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NAMIC 2003 Survey of New State Insurance Laws
Overview
This year's edition of the NAMIC Survey of New State Insurance Laws covers 418 laws enacted in 2003 that have direct relevance to the property/casualty insurance industry. The following is a list of the states included in this year's report with the number of new property/casualty laws noted in parenthesis for each.
Texas (34), Colorado (23), North Dakota (20), Oregon (18), Louisiana (17), California, Virginia (16 each), Arkansas, Rhode Island, Montana (15 each), New Mexico (14), Illinois (13), Maine, Arizona (12), Florida, North Carolina, Nevada, New York, (11 each), West Virginia, Utah (10), Mississippi (9), Georgia, Washington (8 each), Connecticut, Wyoming, Idaho (7 each), Oklahoma, New Hampshire, New Jersey (6 each), Maryland, South Carolina, Tennessee (4), Delaware, Indiana, Kansas, Kentucky, Michigan, Minnesota, Nebraska, South Dakota, Wisconsin (3 each), Iowa, Pennsylvania, Vermont (2 each), Alabama, Alaska, Hawaii, Missouri, Ohio (1 each.)
Several states emerge as having enacted the greatest number of new property/casualty related laws this year. Topping this year's list is Texas with 34 new laws. New laws in Texas address a variety of key property/casualty issues including state building code regulation, financial requirements, fraud, the state guaranty fund, mold, insurer notification requirements, rate and form regulation, residual market plans, structured settlements, telephone sales, tort reform, motor vehicle insurance, and workers' compensation. Colorado (23) and North Dakota (20) rank second and third respectively in this year's tally of new state insurance laws. New measures approved in Colorado impact the use of insurance scoring, the role of the state regulator, tort reform, motor vehicle coverage and workers' compensation. New laws passed in North Dakota impact a relatively wider array of issues including foreign insurers, fraud, insurance scoring, licensure, notification requirements, privacy/disclosure, regulatory filings, residual market plans, the state insurance regulator, telephone sales, motor vehicle coverage, and workers' compensation.
Sixteen states approved at least 10 new property/casualty laws each in 2003. Included in this list (in descending order) are Oregon (18), Louisiana (17), California, Virginia (16 each), Arkansas, Rhode Island, Montana (15 each), New Mexico (14), Illinois (13), Arizona, Maine (12), Florida, North Carolina, Nevada, New York, (11 each), West Virginia and Utah (10).
At the other end of the spectrum, this year's report identifies five states (Alabama, Alaska, Hawaii, Missouri, and Ohio) that approved just one new property/casualty related law each. Iowa, Pennsylvania and Vermont each approved two new measures this year. And, a total of nine states (Delaware, Indiana, Kansas, Kentucky, Michigan, Minnesota, Nebraska, South Dakota, Wisconsin) surface in this year's survey with just three new laws each.
This year's survey categorizes each of the 418 new state laws and identifies 30 distinct issue trends to which these new provisions pertain. As was the case in last year's survey, new laws impacting motor vehicle insurance lead the list of issue trends. A total of 87 new motor vehicle laws were approved this year in 26 states (Arkansas, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Kansas, Louisiana, Maine, Maryland, North Carolina, North Dakota, Nevada, New Mexico, Nebraska, New York, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Virginia, Vermont, and Washington.) The new motor vehicle insurance related laws are further broken down into the following subcategories: accident reporting requirements (2), aftermarket parts (1), commercial coverage issues (2), fraud prevention (4), PIP (2), proof of coverage (5), repair claims/shops (8), salvage (2), traffic safety - DUI standards, seat belt requirements, graduated driver's license requirements (27), UI/UIM (10), and other miscellaneous provisions (24).
As was also the case last year, the second largest category of new property/casualty laws pertains to workers' compensation. A total of 75 new workers' compensation laws enacted in 29 different states (Arkansas, Arizona, California, Connecticut, Colorado, Florida, Georgia, Iowa, Kentucky, Kansas, Louisiana, Maine, Montana, Mississippi, Missouri, North Dakota, North Carolina, New York, New Mexico, New Hampshire, Nevada, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia and West Virginia) are identified in this year's report. The multitude of new workers' compensation laws are further classified into 13 subcategories of specific workers' compensation issues including assessments, benefit calculations, covered claims/injuries, disclosure, fraud, penalties, prescriptions, reporting requirements, self-insurers, legislative studies, workers' compensation regulatory authority -commission or board, omnibus changes to state workers' compensation laws, and other miscellaneous workers' compensation provisions.
New laws impacting the use of insurance scoring and telephone solicitations represent the next most significant issue trends to emerge this year. A total of 24 new laws were enacted in each of these trend categories. Twenty states (Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Maine, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, Virginia and Wyoming) approved new provisions regulating the use of insurance scoring, while 21 states (Arizona, Arkansas, California, Illinois, Louisiana, Maine, Michigan, Mississippi, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Dakota, Texas, Utah and Wyoming) approved new measures regulating telephone sales.
New state laws addressing tort reform represent another significant issue trend in this year's survey. A total of 25 new tort reform measures were approved in 16 states (Arkansas, Arizona, Colorado, Georgia, Idaho, Illinois, Louisiana, Maine, Minnesota, Montana, New Jersey, Tennessee, Texas, Utah, Virginia and West Virginia) in 2003. The various new legal reform laws address several of the core components of tort reform advocated by NAMIC including evidence standards, noneconomic damage limits, class action appeals, exemplary damage claims requirements, appeal bond standards, contingency fee arrangements between government entities and private attorneys, product liability, joint and several liability, and punitive damages.
Other notable issue trends identified in this year's survey include notification requirements (15 new laws in 11 states), omnibus technical and substantive changes to state insurance laws (15 new laws in 14 states), rate and form regulation (14 new laws in 10 states), producer licensing (12 new laws in 11 states) financial regulation (12 new laws in 10 states), and new measures addressing privacy and disclosure requirements (11 new laws in 8 states).
Laws pertinent to state residual market plans were enacted in 8 different states in 2003. Six states approved new insurer tax provisions, the majority of which pertain specifically to increases, exemptions or refunds associated with the premium tax. New laws pertaining to the role of the state insurance regulator, anti-insurance fraud efforts, foreign insurers, guaranty fund operations and obligations, regulatory filing requirements and the issue of mold were enacted in five states each this year.
The other key property/casualty issue trends that emerge from the body of new state insurance laws covered in this year's survey include state building codes, captive companies, mutual and farm mutual companies, structured settlements, terrorism, investment tax credits, demutualization/reorganization, electronic commerce, reinsurance, and the Uniform Commercial Code. The following is a detailed summary and analysis of the various issue trends identified in this year's report.
Search for an Issue Overview
- Building Codes
- Captives
- Demutualization / Mutual Holding Company
- Electronic Commerce
- Financial Regulation
- Foreign Insurers
- Fraud
- Guaranty Fund
- Insurance Scoring
- Investment Tax Credits
- Licensure
- Mold
- Motor Vehicle Accident Reporting
- Motor Vehicle Aftermarket Parts
- Motor Vehicle Commercial Coverage
- Motor Vehicle Fraud Prevention
- Motor Vehicle Insurance
- Motor Vehicle PIP
- Motor Vehicle Proof of Coverage
- Motor Vehicle Repair Claims/Shops
- Motor Vehicle Salvage
- Motor Vehicle Traffic Safety
- Motor Vehicle UI/UIM
- Motor Vehicle Miscellaneous
- Mutuals and Farm Mutuals
- Notification Requirements
- Omnibus Insurance Law Changes
- Privacy/Disclosure
- Rates and Forms
- Regulatory Filings
- Reinsurance
- Residual (Non-Standard) Market Plans
- State Insurance Regulator
- Structured Settlements
- Tax Issues
- Telephone Sales
- Terrorism
- Tort Reform
- Uniform Commercial Code Changes
- Workers' Compensation
- Workers' Compensation Assessments
- Workers' Compensation Benefit Calculations
- Workers' Compensation Covered Claims/Injuries
- Workers' Compensation Disclosure
- Workers' Compensation Fraud
- Workers' Compensation Penalties
- Workers' Compensation Reporting Requirements
- Workers' Compensation Self-Insurers
- Workers' Compensation Studies
- Workers' Compensation Regulatory Authority (Commission/Board)
- Workers' Compensation Omnibus Law Changes
- Workers' Compensation Miscellaneous
- Miscellaneous New Insurance Provisions
Nearly one-quarter (21%) of all the new laws identified in this year's survey pertain to motor vehicle insurance. Twenty-six states (Arkansas, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Kansas, Louisiana, Maine, Maryland, North Carolina, North Dakota, Nevada, New Mexico, Nebraska, New York, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Virginia, Vermont, and Washington) enacted motor vehicle insurance related legislation in 2003. As noted in the overview, the slate of new motor vehicle laws is broken down into eight separate sub categories or issue trends including traffic safety (comprised primarily of provisions that address DUI, seat belt and graduated driver's license laws), miscellaneous new motor vehicle provisions, UI/UIM, repair claims and shops, proof of coverage, fraud prevention, accident reporting, commercial coverage, salvage, PIP, and the use of aftermarket parts. The following is an overview of the new state laws relevant to each of these motor vehicle insurance issue trends.
Far and away the largest sub category of motor vehicle issue trends is traffic safety. Nearly one-third (31%) of the motor vehicle insurance laws covered in this year's survey (27 of 87) address traffic safety. Within the context of this report, new traffic safety laws are those that target DUI violations, passenger safety and licensing standards for young drivers. Fourteen new laws approved in 10 states (Arizona, Colorado, Illinois, New Mexico, Pennsylvania, Rhode Island, Texas, Washington, Wisconsin and Wyoming) this year establish new DUI penalties, blood alcohol levels or testing requirements, and standards for the use of ignition interlock devices. Colorado (SB 76), New Mexico (HB 117), Rhode Island (HB 5452/SB249) Texas (SB 45), Washington (HB 1619), and Wyoming (HB 118) each passed laws this year establishing tougher penalties for DUI violations. Arizona (HB 2002), Illinois (SB 1199), and New Mexico (SB 266 and SB 501) approved measures further regulating the use of ignition interlock devices on vehicles used by DUI violators. And, New Mexico (HB 250), Pennsylvania (SB 8), Texas (HB 292), and Wisconsin (AB 88) each enacted legislation to alter the DUI standard for Blood Alcohol Concentration (BAC) or requirements for testing drivers suspected of being intoxicated.
Another recurring theme within the numerous motor vehicle insurance laws is the issue of uninsured or underinsured motorists (UI/UIM). In fact, 11.5% of the new motor vehicle laws identified in this survey pertain to the regulation of UI/UIM coverage. Ten new UI/UIM laws were approved in eight states (Arizona, California, Colorado, New Mexico, North Carolina, North Dakota, Oregon, and Utah) this year. In Arizona, HB 2151 amends form-filing requirements for UI/UIM coverage. California SB 333 amends provisions governing the time period for causes of action involving UI/UIM coverage. The Colorado Legislature enacted SB 239 eliminating the requirement that auto insurers report policyholder and UI motorist claim data. New Mexico approved HJM 87 calling for an interim study of uninsured motorists in the state. North Carolina approved HB 1023, amending various provisions of that state's UI/UIM laws. North Dakota HB 1190 clarifies that in any UI/UIM claim, the insured and the insurer are responsible for their own attorney fees. Oregon HB 2925 establishes a 60-day time period for signing an election of lower limits for UI/UIM coverage. And, the Utah Legislature approved three new UI/UIM related laws. SB 52 allows accessibility to UI/UIM Identification Database by financial institutions, SB 186 prohibits collection of UI/UIM benefits under certain circumstances, while SB 214 allows self-insurers to provide UI/UIM coverage in an amount less than their maximum self-insured retention.
Motor Vehicle Repair Claims/Shops
New laws regulating the trade practices and payment arrangements between insureds, insurers and repair shops also emerge from among the many new motor vehicle insurance laws enacted this year. Seven states (California, Colorado, Illinois, Nevada, North Carolina, Texas, and Virginia) approved a total of eight new laws regulating repair claims and repair shop arrangements. California passed SB 551 to prohibit insurers from requiring insureds to use specified repair shops. In Colorado a new law was passed (HB 1253) that more generally prohibits insurers from using unfair or discriminatory practices in the payment of repair claims. Illinois approved a new measure (SB 228) creating the Automotive Collision Repair Act, setting forth disclosure requirements for repair estimates and outlining unlawful practices. The Nevada Legislature enacted AB 367 to clarify that insureds may have repair work done at shops of their own choice. North Carolina approved two new related measures. The first (HB 986) requires insurers to disclose any financial interest in recommended repair facilities, while the second (SB 558) amends state laws governing the total loss and repair of insured vehicles. Texas HB 1131, specifically prohibits an insurer from holding or acquiring interest in an auto repair shop. And finally, Virginia HB 2267 also prohibits insurers from recommending specific repair facilities unless they first disclose that insureds are not obligated to use such repair facility.
Motor Vehicle Proof of Coverage
Five states (Arkansas, Colorado, North Dakota, Oregon, and Washington) enacted new laws this year related to proof of insurance coverage. Arkansas SB 406 places an additional responsibility on insurers by requiring them to place their NAIC code number on all automobile proof of insurance identification cards. Colorado approved a measure (HB 1223) placing greater onus on drivers by requiring them to provide proof of insurance coverage as a vehicle registration condition. Similarly, North Dakota HB 1238 places additional responsibility on drivers by requiring them to prove they were in fact covered in contested uninsured motorist cases. In Oregon, SB 247 repeals the authority to use bonds or cash deposits to demonstrate motor vehicle financial responsibility. And, Washington HB 1576 provides for court cost assessment in cases contesting citations for driving without proper insurance.
Motor Vehicle Fraud Prevention
Four states (Colorado, Florida, Illinois, and New York) approved new laws this year aimed at combating or preventing motor vehicle insurance fraud. Colorado passed HB 1251, requiring insures to finance an auto theft prevention fund. During special session this year the Florida Legislature approved SB 32A creating the Health Care Clinic Act, which amends various provisions of state law related to personal injury protection benefits, including prohibitions on the disclosure of police records and accident reports and the creation specific clinic operational standards and billing practices. The Illinois Legislature enacted a new law this year (HB 3522) establishing fines for individuals guilty of providing false address information on insurance applications. And in New York, AB 8671 was approved extending that state's pilot study aimed at auto fraud and theft prevention.
Motor Vehicle Accident Reporting, Commercial Coverage, Salvage Title, Personal Injury Protection (PIP) and Aftermarket Parts
Two states (Arkansas and Nebraska) approved legislation related to accident reporting requirements. Arkansas HB 1573 and Nebraska L 185 both raise the threshold level of damages required for reporting accidents.
California and New Mexico both enacted measures aimed at commercial auto coverage. California AB 1238 amends the definition of commercial vehicle relative to the calculation of defense costs when two or more policies cover a damaged vehicle. New Mexico approved a new law (HB 347) that includes commercial motor carrier within the Motor Carrier Safety Act.
The Nevada and Wyoming Legislatures enacted new laws this year pertaining to the regulation of salvage vehicles. Nevada approved AB 325 setting forth rules to govern transfers or total losses of salvage vehicles, while Wyoming passed a law (HB 135) amending the requirements for application for a certificate of salvage title if the insurer is not involved in the settlement.
Two other western states (Oregon and Washington) approved provisions impacting PIP coverage. Oregon HB 3668, raises the liability coverage required for PIP benefits, while Washington HB 1084 changes the minimum amount of PIP benefits required to be offered by insurers.
And finally, legislation was approved this year in Rhode Island (HB 6066/SB 22) establishing standards to govern the use of aftermarket repair parts.
The 24 remaining motor vehicle laws are a miscellaneous group of new provisions approved in 14 different states in 2003. Arizona (HB 2283) creates provisions to regulate taxis, sedan and limousine services. The Arkansas Legislature approved a measure (HB 1386) changing the limits of liability for taxicabs and another (SB 243) to regulate the payment of sales tax on total loss settlements. California approved two new miscellaneous motor vehicle related laws. The first (SB 841), allows for the use of persistency of coverage as an additional optional rating factor, while the second (AB 1181) requires personal auto insurers to provide certain information at the time of issuance or renewal of a policy. Colorado approved HB 1188, repealing its no-fault auto insurance system as well as HB 1289 requiring movers to maintain general and motor vehicle liability coverage. In Georgia, HB 688 regulates vehicle warranties, while HB 191 changes reporting requirements for fleet policies. Louisiana passed a new law (HB 1686) barring student driver rate increases tied to disciplinary actions.
The Maine Legislature approved HB 12, raising the number of accidents per household that would permit non-renewal. Two new miscellaneous vehicle insurance laws were approved in Maryland. HB 641 requires adoption of rules to govern the settlement of claims involving valuation, while SB 193 requires traffic control monitoring devices to use yellow lights in accordance with federal standards. New Jersey SB 63 amends the unsatisfied claim and judgment fund laws in addition to making several other changes to the state's auto insurance provisions. New Mexico approved HB 108 to establish coverage and limitation requirements and HB 346 repealing laws related to the transport of explosive materials. North Dakota approved measures calling for the creation of a legislative study of the motor vehicle insurance system (SB 2262) and raising the dollar threshold for coordination of auto accident benefits (SB 2275). The Oregon Legislature approved three new laws that fall into this catchall motor vehicle insurance category. The first (SB 246) clarifies the responsibilities of the Department of Transportation regarding the filing of certificates of insurance, the second (HB 2043) provides a tax credit for corporations that utilize a mileage or time-based rating plan, and the third (SB 602) eliminates rules governing primary insurance when an individual lends, rents or otherwise provides a vehicle to another in the course of business. Rhode Island approved a law limiting the liability for short and long term lessors, while HB 5368/SB 280 allows vehicle insurance premium payments to be made in monthly installments. And, Virginia approved a new motor vehicle insurance law (HB 2512/SB 1154) allowing insurers to exclude any person from liability coverage under an umbrella policy.
The second most common issue trend to surface among the new state insurance laws identified in this year's survey is workers' compensation. A total of 75 new laws pertaining to workers' compensation were approved in 29 states (Arkansas, Arizona, California, Connecticut, Colorado, Florida, Georgia, Iowa, Kentucky, Kansas, Louisiana, Maine, Montana, Mississippi, Missouri, North Dakota, North Carolina, New York, New Mexico, New Hampshire, Nevada, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia and West Virginia) this year. NAMIC's analysis of the various new workers' compensation provisions identifies several sub categories of workers' compensation issue trends. Notably, new laws pertaining to assessments, benefit calculations, commercial coverage, disclosure, fraud, penalties, prescriptions, reporting requirements, self-insurers, legislative studies, regulatory authorities, omnibus state law changes and a group of miscellaneous single-issue worker's compensation measures.
Workers' Compensation Benefit Calculations
The most common of the various sub categories of new workers' compensation laws pertains to regulations that govern calculation of benefits. A total of 14 such laws were approved in 10 different states (California, Georgia, Iowa, Maine, New Hampshire, Nevada, Oregon, Rhode Island, and Texas) this year. Seven states (Georgia SB 233, Iowa HB 225, New Hampshire SB 82, New Mexico HB 501, Nevada AB 206, Nevada AB 438, Oregon SB 757, and Rhode Island HB 5600) approved measures to increase maximum benefit limits or otherwise modify the statutory calculation for specific workers' compensation claims. Three states (Maine HB 368, New Hampshire SB 174, and Texas SB 1574) approved new laws to amend the statutory definition of wages used to calculate an individual claimant's benefits. California approved two related measures. AB 149 establishes a time frame under which workers' compensation claim proceedings must commence, while AB 1557 precludes claimants from benefit increases related to unreasonable delay during utilization review. And, the Rhode Island Legislature approved a measure (SB 626) to address the immediate payment of benefits when two or more insurers are liable.
Workers' Compensation Regulatory Authority (Board/Commission)
Eight new laws approved in six states (Kentucky, Louisiana, Maine, Oregon, Texas, Virginia) focus on the state workers' compensation regulatory authority. In Kentucky, HB 397 was approved clarifying that the Employers' Mutual Insurance Authority does not need to appoint it own agents. Louisiana HB 282 changes provisions governing the makeup of its Workers' Compensation Corporation Board, removes the insurer representative and mandates two board members to represent the state. Two related laws were approved in Maine. HB 17 grants the state workers' compensation board latitude to extend partial incapacity benefits, while SB 135 allows the board to issue rules requiring the electronic filing of injury notices. The Oregon Legislature enacted SB 286 setting forth requirements for the state's workers' compensation board. Texas approved two new laws, HB 145, which requires written notice to the Workers' Compensation Commission for judicial review of orders or other decisions and SB 1572 granting the Workers' Compensation Commission authority to adopt individual treatment protocols. And lastly, Virginia HB 2451 requires the state's Workers' Compensation Commission to send copies of awards or opinions to related parties via priority mail immediately after reaching a decision.
Workers' Compensation Self-Insurers
Five states (Arkansas, Mississippi, North Carolina, Oregon and Texas) approved new workers' compensation laws this year specific to self-insurer interests. Arkansas SB 528 allows certain self-insurer groups to waive excess insurance requirements. Mississippi HB 1305 establishes the state's Workers' Compensation Self-Insurer Guaranty Association as the guarantor of self-insurer obligations in default. North Carolina SB 471 raises the assessment and required deposits for self-insurers participating in the guaranty association. Oregon SB 749 allows private community care providers to participate in the state's workers' compensation self-insurance pool. And, Texas approved two new related laws. HB 2095 authorizes workers' compensation group self-insurance plans, while SB 1282 provides clarification about written notification requirements to self-insured employer or political subdivision.
Omnibus Workers' Compensation State Law Changes
Five states (Florida SB 50A, Montana SB 108, Nevada SB 320, Tennessee SB 172, and West Virginia SB 2013) enacted legislation this year making comprehensive technical and substantive changes to their respective state laws governing all aspects of workers' compensation. Because the breadth of these changes are unique to each state, NAMIC recommends a thorough review of the complete text of each of these new laws.
Workers' Compensation Covered Claims
Arkansas, Connecticut, Montana, and Virginia passed new workers' compensation laws this year modifying statutory definitions for compensable injuries and disabilities. Arkansas HB 1965 and Virginia HB 2728/SB897 include adverse reactions to smallpox vaccines within the definition of covered workers' compensation claims. Connecticut HB 6608 expands the definition of a covered claim. Montana HB 410 provides that payments made under collective bargaining, personnel policy, employee handbook or any other document provided to the employee that is not wages, is not a reimbursement for the costs of travel, gas, oil, or lodging and that the employee is not covered while traveling. And in Virginia, one other related laws was approved. HB 1877 requires individuals using a presumption that occupational exposure to blood or bodily fluids is an occupational disease, to resubmit to a subsequent evaluation upon request by their employer.
Workers' Compensation Reporting Requirements
Four states (Colorado, Kansas, Oregon and Utah) approved new laws directly related to workers' compensation reporting requirements. Colorado SB 302 temporarily repeals the state's authority to require data calls. Kansas SB 133 removes reporting requirements for open claims. Oregon SB 914 modifies reporting requirements for insurers and self-insured employers. And, Utah SB 126 establishes rules to govern the reporting of employee injuries.
Workers' Compensation Penalties
Three states (Arizona, Louisiana and South Carolina) passed new laws related to workers' compensation penalties. Arizona SB 1048 raises the threshold level of penalties the workers' compensation commission may assess from $500 to $1,000. Louisiana SB 819 imposes penalties upon employers or insurers that fail to provide medical benefits. And, South Carolina approved HB 3231 empowers the workers' compensation commission to assess double fines and penalties.
Workers' Compensation Assessments
The Legislatures in Maine and Nevada each passed bills this year impacting workers' compensation assessments. Maine SB 21 raises the workers' compensation assessment, while Nevada SB 193 requires an assessment be made against all industrial insurers to fund certain permanent total disability benefits.
Workers' Compensation Legislative Studies
Arkansas and Montana enacted legislation this year calling for studies of certain aspects of the workers' compensation industry in their respective states. Arkansas SCR 28 calls for a study of the impact of exempting sole proprietors and partnerships from workers' compensation liability. Maine SB 304 creates a committee to study the feasibility of selling the state compensation insurance fund and creating an assigned risk pool.
Workers' Compensation Disclosure
Florida and New York approved new workers' compensation measures addressing the disclosure and confidentiality of certain workers' compensation records. Florida HB 1035 allows the insurance department to share confidential employer compliance information with law enforcement representatives. New York SB 5624 expands the list of parties to whom workers' compensation records may be disclosed.
Workers' Compensation Fraud and Prescription Drugs
Two additional single state workers' compensation issue trends also surfaced this year. California approved a new law focusing on workers' compensation fraud. AB 1099 allows the state to request information from insurers about suspected instances of workers' compensation fraud. And, Texas enacted HB 833, which allows employees to purchase brand name drugs rather than the generic equivalents.
Workers' Compensation Miscellaneous
A number of additional new single state workers' compensation laws were also approved this year covering a variety of topics. These additional new workers' compensation laws are grouped together to form this miscellaneous category. In California, two more laws were approved. SB 1007 expands the definition of common trade or business to include certain manufacturing facilities, while AB 1262 requires the commissioner to adopt regulations establishing minimum standards for claims adjusters. Four of these miscellaneous provisions were approved in Colorado. HB 1322 requires workers' compensation insurers to try to settle prior to hearings, HB 1372 deletes certain exemptions for Pinnacol Assurance, SB 224 continues the Physicians Accreditation Program, and SB 240 creates a selection process for independent medical examiners.
In Florida, SB 782 was passed eliminating the sunset of the state's Workers' Compensation Administration Trust Fund. Kentucky HB 115 requires that electrical contractor licensees verify compliance with workers' compensation laws and obtain a specific amount of general liability coverage. Maryland SB 85 exempts the Injured Workers' Insurance Fund from the excessive premium growth charge and other penalties tied to premium growth in risk-based capital calculations. Missouri SB 385 establishes protocols for calculating taxes on workers' compensation policies with deductible options. Nevada AB 294 prohibits the issuance of permanent total disability payments that include restrictive endorsements. New Mexico SB 823 exempts fiscal intermediaries from liability for wrongful acts committed by personal care attendants. North Dakota HB 1149 makes a partner in a limited liability partnership personally liable for failure to pay workers' compensation premiums or file related reports. The Oregon Legislature approved HB 3669 to allow nurse practitioners to provide compensable medical services and to authorize temporary disability benefits.
In Texas, seven of these miscellaneous workers' compensation laws were approved. HB 2198 requires that the first certification of maximum medical improvement and impairment rating assigned to an injured worker is final if not disputed within a certain time frame. HB 2199 establishes that insurers do not waive their right to deny claims by either failing to initiate benefits or dispute claims. HB 2323 establishes procedures for transferring workers' compensation claims when they are originally filed in the wrong court. HB 3168 (SB 820) provides that assignment of an impairment rating or of maximum medical improvement is final if not disputed within 90 days. HB 3378 makes the state's second injury fund a general revenue account. SB 1804 provides that a workers' compensation insurer is liable for health care treatment plans and pharmaceutical services that are voluntarily preauthorized. And finally, Virginia SB 978 requires rating organizations designated by the insurance commissioner to gather, compile, and report experience data for any classification of workers' compensation insurance, including coal mining.
Enumerable state laws have surfaced over the last few years, which impact an insurer's ability to utilize insurance scoring as an underwriting and/or rating tool. Last year's survey of new state laws identified 11 states that approved related legislation. Clearly, insurance scoring continues to represent a key issue as evidenced by the 24 new laws approved in 20 states this year.
The majority of these new insurance scoring measures establish restrictions or prohibitions on the use of credit scoring or create new rules to regulate the practice generally. Alaska SB 13, Arkansas SB 846, Florida SB 40a, Georgia HB 215, Indiana SB 178, Nebraska L 487, North Carolina SB 771, North Dakota HB 1260, Oklahoma SB 539, Rhode Island HB 5362/SB 137 each establish new regulatory restrictions on an insurer's ability to use insurance scoring. Arizona HB 2032, Illinois HB 1640 and HB 3661, Kansas HB 2071, Louisiana HB 1448, Maine HB 362, Nevada SB 319, Oregon SB 260, and Wyoming SB 81 provide for the establishment of rules to regulate the practice.
Colorado (HB 1273) and Virginia (HB 2535) establish disclosure requirements of an insurer's use of insurance scoring. Three other states enacted slightly different insurance scoring-related legislation this year. Arizona SB 1265 authorizes insurers to obtain information about a premises for which coverage is sought from a consumer report. Florida SB 42a exempts insurance scoring methodologies and data from the state's open records laws. And in Virginia, SB 1284 requires auto and homeowners insurers that use insurance scoring as a basis for nonrenewal, to base such decision on credit information procured within 120 days of the nonrenewal.
Another notable issue trend to emerge again this year is the regulation of unsolicited telephone sales calls. A total of 24 new laws pertaining to this issue were approved in 21 states this year. The majority of these new measures either establish new state telemarketing, no-call lists or amend existing no-call registry provisions. Arizona (SB 1119), Arkansas (HB 2293), Mississippi (SB 2445), Montana (HB 424), New Hampshire (SB 98), New Jersey (AB 727), New Mexico (SB 573), North Carolina (SB 872), North Dakota (SB 2255), Pennsylvania (HB 276), South Dakota (SB 41), and New York (SB 5484) each passed laws this year to establish or modify provisions governing their respective no-call registry. The new laws approved in Arkansas and New Hampshire make special provision for adoption of the federal "no-call" registry.
Three more new state telephone sales laws either recognize or encourage adoption of the federal no-call registry. California SB 33, requires compliance with state and federal laws regarding phone solicitations. Michigan SB 164 encourages adoption of the federal do-not-call list. And, New York SB 5484 allows for the transfer of contents of the state no call registry to the federal registry. New provisions approved in two other states (South Dakota and Utah) extend exemptions from the no-call registry to insurers. South Dakota SB 33 exempts calls made by licensed insurers made in an effort to schedule face-to-face meetings, from the definition of unsolicited consumer calls. And, Utah SB 194 exempts insurers from the provisions of the Telephone and Facsimile Solicitation Act.
Several other new telephone solicitation laws were approved this year. Illinois HB 3407 requires solicitors to purchase the state no-call list. Louisiana SB 843 repeals the $5.00 fee for participation in the state's Telephone Solicitation Relief Act. Maine SB 113 prohibits telemarketers from using blocking devices to conceal them from caller identification. Oklahoma HB 1271 renders the no-call list confidential. And in Texas, two new telephone sales laws were enacted. HB 147 amends the definition of telephone sales calls to include those made to mobile numbers, while HB 194 deletes the requirement that addresses be included on the no-call list and replaces that requirement with zip codes.
A total of 25 new tort reform-related laws were approved in 16 states (Arkansas, Arizona, Colorado, Georgia, Idaho, Illinois, Louisiana, Maine, Minnesota, Montana, New Jersey, Tennessee, Texas, Utah, Virginia and West Virginia) this year. These new provisions impact virtually all the key facets of tort reform advocated by the American Legislative Exchange Council (ALEC) and the American Tort Reform Association (ATRA), including measures directed to the award of punitive, noneconomic and exemplary damages, class action certification, appeal bonds, product liability, joint and several liability, prejudgment interest calculation, contingency fee arrangements between public officials and private attorneys and venue shopping.
The Colorado Legislature approved six new tort reform measures this year. HB 1007 limits noneconomic damages in medical malpractice cases. HB 1186 establishes rules to govern assertion of exemplary damage claims. HB 1366 limits appeal bonds in civil proceedings. SB 86 regulates and limits contingency fee contracts between public officials and private lawyers. SB 231 establishes limitations on product liability actions. And, HB 1027 allows for interlocutory appeal of class actions. Georgia also passed a law this year impacting the initiation of class action lawsuits. HB 792 amends procedures for the initiation of civil suits, providing more specific regulation of class action matters.
New laws regulating juror service responsibilities were approved in three states (Arizona, Louisiana, and Utah) this year. Arizona HB 250 establishes the Lengthy Trial Fund to compensate jurors serving 10 days or more. Louisiana HB 2008 amends various juror service provisions including lengthy trial compensation and grounds for waivers and postponements. And, Utah HB 324 establishes acceptable circumstances for juror excusal and postponement and penalties for failing to appear for jury duty.
Legislation related to joint and several liability was enacted in Illinois and Minnesota. Illinois passed a new law (SB 729) exempting plaintiff's employers from joint and several liability calculations for medical costs, while Minnesota approved SB 872, which amends provisions governing the conditions under which several liability exits. The New Jersey Legislature approved a new collateral source payment measure. SB 63 applies the existing collateral source reimbursement provisions to the newly created Special Auto Insurance Policy. And in Tennessee, SB 1687/HB 141 limits the amount of an appeal bond to $75 million.
Montana passed a pair of new punitive damage reform laws. HB 212 generally amends procedures related to the award of punitive damages, while SB 363 establishes actual limits on punitive damage awards. In Maine, HB 835 was approved to prohibit the award of prejudgment interest in small claims matters unless that rate is contractually provided for and limiting prejudgment interest in all other civil cases to the Treasury rate plus 3%. And in West Virginia, SB 213 was approved to prohibit initiation of litigation by nonresidents unless the claim substantially occurred in the state.
The West Virginia Legislature also approved much more sweeping tort reform legislation this year. SB 2122, which specifically targets medical malpractice, provides noneconomic loss limits, elimination of joint liability, and recognition of collateral source payments. In addition to West Virginia, three other states (Arkansas, Idaho and Texas) enacted bills this year that provide comprehensive tort reform. Arkansas HB 1038 reforms state laws specifically related to damages, liability assessment, evidence and venue. Idaho HB 92 eliminates joint and several liability in certain cases, reduces the cap on noneconomic damages in personal injury cases, changes the burden of proof standard and limits punitive damage awards. The Texas Legislature also approved comprehensive tort reform legislation this year. HB 4 revises provisions pertinent to appeal bonds, class actions, intrastate forum shopping, and the award of noneconomic damages.
A couple of more general tort reform measures were also approved this year. Arkansas SB 216 authorizes certain cases be ordered to mediation, while Idaho HB 72 provides rules to resolve lawsuits where the sole relief sought involves $25,000 or less.
New laws impacting an insurer's responsibility to provide notification about rate changes, policy form changes, cancellations, nonrenewals, plans to cease writing business and other more specific issues represent another significant issue trend this year. Fifteen new laws addressing insurer notification requirements were approved in 11 states (Arizona, Arkansas, California, Connecticut, Montana, New York, North Dakota, Rhode Island, South Dakota, Texas and Virginia) this year.
Four of these new measures (Arkansas HB 2823, California AB 1191, Rhode Island HB 5901, and Texas HB 508) establish specific notification requirements for premium increases or adjustments. Arkansas HB 2823 provides notification requirements related to premium increases or nonrenewal for workers' compensation and for the nonrenewal of property/casualty generally, while Rhode Island HB 5901 establishes notification requirements tied to premium and coverage changes.
Several more of these notification requirement laws pertain specifically to policy cancellations. California AB 1727 amends related requirements specific personal property coverage. Montana SB 341 establishes notification regulations for cancellation and nonrenewal of policies. New York SB 4633 requires that notices of cancellation for nonpayment of auto or personal lines premiums include a reference to the premium amount due. Rhode Island HB 5063/SB431 removes the certified mail requirement for cancellation notices on fire policies. And, Virginia SB 1131 provides specific mailing requirements regarding notification of rate changes, cancellations and refusals.
Other notification related measures approved this year include Arizona HB 2150, which establishes notification requirements for liens on damaged vehicles. Connecticut SB 1015 requires insurers to notify insureds of their right to contact the insurance department regarding the denial of claims. North Dakota approved two related measures. HB 1142 requires insurers to notify the commissioner of plans to cease writing, while SB 2238 establishes notification requirements for the determination of total loss of a vehicle. And finally, Texas SB 115 was also approved this year requiring insures to notify insureds at the time of policy renewal of any policy form changes.
Another theme in this year's body of new property/casualty laws is the emergence of broad legislative changes to a variety of sections of individual state insurance codes. These sweeping state insurance law changes include an assortment of technical and substantive revisions, amendments and deletions to statutes governing the practice of insurance.
This report identifies 14 states where these omnibus state insurance law changes occurred in 2003 including Arkansas (HB 2729), Florida (HB 513 and SB 2364), Hawaii (HB 1164), Indiana (HB 1545), Montana (HB 145), Nebraska (L 216), New Hampshire (HB 460), New Mexico (SB 557), Nevada (AB 453), North Carolina (HB 276), Oregon (HB 2278), South Carolina (SB 549), Tennessee (HB 2056), and Utah (HB 373). (Refer to the links provided in the state and issue listings of new laws for a review of the complete text of each of these new laws.)
Ten states (Arizona, Arkansas, Louisiana, Montana, Nevada, New Hampshire, New Jersey, North Carolina, Oklahoma and Texas) approved laws this year related to rate and form regulation. New provisions establishing more flexible rate approval standards were passed in Louisiana and Oklahoma. Louisiana SB 721 exempts rate changes of 10% or less from the state rating commission's approval process, while Oklahoma HB 1721 allows for up to 15% rate decreases without prior state approval. In Texas, two new laws were approved pertaining to homeowner rate increases. SB 113 allows rate discounts to be given to insureds with no claims in three continuous years, while SB 581 lets insurers grant rate discounts to homeowners who use insulating concrete forms. Nevada and Texas enacted laws that simply establish additional regulatory procedures regarding the filing of rates. Nevada SB 250 requires the filing and approval of rates in certain circumstances, while Texas SB 310 requires filing of rate information by all property/casualty insurers.
Additional legislative enactments related to rate and form regulation this year include Arizona SB 1266, which prohibits insurers from charging a higher rate for certain residential properties with a single below deductible claim, than for the same property if no below deductible claims were filed. Arkansas HB 2222 requires property insurers, under certain circumstances, to include an impact statement regarding the effect of rates on fire protection. The Louisiana Legislature approved HB 1508 creating the Office of Property Casualty to assume the functions of the Insurance Rating Commission. Montana HB 588 establishes restrictions on midterm rate increases or coverage decreases for property/casualty policies, under certain circumstances. In New Hampshire, HB 684 was approved to exempt large commercial insureds from rate and form approval regulations. New Jersey AB 2964 deletes regulatory requirements related to surplus policy form regulation. North Carolina SB 769 allows the state underwriting association to create a rate approval process for the Beach Plan Homeowners Policy. And finally, Texas SB 14 regulates rate and form approval for personal auto and residential insurance.
Eleven new laws enacted in eight states (California, Connecticut, Idaho, Illinois, Montana, North Dakota, Utah, and Virginia) this year either amend existing or create new privacy or information disclosure regulations. Six of these new measures pertain specifically to insurer responsibilities related to the handling of confidential information. California SB 27 requires insurers to comply with notification requirements regarding the disclosure of personal information. Illinois HB 1192 requires commercial insurers to disclose loss information at the request of the insured. North Dakota HB 1179 prohibits the disclosure of nonpublic personal information to nonaffiliated third parties. Utah HB 181 prohibits the posting of an insured's social security number on insurance identification cards. And in Virginia, SB 878 requires all insurance entities to implement comprehensive, written information security programs, while HB 2524 allows oral communication of an insurer's privacy practices if insured is given notice.
In addition to these new measures aimed specifically at insurer requirements, several additional bills were enacted pertaining to privacy and disclosure standards. Connecticut SB 836 requires the insurance department to maintain the confidentiality of certain records related to investigations. Idaho HB 58 creates a process by which confidential information can be shared between government entities and the National Association of Insurance Commissioners (NAIC). California SB 1 enacts the California Financial Information Privacy Act of 2003, while Montana HB 205 simply outlines several changes to the state's insurance privacy laws. And finally, the Virginia Legislature enacted a new law (HB 1928) prohibiting financial institutions from disclosing customer records to law enforcement officials pursuant to a subpoena duces tecum.
Twelve new financial regulation laws were approved this year in 10 states. Three of these new measures address regulations specific to insurer investments, two of which pertain to foreign investments. Idaho HB 59 clarifies that insurers may invest in any foreign corporation publicly traded on the U.S. stock exchange, while Washington SB 5616 simply establishes rules to govern insurer investments abroad. Mississippi HB 688 specifies how a domestic insurer may invest its assets.
In Kansas, SB 26 was passed reauthorizing the NAIC's Risk-Based Capital instructions. Maine SB 522 permits the creation of Special Purpose Reinsurance Vehicles (SPRV). In New York, SB 3878 extends the use of derivatives. The Oregon Legislature approved HB 2623 changing the composition of the deposit that insurers are required to place with the state. Texas SB 637 makes insurers responsible for paying NAIC filing fees. Virginia enacted a new measure requiring insurers to report their direct gross premium income during the previous year. In Washington, HB 1654 was approved creating rules to govern the borrowing of money by domestic insurers. And, West Virginia approved two new financial regulation laws this year. SB 356 establishes a 40 day timeframe to conduct a public hearing related to agreement between domestic insurers and depository institutions to exchange securities, while SB 486 requires a certified public accountant to provide notification about misstated financial conditions.
Twelve new insurer licensing laws were approved in 11 states (Arizona, Delaware, Louisiana, Montana, New York, North Dakota, Oregon, Rhode Island, Utah, West Virginia, and Wyoming) this year. Four of these states (Montana HB 169, New York SB 5729, Oregon SB 253, and Utah HB 374) provide a variety of amendments to their respective producer licensing laws.
Arizona and Louisiana passed licensing measures affecting continuing education requirements. Arizona HB 2150 extends the repeal date for provisions related to continuing education requirements, while Louisiana SB 229 provides for the award of continuing education credits for membership in a state or national insurance association. Two other states approved licensing measures related to surplus lines. North Dakota SB 2123 allows the insurance commissioner to revoke or suspend a surplus lines license if a producer fails to file an annual statement or pay taxes, while West Virginia HB 2715 amends and reenacts that state's surplus lines law to, among other things, address nonresident licensing reciprocity.
Delaware HB 280 establishes licensing standards for public adjusters. Montana SB 444 provides penalties for individuals who hold themselves out as insurance producers without being properly licensed. And, Wyoming HB 193 requires individuals who offer rental car insurance to become licensed producers.
Eight states approved legislation related to residual market plans. Three of these new laws (Iowa HB 599, Mississippi HB 1113 and SB 2628) create new placement facilities or residual market plans to provide residential and medical malpractice coverage. Two other states (Maryland HB 1153 and Rhode Island HB 5476/SB 281) passed new laws increasing the level of coverage that can be provided under their respective Fair Access to Insurance Requirements (FAIR) plans.
The Wyoming Legislature approved a measure (HB 261) calling for a feasibility study to evaluate the creation of joint underwriting associations to provide medical malpractice, mutual and liability risk retention coverage. Texas SB 1606 changes the regulatory requirements for establishing residential FAIR plans. South Dakota approved SB 2251 giving the state insurance commissioner authority to create a property insurance placement facility. And finally, the Louisiana Legislature approved HB 1788 requiring property insurers to participate in the Coastal and FAIR plans.
Five states (Colorado, Connecticut, Idaho, Maine, and North Dakota) approved new laws this year that directly pertain to the role of the state insurance regulator. Four of these new laws establish additional authorities for the state insurance regulator. Connecticut HB 6377 authorizes the commissioner to engage the services of experts to assist in the review of financial, licensing and holding company regulatory analysis. Idaho HB 60 authorizes the insurance department to investigate company applicants for certificate of authority. Maine SB 510 authorizes the superintendent of insurance to adopt rules to govern fees and fee caps, while North Dakota SB 2205 empowers the commissioner to grant extensions and waive penalties related to annual report requirements.
Colorado approved a more general insurance regulator provision (SB 59) that simply reenacts the division of insurance and its regulatory functions. And, the North Dakota Legislature approved two additional related laws. HB 1137 requires insurers to respond to commissioner inquiries within 20 days regarding company activities, while HB 1264 prohibits the commissioner from renewing or approving licenses suspected to be used to write controlled business.
Six states (New Mexico, New York, Oklahoma, Virginia, Wisconsin, and West Virginia) approved new laws this year related to insurer tax issues. New Mexico HB 420 increases the state's premium tax rate (from 3% to 3.003%), while SB 331 exempts state/political subdivisions from the premium tax assessment. New York approved AB 2106, replacing the state's franchise tax with a 2% premium tax. Oklahoma passed HB 1658 providing procedures for obtaining a refund for erroneously paid premium taxes.
The Virginia Legislature approved SB 854 to provide penalties for failure to report gross premium income or to pay tax. In Wisconsin, SB 197 changes the franchise tax formula for domestic companies. And, West Virginia SB 485 allows the insurance commissioner to compromise any claim relating to the liability of a person with respect to a tax, surcharge, interest, fee, fine or penalty.
Five states (Florida, Georgia, Louisiana, North Dakota and Texas) approved new laws this year related to the issue of insurance fraud. The Florida Legislature enacted SB 1694, the Pete Orr Insurance Anti Fraud Act, which represents the most comprehensive state legislative initiative in 2003 aimed at combating insurance fraud. In Georgia, two new laws were enacted both of which amend definitions related to insurance fraud activities. HB 236 specifically includes the term insurance fraud within the definition of racketeering under the state's RICO laws, while HB 598 amends the definition of insurance fraud to include acts of persons representing unauthorized companies.
Louisiana approved a new measure (SB 923) creating the Fraudulent Transfers Act to provide penalties and remedies with respect to insolvent debtors. The North Dakota Legislature passed HB 1231, creating an insurance fraud unit within the state insurance department. And finally, Texas approved a measure (HB 1838) requiring anyone convicted of insurance fraud to pay restitution.
Five states (Louisiana, Montana, Oklahoma, Rhode Island, and Texas) approved legislation this year directed to the problem of mold and mold remediation. Two of these new measures (Louisiana HB 1328 and Texas HB 329) establish licensure requirements for individuals involved with mold assessment and remediation. Texas HB 329 may represent the most substantial mold-related legislation in terms of its direct impact on the property/casualty industry because it actually prohibits certain underwriting decisions that are based on prior mold claims.
The Louisiana Legislature also approved a measure (HB 1681) requiring the state Real Estate Commission to produce an information pamphlet about mold. In Montana, HB 536 was enacted requiring sellers or landlords to disclose knowledge of mold on a premises to prospective buyers and renters. And finally, legislative study groups have been created in two states to review and make state policy recommendations about mold. Oklahoma HCR 1011 creates the Joint Task Force on Mold Remediation, while Rhode Island SB 983 creates a group to study the effects of toxic mold.
Five states (Louisiana, Mississippi, North Dakota, Ohio, and West Virginia) enacted legislation impacting the operation of foreign insurers. Louisiana HB 1477 changes its laws regulating the certification of foreign insurers. Louisiana HB 1477 amends state provisions regulating the certification of foreign insurers. Mississippi SB 2261 requires foreign insurers to include articles of incorporation and bylaws in filings made with the insurance commissioner. North Dakota HB 1140 exempts foreign insurers from state examination requirements under certain circumstances. Ohio HB 137 establishes provisions to regulate the appointment of agents by foreign companies. And, West Virginia SB 358 allows domestic companies to transfer domicile and become admitted as foreign insurers.
Five states (Minnesota, New Hampshire, North Carolina, Oregon, and Texas) enacted new provisions this year related to insurer participation in or regulation of the state guaranty fund. Minnesota HB 946 amends various sections of state law pertaining to the guaranty fund. New Hampshire SB 178 excludes guaranty fund coverage for claimants with a net worth greater than $25 million, while North Carolina HB 1093 exempts coverage for claimants with a net worth of $50 million. Oregon passed a new law (HB 3031) requiring insurers to recoup guaranty fund assessments through an assessment on net direct written premium. And finally, the Texas Legislature approved SB 1192 to amend the definition of a claim covered under the state guaranty fund.
Regulatory Filing Requirements
Five states (Arkansas, Connecticut, Mississippi, North Carolina, and North Dakota) approved new laws this year that pertain to an insurer's regulatory filing requirements. Arkansas HB 2770 requires the filing of annual fire loss statements on a county-by-county basis. Connecticut SB 837 requires that any filings submitted to the NAIC also include any additional filing information required by the state. Mississippi HB 692 requires new domestic companies to file quarterly financial statements with the state. North Carolina HB 283 specifies the type of paper to be used by companies when submitting filings and other information with the insurance department. And, North Dakota SB 2121 authorizes the insurance commissioner to designate the NAIC as the chief repository for annual statement filings.
Four states approved new laws this year related to the adoption, modification or enforcement of state building code provisions. For several years now, NAMIC has helped lead property/casualty industry advocacy efforts aimed at encouraging adoption and strict enforcement of up to date state building regulations as a fundamentally important means of improving life safety and reducing damages associated with catastrophic events. Oregon HB 2564 creates rules to regulate the licensure of individuals employed in the building trade. South Carolina SB 449 empowers the state building code council to review and adopt building codes, removing that responsibility from counties and municipalities, but maintaining their responsibility for code enforcement. Texas HB 730 creates a state construction commission to adopt building code standards. And, Washington HB 1734 adopts the International Building Code as the official state building code.
Four states (Arizona, Montana, New York, and Utah) approved legislation this year related to the formation or regulation of captive insurance entities. Three of these new laws (Arizona HB 2152, Montana HB 179, and Utah HB 372) establish rules to govern formation, operation and licensure of captive insurers. The fourth (New York AB 8592) allows for the formation of captive companies, for liability coverage only, related to activities in or near the world trade center in response to the events of 9/11.
The Legislatures in four states (Indiana, Michigan, New York, and West Virginia) enacted measures this year that pertain to the regulation of the mutual or farm mutual industry. Indiana HB 1692 amends that state's farm mutual laws to, among other things, create two separate classes of insurers (extended and standard) and remove geographic boundary restrictions. The Michigan Legislature approved HB 4311 creating a farm produce insurance authority and fund to be financed through assessments on grain dealers. New York SB 4451 decreases the number of board members required to incorporate a mutual company. And, West Virginia SB 488 establishes the amount of required contingent liability of members of farmers' mutual fire insurance companies and limits the amount of risk such companies may undertake.
Four states (Connecticut, Illinois, Nevada, and Texas) approved new laws this year to govern structured settlements. Three of these (Connecticut SB 1059, Illinois HB 3582, and Nevada AB 166) either adopt the model state structured settlements protection act or more generally establish rules to govern the transfers of rights under structured settlements. The Texas Legislature approved a new law (HB 1666) to expand which courts may approve structured settlement transfers.
Four states (Michigan, Minnesota, New Jersey, and Virginia) approved new laws this year pertaining to the issue of terrorism and an insurer or financial institution's responsibilities related thereto. The Michigan Legislature enacted HB 4432, which allows insures to specifically exclude coverage for fire following an act of terrorism. Minnesota HB 267 provides that losses resulting from acts of terrorism are not covered under commercial property policies unless they include an endorsement that specifically covers those types of losses. New Jersey AB 1651 prohibits financial institutions from withdrawing or otherwise disposing of funds or assets related to or suspected to relate to terrorism until further court order. And, Virginia HB 2606 requires all standard fire policies to contain a provision stating that the insurer will not be liable for terrorism related losses.
Three states (Alabama, Florida and Georgia) approved new laws this year amending provisions that govern investment tax credits. Alabama HB 13a changes numerous provisions governing an insurer's ability to receive investment credits against their premium tax payments. Florida SB 1176 specifies the allocative reporting requirements for employee salaries relative to the state's premium tax credit. And, the Georgia Legislature approved HB 43 to delay the time at which a certified investor may take up to 10% of vested tax credits to reduce its premium tax liability.
Demutualization/Reorganization
Three states approved new laws specific to mutual industry reorganization issues. The Florida Legislature approved HB 235 specifying the distribution of assets upon voluntary dissolution or merger of domestic mutual holding companies and the equity share of each member upon conversion into stock entities. South Carolina (HB 3575) and Tennessee (HB 1552) both approved new laws specifying when unclaimed property payable and distributable in the course of a demutualization is considered abandoned.
Three states (Idaho, Kentucky, and Vermont) passed new electronic commerce related laws this year. Idaho SB 1061 eliminates inconsistencies between the state's Filing Act and the Uniform Electronic Transactions Act (UETA). The Kentucky Legislature approved SB 153 to allow policies to be electronically transmitted upon agreement between insurer and insured. And, Vermont HB 148 adopts the UETA model law.
New laws specific to the reinsurance industry were approved this year in Maine, North Dakota, and Wisconsin. Maine HB 1095 excludes obligations of insurers related to reinsurance contracts from the state loss claim requirements. The North Dakota Legislature approved HB 1141 requiring domiciled insurers to report any new ceded reinsurance agreements to the insurance commissioner. And, Wisconsin SB 116 establishes when the amount recoverable by a liquidator from a reinsurer of a ceding insurer is reduced.
Uniform Commercial Code Changes
Delaware and Washington State both approved Uniform Commercial Code (U.C.C.) changes this year. Delaware HB 268 amends the U.C.C. by increasing fees related to secured transactions and provides for expedited services via the secretary of state. And, Washington SB 5561 establishes rules to govern restrictions on assignments under the U.C.C.
Miscellaneous New Insurance Law Provisions
A total of 20 additional laws, approved in 16 states (California, Colorado, Connecticut, Illinois, Louisiana, Mississippi, Montana, New Jersey, New York, Oklahoma, Oregon, Rhode Island, Texas, Virginia, Washington, and West Virginia) this year, represent unique, single state issue trends that do not fall into the various issue trend categories identified in this report, but which bear direct relevance to the property/casualty industry. A brief recap of these miscellaneous new insurance law provisions is provided below.
In California, AB 1049 was approved prohibiting adverse underwriting decisions based on an individual's prior inquiry about coverage under a residential fire or property policy. Colorado HB 1045 increases criminal penalties for the sale of unauthorized insurance products. Connecticut SB 1112 increases recovery limits under the DRAM Shop Act. Illinois approved two of these miscellaneous provisions. HB 3547 extends the restriction on denial of coverage for victims of abuse, while SB 1207 increases the damage limits tied to unreasonable or vexatious delays. The Louisiana Legislature also approved two new laws. HB 224 requires trust companies to be insured, while SB 150 provides that contingency fee arrangements between insurers and adjusters are null and void. Mississippi SB 2268 eliminates the requirement for agents to exhibit (on demand) their company appointment certification. Montana HB 130 changes provisions regarding timely payment of claims. New Jersey AB 3319 protects certain insurance producers when an insurer transfers business to another company. The New York Legislature also approved two new miscellaneous laws. AB 8021 requires wrongful death actions related to 9/11 to commence within 2.5 years of death, while SB 5700 extends the property casualty availability act to 4/30/04.
In Oklahoma, HB 1273 clarifies that when paying a total loss on a motor vehicle to a third claimant, any registered lien must be included. Oregon SB 297 requires insurers to pay all amounts under a general liability policy unaffected by other insurance that may provide coverage. Rhode Island HB 6021/SB433 establishes rules to govern premium finance arrangements. In Texas two miscellaneous laws were also enacted. HB 1865 allows insurers to write group property coverage for a group or association constituting a large risk, while HB 2455 sunsets the state department of insurance and the office of public insurance counsel on September 1, 2007. Virginia SB 877 establishes that failure to pay late penalty fees for appointment processing or renewal constitutes grounds for appointment termination. Washington HB 1150 prohibits the sale of single premium credit insurance in connection with mortgage loans unless certain conditions are met. And finally, the West Virginia Legislature approved HB 2702 this year, eliminating the examination assessment fee on risk retention groups.
Compliance Resources
Legislative and Regulatory Information Service (LARIS)
NAMIC Survey of New State Insurance Laws
Related Links
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