NAIC/IAIABC Joint (C) Working Group
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The NAIC/IAIABC Joint (C) Working Group met on Dec. 5, 2009.

During the meeting, the NAIC/IAIABC Joint (C) Working Group:

• Received a Sept. 22, 2009 exposure draft titled “Implementation Commentary,” a white paper to be of assistance to states in implementing the Guidelines for Regulations and Legislation on Workers’ Compensation Coverage for Professional Employer Organization Arrangements (PEO Guidelines). The development of the paper is considered important due to the complexity of the PEO Guidelines, adopted in 2007, and due to the number of challenges regulators face today pertaining to PEO matters. It was explained that Appendix B of “Implementation Commentary,” titled “NCCI Alternatives and Technical Supplement on Data Reporting,” is to be amended prior to the NAIC 2010 Spring National Meeting. It was announced that any comments on “Implementation Commentary” should be e-mailed to Bob Wake (Robert.a.wake@maine.gov), with copy to Bob Card (bcard@naic.org).

• Recognized members of the NCOIL Independent Contractor Model Law Subgroup, of the Working Group. The Subgroup held conference calls this past quarter to provide the National Conference of Insurance Legislators (NCOIL) with comments from the NAIC and the International Association of Industrial Accident Boards and Commissions (IAIABC) regarding the then draft NCOIL “Construction Industry Workers’ Compensation Coverage Act” (independent contractor model law). A copy of the Nov. 22, 2009 NCOIL adopted independent contractor model law was distributed during the Working Group meeting.

• Received an update from the Large Deductible Study Implementation Working Group reporting progress made in drafting its Third Party Administrator (TPA) Guidelines. The draft had recently been revised to include health insurance changes as recommended by the Regulatory Framework (B) Task Force. The draft TPA Guidelines were developed to replace the current TPA Model Law in order to add workers’ compensation and to update the original model law, which entailed making some health insurance changes.  The Working Group will reconsider the revised draft during a January conference call before it forwards the redraft to the Producer Licensing (EX) Task Force for review. It is anticipated that the Workers’ Compensation (C) Task Force will consider the redraft for adoption during the NAIC 2010 Spring National Meeting.

• Received an update on HR 635 which proposes federal legislation that would authorize the creation of a National Commission on State Workers’ Compensation Laws. It was reported that a number of stakeholders have come forward in opposition to HR 635 including the American Insurance Association, the National Association of Professional Insurance Agents, the National Conference of State Legislators, the Property Casualty Insurers Association of America, and the U.S. Chamber of Commerce. However, the bill was reported to now have 13 House co-sponsors.

• Received an update on progress made by the Workers’ Compensation Large Deductible Subgroup of the Casualty Actuarial and Statistical Task Force from one of its members. The Subgroup has been evaluating whether a preferable method could be developed for assessing workers’ compensation large deductible premiums. States today base large deductible policy assessments on direct written premiums net of deductible, and some states assess based on paid losses that then add back deductible losses. It was reported that the Subgroup is currently creating a summary to present, but also to recommend against the use of direct premiums net of deductible credits.