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Reps. Seek to Provide Greater Oversight on International Insurance Standards
Financial Regulation News (04/12/17)

U.S. Reps. Sean Duffy (R-Wis.) and Denny Heck (D-Wash.) have issued a discussion draft of a bill designed to preserve the state-based system of insurance regulation and provide greater oversight and transparency on international insurance standards setting processes. "Our state-based system of insurance regulation has worked well for more than 150 years and should be held up as a model to be supported by our negotiators in international forums," said Duffy. The International Insurance Standards Act would require that international insurance agreements reflect U.S. policy and ensure that state insurance regulators are included throughout the negotiations of covered agreements and international insurance agreements. The act also would enhance Congressional consultation and review of international insurance agreements and require that covered agreements not include new prudential requirements for U.S. insurers. Finally, it would treat international insurance agreements and covered agreements as rules for the purposes of the Congressional Review Act.

NAIC in the News

President Faces Risky ACA Choice
The Hill (04/13/17) Hellmann, Jessie

President Donald Trump said in a recent interview that he was considering withholding cost-sharing payments to insurers in an attempt to force Democrats to work with him on reforming healthcare. The administration also must finalize a proposal by the U.S. Department of Health and Human Services that aims to help prevent insurers from leaving the market or boosting premiums. Observers note that President Trump would be taking a big risk if he does nothing and insurers leave the market, as voters could blame him and Republican lawmakers for rising premiums and fewer healthcare choices. Tennessee's insurance commissioner has been in talks with the state's remaining insurers, Blue Cross and Blue Shield and Cigna, to fill in gaps left as Humana exits the market. However, Tennessee Department of Commerce and Insurance spokesperson Kevin Walters said, "At this time, we have no commitments from other carriers willing to cover that area in 2018. The department agrees with Sen. Lamar Alexander's position that, absent any national direction, there could be Tennesseans who currently buy insurance who may not have any choice for insurance on the exchange in 2018." Related Stories: Reuters; Bloomberg; Reuters; Wall Street Journal (subscription); Bloomberg BNA

How Alaska Fixed the ACA
Vox (04/13/17) Kliff, Sarah

When Alaska's Affordable Care Act (ACA) insurance exchange was in jeopardy, with rates set to increase 42 percent, state officials created a plan to save the marketplace. Alaska Insurance Director Lori Wing-Heier devised a plan that would have the state pay back insurers for especially high medical claims submitted to ACA plans, which lowered premiums for everyone. Ultimately, the premium increase was a mere 7 percent. "We knew we were facing a death spiral," says Wing-Heier. "We knew even though it was a federal law, we had to do something." Now other states are interested in trying Alaska's idea, especially because Wing-Heier is working with the Trump administration to have the federal government, not the state, cover those costs. If the waiver does go through — and Wing-Heier says she is "confident" the Trump administration will approve it — Alaska expects that ACA rates might actually decrease in 2018, and about 1,650 additional people could join the marketplace due to the lower premiums. While there is only one insurance plan selling coverage and premiums are still high, Wing-Heier says it is still better than where the state would have been without this policy change. "It brought stability to our market, and the waiver is going to bring funding to us," she says.

How IoT Helps Insurers Mitigate the Risks of Climate Change
CIO (04/12/17) Olavsrud, Thor

According to the forward of Ceres' "Insurer Climate Risk Disclosure Survey Report & Scorecard: 2016 Findings & Recommendations" report written by Washington Insurance Commissioner Mike Kreidler and California Insurance Commissioner Dave Jones, "Insurance companies rely upon historical loss records to guide their underwriting and set their prices. ... More and more frequently, the climate is behaving in ways that we can't predict. Weather patterns are shifting, and the severity and breadth of damage are intensifying, resulting in more costly disasters than we've ever seen." Many insurers turning to technology to understand and assess risks associated with climate change and other exposures. The Internet of things (IoT) is shaping up to be a key component in mitigating those risks. ROC-Connect Senior Vice President of Business Development Kevin Meagher says IoT could allow insurers to completely transform their business models and go to market in a new way. He says, "You're already starting to see a whole bunch of interesting new business models sprouting up: Companies that don't sell insurance, they sell a smart home monthly subscription. The insurance is bundled in with the smart home services. They know if you have all these services, you're a low-risk customer."

Rising Complaints About Sky High Air Ambulance Fees
KOMO News (WA) (04/12/17) Thompson, Connie

Insurance companies typically are willing to pay only a fraction of the cost of air ambulance bills, forcing consumers to pay the rest. According to Consumer Reports, the average bill for medical helicopters is over $30,000. Consumer Reports also indicates that many people taken by air ambulance could have safely driven to the hospital in a ground ambulance, and they often have no idea they will be on the hook for the bill. It recommends that consumers ask their insurance company to advocate on their behalf to challenge the bill directly with the air ambulance provider and file a formal complaint with the appropriate agency in their state government. In many states, including Washington, insurance commissioners have no jurisdiction over medical air transport companies due to a federal law passed in 1978 that prohibits states from regulating their prices, routes, or services. However, consumer complaints can give insurance regulators an idea of the scope of the problem.

Regulators Form Long-Term Care Insurer Solvency Team
ThinkAdvisor (04/12/17) Bell, Allison

The National Association of Insurance Commissioners (NAIC) has formed a Joint Long Term Care Insurance (LTCI) Task Force, which will be run by the NAIC's Health Insurance and Financial Condition committees. Members of the NAIC's executive committee and its plenary approved the decision to establish the task force on April 11 at the NAIC's spring meeting in Denver. The new task force will bring together the people who work on product design and marketing rules with those who monitor LTCI issuers' finances. In coming up with its own list of goals, the new task force will look at such things as LTCI issuer solvency, state LTCI rate regulation procedures, regulation of short-term care insurance policies, and efforts to update the rules for the guaranty funds that protect policyholders against LTCI issuer defaults. Ultimately, the task force could shape the kinds of products people can buy to pay for post-acute care, change how often and how much the prices of those products change, and impact what happens to clients when issuers become insolvent.
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State Insurance Commissioners Consider Strengthening Annuity Sales Rules
InvestmentNews (04/12/17) Schoeff, Jr., Mark

The National Association of Insurance Commissioners (NAIC) launched an annuity suitability working group at its spring meeting in Denver on April 8. The panel will review the NAIC's model regulation for annuity transactions, which was last revised in 2010. Idaho Insurance Director Dean Cameron, head of the working group, said the time has come to revisit the model. "It was always the NAIC's intent to take into consideration what is in the client's best interests. Our model act needs to be strengthened in that respect," said Cameron. "There will be a strong element of disclosure. There will be a strong element of oversight to make sure the best interest of the consumer is taken into account." Under the current model regulation, a recommendation for an annuity purchase must be suitable for a client based on their investment objectives, time line, net worth, liquidity needs, risk tolerance, and other criteria. Cameron said, "We're trying to protect consumers, but we're also trying to make sure consumers have an opportunity to invest and save for their retirement."

Get Set for Trump Revisions to Your Affordable Care Act Insurance
NPR Online (04/13/17) Appleby, Julie

The Trump administration's proposed rule aimed at stabilizing the existing health law's insurance marketplace could have rapid, dramatic effects, especially on people who do not receive insurance through work and buy it on the Affordable Care Act's exchanges. Among the changes in the draft rule are a shorter enrollment window, tighter vetting of people who sign up outside of those open periods, and efforts to penalize consumers who do not maintain "continuous coverage." During a 20-day public comment period, the U.S. Department of Health and Human Services received comments from nearly 4,000 organizations and individuals. Some worry the changes could result in fewer healthy enrollees, and others point out they do not address the fate of federal subsidies that help low-income consumers pay deductibles and other out-of-pocket costs. The National Association of Insurance Commissioners warns that there might be legitimate reasons people stop paying premiums, such as billing errors that are not the fault of the consumer or because of job loss. They argue that some changes could violate a key part of the health law that requires insurers to offer coverage to just about everyone who applies.

Stars Insurance Being Investigated for Selling Fake Policies
Fox 19 (Cincinnati) (04/12/17) Baldwin, Michael

The Kentucky Department of Insurance is investigating Stars Insurance LLC in Erlanger for allegedly selling fake policies. According to the search warrant issued on April 10, the company is not licensed to sell insurance in Kentucky. It also indicates that the company's owners, Michael Fleckinger and his sister, Michelle Fleckinger, were offering quotes on their website on policies for property, casualty, life, health, auto, boat, and RV insurance. Furthermore, when an undercover agent asked which insurance company would provide him coverage, he was told Stars has "their own company." Michael Fleckinger was convicted on 13 counts of fraudulent insurance acts in 2008.

OneWest Avoided Force-Placed Insurance Class Actions During Crisis
Bloomberg BNA (04/12/17) Hinkes-Jones, Llewellyn

OneWest Bank, the mortgage servicer previously owned by U.S. Treasury Secretary Steven Mnuchin, has been accused by homeowner advocacy groups of foreclosure abuse involving lender-placed, or force-placed, insurance (LPI), which involves mortgage insurers forcing insurance policies on homeowners during a lapse in coverage, when premiums have not been paid, or they have no hazard insurance. Numerous class actions accused mortgage servicers during the 2010 foreclosure crisis of forcing expensive LPI policies on homeowners when they were not necessary, resulting in many large-scale settlements with banks. OneWest avoided prosecution and class action settlements, but documents obtained by Bloomberg BNA indicate the company attempted to levy LPI policies costing more than $10,000 for coverage from "hurricane-wind" damage over nine times the nationwide average for fire and homeowner's insurance, according to data from the National Association of Insurance Commissioners. Mississippi Insurance Commissioner Mike Chaney told Bloomberg BNA that "[LPI] is directly correlated with mortgage foreclosures [because mortgage contracts give the lender the right to force-place hazard insurance.] In short, lender-placed insurance became more prevalent during the 2007-2008 financial crisis because more people stopped paying their mortgages." All individual cases against OneWest were either dismissed or settled out of court.

State News Releases

Commissioner Urges Citizens to Avoid Distracted Driving
North Carolina Department of Insurance (04/12/17)

North Carolina Insurance Commissioner Mike Causey joined the National Safety Council in urging North Carolinians to concentrate on the road and avoid distractions while behind the wheel. April is Distracted Driving Awareness Month. "Driving has always been dangerous, but now more than ever, we need to concentrate on the road," said Causey. "The safety of every North Carolinian is my top priority, and I urge everyone to put down your phone and concentrate on driving your vehicle." Last year in North Carolina, 177 people were killed in crashes involving a distracted driver. Additionally, an estimated 26,962 were injured. Tips to help curtail distractions before they happen include: do not use your cellphone while driving; let calls go to voicemail or let a passenger talk for you; select music before you start driving; refrain from eating, drinking, and smoking; make sure your passengers and pets are properly restrained; know your route; and manage passenger conversation.

DFS Reminds Health Insurers of Their Obligation to Cover Office Visits That Also Include Medical Marijuana Certification
New York State Department of Financial Services (04/12/17)

New York Department of Financial Services (DFS) Superintendent Maria T. Vullo announced that the DFS is reminding all insurers authorized to write accident and health insurance in New York State, including health maintenance organizations, student health plans, and municipal cooperative health benefit plans, that they must provide coverage for office visits for covered services, including those that may result in a medical marijuana certification, as long as the visit was not solely for the purpose of the certification. DFS has received inquiries as to whether coverage must be provided for an office visit during which a practitioner, along with other services, provides a patient with a medical marijuana certification in accordance with New York Law. "DFS is reminding insurers today of their obligation to provide coverage for health care services, and that they cannot deny coverage just because a doctor may provide a medical marijuana certification as part of an otherwise covered office visit," said Vullo.

Prince George's County Man Sentenced in Insurance Fraud Scheme
Maryland Insurance Administration (04/12/17)

Maryland Attorney General Brian E. Frosh announced that Gary Eugene Stewart of Bladensburg was sentenced on one count of felony theft scheme having a value of $100,000 or more. Stewart's theft scheme began in March 2011 and continued through November 2013. Stewart submitted numerous fraudulent insurance claims against his mother's long-term care insurance policy, falsely alleging she was being cared for by private care givers. Stewart continued to submit fraudulent claims even after his mother's death, stealing a total of $101,407 from Genworth Life Insurance Company. On April 6, Stewart was sentenced to five years of incarceration, suspending all but 24 to 18 months followed by five years of supervised probation and full restitution. Stewart paid $60,000 in restitution at the time of sentencing and will pay the balance over the period of his probation. Maryland Insurance Commissioner Al Redmer, Jr., said, "We worked closely with Attorney General Frosh and his team to investigate this case of insurance fraud. When citizens commit fraud, it impacts all of us as rate payers with the carriers. We encourage people to report suspicious activity so we can determine if in fact fraud is being committed."

Regulatory & Legislation

Opinion: Curtains for Global Financial Regulation
Wall Street Journal (04/13/17) P. A17 Wallison, Peter J.

American Enterprise Institute senior fellow Peter J. Wallison says the election of President Donald Trump "has interrupted this march toward greater government power over global finance." With the resignation of Daniel Tarullo — whose term ends in 2022 — from his position as Federal Reserve governor, it is clear that the administration will not sign onto the G-20's agenda of creating an international system of financial oversight. When the Dodd-Frank law was passed, the goal was to create an international system to monitor the financial markets across the globe, but the Financial Stability Oversight Council in the United States, which was to carry out the agenda, was unable to regulate shadow banks, though it did designate firms as systemically important financial institutions. "The United States has dodged a bullet," according to Wallison.
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Louisiana Considers Workers' Comp Drug Formulary
Business Insurance (04/12/17) Esola, Louise

Louisiana lawmakers are considering two bills that could create a drug formulary for workers' compensation. House Bill 592 would create a drug formulary that is in line with the most recent version of the Workers' Compensation Formulary of the Official Disability Guidelines, published by the Work Loss Data Institute. House Bill 529 proposes the creation of a closed drug formulary that will limit what doctors can prescribe in line with evidence-based medicine and created by engaging employers, insurers, treating physicians, injured workers, attorneys, and other stakeholders. Both bills were sent to the House Labor and Industrial Relations committee on April 10.
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Property & Casualty Spotlight

FEMA: Residents Should Brace for Flood Insurance Cost Changes
Minot Daily News (ND) (04/13/17) Schramm, Jill

Federal Emergency Management Agency (FEMA) senior flood plain specialist Barb Fitzpatrick told policyholders at a workshop in Minot, N.D., that the best shield against predicted hikes in flood insurance premiums is continuous insurance coverage. There is no guarantee on rates, but currently "grandfathering" offers some protection against how much rates can rise, she said. FEMA expects to release new flood plain maps for the county early this summer, with a meeting in July to present the maps, followed by public meetings. Once the meetings are completed, it will be about a year and a half before new flood plain maps take effect, said Fitzpatrick. The maps are expected to place many homes currently in a preferred risk zone into a higher risk flood zone with higher premiums. Fitzpatrick said property owners who have preferred risk insurance will not be required to pay the rate of the higher risk zone because Congress has allowed for grandfathering. Instead, they would see gradual rate increases as high as 18 percent a year until reaching the actuarial rates set for that higher risk zone. Related Story: KKOH

CWCI: High Prevalence of TD Claims, but PD Lower Than Statewide Average in Sierra Nevada
WorkCompCentral (04/13/17)

In its latest scorecard report, the California Workers' Compensation Institute found that the 11-county region along the Nevada border has a higher-than-average rate of temporary disability claims but a lower proportion of permanent disability claims than the rest of the state. Temporary disability accounted for 19.3 percent of claims filed in the Sierra Nevada, compared to a 15.9 percent in the rest of the state. On the other hand, permanent disability accounted for just 12.9 percent of claims in the Sierra compared to 15.2 percent in the rest of the state. Opioids accounted for 30.8 percent of prescriptions in the Sierra in calendar year 2014, compared to 27.3 percent in the rest of the state. Nearly a third (32.5 percent) of payments for prescription drugs in the Sierra were for opioids. Overall, the Sierra generated 1.7 percent of workers' compensation claims filed between 2005 and 2015 and accounted for 1.7 percent of payments in California's workers' comp system.
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April 13, 2017
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