Filed Under:Claims, Auto

The Continuum of Compliance

Ushering In A New Age of Responsibility

(Editor's Note: Kathy Donovan is senior compliance counsel for Insurance Compliance Solutions at Wolters Kluwer Financial Services and a regular contributor to PC360.) 

The end of yet another year gives all of us an opportunity to review recent legislative and regulatory initiatives and then pause to consider what the next year might bring. As one would expect, 2012 most definitely provided property and casualty (P&C) insurance compliance professionals many new and revised requirements across multiple functional areas. A quick recap of some key updates can assist in identifying the current legislative and regulatory focus and perhaps provide some insight into what 2013 may have in store. 

An upcoming requirement in Washington will affect property insurance cancellations and nonrenewals. Effective April 1, 2013, WAC 284-19-170 will require more information be provided to the insured when an insurer cancels or nonrenews a property insurance policy. Currently, insurers must explain the procedure for making application under the Washington Essential Property Insurance Inspection and Placement Program either in the notice of cancellation or nonrenewal or accompanying such notice. The new mandate requires that the notice of cancellation or refusal to renew must include:

• Contact information for the office of the Washington state insurance commissioner’s consumer-protection services, including the consumer-protection division’s hotline phone number and the agency’s website address.

Credit Score Information Challenges “Not as Hot” 
For the past few years, it was not uncommon to see close to half of the states with introduced legislation proposing to restrict or ban the use of credit information in one or more lines of business. However, this year there were substantially fewer states that filed bills advocating such actions. An example of such a bill was Missouri’s HB 1406, which failed to pass. It was drafted to prohibit an insurer from using a credit report or insurance credit score as a factor in underwriting or to take any adverse action based on a credit report or insurance credit score against a person currently insured under an existing insurance contract with the insurer. 

One bill that was enacted was Michigan’s HB 4595, with an anticipated effective date of March 20, 2013. Under this bill, when requested by an insured or an applicant, an insurer is required to provide reasonable exceptions to its use of credit information in the insurer’s rates, rating classifications, or company or tier placement for an individual who has experienced and whose credit information has been directly influenced by extraordinary life circumstances. Additionally, HB 4596 requires that an insurer, upon receiving notice, must reevaluate its evaluation of an insured’s credit score information if the established dispute-resolution process determines that the initial evaluation was based on incorrect or incomplete credit information and make necessary adjustments. This second bill also has an expected effective date of March 20, 2013.

Managing Claims Revisions
From new fraud warning statement requirements in Alabama and Maryland to notices and disclosures, states continued to mandate additional provisions. West Virginia’ HB 4486, effective June 8, requires an insurance company to provide a response that includes the name of the insurer, the name of each insured on the policy, the limits of any motor vehicle liability, and the declaration page within 30 days of receipt of a written request from the claimant’s attorney. 

New Hampshire’s Administrative Rule Ins 1002.08, effective Dec. 1, 2012 requires that when insurers pay P&C insurance claims, the form of payment must allow the claimant or the insured ready access to claims funds. Insurers do have options available to affect a compliant payment, including using a paper check or draft; direct deposit to a claimant’s or an insured’s financial account with prior verifiable authorization of the insured or claimant; or delivery of a debit card, bank card or other similar card. This latter option has specific disclosure requirements to which the insurer must adhere. 

Vermont’s HB 766 provides that effective July 1, the limitations period for a cause of action by or against a member of the National Guard will be tolled during the duration of his or her out-of-state military or naval service or in-state active-duty service, plus an additional 60 days. 

“Electronics” Initiatives 
Our electronic age affects insurers’ regulatory environment, with the impact evidenced by the advances many states have made in establishing requirements for both portable electronics insurance and the regulatory acceptability of an image of a motor vehicle identification card that is displayed on a wireless communication device. States enacting portable electronics provisions this year include Alabama, Arizona, Colorado, Delaware, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Nevada, New Hampshire, New Jersey, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Washington and Wisconsin. In addition, other states, including Illinois, Kansas, Maryland, Minnesota, Missouri, Oklahoma and Oregon continued to refine previously enacted requirements. 

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