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NAMIC 2004 Survey of New State Insurance Laws Summary and Analysis
Overview
The 2004 edition of NAMIC's Survey of New State Insurance Laws identifies, categorizes, summarizes, provides effective dates as well as active link access to the complete text of 281 new insurance laws enacted by the 44 state legislatures that met this year. (Arkansas, Montana, Nevada, North Dakota, Oregon and Texas did not meet in regular session in 2004.) Once again, the new laws that make up this year's report bear direct relevance to various aspects of the Property/Casualty (P/C) industry and deemed to be of particular significance to NAMIC members. The following is a list of the states included in this year's report with the number of new P/C laws noted in parenthesis for each.
Alabama (0), Alaska (6), Arizona (12), California (7), Colorado (18), Connecticut (2), Delaware (5), Florida (5), Georgia (6), Hawaii (1), Idaho (19), Illinois (2), Indiana (5), Iowa (6), Kansas (5), Kentucky (4), Louisiana (10), Maine (3), Maryland (4), Massachusetts (7), Michigan (3), Minnesota (2), Mississippi (3), Missouri (2), Nebraska (5), New Hampshire (8), New Jersey (10), New Mexico (5), New York (6), North Carolina (1), Ohio (9), Oklahoma (11), Pennsylvania (9), Rhode Island (11), South Carolina (5), South Dakota (12), Tennessee (7), Utah (16), Vermont (2), Virginia (19), Washington (9), West Virginia (9), Wisconsin (5), Wyoming (5)
A significant portion of the new laws identified in this year's report are concentrated in a relatively small number of states. Four states (Colorado, Idaho, Utah and Virginia) account for over one-quarter of all the new laws in this year's report. The legislatures in just these four states alone enacted 72 new laws in 2004 or 26% of the new measures highlighted in this report. Moreover, just nine states in this year's survey (Arizona, Colorado, Idaho, Louisiana, New Jersey, Oklahoma, Rhode Island, Utah and Virginia) account for 126 new laws, nearly half (45%) of all the new state laws identified by the 2004 survey.
Virginia and Idaho lead the way this year with 19 new P/C-related laws approved by each. The Idaho Legislature enacted new laws that pertain to a variety of key industry issues including financial regulations related to NAIC accounting standards, risk-based capitol requirements, and the state guaranty fund, as well as several new incorporation and certification standards, in addition to new measures addressing more specific areas such as the premium tax, state building codes, the role of the state regulator, telephone sales restrictions, and workers' compensation. The Virginia Legislature also approved 19 new laws this year addressing the use of CLUE, fire insurance coverage, mold, rate regulation, the role of the state regulator, telephone sales, tort reform, workers' compensation, and various other specific regulatory operating requirements.
The Colorado legislature passed 18 new P/C-related laws addressing a wide variety of issues including the use of CLUE, insurance scoring, motor vehicle laws (related to salvage title, assignment of benefits, cancellation requirements, domestic and optional or enhanced coverage factors, medical payments and proof of coverage requirements), premium tax credits, regulation of rates, powers of the state insurance department, tort reform specific to jury duty requirements and workers' compensation provisions.
And, Utah is also at the top of the list with 16 relevant new P/C laws (pertaining to captive insurers, the use of CLUE, financial solvency and liquidation standards, fraud, licensing requirements, PIP payments, DUI penalties, UI/UIM coverage, state building codes, telephone sales restrictions and workers' compensation.)
With a large percentage of new state laws concentrated in a relatively small number of states it is not surprising to find that an equally significant number of states passed very few relevant new P/C laws in 2004. In fact, eight state legislatures approved two or fewer new laws in 2004. States with the fewest new P/C laws in this year's report include Alabama (0), Connecticut (2), Hawaii (1), Illinois (2), Minnesota (2), Missouri (2), North Carolina (1) and Vermont (2).
The 2004 Survey of New State Insurance Laws categorizes all 281 of the various new P/C laws into 21 individual key issue trends that are significant to the NAMIC membership. These include: captives, the use of CLUE, FAIR Plans, financial regulation, fire insurance, fraud, guaranty funds, insurance scoring, licensure standards, miscellaneous new insurance provisions - focusing on a variety of regulatory issues, motor vehicle insurance, mold, omnibus - technical and substantive - state insurance law changes, premium tax, rate regulation, state building codes, the role of the state regulator, restrictions on the use of telephone sales, terrorism coverage, tort reform, and workers' compensation.
Closely following the notable key issue trends from recent years, far and away the greatest number of new laws identified in this report pertain to motor vehicle insurance. This year's survey identifies 59 new motor vehicle related laws approved in 27 states (Alaska, Arizona, Colorado, Delaware, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Missouri, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington and West Virginia.) Nearly one-quarter (21.2%) of all the laws identified in this report relate to motor vehicle insurance. Of these 59 new laws, over one-third (23 or 39%) address a general category referred to as "traffic safety", which encompasses DUI thresholds and penalties, child safety seat standards, graduated driver's licenses, seat belt enforcement, and unsafe driving acts. Other notable subcategories of new motor vehicle insurance laws that surface in this report include proof of coverage or financial responsibility requirements, UI/UIM, salvage title, cancellation and notification requirements, and a variety of other miscellaneous new motor vehicle provisions.
Also closely mirroring the notable key law issue trends from recent years, the second greatest number of laws contained in this report pertain to workers' compensation. The 2004 survey highlights 40 new workers' compensation provisions approved in 23 states (Alaska, Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho, Louisiana, Maryland, Nebraska, New Hampshire, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Dakota, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming) in 2004, accounting for nearly 15% of all the new laws in this year's compilation of new laws. The more notable recurring issue themes among this year's batch of new workers' compensation measures include: benefits, claims and authorized treatments; disputes and settlements; omnibus - technical and substantive - state workers' compensation law changes; state workers' compensation fund regulations; contractor requirements; workers' compensation fees; state regulatory oversight; and a variety of other miscellaneous new laws addressing other more specific areas of workers' compensation regulation.
Another significant issue trend in this year's report is tort reform. It is encouraging to note that many of the new provisions contained within this category represent efforts (such as reforming civil justice certification standards, jury duty requirements, appeal bond amounts, the amount of interest accruing to judgments and product liability reforms generally) that NAMIC and the insurance industry are actively advocating before state legislatures around the country as necessary steps toward improving the state court civil justice system. A total of 21 new tort reform related laws identified in this year's report were approved in 16 states (Arizona, Colorado, Georgia, Illinois, Iowa, Kansas, Michigan, Minnesota, Mississippi, New Mexico, Ohio, Oklahoma, Pennsylvania, Tennessee, Virginia and Washington) in 2004. The most common categories of tort reform include appeal bond reform (approved in Georgia, Minnesota, and Virginia), common sense consumption litigation reform (Illinois, Michigan and Tennessee), the calculation of interest on judgments (New Mexico, Ohio and Washington), product liability reform (Arizona and Iowa), asbestos-related actions (Ohio and Pennsylvania), and more comprehensive tort reform legislation (Mississippi and Oklahoma.) Other important tenets of tort reform addressed by state legislatures in 2004 include efforts to curb frivolous lawsuits (Arizona), jury duty requirements (Colorado), class action certification (Kansas) and silica and/or mixed dust claims (Ohio).
Collectively, the new laws pertaining to motor vehicle insurance, workers' compensation and tort reform account for nearly half (120, 43%) of all the new state insurance laws identified in this year's report. But, several other notable issue trends also emerge from the 2004 survey.
Thirteen new laws that address financial regulations were approved in 12 states (Delaware, Florida, Idaho, Indiana, Kentucky, Maryland, Oklahoma, Pennsylvania, South Dakota, Utah, Washington and West Virginia) in 2004. Ten states (Colorado, Delaware, Louisiana, Massachusetts, New Hampshire, Oklahoma, Rhode Island, South Carolina, South Dakota and Virginia) approved new laws that address rate regulation. Nine states (Alaska, Florida, Idaho, Louisiana, New Hampshire, New Jersey, South Dakota, Washington and Wisconsin) approved new measures related to their respective state guaranty funds. Nine states (Arizona, Colorado, Georgia, Maine, North Carolina, Oklahoma, Utah, Virginia and Wyoming) approved laws related to use of CLUE. Eight states (Arizona, Colorado, Idaho, Iowa, New Hampshire, New Mexico, Tennessee and Virginia) passed laws that address the role of the state insurance regulator. Eight states (Colorado, Florida, Idaho, Kansas, Kentucky, New Jersey, South Carolina and South Dakota) passed new premium tax related laws.
Other trends that surface from among the many new laws in this year's report include measures aimed fire insurance coverage (9 new laws in seven states), licensure standards (eight new laws in eight states), insurance-based credit scoring (seven new laws in seven states), fraud (eight new laws in seven states), telephone sales (seven new laws in six states), Omnibus state insurance law - technical and substantive - changes (six laws in six states), FAIR plans (five new laws in four states), state building codes (five new laws in five states), mold (four new laws in four states), captives (three new laws in three states), and terrorism coverage (two new laws in two states.)
The following provides a brief summary and analysis of each of the notable key issue trends that emerge from this year's listing of new laws.
Search for an Issue Overview
- Traffic Safety
- Proof of Coverage/Financial Responsibility
- UI/UIM
- Salvage Title
- Cancellation, Denial (Nonrenewal) Requirements
- Miscellaneous New Motor Vehicle Insurance Laws
- Benefits, Claims and Authorized Treatments
- Disputes and Settlements
- Workers' Compensation Funds
- Omnibus State Law Changes
- Contractor Requirements
- Fees
- State Oversight
- Miscellaneous New Provisions
- Appeal Bond
- Judgment Interest
- Common Sense Consumption
- Product Liability
- Asbestos
- Comprehensive Legislation
- Frivolous Lawsuits
- Jury Duty
- Class Action Certification
- Silica/Mixed Dust Claims
Additional Emerging New Law Issue Trends
- Captives
- CLUE
- FAIR Plans/Shared Markets
- Financial Regulation
- Fire Insurance
- Fraud
- Guaranty Fund
- Insurance Scoring
- Licensure
- Mold
- Premium Tax
- Rate Regulation
- State Building Codes
- State Regulator
- Telephone Sales
- Terrorism Coverage
- Omnibus Insurance Law Changes
- Miscellaneous New Insurance Provisions
Motor Vehicle Insurance
Once again this year, nearly one-quarter (21%) of all the new laws identified address motor vehicle insurance. Twenty-seven states (Alaska, Arizona, Colorado, Delaware, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Missouri, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington and West Virginia) enacted legislation related to motor vehicle laws in 2004. As noted above, the various new motor vehicle insurance laws pertain to several distinct motor vehicle insurance issues including traffic safety (DUI, child safety seats, seat belt enforcement, graduated driver's licenses and unsafe driving actions), proof of coverage or financial responsibility, UI/UIM requirements, salvage title, cancellation and notification requirements, and a miscellaneous group of additional motor vehicle related laws.
Nearly half (23) of the new motor vehicle insurance related laws contained in the 2004 report pertain to traffic safety, which includes laws pertaining to DUI thresholds and penalties, child safety seat and seat belt enforcement, graduated driver's license standards and unsafe driving actions. Far and away the most commonly identified new traffic safety laws pertain to DUI thresholds and penalties. Nine states (Arizona, Delaware, Indiana, New Jersey, New Mexico, Pennsylvania, South Dakota, Utah and West Virginia) enacted legislation in 2004 to clarify, revise or toughen DUI thresholds and related penalties. Five states (Georgia, Indiana, New York, Pennsylvania and Vermont) passed laws in 2004 further regulating the use of child safety seats. Pennsylvania and New Jersey both approved measures aimed curbing unsafe driving actions. Pennsylvania passed HB 873 to revise penalties pertaining to careless driving and school zone infractions, while the New Jersey legislature approved AB 3109, which increases unsafe driver surcharges from $100 to $150, and AB 3114, which directs state courts to assess persons found guilty of unsafe driving violations a $250 surcharge.
In addition, Alaska HB 213 was approved in 2004, providing basic criteria for the state to issue provisional (graduated) drivers' licenses to young drivers between the ages of 16 and 18.
Proof of Coverage/Financial Responsibility
Seven states (Colorado, Kansas, Kentucky, Nebraska, Ohio, Rhode Island and Tennessee) approved new laws in 2004 that pertain to proof of insurance coverage or financial responsibility. Colorado approved two such laws. HB 1042 require registrants to demonstrate proof of insurance at the time of registration, while HB 1193 increases fines related to failure to provide proof of coverage. Kansas (HB 2545) and Kentucky (HB 29) approved legislation aimed at establishing additional insurer verification requirements. Nebraska L 911 allows for the electronic transmission of a certificate of proof of financial responsibility. The Ohio General Assembly passed a new law (HB 139) specifying that policies under the state's Financial Responsibility Law remain subject to their original terms and conditions. Rhode Island HB 8237 requires proof of insurance to state the insured's right to choose any qualified auto repair facility. And, Tennessee HB 2601 requires motor vehicle reports to include evidence of compliance with financial responsibility requirements by individuals and vehicles involved in accidents.
Five states (Alaska, Illinois, Oklahoma, Utah and Washington) approved new provisions in 2004 that address uninsured and underinsured motorist laws. Alaska HB 336 limits recovery of noneconomic damages resulting from operating a vehicle while uninsured. Illinois SB 2238 allows insureds to reject additional uninsured motorist coverage in excess of state law. Oklahoma HB 2549 expands the class of policies to which uninsured motorist coverage does not apply. Utah SB 225 prohibits interpolicy stacking of uninsured and underinsured motorist coverage. And, Washington HB 2987 requires insurers that write motorcycle coverage to provide information about underinsured coverage.
Four states (Colorado, Missouri, Ohio and Washington) passed new motor vehicle laws in 2004 that related to salvage value or title requirements. In Colorado, HB 1062 establishes procedures for handling abandoned vehicles with an appraised value of $2,000 or less. Missouri SB 1233 amends provisions regarding, among other things, salvage vehicles. Ohio HB 230 changes requirements for salvage title certificates, while Washington HB 2908 simply establishes rules to govern registration and inspection of salvage vehicles.
Cancellation, Denial (Nonrenewal) Requirements
Four states (Colorado, New Hampshire, Oklahoma and South Dakota) approved new laws addressing regulatory requirements specific to cancellation, denial or nonrenewal of motor vehicle insurance. Colorado SB 26 increases the time period in which the insurance commissioner must hold a hearing regarding cancellations that have been protested. New Hampshire SB 371 amends various provisions generally related to denial of coverage. Oklahoma HB 2668 prohibits an insurer from canceling, refusing to renew or charging a higher premium on the basis that the insurer has lower liability limits with a previous insurer, without actuarial justification. And, South Dakota SB 25 allows that an automobile insurance policy in effect for less than 60 days may be cancelled for any reason if notice is given within 60 days.
Miscellaneous New Motor Vehicle Insurance Laws
Eight states (Arizona, Colorado, Georgia, Iowa, Kansas, New York, Rhode Island and Utah) approved other specific types of key motor vehicle insurance laws in 2004, which are captured under this miscellaneous motor vehicle insurance laws category.
Two states (Arizona and Colorado) approved new laws that generally pertain to coverage factors. Arizona SB 1241 simply amends the definition of accident for automobile insurance purposes. Colorado SB 21 requires collision coverage to apply to accidents occurring with the U.S. and its territories, eliminating the requirement that coverage apply to accidents occurring in Canada, while Colorado HB 1232 prevents insurers from automatically including optional or enhanced coverage without the policyholder's consent. The Colorado Legislature approved two additional laws. HB 1026 requires insures offering med-pay coverage to offer a $5,000 limit option, while HB 1114 prohibits insurers from reimbursing health care providers at different rates for the same services and precludes retroactive reimbursement adjustments after 12 months. The Georgia Legislature approved HB 1499 to reduce the mandatory period of pre-payment of motor vehicle premiums to 30 days. In Iowa, SB 2253 was approved amending disclosure requirements regarding the transfer of vehicle ownership. In Kansas, HB 2563 was passed increasing from $500 to $1,000 the apparent financial damages from an accident requiring notice be given of such accident. The New York General Assembly approved SB 5120 establishing insurer verification responsibilities. Rhode Island SB 2106 requires rental vehicle coverage be provided under the property damage liability section of a private passenger policy, while HB 7710 repeals sunset provisions of motor vehicle laws pertaining to liability of vehicle owners for the safety of others. And in Utah, HB 325 prohibits insurers from issuing policies covering at fault drivers from reducing compensation based on an injured party's failure to maintain coverage providing personal injury protection.
Workers' Compensation
As was the case last year, the second most common category of new state law to surface this year pertains exclusively to workers' compensation. Nearly 15% of all the new laws identified in this report relate to the regulation of some aspect of workers' compensation insurance. A total of 40 new workers' compensation measures were approved in 23 different states (Alaska, Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho, Louisiana, Maryland, Nebraska, New Hampshire, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Dakota, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming) in 2004. A brief analysis of the various and distinct issue themes (contractor requirements; benefits, claims and authorized treatments; fees; disputes and settlements; omnibus law changes; workers' compensation funds; state oversight; and miscellaneous new workers' compensation provisions) contained within these new workers' compensation laws is provided below.
Benefits, Claims and Authorized Treatments
Five states (Arizona, California, Maryland, Washington and Wyoming) approved new laws in 2004 that generally impact benefits, claims or authorized workers' compensation treatments. Arizona HB 2399 provides that any testing or prophylactic treatment for HIV or hepatitis C qualifies as a workers' compensation claim under certain circumstances. California AB 1840 provides for a $250,000 death benefit to be paid to the estate of deceased police officers. Maryland HB 776 extends benefits to Montgomery County deputy sheriffs. Washington HB 1691 authorizes advanced registered nurses to examine, diagnose and treat injured workers. And in Wyoming two new related measures were approved. HB 52 allows surviving children (enrolled in post-secondary education) to continue to receive benefits to the age of 21, while HB 53 requires temporary light duty awards to be paid monthly at 80% of the difference between the employer's light duty wage and the employee's actual monthly earnings.
Three states (Connecticut, Louisiana and New Hampshire) approved new laws in 2004 that specifically address either dispute resolution or settlement protocol of workers' compensation cases. Connecticut HB 5340 allows lump sum settlements to be prorated over the life expectancy of the injured party. The Louisiana Legislature approved two new related measures. HB 823 allows disputes between a health care provider and a payor to be consolidated and establishing proper venue within the workers' compensation district in the parish of domicile of either the payor or provider, while HB establishes that prior written approval from the second injury board is required before submitting a settlement for approval. And in New Hampshire, two new related laws were also approved. SB 423 exempts records and proceedings of the state Department of Labor from the right to know law with regard to workers' compensation claims, while SB 431 establishes a prohibition on provisions in any agreement that would require employers or their carriers to waive subrogation rights.
Three states (Georgia, Idaho and Nebraska) approved new measures directly related to their respective state workers' compensation funds. Georgia HB 1579 provides that the state's subsequent injury trust fund may not reimburse self-insured employers or insurers for subsequent injuries for which a claim is made for an injury occurring after 6/30/08. Idaho legislators approved two new related laws in 2004. HB 533 extends provisions that require a claimant, employer/surety, or self-insured employer to provide materials for evaluation of the merits of a claim prior to filing a complaint for benefits from the industrial special indemnity fund, while HB 488 requires the state insurance department to conduct an examination of the state insurance fund every five years. And in Nebraska, L 1091 specifies that the workers' compensation trust fund be administered by the state workers' compensation court.
Omnibus State Workers' Compensation Law Changes
The legislatures in three states (Florida, Vermont and Wisconsin) enacted legislation in 2004 to revise, update, modify or otherwise amend their various and complex workers' compensation laws. The Florida Legislature approved SB 1926 addressing notification and rate approval requirements and requiring an annual report on the status of the state's workers' compensation market. In Vermont, HB 632 was also approved making various technical and substantive revisions to its workers' compensation laws. And, Wisconsin AB 669 amends provisions pertaining to benefit payments, disputes, supplemental benefits, examination and treatment, self-insured employer payments and program administration.
Alaska and Colorado approved new workers' compensation provisions in 2004 that specifically address compliance requirements of contractors working in those states. Alaska SB 323 requires general contractors to provide workers' compensation coverage for employees of subcontractors if the subcontractor fails to do so. Colorado HB 1090 establishes a civil penalty for independent contractor's who fail to provide coverage to all employees.
The legislatures in Arizona and Idaho passed laws in 2004 that address specific workers' compensation related fees. Arizona HB 2438 directs the state workers' compensation commission to establish a fee schedule for prescription drugs, while Idaho SB 1393 authorizes a fee to be charged to community service workers' for the purpose of providing them coverage.
The New Mexico and Virginia legislatures approved new measures aimed at state regulatory oversight of their respective workers' compensation markets. New Mexico SB 30 reduces the time period an ombudsman is ineligible to hold another position within the administration from five years to one year. And, Virginia SB 597 establishes that the state workers' compensation commission has the powers of a court to administer oath, mandate witness appearances, require document production, punish, appoint guardians, and enforce general compliance.
Miscellaneous New Workers' Compensation Provisions
Eleven states (Arizona, California, Colorado, Florida, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Dakota, Utah and Virginia) approved other types of workers' compensation measures in 2004 that address a variety of additional specific aspects of workers' compensation laws and regulations. Arizona HB 2382 establishes limits on governmental use of complete social security numbers, but provides for government use of social security numbers to administer workers' compensation issues. California AB 2649 establishes an exclusion from the definition of employee any owner-builder participating in mutual self-help housing sponsored by a non-profit corporation. Colorado HB 1068 addresses damages resulting from the negligence of a stranger. In Florida, HB 1251 amends state laws pertaining to the workers' compensation and employer's liability joint underwriting association. New Jersey AB 2895 extends coverage secured by the state horse racing injury compensation board to thoroughbred horse exercise riders. Two states passed resolutions focusing on specific aspects of workers' compensation. The New Jersey Legislature approved AR 73 to encourage congress to amend the social security law to ensure the 80% limit on total combined social security and workers' compensation benefits for disabled workers be based on pre-injury earnings adjusted for inflation, while Pennsylvania HR 660 was approved directing the state budget and finance committee to study the workers' compensation system relative to nearby states and make recommendations for lowering medical, indemnity and legal costs, streamline processing of claims and control prices. Legislators in Rhode Island approved two related measures. HB 7870 prohibits petitions for workers' compensation benefits from being filed while a nonprejudicial memorandum of agreement is pending or until after notification that payments have been terminated, while HB 7872 requires claimants to submit to reasonable examinations by qualified providers appointed by the director as a means of determining claimant's physical or mental condition. The Utah Legislature also approved a new related law specific to medical examinations or records. HB 238 requires injured parties and their employers to comply with the state labor commission rules regarding disclosure of medical records relevant to the injury or accident in question. In South Dakota, HB 1048 prohibits cancellation of a policy for nonpayment of premium unless notification is provided by the employer within 10 days. Finally, the Virginia Legislature approved specific new workers' compensation laws aimed at vocational rehabilitation, self-insurers and lien rights. HB 270 allows contractors or employees of state agencies that provide vocational rehabilitation to use the title "rehabilitation provider". HB 474 amends provisions relating to the security deposits required from workers' compensation self insurers and defines acceptable financial instruments, while SB 323 requires a financial deposit from self-insured workers' compensation insurers. And, HB 864 converts into a lien assignment to an employer of an injured employee's right to recover damages from a third party, while SB 558 creates a lien on behalf of employees when injured/diseased employees recover damages from a third party,
Tort Reform
Sixteen states (Arizona, Colorado, Georgia, Illinois, Iowa, Kansas, Michigan, Minnesota, Mississippi, New Mexico, Ohio, Oklahoma, Pennsylvania, Tennessee, Virginia and Washington) approved new laws this year that relate to some of the fundamentally important tenets of tort reform that NAMIC continues to advocate. The specific focus of these new measures fall into the following categories: product liability, frivolous lawsuits, jury duty, appeal bonds, common sense consumption, class action certification, judgment interest, asbestos claims, silica/mixed dust claims, and comprehensive tort reform packages and a brief summary description of each is provided below.
Three states (Georgia, Minnesota and Virginia) approved new laws in 2004 that target appeal bond amounts and procedures. Georgia SB 411 allows trial courts to accept forms of security other than a supersedeas bond as a condition of staying a civil judgment during appeal. Minnesota HB 1425 provides that the execution of a judgment for payment of money is stayed during the course of appeal if the judgment debtor files a bond in the amount of the judgment. And, the Virginia Legislature approved two new related measures. HB 430 establishes a maximum amount for an appeal bond or irrevocable letter of credit, while SB 172 sets a statutory ceiling for appeal bonds at $25 million in civil actions.
Three states (New Mexico, Ohio and Washington) passed new laws related to interest allowed to accrue on judgments. New Mexico SB 625 allows for judgment interest at a rate of two points above prime against governmental entities or public employees for which tort immunity has been waived under the Tort Claims Act. Ohio HB 212 simply establishes criteria for the computation of interest on judgments. And, Washington HB 2485 changes the calculation of post-judgment interest for tort claims.
Three states (Illinois, Michigan and Tennessee) took steps to address a litigation trend involving claims against food sellers and manufacturers for weight gain, obesity or related health problems. The Illinois Legislature approved HB 3981 creating the Common Sense Consumption Act prohibiting initiation of actions against sellers of qualified products. Michigan HB 5809 exempts food related businesses (manufacturers, packers, distributors, sellers, marketers, etc.) for obesity or related health condition claims. And, Tennessee SB 2379 simply limits liability associated with obesity and related conditions resulting from long term consumption of certain food products.
The Arizona and Iowa Legislatures approved new laws in 2004 specific to product liability actions. Arizona HB 2220 establishes an affirmative defense in product liability actions resulting from food consumption, while Iowa HB 2170 provides that assemblers, designers, suppliers of specifications, distributors, manufacturers, or sellers are not liable for failure to warn claims in product liability actions for generally known product risks.
Ohio and Pennsylvania approved new laws in 2004 that specifically target asbestos claims. In Ohio, HB 292 establishes minimum medical requirements for filing certain types of asbestos claims as well as limited asbestos-related successor liabilities for corporations. Pennsylvania SB 92 modifies provisions pertaining to applicability of certain asbestos claims based on a two-year statute of limitations.
Comprehensive Tort Reform Legislation
The legislatures in Mississippi, Ohio and Oklahoma approved comprehensive tort reform legislation in 2004. Mississippi HB 13a addresses noneconomic damages, product liability, punitive damages, joint and several liability and jury duty standards. Ohio SB 80 and Oklahoma HB 2661 enact similarly wide reaching reforms.
Frivolous Lawsuits, Jury Duty, Class Action Certification, Silica/Mixed Dust Claims
Four states individually passed more specifically targeted tort reform-related laws. The Arizona Legislature approved SB 1113 to curtail the filing of frivolous lawsuits against health care professionals. In Colorado, HB 1159 was approved to modify that state's jury selection process. Kansas approved a new law (HB 2764) to allow a court of appeals the discretion to permit an appeal from a district court order granting or denying class action certification. And, the Ohio General Assembly approved HB 342 to establish minimum medical requirements for filing certain silica and mixed dust disease claims.
Additional Emerging New Law Issue Trends
Arizona, South Carolina and Utah each approved new laws in 2004 pertinent to captive insurers. Arizona HB 2235 allows nonprofit group insurers to form group and pure captive insurers. South Carolina HB 5002 provides for confidentiality of information submitted by captive insurers and makes other changes to laws regulating captives. And, Utah HB 17 amends the state's captive laws to establish related statutory definitions, insurance commissioner authorities as well as other regulatory laws specific to captives.
Nine states (Arizona, Colorado, Georgia, Maine, North Carolina, Oklahoma, Utah, Virginia and West Virginia) passed laws in 2004 that address use of the Comprehensive Loss Experience (CLUE) database of loss history information as an underwriting tool. Arizona HB 2547 prohibits insurers from using inquiries about whether a policy will cover a loss or about types or levels of coverage as a claim. Colorado HB 1292 restricts insurers from using certain negative factors in the rating or underwriting of homeowners coverage. Georgia HB 1263 defines a claim and establishes that reporting a loss or a question relating to coverage does not independently establish a claim. Maine SB 692 restricts the conditions under which insurers can refuse to underwrite or renew property insurance policies. In North Carolina, SB 486 was approved to prohibit insurance companies from terminating a policy based on inquiries or claims closed without payment. The Oklahoma Legislature approved HB 2324 which also prevents insurance companies from raising premium rates, canceling, refusing to issue or renew on the basis of such an inquiry. The Utah Legislature approved two related laws in 2004. HB 250 prohibits premium increases based on certain inquiries, while SB 52 prohibits personal lines writers from using certain types of losses and certain inquiries as a basis for rendering adverse underwriting or rating decisions. Virginia HB 818 bars insurers from refusing to renew homeowner's coverage solely due to a claim incurred over five years prior to the expiration of the current policy. And finally, Wyoming HB 40 was approved in 2004 imposing related restrictions on homeowner's insurer's cancellation, issuance and nonrenewal decisions.
Four states (Louisiana, Massachusetts, New York and Tennessee) passed laws directed to their respective state FAIR or shared market plans. The Louisiana Legislature approved two such measures in 2004. HB 423 simply changes the fiscal year for the Coastal and FAIR plans, while HB 752 deletes farm owners' multiperil insurance from the Louisiana Citizens Property Insurance Corporation. In Massachusetts, HB 4672 was approved establishing the property insurance underwriting association rating procedures for homeowners insurance for large share territories. New York SB 7576 extends the state's property insurance underwriting association. And, Tennessee SB 2668 requires the insurance commissioner to develop a plan for the creation of a natural disaster property insurance pool to provide residential and commercial coverage for property owners unable to obtain it in the open market.
Twelve states (Delaware, Florida, Idaho, Indiana, Kentucky, Maryland, Oklahoma, Pennsylvania, South Dakota, Utah, Washington and West Virginia) passed laws in 2004 that address specific insurer financial regulations. Several notable issues surfaced among the new financial regulation laws including investment regulations generally, solvency/liquidation standards, asset determination, catastrophe funds, NAIC accounting standards, risk-based capital requirements, impaired insurers and banking.
Four states (Indiana, Pennsylvania, South Dakota and Washington) approved measures that pertain to authorized insurer investments. The Indiana General Assembly enacted legislation (HB 1150) to allow domestic P/C companies to invest up to 10% of their assets in asset-backed securities. Pennsylvania SB 1096 establishes provisions for eligible investments. South Dakota SB 193 allows domestic companies to invest up to 20% of their assets in general obligation or revenue bonds of any state or Canadian province not rated by the NAIC Securities and Valuation Office. And in Washington, HB 2817 provides that investments in limited liability companies may not exceed the lesser of 4% of assets or 50% of surplus over capital and other liabilities.
Three states (Kentucky, Oklahoma and Utah) approved new financial regulation laws in 2004 that address liquidation and solvency standards. In Kentucky, SB 171 was approved to amend laws pertaining to the treatment of credits allowed in the event of insolvency of a ceding insurer. Oklahoma approved SB 1411 changing the definition of insolvent from net assets exceeding total liabilities to total liabilities exceeding total assets. And Utah approved HB 172 to change the dollar amount for transactions a liquidator may engage in without permission of the court.
The Delaware Legislature approved HB 272 allowing insurers to count goodwill as an asset in any determination of financial condition. In Florida, SB 2488 makes changes to laws governing the state's hurricane catastrophe fund. Idaho passed two new financial regulation provisions. HB 497 requires insurers to use the NAIC accounting practices and procedures manual, while HB 618 excludes domestic reciprocal insurers from the definition of P/C insurer if they have fewer than seven subscribers that insure only workers' compensation and issue only fully assessable policies, and excludes insurers with very few subscribers from risk-based capital filing requirements. Maryland approved HB 533 to amend the definition of an impaired insurer as it applies to both stock and mutual companies. And finally, the West Virginia Legislature passed a new law (SB 506) providing that only a banking institution or a person authorized by the banking commissioner may conduct banking or trust business in the state.
Seven states (Arizona, California, Louisiana, Massachusetts, Mississippi, Rhode Island and Virginia) passed new laws in 2004 specifically addressing fire insurance coverage. Arizona approved SB 1242, which holds persons convicted of arson liable for emergency response expenses. California passed AB 2199 pertaining to the scope of coverage by establishing a definitive measure of indemnity under an open fire insurance policy requiring payment of replacement cost. Louisiana approved SB 540 providing that the standard fire policy form required by law is not needed if the policy forms covering the peril of fire offer the same or more provisions. The Massachusetts Legislature passed a new law (HB 1879) to prevent tenants displaced by fire damage from receiving security deposits from both the landlord and the insurer. Mississippi approved SB 2450 expanding the scope of industrial fire coverage to include personal or real losses tied to burglary or theft. The Rhode Island Legislature enacted three related pieces of legislation. HB 7194 repeals existing provisions requiring fire insurers to obtain an anti-arson application as a prerequisite for writing a policy, SB 2817 increases the number of days to issue written cancellation notices on fire insurance policies, while HB 8430/SB3057 amends the commercial deregulation statute to exempt certain commercial special risks from standard fire policy requirements. And finally, Virginia HB 609 requires that any insurer issuing fire insurance policies excluding coverage for flood damage to provide written notification to that effect along with additional information about sources of flood insurance.
Seven states (California, Louisiana, Maryland, Massachusetts, Minnesota, Utah and West Virginia) approved new laws this year directly related to insurance fraud. The California Legislature approved two such measures. AB 2866 requires the state insurance department to post on its web site, information about any case or defendant convicted of insurance fraud violations, while SB 1344 adds workers' compensation fraud investigations conducted by peace officers in the department of corrections to investigations that are exempt from disclosure requirements. Louisiana HB 350 changes the termination date of its fraud investigative unit from 2004 to 2008. The Maryland Legislature approved SB 639 requiring the insurance fraud division to notify the workers' compensation commission of suspected cases of workers' compensation fraud. In Massachusetts, a new law was passed (Chapter 464) creating tougher penalties for injury claims fraud and establishing tighter licensing and enforcement standards for certain health workers. In Minnesota, HB 2640 was passed creating the division of insurance fraud prevention and requiring insurers to pay an assessment to fund the division. West Virginia also approved a measure (HB 4004) to establish a fraud unit. And finally, Utah approved HB 171 revising various insurance code provisions pertinent to insurance fraud including prohibiting individuals from acting as runners, clarifying treatment of certain nonlapsing funds, establishing civil penalties, and requiring disclosure of fraud tied to title insurance, among other things.
Nine states (Alaska, Florida, Idaho, Louisiana, New Hampshire, New Jersey, South Dakota, Washington and Wisconsin) approved new laws in 2004 related to their respective guaranty funds. Alaska SB 276 increases assessments on member insurers, self-insured employers and joint insurance arrangements. Florida HB 639 revises the definition of a covered claim for the state's insurance guaranty association and the workers' compensation guaranty association to exclude claims rejected in other states based on the insured's net worth being greater than that allowable under that state's guaranty fund. The Louisiana Legislature approved two new related guaranty fund laws. HB 1051 requires asbestos or other environmental related exposure related injury or death suits to first exhaust all available insurance prior to recovery against the association, while HB 1052 provides for the recovery of costs incurred by the guaranty association in defense of a claim. New Hampshire SB 367 establishes the New Hampshire Guaranty Association Act. The New Jersey Legislature also approved two new related laws in 2004. SB 702 makes revisions to the state's surplus lines guaranty fund act many of which bring it into line with the NAIC post assessment property and liability insurance guaranty association model act, while SB 1581 revises the surplus lines guaranty fund act to also bring it closer in line with the NAIC model act. In South Dakota, HB 1211 was approved allowing the state's guaranty association to transfer claims handling and financial responsibility for a covered claim to an insured with a net worth over $50 million. Finally, Washington SB 6158 directs the insurance commissioner to study the impact of covering commercially purchased workers' compensation policies under the state guaranty fund.
Legislation addressing an insurer's ability to utilize credit-based insurance scoring models continues to be a focal point for state policymakers as evidenced by the fact that seven states (Colorado, Iowa, Maryland, New York, Tennessee, Washington and West Virginia) passed new laws in 2004 addressing the use of this important tool. Colorado approved a measure (HB 1236) requiring insurers to provide homeowner applicants notification and requiring the filing of underwriting guidelines. Iowa approved SB 2257, which adopts language similar to the National Conference of Insurance Legislators (NCOIL) regarding the use of credit information. Maryland SB 101 repeals the sunset provision in a law allowing the use of credit history in issuing private passenger motor vehicle policies. New York SB 5618 establishes restrictions on the use of credit information by personal lines writers and is also based largely on the NCOIL model act. Tennessee SB 2259 establishes the so-called "sole basis" restriction and other restrictions on the use of credit information by personal lines insurers. In Washington, HB 2727 requires personal lines insurers using credit history or insurance scoring to file all related rates and rating plans. And finally, West Virginia HCR 31 is a resolution requesting the joint committee on government and finance to study the use of credit scoring as a factor in determining premiums.
Eight states (Arizona, Indiana, Oklahoma, Rhode Island, South Dakota, Utah, West Virginia and Wyoming) passed laws in 2004 that pertain specifically to industry licensing standards. Arizona HB 2232 amends various sections of the state's insurance laws pertaining to producer licensing requirements. Indiana HB 1005 exempts certain individuals from producer licensing requirements and creates education requirements for title producers. Oklahoma HB 2385 decreases the producer licensing exam retest time from six months to 30 days. In Rhode Island, SB 2688 was approved abrogating pre-licensing requirements for P/C and other insurers and replacing them with a general provision authorizing the insurance commissioner to promulgate reasonable producer licensing rules. South Dakota SB 35 prohibits insurers from paying or assigning a commission, service fee or brokerage fee for referral to any person not licensed as an insurance producer. The Utah Legislature approved HB 187 requiring viatical settlement providers to file a license application and pay the related fees. West Virginia HB 4303 repeals the requirement for insurance contracts to be countersigned by a licensed resident agent of the insurer. (Counter signature repeal.) And finally, Wyoming HB 58 amends producer licensing laws to change fee standards, appointment processes and continuing education requirements.
Four states (Oklahoma, Rhode Island, South Carolina and Virginia) approved new laws in 2004 related to mold-related liability. Oklahoma HB 2554 prevents a single individual from performing mold assessment and remediation on the same property unless total cost of services is less than $200. Rhode Island SB 2772 extends the previously established reporting date of a special senate commission to study health effects of toxic mold and make recommendations for related public safety measures. In South Carolina, SB 949 was approved to provide that no cause of action be brought against a real estate agent acting on behalf of a buyer or seller who has truthfully disclosed any known material defects. And, the Virginia Legislature approved HB 824 requiring landlord disclosure to prospective tenants about visible evidence of mold in a dwelling.
Eight states (Colorado, Florida, Idaho, Kansas, Kentucky, New Jersey, South Carolina and South Dakota) passed laws in 2004 that pertain specifically to the premium tax. The Colorado Legislature approved two such measures. HB 1206 establishes a premium tax credit for contributions to CoverColorado, while SB 106 creates venture capital premium tax credits and repeals the tax credit for insurers investing in certified capital companies. Florida HB 251 requires the state revenue department to create a database containing local taxing jurisdictions. Idaho HB 724 reduces the state premium tax rate from 2.75% to 1.5% over a six-year period. In Kansas, SB 312 was approved limiting the state fire marshal levies to less than .80 % for calendar year 2004 and subsequent years and requires insurance companies to contribute to fire service training programs. Kentucky HB 19 specifies that premium-based license fees and taxes imposed by local governments do not apply to premiums paid on municipal bonds, leases, or other debt instruments issued by or on behalf of any political subdivision within the state. The New Jersey Legislature passed a new law (AB 3111) to establish various business retention and relocation incentives including premium tax credits. South Carolina approved SB 516 amending the definition of a new job as it relates to the job tax credit allowed against premium tax obligations. And, South Dakota SB 39 modifies the definition of regional home office and requires insurers qualifying for a related premium tax credit to maintain all pertinent records in that home office.
Ten states (Colorado, Delaware, Louisiana, Massachusetts, New Hampshire, Oklahoma, Rhode Island, South Carolina, South Dakota and Virginia) approved new laws in 2004 that address insurance rate regulation. Colorado passed a law that simply mandates the effective dates for workers' compensation and medical benefit filings to be made and for related rates to take effect. The Delaware Legislature approved a resolution (HCR 40) urging auto insurers to recognize the success of the state's driver education program by reducing related premiums. In Louisiana, HB 1514 was approved vesting exclusive authority within the office of P/C to accept, review and approve insurance rates and rate changes for all commercial P/C insurance. The Massachusetts General Assembly approved two new rate regulation provisions in 2004. HB 1700 mandates that state policy form and rate regulation requirements do not apply to large commercial risks, while HB 4675 regulates the establishment of private passenger auto rates. New Hampshire SB 370 changes insurance rating laws and requires title insurers to file a schedule of rates. Oklahoma HB 2470 establishes a file and use rate regulatory system for all lines except workers' compensation. Rhode Island HB 8042 allows insurers to adjust rates by 5% without the approval of the insurance commissioner at the onset of a new policy period for policies covering vehicles used primarily for nonbusiness purposes. The South Carolina Legislature approved two new related laws in 2004. SB 686, arguably one of the most significant state legislative rate reform initiatives passed in 2004, essentially deregulates personal lines insurance rates, while SB 891 amends provisions pertaining to rate regulation for all casualty lines. South Dakota SB 37 also establishes a file and use rate regulatory system for all lines except inland marine and auto and exempts certain commercial risks from rate and form approval. Finally, Virginia HB 553 clarifies that an insurer may file rate information to limit renewal policy rate increases that would otherwise apply.
The legislatures in five states (Idaho, Maine, Nebraska, Pennsylvania and Utah) approved new laws in 2004 pertaining to their respective state building code standards. Idaho HB 756 adopts the 2003 International Building Code, Energy Conservation Code, Mechanical Code, and Fuel Gas Code. Maine SB 356 establishes the office of building codes to reside within the state's professional and financial regulations department. The Nebraska unicameral body approved L 888 updating references to the 2003 instead of 2000 edition of the International Energy Conservation Code for new state buildings, or renovations or additions to existing buildings initiated by 7/1/05. In Pennsylvania, SB 1139 simply revises existing sections of the state's construction code. And, Utah HB 215 requires the state's occupational and professional licensing division to adopt a residential code for one and two family dwellings, a fuel gas code and an energy conservation code.
Eight states (Arizona, Colorado, Idaho, Iowa, New Hampshire, New Mexico, Tennessee and Virginia) passed laws in 2004 that address required or authorized duties and roles of the state insurance regulator. Arizona HB 2224 requires insurers to produce claim files or related documentation upon request of the state insurance director. Colorado HB 1154 authorizes the state division of insurance to contract for certain personal services where the insurance commissioner determines the department lacks the necessary skills or expertise. The Idaho Legislature approved two new related measures. SJM 106 proclaims the state legislature's commitment to maintaining the state as the sole regulator of insurance in opposition to any proposed federal law that could undermine state authority, while HB 495 authorizes the state insurance director to determine the procedure for filing of required regulatory documentation. In Iowa, a Senate resolution was approved requesting the state insurance commissioner to submit annual reports about medical malpractice claims. The New Hampshire Legislature approved two new laws impacting the role of the state regulator. SB 369 amends laws regarding conduct of examinations by the insurance department to conform to the NAIC model law, while SB 430 authorizes the insurance commissioner to contract for external review of mandated benefits and requires, if requested by a committee, an evaluation by the department of any legislation proposing mandated benefits. New Mexico HB 240 establishes an insurance operations fund in the state treasury to provide necessary funds to carry out the insurance department's responsibilities. Tennessee SB 2601 directs the insurance companies to respond within 30 days to requests from the state insurance department regarding complaints. And, Virginia HB 69 authorizes the risk management division with the treasury department to establish more than one risk management plan, specifying terms and conditions and to provide liability coverage for various political subdivisions of the state.
Six states (Hawaii, Idaho, Louisiana, Ohio, Utah and Virginia) approved new laws in 2004 that pertain to restrictions or prohibitions on telemarketing solicitation calls most of which are generally related to the national "do-not-call" registry. Hawaii SB 2902 simply prohibits telephone solicitations to numbers listed on the do-not-call list. Idaho HB 535 provides that the national no call list may serve as Idaho's no solicitation contact list. Louisiana HB 189 exempts from the federal no call law periodic follow up calls from doctors to patients. Ohio SB 28 prohibits sellers from violating the federal law and authorizes the state attorney general to enforce those laws and conduct related investigations. Utah SB 27 amends the state's no call list to ensure that it applies only to unsolicited calls. Insurers continue to be exempt from this law. And, the Virginia Legislature approved HB 689/SB 344 to prohibit calls to numbers on the national do-not-call list and includes within that law calls to wireless numbers and prohibits solicitors from blocking identifying information.
Both Connecticut and Georgia approved new laws in 2004 that pertain to the issue of terrorism coverage. Connecticut HB 5200 allows commercial insurers to exclude loss due to terrorism as defined by the insurance commissioner. And, Georgia HB 1450 amends state laws pertaining to judicial proceedings in the event of a natural disaster, civil disturbance or other emergency situation.
Six states (Alaska, Kansas, Kentucky, Missouri, Oklahoma and Utah) approved laws in 2004 that represent a wide variety of both technical and substantive changes to their respective state insurance codes. Please refer to the 2004 Survey of New State Laws - Issue List (under Omnibus Insurance Law Changes) for a summary of each new provision and a link to the complete text of each.
Miscellaneous New Insurance Provisions
The remainder of the new provisions identified in this year's report represent a group of individual measures that address other important and specific areas of state insurance regulation. Fifteen states (California, Idaho, Iowa, Maine, Massachusetts, Mississippi, Nebraska, New Hampshire, New York, Ohio, Pennsylvania, Utah, Virginia, Washington and West Virginia) approved related new laws in 2004. The particular issues trends or underlying themes pertinent to this miscellaneous grouping include disclosure requirements, surplus lines insurers, incorporation and certificate of authority requirements, deceptive practices, organizational structure generally and mutual holding companies specifically, NAIC reinsurance filing requirements, allowable contributions, group marketing plans, liquor liability, asbestos claims, the regulation of specific lines of coverage, involuntary unemployment insurance, financial guaranty insurance, medical malpractice, mutual insurance company property liens, manufactured housing, insurance code exemptions, interstate regulation, homeowner exclusions, and cancellation and nonrenewal requirements. Please refer to the 2004 Survey of New State Laws - Issue List (under Miscellaneous New Insurance Provisions) for a summary of each new provision and a link to the complete text of each.
Compliance Resources
Legislative and Regulatory Information Service (LARIS)
NAMIC Survey of New State Insurance Laws
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