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NAMIC 2006 National State Legislative Agenda

NAMIC Advocacy Actions and Archived Agendas

Latest State Advocacy Actions

NAIC: NAMIC testifies at NAIC public hearing on climate change. Contact Robert Detlefsen. (Date Posted: 12/18/2006)

NAIC: NAMIC advocates “Arkansas” method for disposition of large-deductible assets. Contact William Boyd. (Date Posted: 12/11/2006)

NAIC: NAMIC sends letter opposing national database for disaster reporting. Contact David Reddick. (Date Posted: 12/7/2006)

NAIC: NAMIC comments on proposed reinsurance evaluation office. Contact William Boyd. (Date Posted: 11/15/2006)

Massachusetts: NAMIC joins state trade in opposing agents’ plan to ban the use of insurance-based credit scoring. Contact Paul Tetrault. (Date Posted: 11/6/2006)

Complete Advocacy Actions

NAMIC 2005 National State Legislative Agenda

NAMIC 2004 National State Legislative Agenda

NAMIC 2003 National State Legislative Agenda

NAMIC 2002 National State Legislative Agenda

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ONGOING ISSUES

Rate Modernization (Based on NCOIL model and NCSL Principles)

NAMIC's first agenda priority is adoption of "modernization" laws creating rate approval standards less restrictive than prior approval. In 2005, personal lines modernization was achieved in Alaska, Minnesota and Nebraska - bringing the number of states adopting some form of regulatory modernization over the past three legislative sessions to 11. NAMIC provided testimony and advocated for passage in all these states.

Underwriting Freedom (Insurance Scoring, CLUE, etc.)

Insurance scoring and loss history databases continue to attract attention in legislatures around the country. In 2005, 24 states debated the use of credit-based insurance scores; legislators in twelve states unsuccessfully attempted to ban the use of this tool (six of the twelve currently have laws based on, or similar to, the NCOIL model). Debate on loss history reports in state legislatures is centered on insurer treatment of "closed without payment" claims. Both NCOIL and the NAIC are considering model legislation to restrict the use of loss history reports.

Prevent application of Sarbanes-Oxley to non-public insurers.

NAMIC leads the advocacy activity opposing NAIC efforts to incorporate elements of the Sarbanes-Oxley (SOX) Act into state insurance laws. Our recent cost-benefit analysis concludes that adding SOX Section 404 content to state insurance regulation would cost almost eight times the maximum potential benefit to mutual insurance companies if all insolvencies were eliminated. Despite this and other compelling evidence, the NAIC/ AICPA Work Group continues to advocate for applying these elements to non-public insurers. NAMIC is focusing significant time and resources to defeating this proposal. This battle may transfer to individual state legislatures and insurance departments.

EMERGING ISSUES

Guaranty Fund Reform (based around models developed by NCGIF)

In partnership with the National Conference of Insurance Guaranty Funds (NCIGF), NAMIC and the other national trades have been working to enact appropriate insolvency fund reforms in relevant states.

Reinsurance Risk Transfer Issues (finite reinsurance, etc.)

The New York Attorney General, the SEC and others have all recently alleged abuse of finite reinsurance agreements, suggesting that some arrangements do not include appropriate transfers of risk. Regulators are increasingly concerned about the existence and prevalence of finite reinsurance arrangements that may not qualify as reinsurance. A number of state regulators have issued requests for information from domiciliary companies regarding their reinsurance contracts and the NAIC is currently debating uniform disclosure and attestation language. The current debate centers on defining what qualifies for credit for reinsurance.

Security Breach Legislation

Recent security breaches at financial service companies such as ChoicePoint have set off an avalanche of state and federal legislative activity on the issue of identity theft. No less than 116 bills were introduced in state legislatures attempting to address this issue; 13 states enacting legislation so far this year. Some proposals require credit card companies and other merchants to notify consumers of a breach, while other proposals would allow consumers to freeze credit if they believe their identity has been stolen. Legislators have moved aggressively to increase criminal penalties for persons convicted of identity theft and have enacted laws to limit the use of individual Social Security numbers, particularly by state agencies. Security breach notification and security freeze bills hold great interest among state policymakers, and this trend is likely to spread to other states. Care must be taken to ensure that new bill introductions do not negatively affect insurers with requirements that are not uniform across the country.

TARGETS OF OPPORTUNITY

Market Conduct Reform

In 2004, NCOIL adopted a version of the Market Conduct Model Law - a significant step toward reform that creates targeted exams, requires states to submit an exam budget and lays out a framework for states to conduct market analysis. NAMIC was very involved in the creation and adoption of the model. However, the model still includes language NAMIC does not agree with and, most critically, does not include language that expressly creates a self-audit privilege for insurance companies. In 2006, NAMIC will be poised to advocate market conduct reform legislation based on the model (including our changes) in states where such reforms are most needed.

Asbestos Reform (Priority of claims, Inactive Docket)

Last year, the American Legislative Exchange Counsel (ALEC) adopted the Asbestos Claims Priorities Model Act that would create an inactive docket. Asymptomatic plaintiffs who meet filing rules that require specific medical proof from appropriate medical personnel may have their claims placed on an inactive docket. The case may be removed from that docket and set for trial only if the plaintiff can prove that they have an illness that is related to asbestos exposure. The statute of limitations is tolled while cases are on inactive docket status, protecting the rights of exposed asymptomatic individuals. The Act also prohibits "venue shopping" by requiring that claims must be filed in the jurisdiction where the primary harm of exposure occurred.

Farm Mutual Modernization

Since 2003, NAMIC staff has assisted the farm mutual companies of several states to revise their governing statutes. Although enactments have varied from state to state, most allow for new geographic territory for farm mutuals and eliminate outdated and sometimes contradictory sections of the code. In 2005, Arkansas, Montana and North Dakota enacted some form of modernizing legislation.