One thing we can definitely count on during the late springlegislative “rush” is that a significant number of bills are signedinto law, with multiple impacts on the property and casualtyinsurance industry. Four states in particular offer prime examplesof this type of activity:

Maryland

While Maryland's recent enactment of SB 531, effective Oct. 1,2013, allows for insurers to take action on the discovery of amaterial risk factor during the underwriting period, it alsoimposes a notice requirement on insurers availing themselves ofthis option. Specifically, “if the insurer discovers a materialrisk factor during the underwriting period, the insurer shallrecalculate the premium for the policy or binder based on thematerial risk factor as long as the risk continues to meet theunderwriting standards of the insurer in accordance with the ratesand supplementary rating information filed by the insurer.”However, to the extent that an insurer does recalculate thepremium, the insurer is bound to provide a written notice to theinsured. The notice must be on a form approved by the commissionerand must state the following:

• Amount of the recalculated premium.
• Reason for the increase or reduction in the premium.
• Insured's right to terminate the policy.

Alabama

There has been increased regulatory activity over the past fewyears as states take additional steps in fighting insurance fraud.This includes the expansion of existing fraud warning requirements,adopting new warning statements, and requiring the implementationof anti-fraud plans by insurers.

We have already seen that Maryland has a revised fraud warning effective Jan. 1, 2013,but now Alabama has its own fraud warning requirement. The warning,which states the consequences of presenting false/fraudulent claimsor information, must be used in at least one of the followingdocuments: claim release forms, applications, reinstatements forinsurance, participation agreements, declaration pages, and claimdocuments, regardless of the method or form of transmission of theform.

Alabama's fraud warning requirement is effective six monthsafter Aug. 1, 2012.

Louisiana

Louisiana's HB 154 addresses refunds due to insureds based onthe cancellation, elimination, or reduction of coverage by eitherthe insurer or the insured. This bill allows for an optional mannerin which the funds can be returned to the insured. If the insuredcontinues to maintain a policy of insurance with the insurer, or anaffiliated insurer, and the amount of the refund plus interest is$25 or less, the insurer may credit the amount of the paymentagainst future premiums. The insurer must provide written notice tothe insured of the credit and the amount at policy renewal.

Another Louisiana enactment, HB 308 effective Aug. 1, 2012,actually repeals two laws regarding unfair trade practices inautomobile insurance because they were found to be unconstitutionalby the U.S. District Court for the Eastern District ofLouisiana.

The statutory sections are: R.S. 22:1965, which prohibitedagreements for performing repair work, and R.S. 22:1966, whichprohibited agreements for performing glass work.

Indiana

Indiana is joining many other states in providing trade secretprotection for insurers' form, rate and rule filings. EffectiveJan. 1, 2013, provisions created under HB 1226 apply to filings andsupporting information filed under IC 27-1-22-4. Specifically, thebill's criteria indicates that if the filer marks the filing orsupporting information “confidential,” “trade secret,” or“proprietary,” the filer must provide the commissioner with“sufficient basis” for determining whether it can remainconfidential or not.

There is also a 30-day deemer provision for insurers, whichallows the filing to be presumed approved if not disapproved withinthe specified time period. However, if the commissioner determinesthat a filing or supporting information is not confidential, theentire filing will be returned to the filer upon request before thefiling or supporting information is open to public inspection.

More new and revised requirements will likely be created in therush to meet pending gubernatorial signing deadlines. However, formany of these, the states are providing lead time in order forprocesses to be adapted to achieve compliance. Keeping an eye onthese changes can better prepare insurers to make good businessdecisions across their organizations.