Top Advocacy Issues: State

History

If one word could be used to describe this year’s state legislative sessions, it’s probably the word “change.”

As a result of last November’s elections, party control has switched in a dozen state legislative chambers. This has resulted in 21 new House speakers and 18 new Senate presidents or president pro tempores. And, at least 1,200 lawmakers took the oath of office for the first time this year.

Lawmakers face a myriad of issues, including balancing state budgets, grappling with rising health and education costs as well as finding ways to stimulate state economies with new job creation programs.

While these issues normally do not directly affect the insurance industry, lawmakers may begin searching for new revenue sources. A case in point is South Carolina. When the state’s new fiscal budget was unveiled, it called for insurers to pay a $250 solvency monitoring desk audit fee and a $25 fee for filing forms and rates. Insurers were also asked to help fund four new fraud prosecutors through other departmental fee increases.

Rate Modernization

NAMIC expects rate modernization bills to be considered in Alaska, Connecticut, Massachusetts, Mississippi, Nebraska and North Dakota and possibly West Virginia.

Alaska: Local lobbyists are working on a rate modernization proposal for introduction this year, but specific details of it are still sketchy.

Connecticut: Rate modernization is the top priority of the Insurance Association of Connecticut. They are seeking a 12 percent flex band rating for personal lines.

Massachusetts: The Coalition for Automobile Insurance Reform plans to bring forth a flex-band proposal, but details are still pending. The Governor’s Task Force on Automobile Insurance Reform also may submit a legislative package eliminating the state’s established fixed rating scheme with a flex-band approach. The state’s no-fault system also may be addressed since the dollar threshold is so easily pierced.

Mississippi: Senator Dean Kirby, chair of the Senate Insurance Committee, has introduced a personal lines flex rating bill that would allow for a plus or minus eight percent rating limit.

Nebraska: Insurance Commissioner Tim Wagner is expected to introduce a bill to move personal lines filings from a prior approval to a file and use standard.

North Dakota: NAMIC and other industry trades are working with House Insurance Chair George Keiser in North Dakota on a bill primarily based on the rate modernization model act adopted by the National Conference of Insurance Legislators (NCOIL).

West Virginia: An interim legislative study committee has looked at possibly modernizing filing rules for commercial lines products, but it’s not certain at this point if this will result in legislation this year.

Florida: The Office of Insurance Regulation has proposed changes on how it reviews rate filings, although there is concern among the industry that the regulation could create more problems for the industry than it intends to improve.

Underwriting

NAMIC will oppose any attempts by lawmakers to limit an insurer’s ability to use insurance scores for rating and underwriting purposes or to impose any restrictions on the use of the C.L.U.E. database.

Initial intelligence suggests that attacks on underwriting freedom may surface this year in California, Colorado, Kansas, Kentucky, Illinois, Indiana, Louisiana, Michigan, Missouri, Montana, New Jersey, New Mexico, New York, North Dakota, Texas, Utah, Washington and Wyoming.

Tort Reform

Legislative action is expected in Connecticut, Georgia, Indiana, Kentucky, Minnesota, Missouri, New Hampshire, New York, South Carolina and possibly West Virginia this year.

Connecticut: The Insurance Association of Connecticut plans an aggressive tort reform agenda, including offer of judgment, mitigation of damages for failure to wear a seat belt, jury instructions on economic and non-economic damages and collateral offset.

Georgia: Republicans gained control of the House in November for the first time since Reconstruction. This has created some renewed optimism that tort reform is possible. One pre-filed bill proposes a “Texas-style” aggregate cap on non-economic damages of $750,000.

Indiana: The Insurance Institute plans to clarify and limit UM/UIM coverages to personal lines, address two negative workers compensation cases and pursue a more reasonable premises liability standard for not-for-profit entities.

Kentucky: The Insurance Institute plans to introduce legislation to overturn the Lanier v. WalMart decision, which makes a merchant prima facie liable for injuries caused when a customer falls in a store.

Minnesota: Local lobbyists plan to pursue statute of limitations language that reduce the state’s standard from six years to something less.

Missouri: The state’s new Republican governor, Matt Blunt, promises tort reforms this year. For the past two years, lawmakers have approved reforms, only to see them vetoed by former Democratic Gov. Bob Holden.

South Carolina: Republican Gov. Mark Sanford has proposed tort reforms, including a $300,000 cap on non-economic damages, a sliding cap on punitive damages of three times actual damages, elimination of joint and several liability, limits on venue shopping and allowing evidence of seat belt usage at trial.

West Virginia: New Governor Joe Manchin has expressed interest in tackling some tough issues in his first year, including comprehensive tort reforms. However, local industry observers believe only modest reforms are likely.

Asbestos Reform

The American Legislative Exchange Council (ALEC) recently adopted the Asbestos Claims Priorities Model Act. Asymptomatic plaintiffs who meet filing rules that require specific medical proof from appropriate medical personnel may have their claims placed on an inactive docket. NAMIC staff will work actively on this issue in states where the Model Act is introduced.

Market Conduct Model

NCOIL adopted an amended version of its Market Conduct Surveillance Model Act in July in the wake of objections from state insurance regulators. NAMIC and other industry trade groups believe the model still needs work, and have considered working behind the scenes on recommending specific amendments for NCOIL’s consideration. Chief among them is stronger language on a self-evaluative privilege protection for insurers.

Standard Fire Policy

NAMIC is working with an industry coalition to seek standard fire policy exemptions in 13 states this year. They include Arizona, Iowa, Illinois, Idaho, Massachusetts, Missouri, New Jersey, New York, North Dakota, Pennsylvania, Oregon, Washington and Wisconsin. In 2004, eight states adopted the exclusion.

Farm Mutual Modernization

NAMIC has had preliminary discussions with regulators in Arkansas, Tennessee and West Virginia about possible changes to statutes governing farm or county mutuals. Regulators in Montana have also been asked to look at changes in the investment section of the farm mutual statute.

Roger H. Schmelzer brings more than 20 years of experience in state and federal legislative affairs to the National Association of Mutual Insurance Companies (NAMIC) in his capacity as senior vice president of state and regulatory affairs. Since joining NAMIC in 1999, he has implemented a dramatic change in state advocacy strategy and managed tremendous growth in the resources available to member companies. Under Roger’s leadership, NAMIC has established a 50-state legislative and regulatory advocacy network, a regulatory compliance services program and a member communications initiative. Roger is also responsible for a public policy issue development and management process that combines state, regulatory, federal and public affairs. You may contact him at rschmelzer@namic.org.

Posted: Friday, April 01, 2005 12:00:00 AM. Modified: Thursday, April 14, 2005 1:08:46 PM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.