discontinuing online proctored exams for Department of Insurance candidates – the state only offers in-person exams at PearsonVUE locations.

Utah issued a bulletin for title insurance producer agencies. The law in Utah allows title insurance agencies to become affiliated with noninsurance title businesses. The Department of Real Estate, not the Department of Insurance, governs noninsurance title businesses and their affiliates. The bulletin identifies areas where Department of Insurance and Department of Real Estate rules may overlap or diverge. The state also issued a bulletin to notify bail bond agencies that, if the agency faces a forfeiture judgment from the department and doesn’t challenge it or pay it, the DOI will suspend the agency’s license five days from the date the forfeiture payment was due.

Washington is warning consumers to be alert to fraudulent Medicare for unnecessary and unused medical benefits. The state news release notes nationwide Senior Medicare Patrol programs saw complaints over unreceived and unneeded urinary catheter charges leap by 750 percent. The state is also delaying transitioning to the federal No Surprises Act Independent Dispute Resolution until mid 2025, instead favoring a state-driven dispute resolution. 

Wisconsin released its list of administrative actions, and while there’s the usual handful of tax delinquency, many people also lost licenses for things like applying with only a probationary license from another state, borrowing money from clients, failing to pay previous forfeitures, or using prohibited sales practices.

NASAA – the North American Securities Administrators Association – released the 2024 version of the Investment Adviser Representative Continuing Education Program Handbook, which is worth a perusal if you have to stay current with investment adviser representatives and their license requirements. 

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.