Regulatory Roundup: Wild Weather, Vermont Tackles AI, Key Bridge Collapse

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. 

April showers bring May insurance claims

Several states published newsletters and notices to carriers and consumers alike to remind everyone that storm season is coming.

While this can mean different things depending on what state you’re in, in general it means floods, wind damage, and property damage. That’s something that concerns both carriers and consumers alike. 

For consumers, states like Michigan, Maryland, Alabama, and Minnesota have all suggested checking insurance policies to understand coverage, stockpiling emergency supplies, clearing gutters, considering flood insurance, and otherwise investing in home-hardening options. Many states have also used this seasonal opportunity to remind consumers that the NAIC’s Home Inventory App can help evaluate the items in your home before a disaster strikes. (Also, bravo to the NAIC for this app, just a masterstroke of collaboration for consumers’ good!)

For insurance carriers, however, this season means evaluating your adjuster force, assessing your claims processing capabilities, and doing your due diligence to assess whether the new tech you’re implementing follows the appropriate state regulations. More states are rolling out legislation and regulatory bulletins directed toward the use of AI and algorithms in claims payments and consumer communications. That raises the stakes for carriers that see AI as the way forward to close the gap on recent P&C losses.

While you’re evaluating your insurance adjuster force, consider whether this season prompts your operations and admin teams to panic-sweat at each new disaster. If the answer to that is yes, check out how AgentSync can help you dial your adjuster force up or down in each state as each emergency requires.

Vermont issues bulletin targeting AI

The last few Regulatory Roundups have featured states issuing bulletins to regulate carriers’ use of AI, and we wouldn’t want to disappoint our loyal readership. Vermont has joined the wave of states that have issued bulletins targeting carrier use of AI in the industry. The memo provides basic guidelines and expectations for AI system governance and controls.

Among the guidelines are the admonition that, whether made by man or machine, decisions mustn’t be “inaccurate, arbitrary, capricious, or unfairly discriminatory.” 

The guidelines require carriers to maintain a written AI Systems Program to outline their responsible use of AI and algorithmic systems. With sections on guidelines, governance, risk management and internal controls, and third-party AI systems and data, this memo is one of the more robust communications from state regulators about their expectations and carriers’ responsibilities. Go Vermont; we love to see the clarity.

Cargo ship Dali crash with Francis Scott Key Bridge in Baltimore has insurance repercussions

Six people were lost in the cargo ship crash March 26, 2024, in the Baltimore port. The crash has also closed entry and exit to one of the world’s busiest ports, leading to supply chain interruptions and untold millions of dollars in damage to local infrastructure.

A report from Business Insider notes the federal government may see a bill of up to $600 million as it tries to quickly rebuild the bridge, but insurance carriers and reinsurers will undoubtedly pay the bulk of damages. In addition to the property damage to cargo on the Dali (as well as potential liability coverage), many other ships and their containers will be unable to meet their deadlines, and many goods will expire before reaching their destinations. 

It’ll undoubtedly be months before shipping lanes re-establish and carriers stop seeing claims from this incident, further proving that everything is tied to insurance in some way.

Other state regulatory changes

Connecticut announced its appointment renewals are open via NIPR from May 1 to May 31, 2024. Carriers looking to lighten their bill should terminate unwanted appointments by April 15, 2024.

Delaware Commissioner Trinidad Navarro reissued a bulletin to update the department’s contact information and also remind all carriers that the state considers it the mandatory duty of all insurers in the state to report suspected fraud to the department. The state also issued a bulletin to help health insurance carriers comply with state regulations to complete Affordability Standards Data Submissions for the plans they offer in Delaware.

Florida CFO Jimmy Patronis announced a new position in state government, a federal tax liaison to help taxpayers advocate for themselves during filing season.

Georgia stopped allowing licensees whose licenses were suspended for missing CE to renew or apply for a state license via NIPR as of April 12, 2024. The state also issued a bulletin to clarify what it means by certificate of insurance, and extended the deadline for insurance carriers to renew their certificates of authority in the state. Georgia’s most current bulletins live here. 

Guam is still in the process of converting to State Based Systems for its appointments and other insurance carrier management. Among those changes, Guam assigned the carriers in its state new company numbers (not, notably, new NAIC CoCodes).

Indiana is the 45th state to adopt the NAIC Suitability in Annuity Transactions model. New training requirements and CE requirements will be in effect July 1, 2024.

Louisiana Commissioner Tim Temple issued a statement expressing condolences to the family and friends of Phyllis Perron, a longtime Louisiana insurance contributor. Perron was a driving force behind the Louisiana Life and Health Insurance Guaranty Association (LAHIGA). 

Michigan issued a bulletin to ask insurers to be flexible with coverage and cost-sharing while the state has a shortage of prescription drugs that treat attention-deficit/hyperactivity disorder (ADHD). 

Montana is looking for investors, and the Commissioner of Securities & Insurance and the Office of the Montana State Auditor are bringing together those looking to invest with those looking for investments for a social and educational event June 11, 2024. 

Oklahoma Commissioner Glen Mulready is keeping fingers crossed that the Oklahoma Senate will pass a bill already greenlit by the state House of Reps. The bill would create a grant program for the Oklahoma Insurance Department to distribute funds to consumers to promote home hardening and, hopefully, reduce premiums.

South Dakota will host a hearing April 15, 2024, to gather feedback on the state’s proposed changes to Medicare Supplement coverage. The state essentially is adopting the federal government’s 2024 guidelines for Medicare Supplement plans.

Washington fined a health insurance company $100,000 when an internal system used automations that improperly denied claims, terminated enrollees in error, and improperly billed consumers. We stan a good automation, but only when it’s accurate!

Wisconsin, effective April 12, 2024, has stopped recognizing risk purchasing groups and rate service organizations as company types and started classifying them as license classes.  

Wyoming sent a reminder to third-party administrators that license renewals are coming in June, and that you’ll want all your renewal documents to be tight before submitting. Check out the requirements for TPAs in Wyoming here.  

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.