NAIC NewsWire
Health Insurance That Doesn't Cover the Bills Has Flooded the Market Under Trump
Bloomberg (09/17/19) Faux, Zeke; Mosendz, Polly; Tozzi, John

With an exemption for short-term health insurance plans in the Affordable Care Act, more Americans have discovered that their affordable health insurance plans do not cover everything. These plans do not follow the same restrictions of other ACA plans, which are prevented from capping coverage, canceling coverage retroactively, or turning away people with preexisting conditions. Fewer than 100,000 people had such plans at the end of last year, according to state insurance regulators, but by allowing Americans to buy these cheaper plans, the Trump administration expects about 600,000 plans in effect this year. In interviews, lawsuits, and complaints to regulators, dozens of Health Insurance Innovations' customers say they were tricked into buying plans they didn't realize were substandard until they were stuck with surprise bills. The company denies responsibility for any such incidents, saying it's a technology platform that helps people find affordable policies through reputable agents.
5OYS: What Insurance Option Is Best for You?
WeAreIowa.com (09/16/19) Droze, Rachel

As enrollment season approaches, there are new options this year for consumers for whom the cost of insurance remains high. Iowa Insurance Commissioner Doug Ommen says the state extended eligibility for short-term health plans for 2020. He explains, "This is not a perfect option for everyone. This is really designed to allow an opportunity for people to get coverage that have been priced out of the individual market under the ACA." Iowans can buy short-term plans that cover them for 364 days at a time, and the plans can be renewed up to three times. "So if you're 63, and you're looking for a bridge to Medicare, this may be something that you would be able to access to provide coverage guarantee for circumstances that arise during that time you are moving up toward Medicare," Ommen says. He adds this option is not for everyone: "If you have a preexisting condition, the companies are able to not cover you."
Savings, Flexibility, Control Drive More States to Create Health Exchanges
BestWire (09/16/19) Darragh, Timothy

States like Pennsylvania, New Mexico, New Jersey, and Nevada are considering a shift from the federal health insurance exchange to their own state-run exchanges. According to a 2018 Commonwealth Fund study, state-based exchanges performed better, with state-run marketplaces seeing lower premium increases from 2016-2018 than states using the federal marketplace. Pennsylvania Insurance Commissioner Jessica Altman said in May Pennsylvania insurers are sending about $88 million a year to Washington to run its exchange, and a conservative estimate indicates the state could operate its own exchange for $30 million to $35 million. Pennsylvania Insurance Department spokesperson Ron Ruman said officials are studying exchanges in several states before deciding which system to use. Another advantage of a state-based system is that it provides real-time data to state officials, said the Nevada Division of Insurance, allowing for targeted advertising and individual messaging and increasing the effectiveness and efficiency of outreach. Oregon is exploring its options. Leah Andrews, director of Public Information and Communications for the Department of Consumer and Business Services, says, "as stewards of state resources, we have a responsibility to learn about different methods for health care marketplace platforms to ensure cost-effective use of funds."
No One Can Agree on How to Price California Home Insurance for Wildfires
Wall Street Journal (09/16/19) Friedman, Nicole

Insurers have long used algorithmic models to predict catastrophe losses, but now insurers, homeowners, and regulators disagree about how those models should be applied in assessing California's wildfire risk. As wildfires become more destructive and costly across the state, insurers want to use catastrophe models to set rates, but some consumers say those models are opaque and fail to adequately capture wildfire risk. With many homeowners paying significantly more for insurance or having problems finding coverage, the use of these models has become a hot button issue. California wildfires cost insurers more than $24 billion in 2017 and 2018. But different models might still reach different conclusions about the risk facing a certain property or book of business, say critics. "Any model that is used in a rate filing would have to be vetted through a public process," says Joel Laucher, special consultant for the California Department of Insurance. The state's insurance regulators are "balancing the risk that insurers will nonrenew customers against the risk that customers will be asked to pay more than they can afford," he says.
Insurers Face Hurdles Serving Medical Marijuana Clients
Reading Eagle (PA) (09/16/19) McGaw, Jeff

Some 300 million acres of farmland were protected nationwide through the Federal Crop Insurance Program in 2018, including 1.2 million acres in Pennsylvania, according to information published by the Federal Crop Insurance Program. A farmer in California had a crop insurance policy that provided $1 million in coverage for his failed greenhouse marijuana crop following the 2017 Thomas fire. The National Association of Insurance Commissioners (NAIC) formed a Cannabis Insurance Working Group to identify insurance issues, gaps, and opportunities facing the cannabis industry and to identify best regulatory practices to address those issues. "Even where coverage is available, the underwriting criteria may be so strict as to prevent businesses from actually obtaining the insurance," says a spokesperson for the Pennsylvania Department of Insurance. "At the NAIC conference in San Francisco, we took testimony on this issue and one thing that stood out is that insurers who are willing to insure the cannabis industry place requirements on insureds that they would not place on any other business."
Florida Bill Targets Windshield Repair Incentives
CBS Miami (09/16/19)

Florida state Rep. Richard Stark (D) has proposed legislation to prevent auto-glass shops in the state from offering cash, gift cards, or other incentives to motorists to attract windshield-repair work. The bill could spur renewed debate about the insurance practice known as assignment of benefits (AOB), under which policyholders sign over claims to contractors who then pursue payment from insurers. During the 2019 session, lawmakers placed restrictions on AOB for property-insurance claims and debated restrictions for windshield claims. Florida CFO Jimmy Patronis says he will pursue the windshield issue during the 2020 legislative session, which starts Jan. 14, 2020. Insurance companies say the AOB process is undermined by fraud and excessive litigation, while contractors say it helps ensure that claims are paid properly. Supporters of the bill say unnecessary windshield claims could lead to higher premiums for motorists, while opponents say the bill would hurt small windshield-repair businesses that compete with larger corporations that have arrangements with insurers.
GDPR and CCPA Are Just the Beginning for the Middle Market
Law.com (09/16/19) Schuler, Karen A.

Soon after the European Union's General Data Protection Regulation (GDPR) was implemented, the California Consumer Privacy Act of 2018 (CCPA) was ratified, and it has provisions similar to but not identical to the GDPR. The CCPA's enforcement has been deferred to July 1, 2020. Since the CCPA's enactment, all 50 states have either introduced their own data privacy legislation or amended their data breach notification laws. South Carolina was the first state to adopt breach notification and cybersecurity requirements based on the National Association of Insurance Commissioners Model Law, applicable to all insurers, agents, and other licensed entities authorized to operate under the state's insurance laws. Vermont's new law, effective as of February 2019, is applicable to companies in the "data broker" industry and requires minimum security standards, annual registration and a host of other obligations. Related Stories: JDSupra; Bloomberg Law
TDI Offers Guidance on New Ban on Named Driver Policies
Insurance Journal (09/16/19)

The Texas Department of Insurance has issued a bulletin providing guidance on House Bill 259 that prohibits insurers from delivering, issuing for delivery, or renewing named driver policies on or after Jan. 1, 2020. The prohibition contained in HB 259 does not apply to operators' policies, as defined in Texas Transportation Code Section 601.077, TDI. Under the new law, an insurer may continue to write and renew named driver policies that comply with current laws and rules as late as Dec. 31, 2019. After Jan. 1, 2020, insurers may not send named driver policyholders a renewal because under HB 259 named driver policies may not be renewed on or after January 1, 2020. Insurers can offer a new policy together with the notice of nonrenewal. An insurer must give 30 days' notice of nonrenewal under Texas Insurance Code Section 551.105. Insurers also must issue new offers must be for a policy form that were filed with and approved by TDI. The insurer must have rates on file for the new policy.
AZ Insurance Regulator Warns of Phishing Scam Targeting Insurance Professionals
Insurance Business America (09/16/19) Adriano, Lyle

Arizona's Department of Insurance (AZDOI) issued an email to all insurers operating in the state to warn them of an ongoing phishing scam. It states that email messages falsely claiming to be from the National Association of Insurance Commissioners (NAIC) are being sent to insurance professionals, claiming that the NAIC has received a complaint against the professional for submitting a falsified claim. The email includes a link to the complaint notification, but the link downloads a trojan virus once clicked. The email may look official since it prominently displays the NAIC and CIPR logos, but it is a scam. AZDOI noted that the virus has been identified as Lime RAT, a remote access trojan that can be used to perform malicious actions on the affected computer, such as installing ransomware. The department says that the phishing email originally targeted insurance producers in Wisconsin, but has now spread to Illinois, Minnesota, and Washington. All insurance producers – even those not operating in the state – should be wary of suspicious emails.
New Jersey Insurance Department to Review Firearms-Related Products
BestWire (09/13/19) Darragh, Timothy

New Jersey Gov. Phil Murphy signed an order that Department of Banking and Insurance and other state departments promote responsible gun safety practices for gun vendors and financial institutions and to take action against insurance policies that encourage improper firearm use. Banking and Insurance Commissioner Marlene Caride has 30 days to "take all appropriate action within her authority to prohibit and/or limit the sale, procurement, marketing, or distribution of insurance products that may serve to encourage the improper use of firearms." Caride pointed to a recent fine of $1 million against Lockton Affinity to settle allegations that it permitted the National Rifle Association to market directly for the Carry Guard insurance program in the state. "We are continuing to investigate other firearm-related insurance programs for potential violations of state insurance laws," Caride says. The department did not immediately say what those other measures may be. Related Story: PropertyCasualty360 (registration)
CFO and Governor Announce FinTech Priorities in Jacksonville
Florida Department of Financial Services (09/16/19)

Florida Chief Financial Officer (CFO) Jimmy Patronis joined Governor Ron DeSantis in Jacksonville to announce several key initiatives that encourage financial technology ("FinTech") companies to open, relocate, and expand in Florida. Patronis said, "It was an honor to stand with Governor Ron DeSantis for an important announcement today. I promise we will always work to protect our consumers and allow for businesses to grow and prosper here in Florida. By ensuring common-sense regulations are put in place to guarantee a stable market that protects consumers, we're doing just that with FinTech in our state."
Ohioans Have Uncovered Millions in Missing Life Insurance Funds
Ohio Department of Insurance (09/16/19)

A free service provided by the Ohio Department of Insurance is helping Ohio residents uncover millions of dollars in life insurance funds they are rightfully due. The Department of Insurance's missing life insurance policy and annuity contract search service, launched in 2009 as one of the first such services in the country, has matched 2,043 individuals to beneficiary funds from a policy of a deceased Ohio resident. Beneficiaries have received a total of $11.4 million through the service. Department of Insurance Director Jillian Froment said, "September is Life Insurance Awareness Month, and we want to make sure every Ohioan is aware of the missing life insurance policy program. Many consumers may not realize they could be due life insurance policy proceeds or maybe they tried but could not locate the policy. We can help in those circumstances and encourage all Ohioans with questions about life insurance to contact us."
Banks Warm to Mortgage Bonds That Burned Them in 2008
Wall Street Journal (09/16/19) Eisen, Ben; Demos, Telis

Several U.S. banking giants have in the past year expanded or revived the business of building mortgage bonds. The activity could help reenergize the private-label market for mortgage bonds following its collapse during the 2008 financial crisis, just as Washington scales back its involvement in housing finance. The Urban Institute calculated that roughly $70 billion of mortgages — the most since 2007 — wound up in private-label mortgage bonds last year. Traders and executives suggest the shrinkage of Fannie Mae and Freddie Mac could allow even more private players to package and sell mortgage bonds. Observers also say many money managers now envision mortgage bonds as an opening to generate greater income amid low interest rates.
Prudential Pays $32.6 Million to Settle Probe of Mutual-Fund Business
Wall Street Journal (09/16/19) Michaels, Dave

Prudential Financial Inc. agreed to pay $32.6 million to settle claims that it didn’t disclose how a reorganization of its mutual-fund business would cost the funds millions in lost interest income. The Securities and Exchange Commission (SEC) said the 2006 reorganization — intended to engineer tax benefits for Prudential — created a conflict of interest because the company benefited while the funds lost income from securities lending. They also paid higher taxes in certain foreign jurisdictions. In addition to paying the fines, Prudential reimbursed over $155 million to the funds, said the SEC. The allegations are related to Prudential's decision to recall from 2005 through 2015 various fund securities on loan to banks and other traders. Mutual funds routinely lend stocks or bonds they own as a way of boosting returns. Prudential's decision to recall the securities from borrowers allowed it to receive dividends that were deductible for tax purposes, the SEC said. Related Story: ThinkAdvisor (registration)
Tropical Disturbance in Gulf of Mexico Set to Deluge Texas with Heavy Rain, While Hurricane Humberto May Target Bermuda
Washington Post (09/16/19) Cappucci, Matthew

Thunderstorms over the western Gulf of Mexico has the potential to become a major rainmaker for parts of East Texas. While the National Hurricane Center gives it a 10% chance of becoming a named storm, it could produce excessive rainfall totals and potentially lead to flooding. Flash flooding can evolve quickly in this sort of atmospheric scenario. Areas of heavy rain were already approaching the Texas coast as of Sept. 16, but the heaviest and most widespread downpours are forecast midweek. Inland flooding has been the leading cause of fatalities from tropical systems in recent years. Meanwhile, Hurricane Humberto is gaining strength in the Atlantic Ocean off the East Coast, and it may approach close to Bermuda by Sept. 18-19. The first hints of an eye are appearing on infrared satellite imagery. Humberto is now forecast to become a Category 3 hurricane. A few model simulations even bring the storm close to the U.S. East Coast, although still offshore. Related Stories: South Florida Sun-Sentinel; Insurance Journal
Visa Direct Offers Real-Time Claims Payments with Insurance Partners
Forbes (09/13/19) Groenfeldt, Tom

Visa is working with insurance companies that want to use the Visa Direct real-time payment system to send insurance payouts to their customers. Insurance payments could be made through a customer's debit card directly into a checking account or through a prepaid card. These payments could be made for damages to homes or cars, as well as travel insurance claims or health care payouts. For customers, receiving funds in real-time is valuable because they can get repairs made and life back underway instead of waiting several days for a check to arrive and then clear. Bill Sheley, senior vice president and global head of push payments at Visa, says, "It is a much more digital experience so you can embed it in a mobile app. It incorporates all of the technology and security and operating scale the Visa network has been doing for decades, and includes risk screening, AML compliance — all thing things you want in a payment clearing mechanism, and at speed." Related Story: Insurance Business
Spokane Man Charged in Faking Water Damage Claim
Washington State Office of the Insurance Commissioner (09/12/19)

Ivan Kriger of Spokane was charged in Spokane County Superior Court with attempted first-degree theft and presenting a false claim for insurance purposes after an investigation by Washington State Insurance Commissioner Mike Kreidler's Criminal Investigations Unit (CIU). According to the investigation, Kriger filed a claim exceeding $18,800 with Grange Insurance for water damage to a house he owned and was renovating. He said the pipes froze in the kitchen in January 2018 and caused damage that he documented with photos. Grange found the City of Spokane had declared the property a nuisance in 2017, before Kriger purchased it. The water to the house was shut off in September 2017, and the water meter reading had not changed as of the date of the claim. An inspector found old water damage and mold but nothing that indicated a water pipe freeze and subsequent leak. Additionally, the metadata on the photos showed they were taken before the date Kriger said the damage happened. Grange denied the claim and referred the case to Kreidler's CIU.
Sussex County Woman Indicted for Insurance Fraud
Delaware Department of Insurance (09/13/19)

Janet Lane, formerly of Ocean View, was indicted on Sept. 9 by a Sussex County Grand Jury for two counts of insurance fraud and one count of identity theft following an investigation by the Delaware Department of Insurance Fraud Prevention Unit. Lane had been a passenger in a car that was struck in a motor vehicle accident in July 2015. She sustained injuries from the accident. During the course of the claim process, Lane submitted a fraudulent wage and salary verification form to her insurance company, CSAA Insurance, utilizing her past employer's information and forged signature. She claimed that she was employed during the time of the July 2015 accident. However, Lane was not employed at the time of the accident. In addition, Lane submitted a fraudulent doctor's work note to CSAA Insurance. Based upon the fraudulent documents, Lane received $15,488 for lost wages she was not entitled to receive from CSAA Insurance.
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