The National Council of Insurance Legislators’ spring meeting in San Diego, held March 9-11, featured a curious mix of attractions. On the one extreme, general sessions on gun liability and the impacts of environmental, social, and governance on insurance felt a bit like cycling through dueling 24-hour news networks. On the other, sessions on insurance rating transparency and data privacy offered reassurance that “insurance nerds” remain welcome at NCOIL.

The meeting brought out 317 attendees, including 53 legislators from 23 states and nine insurance commissioners. As is often the case, the legislator attendance at this meeting was more unpredictable than usual because it overlaps with active legislative sessions in many states.

Property-Casualty Committee

The chief news item from the meeting was NCOIL’s adoption of the long-pending Insurance Underwriting Transparency Model, sponsored by Indiana Rep. Matt Lehman, former NCOIL president. The proposal is designed to require additional disclosures for material changes on home and auto policies. Lehman’s specific concerns have centered on increasing complexity in rating and underwriting factors and his belief that consumer and agents often do not understand the reasons for changes. NAMIC had opposed the model at previous NCOIL meetings, including the annual meeting in November, where Lehman decided to defer further consideration to this meeting. In the meantime, he filed a transparency proposal in his home state, as part of an omnibus bill that has now passed the Indiana House and is pending in the Senate.

Lehman gave the committee a brief history of the development of this model law between the work at NCOIL and the Indiana Legislature followed by an overview of the changes made to the model since the annual meeting. The most significant changes include the removal of declinations of coverage from the model and an exemption for notices already required under the Fair Credit Reporting Act, which were two of the issues NAMIC had identified in its previous opposition.

At this meeting, NAMIC acknowledged the improvements but noted two concerns that prevented its endorsement: a provision adding its requirements to any existing overlapping laws requiring notice; and the requirement still cause concern about the value the notice will provide in relation to its cost. NAMIC’s view was that further discussion of the model at NCOIL was unlikely to produce consensus at this time, and the experience with the model in individual states would be instructive for what other changes might be desirable. Of note, the new committee chairman, Rep. Edmond Jordan of Louisiana, expressed a desire for a “stronger” bill that would include declinations; however, he ultimately voted in favor of the model.

After two amendments by the sponsor, neither of which changed the gist of the bill, the model was approved with a few dissenting votes.

The committee also heard a presentation on improving natural disaster resiliency efforts by Roy Wright, president/CEO of the Insurance Institute for Business & Home Safety, and Louisiana Insurance Commissioner Jim Donelon. They provided an overview of various disaster resiliency efforts and statewide building codes and efforts Louisiana and other states have taken to incentivize natural disaster mitigation. The purpose of the presentation was to begin the consideration for a model law to incentivize natural disaster resiliency, previously considered by NCOIL several years ago. One of the clear key issues in this discussion will be whether and how mitigation activities should be subject to premium credits. A second presentation, by the National Insurance Crime Bureau, focused on insurance issues related to catalytic converter thefts. NICB provided the committee the background on the increase in thefts across the country and how states are addressing the issue from a public policy perspective.

Environmental, Social, and Governance, Part 1

Friday’s general session featured the first of a series of planned NCOIL discussions on environmental, social, and governance concepts as they relate to insurance. These discussions at NCOIL are unusual in the sense that from the outset – in a clear testament to the diversity of views of the subject – NCOIL leadership has stated that it does not expect the conversation to lead to any sort of NCOIL model recommendation.

This opening discussion ostensibly focused on environmental issues, although the eight featured panelists roamed across a large swath of ESG-related topics, both general and specific. As in many ESG-related conversations, the debate suffered from a lack of clarity on exactly what was being debated. In general, the anti-ESG panelists tended to emphasize ESG considerations as representing a sea change in the outlook of many industries – including, as to insurers, in how to underwrite and invest. Those advocating for some ESG consideration, including the investment manager for the California public employees’ retirement system and a former New York state senator, took the position that ESG considerations are fundamentally still based on financially material issues and are more a difference of degree than kind from pre-ESG considerations.

In terms of defining what ESG means, the most cogent offering cited a 2004 UN report that generally described from the concept as one of moving from “shareholder capitalism” to “stakeholder capitalism.” The latter, broader concept focuses on considerations other than financial returns, although it may still be grounded in a view of long-term returns. Some ESG critics on the panel focused less on whether investment or business practices involving ESG considerations was categorically wrong and more on whether broad agreements to use ESG considerations in particular ways might be unduly coercive or collusive. And while not necessarily directly related to ESG, the discussion also touched on purported “boycotts,” with the most common examples being fossil-fuel-related industries and guns.

In terms of what this discussion means for ESG legislation related to insurance, the panel offered no clear answer. Legislation in some states would prohibit consideration of ESG scores in rating and/or underwriting, but to date none of these bills clearly delineates when legitimate rating and underwriting considerations become inappropriate. The NCOIL president, Rep. Deborah Ferguson of Arkansas, noted that to the extent states diverge on issuing conflicting edicts to the industry about ESG, this divergence would invite federal intervention. One example of potential diversion, noted by Indiana’s Lehman, is a Connecticut bill that would require insurers to impose a surcharge on fossil fuel industries.

Gun Liability General Session

At the request of Rep. Brenda Carter of Michigan, the meeting featured a panel discussing “Gun Liability: Is It Time?” The panelists revived a conversation on whether some form of liability insurance could help discourage violence committed using guns or help compensate victims of such violence. Two of the panelists – Rob Hoyt, professor at the University of Georgia, and R.J. Lehmann from the International Center for Law & Economics – made the general point that most gun incidents are intentional and excluded from insurance coverage, for good reasons, and that insurers have no desire and likely limited if any ability to enter a market for providing additional coverage.

The most expansive view of insurance’s role was offered by Deborah Ramirez, Northeastern University Law professor, who posits that insurance for gun owners and gun dealers should be able to help address the problem of dangerous individuals owning firearms and better compensate victims, and that insurers should be required to provide this coverage. Another panelist, state Sen. Catherine Blakespear of California, disclaimed any desire to cover truly intentional acts but suggested that gun ownership should be treated the same way as ownership of a pool or trampoline. Lehmann noted that an insurance mandate would also face the problem of a lack of actuarial support to price coverage.

There is no active model before NCOIL on this issue nor is it apparent that there is any role for insurers to play on this issue beyond coverage that already exists for fortuitous and accidental events involving guns. NAMIC will remain engaged on this issue.

NCOIL/NAIC Dialogue

The NAIC/NCOIL dialogue agenda featured a few items of interest for the property/casualty insurance industry. A discussion was held on issues with tribal insurers, in particular a consortium of three tribes that asserts it can operate in the insurance business outside of state law, given the unique position of tribes under federal law. The tribes’ first foray has been into health insurance, although they have indicated interest in other lines as well. There was general agreement that the tribes’ activities were likely to end up being decided in Congress or the U.S. Supreme Court.

The dialogue also covered the NAIC’s current exposure draft for the new Data Privacy Protection Model Law. NAMIC is in the process of compiling comments on this draft prior to an April 3 deadline. Further on this topic are included in the Financial Services & Multi-Lines committee section.

Joint State-Federal Relations & International Insurance Issues Committee

The Joint State-Federal Relations and International Insurance Issues Committee heard three presentations covering balance billing, preventive services, and preparations for the end of the public health emergency. The committee did not consider any model legislation during the meeting.

Workers’ Compensation Committee

The Workers’ Compensation Committee heard three presentations. The first provided an overview on the developments in California’s Workers’ Compensation marketplace. The second presentation provided the committee an update on the proposed Department of Labor Worker Classification Rule, focusing on the current White House administration efforts to undo the previous administration’s rule. Finally, the committee heard about emerging issues in workers’ compensation from the National Council on Compensation Insurance, which included single-payer health plan legislation, the legalization of marijuana and workers’ compensation coverage for medical use, and the use of independent contractors and job classification in the gig economy. The presentation concluded with an overview of the continued expansion of presumption laws for workers’ compensation coverage across the country. There were no model laws considered during the meeting.

Ultimately the committee accepted the two amendments outlined above and adopted the model with at least three no votes. The new Property-Casualty Committee chairman, Rep. Edmond Jordan, D-La., expressed a desire for a “stronger” bill that includes declinations.

Adoption of the Transparency Model Act concluded the committee’s business for the spring meeting.

Financial Services & Multi-Lines Issues

To close Day 2 of the spring meeting, the Financial Services and Multi-lines Committee discussed a range of insurance topics, including the Name, Image, and Likeness industry, potential for an NCOIL consumer data protection model act, a discussion and consideration of potential amendments to the NCOIL Insurance E-Commerce Model Act, and an update on the developments in direct procurement of insurance. No model laws were considered or adopted.

NAMIC participated in the panel discussion on the potential for an NCOIL consumer data protection model act. Some panelists, largely driven by vendor-specific concerns in the health space, recommended that NCOIL consider modelling the Virginia data privacy law. NAMIC’s comments noted that while the Virginia law had some good features in relation to data privacy proposals in other states, that it also generally excluded property/casualty insurers and that a model resolution encouraging a recognition of the unique data needs of the insurance industry might be more appropriate. NAMIC also suggested that NCOIL look at the results of the current comment period on the potential updated NAIC data privacy model law before charting a path forward.

Post Details

Publish Date

March 14, 2023

News Type

  • Special Reports

Topics

  • NCOIL

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