Regulatory activity continues to make headlines, even as the majority of legislative sessions have long since ended. From bulletins to regulatory adoptions, various states continue to present insurers with multiple challenges in tracking all the regulatory activity, analyzing documents, and implementing changes for one or more lines of business.

Some of the more recent developments from state insurance departments are identified below, beginning with Colorado's B-5.35.

Additional or Enhanced Coverages

This bulletin provides information about the state's Homeowner's Insurance Reform Act of 2013. Compliance areas addressed in B-5.35 include the issuance or renewal of a replacement-cost homeowners' insurance policy and a homeowners' right to obtain additional or enhanced coverage. It also clarifies the division's position concerning the option to purchase 24 months of additional living expense (ALE) coverage. According to the Colorado Division of Insurance, an application for a homeowner's insurance replacement-cost policy shall give the consumer the choice to accept or reject each of the following benefits, unless the benefit is a standard policy provision:

Extended replacement-cost coverage equal to at least 20 percent of the dwelling limit.
Law and ordinance coverage at a minimum of 10 percent of the dwelling limit.
ALE coverage for a total of 24 months.

If, at renewal, the policy does not include the maximum benefit provided by this statute, the insurer shall offer the opportunity to purchase the above listed coverages. The offer shall clearly explain the purpose, terms, and cost of each of these additional coverages, as well as any policy limitations. The insurance producer or representative of the insurer should maintain, in its records, documentation of any coverage rejection.

Turning our attention now to Maine, Bulletin 387 concerns motor vehicle glass and collision damage repair. With its issuance, Maine seeks "to remind motor vehicle insurers of Maine's laws requiring claimants to be offered the opportunity to choose their motor vehicle glass and collision appraisal and repair providers, and to explain how those requirements apply to the practice of having appraisals done at preferred repair facilities."

The statute also prohibits any insurer from entering into an agreement to manage, handle, or arrange for appraisals or repairs if the compensation is based on the difference between the list price of the repair services and the amount paid to the repair shop. The Maine Bureau of Insurance notes it has received complaints of "insurers referring claimants to specific repair shops or networks of repair shops without clearly disclosing that the claimants may use any facility for their repairs." Specifically, Section 2164-C prohibits this practice; it does, however, allow insurers to:

Contract with repair shops for repairs to claimants' motor vehicles on a discounted basis, if the interests of those claimants who elect to have repairs made elsewhere are not adversely affected and if such agreements do not violate other applicable laws, such as antitrust laws.
Limit the allowable charge for motor vehicle repairs to the amount for which the claimant can reasonably cause the repair to be performed absent a special arrangement between the insurer and repair shop or network of repair shops.

In Other Developments

New Mexico's Bulletin 2013-006 about "tie-in sales" specifically "advises property and casualty insurers that requiring an insurance consumer to purchase a private automobile insurance policy from the insurer or its affiliates in order to purchase a homeowners' multi-peril insurance policy from that insurer, or vice versa, is considered an unfair method of competition and is prohibited under 59A-16-3 NMSA 1978. However, it is permissible for an insurer issuing a personal lines umbrella policy to require a supporting automobile and/or homeowner policy issued by the insurer or its affiliates."

Oklahoma's Bulletin PC 2013-08 addresses the increase in days' notice for the nonrenewal of homeowner's insurance policy or any other personal residential insurance coverage from twenty days to 30 days effective July 14, 2013. Additionally, OK Bulletin 2013-09, in addressing the "sale, solicitation, and negotiation of insurance," provides detailed examples of licensed producer activities as well as those activities which it has determined are "non-licensed" activities.

Rhode Island's amended Regulation 110 titled "Property Insurance and Weather-Related Claims, effective October 3, 2013, includes new provisions covering hurricane deductibles, cancellation and nonrenewals, premium increases or surcharges, comprehensive nonrenewal plans and cessation of new business in the state, as well as Division authority to establish a mediation program and to adopt emergency measures.

Vermont's Bulletin 3 summarizes the notice requirements in that state's Security Breach Notice Act, which was effective May 13, 2013.

State regulators are sure to issue additional guidance the form of bulletins between now and the end of the year. More new and amended regulations are also to be expected. As we head into the last quarter of 2013, all this regulatory activity will set the stage for what we will see in the way of legislative developments in early 2014.

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