The summer meeting of the National Council of Insurance Legislators brought to Minneapolis 355 attendees, including 55 legislators from 30 states. NCOIL staff reports this is the highest attendance for a summer meeting in more than a decade. On the property/casualty insurance front, the July 19-22 meeting was highlighted by the introduction of model laws relating to the premium credits for mitigation activities, standards of conduct for public adjusters, and catalytic converter theft. These models will remain of interest throughout 2023 and possibly beyond, as NCOIL considers their possible adoption. Also, of note was NCOIL’s ongoing discussion of environmental, social, and governance issues.

Minnesota Insurance Commissioner Grace Arnold kicked off the meeting and highlighted areas of focus for her department. Of interest to NAMIC members, the department is focused on increasing resilience of property in the state, which had 568 hail events in 2022. The DOI will be spending the next two years developing programs to help residents and policyholders retrofit their homes to increase their resilience. In addition, the department is looking at ways to upgrade infrastructure to make areas less prone to flooding and exploring public/private partnerships. Finally, the department has started a marketing campaign for consumers to help prevent auto theft, including such seemingly basic precautions as not leaving keys in the car. The campaign has had more than 6 million views.

In addition to Arnold, commissioners from Idaho, Indiana, Louisiana, and Oklahoma also attended.

Property/Casualty Committee

The Property/Casualty Committee, chaired by Rep. Edmond Jordan of Louisiana, considered a busy agenda but did not approve any models or resolutions other than routine re-adoptions of existing models.

Leading off the day was a discussion of potential amendments to NCOIL’s Model Uniform State Building Code to potentially include language requiring discounts for certain mitigation activities. The model language introduced in committee applies to FORTIFIED designations for roofs from wind and hail damage, although much of the discussion in committee related to wildfire mitigation activities.

Matt Overturf, NAMIC regional vice president, expressed opposition to the concept of mandatory mitigation discounts, noting both that this is an issue the market should be allowed to evaluate and compete over, and mandatory discounts do relatively little to encourage mitigation. Much more helpful are stronger, up-to-date, and enforceable baseline code requirements combined with direct financial assistance for mitigation. NAMIC’s testimony also noted that wildfire discounts are even more challenging because individual mitigation activities have more limited impact than community-wide activities. A representative of United Policyholders also testified generally to the benefits and challenges of mitigation but also argued that mandated discounts were justified as a way to prevent “market disruption.”

Model sponsor Rep. Jim Dunnigan of Utah was unable to attend the meeting, so the discussion on this item was abbreviated to some extent. Further discussion is likely at the November annual meeting.

The committee also continued its discussion and development of a catalytic converter theft model law sponsored by Jordan and Rep. Tom Oliverson of Texas. According to the National Insurance Crime Bureau, since 2019, there has been a 1,200 percent increase in catalytic converter thefts across the country. The NCOIL Catalytic Converter Model Law aims to reduce those thefts by increasing criminal penalties, implementing buyer limitations and seller restrictions, and instituting a VIN etching program on catalytic converters. Pat Martin from NICB spoke in support of the model law. A representative of the Alliance for Auto Innovation, which represents manufacturers, also spoke to the model. The alliance is in support of most of the components of the model law but is concerned with the VIN etching component as the organization suggests it is a costly program with likely negligible results. The model law will also be up for further consideration at the annual meeting this fall. NAMIC did not testify but is generally supportive of this model.

The committee also considered a model law on public adjusters sponsored by Rep. Michael Meredith of Kentucky and Rep. Matt Lehman of Indiana. Anne Marie Franklin from the Kentucky Farm Bureau outlined the provisions of the model law as it was taken from recently passed Kentucky legislation with some additions from an Indiana bill. The model law includes fee caps, contract review by the state departments of insurance, access to the NAIC database to check a public adjuster’s standing, contract transparency between the public adjuster, insured, and insurer, and finally prohibits the public adjuster from having a financial interest in companies repairing the damage.

The American Association of Public Insurance Adjusters also spoke to the proposed model. While AAPIA supports the intent of the model law, the organization raised concerns with various provisions including the bond amount, contract pre-approval, the contractor prohibition, and the fee caps.

To conclude the discussion, Jon Schnautz, NAMIC’s assistant vice president – state affairs, spoke in support of the model law while suggesting ways it could be strengthened. Pulling from the Texas public adjuster statute, NAMIC suggested improvement to the model including stronger fee caps, a standardized form contract, clarification that a public adjuster cannot give legal advice, prohibition on referral fees, and the ability for a public adjuster to accept compensation prior to a contract being in place.

Delegate Steve Westfall of West Virginia indicated strong support for the model law and was added as a co-sponsor to the bill; he also indicated his intent to run a public adjuster bill during the West Virginia 2024 legislative session.

Finally, the committee re-adopted, without change, several existing model acts: the Consumer Protection Towing Act, Model Act Regarding Auto Airbag Fraud, Model Act Regarding Disclosure of Rental Damage Waivers, Model Anti-Runners Fraud Bill, and Property and Casualty Insurance Domestic Violence Model Act. While scheduled for routine re-adoption, the committee did not re-adopt the Model State Uniform Building Code in light of the ongoing discussion about amendments and because model sponsor Dunnigan was not present.

In other business, Westfall indicated his intention to propose amendments to the Delivery Network Company Insurance Model Act at the November meeting. The model was adopted in November 2022 and passed this year in two states, but some ongoing unresolved issues that have complicated its adoption are likely to be addressed prior to the next meeting. NAMIC has been closely engaged on this model throughout the process and will continue to do so.

General Session – ESG

NCOIL’s planned three-part discussion series of ESG issues continued with a panel focused on the “social” component. NCOIL Vice President Rep. Tom Oliverson of Texas began the session with an acknowledgement that while many issues NCOIL discusses are non-partisan, this one is decidedly not so. He also suggested that no model policy would be forthcoming on such a divisive issue but that perhaps “model policies” might be the result.

The discussion began with a panelist from AM Best Rating Services, who emphasized that his organization only considers ratings issues that are tied to financial strength – but that those factors could include considerations that could fall into ESG categories. He also emphasized that use of these considerations, if related to financial strength, predated any public discussion around ESG as a concept.

The panel also included NAIC Diversity, Equity, and Inclusion director Evelyn Boswell, who described both NAIC’s internal DEI initiatives and coursework the NAIC offered to state insurance departments on DEI. She reported that as of early July, 465 state insurance department employees had completed the course. In response to a question about whether legislators could see the coursework, Boswell replied that sharing it was “on the books for NAIC to consider.” She also stated that the NAIC has no position on ESG as a topic.

The final panelist was an attorney who offered a perspective on how ESG issues were viewed in Canada. He noted that some issues there, for example, availability of coverage to the oil and gas industry, were driven by European-based parent insurers.

The panel concluded with Oliverson asking each panelist to define the “social” component of ESG. The AM Best panelist included a broad swath of issues that relate to a company’s reputational risk, along with social inflation and DEI considerations. The NAIC panelist declined to comment but noted the NAIC’s DEI program. The final panelist suggested that the subject narrowly encompassed DEI-type initiatives and more broadly referred to a company’s relationship with the broader community and even issues like philanthropy.

The ESG discussion series is likely to continue at the NCOIL annual meeting in November, this time likely with a focus on the governance component.

NCOIL/NAIC Dialogue

The NCOIL-NAIC Dialogue portion of the agenda was attended by five chief state insurance regulators: Glen Mulready of Oklahoma, Amy Beard of Indiana, Jim Donelon of Louisiana, Dean Cameron of Idaho, and Arnold from the host state of Minnesota.

The dialogue agenda featured discussion on the new NCOIL Public Adjuster Professional Standards Reform Model Act (see notes in Property/Casualty Committee summary), specifically how the potential new NCOIL model might mesh with the NAIC’s existing Public Adjuster Licensing Model Act, which has been in place since 2005 and portions of which have been modelled in several state laws. Donelon noted that he appreciated NCOIL’s interest in revisiting the issue of public adjuster regulation and that NAIC also planned to update its model. He also noted that he was interested in expanding the public adjuster discussion to include potential abuses involving assignments of benefits.

NAIC’s recently exposed, second draft consumer data privacy protection model was also discussed. Beard described some of the changes from the model’s first version and indicated that the NAIC planned to move forward with adoption at its fall meeting. Lehman, NCOIL’s immediate past president, questioned whether the many concerns noted in the original NAIC proposal had been adequately addressed and whether the NAIC would consider pausing adoption of the model; no commitments were made on changing the model’s timing. Lehman also expressed concern that the more appropriate focus on data privacy might be aimed at larger aggregators of data that are not closely regulated, rather than at insurers that are already heavily regulated.

Beard also briefly described the NAIC’s recently released proposed model bulletin on issues related to artificial intelligence in the insurance industry. She noted that the general goal was to establish a “principles-based” approach to AI issues focused on governance of AI issues, along with some validation and “testing” components. The model bulletin is expected to be a discussion item at the NAIC meeting in August.

Finally, Mulready provided an update on issues related to tribal insurers, reprising a discussion item from previous dialogue sessions. Mulready noted that the Sovereign Nations group continued to sell health insurance both on and off reservations and to tribal and non-tribal members, but under regulatory pressure in some states, it had agreed to limit its writings. However, he also indicated the company may expand into life insurance and continues to take the public position that it is not subject to state insurance regulation.

Joint State-Federal Relations & International Insurance Issues Committee

The Joint State-Federal and International Issues Committee heard three presentations. The first two were health insurance focused covering federal health care reform and an overview of Minnesota’s Basic Health Program.

The committee concluded with a brief discussion on the IRS Proposed Regulation on Captive Insurers by James Kendrick from Independent Community Bankers of America.

Financial Services and Multi-Line Committee

The committee’s relatively light agenda included a few items of potential interest to property/casualty insurers. The committee adopted a resolution in support of existing exemptions to comprehensive state data privacy laws; the resolution was proposed to address potential issues involving application of these laws to clinical trials. NAMIC staff had worked to address potential concerns with the resolution and the earlier-proposed concept of a model law and, after concerns were addressed, took no position on the resolution.

The committee also approved a Federal Home Loan Bank Insurer-Member Model Act purportedly designed to enable loans to insurers on more favorable terms. The committee deferred to its next meeting substantive discussion on a resolution in support of National Standards in Interstate Insurance Transactions. This resolution is intended to address issues with payment of premium taxes on independently procured surplus lines policies.

Finally, committee chair Rep. Forrest Bennett of Oklahoma informed the committee of his interest in an NCOIL model resolution regarding “earned wage access providers.” Bennett indicated he would ask for this item to be included on a future agenda.

Workers’ Compensation Committee

The Workers’ Compensation Committee kicked off day two of the summer meeting with an update on the status of and trends in the workers’ compensation marketplace by Jeff Eddinger, National Council on Compensation Insurance. The presentation covered the workers’ compensation experience over the last year as well and a comparison of the marketplace pre- and post-pandemic.

The committee then heard a presentation from Ramona Tanabe with the Workers Compensation Research Institute on trends in states that adopt workers’ compensation drug formularies. Seventeen states have adopted a drug formulary in workers’ compensation – many of which have experienced a reduction in drug spending compared to non-formulary states.

Concluding the committee’s business, the committee unanimously re-adopted the following model laws with no changes:

  1. Model Act on Workers’ Compensation Coverage for Volunteer Firefighters

  2. Workers’ Compensation Pharmaceutical Reimbursement Rates Model Act

  3. Construction Industry Workers’ Compensation Coverage Act

  4. Model Act Regarding Workers’ Compensation Insurance Coverage in Professional Employer Organization Relationships

Life Insurance & Financial Planning Committee

The Life Insurance & Financial Planning Committee met during day two of the summer meeting and continued its discussion of the NCOIL Life Insurance is a Promise for Life Model Act, sponsored by Sen. Travis Holdman of Indiana. The committee also heard a presentation from Steve Schoonveld from FTI Consulting on the Minnesota Project to Increase Access to Long-Term Services and Support.

To conclude the committee’s summer meeting, it considered the NCOIL Resolution Opposing the Return of a U.S. Department of Labor Fiduciary Rule sponsored by South Carolina Rep. Carl Anderson. Bianca Weiss from the National Association of Insurance and Financial Advisors spoke in support of the resolution, which was adopted unanimously with technical amendments. Finally, the committee received an update on the Interstate Insurance Product Regulation Compact from Karen Schutter from IIPRC. Currently 47 states are members of the compact.

No model laws were scheduled for re-adoption.

Executive Committee

The summer meeting concluded with a brief meeting of the NCOIL Executive Committee. Three legislators were added to the committee: Reps. Rachel Roberts and Michael “Sarge” Pollock of Kentucky and Rep. David LeBoeuf of Massachusetts. In addition, per NCOIL bylaws the state committee chairs from NCOIL contributing states are automatically members of the executive committee, making Rep. Michael Meredith of Kentucky and Assemblyman David Weprin of New York ex officio members.

The committee also adopted all the model acts and resolutions approved at the meeting by the various subject matter committees but deferred action on proposed changes to the NCOIL bylaws until the November meeting. The most notable of these proposed bylaw changes would have limited the number of legislators from one state who can vote on an NCOIL model to four.

Post Details

Publish Date

July 25, 2023

News Type

  • Special Reports

Topics

  • NCOIL

Points of Contact
Erin Collins
Erin Collins
Senior Vice President, State & Policy Affairs