Insurance Legislation Surges This Year In Congress, Legislatures

NU Online News Service, Sept. 17, 2:06 p.m. EDT

Federal and state activity to create rules and laws for the insurance industry has surged this year increasing demands on carrier resources, a consulting firm said.

From January to July 2009, more than 10,000 pieces of such legislation were introduced, representing more than a 70 percent increase over the period in 2008, a report by Waltham, Mass.-based Wolters Kluwer Financial Services' Insurance Compliance Solutions group found.

"All this activity ratchets up the work, the resources and time spent tracking all this legislative activity" by insurers, noted Daryl James, a Wolters Kluwer product manager.

He said on average for insurers the highly manual process of tracking legislative activity and rules "takes 70-to-90 person hours a week to track and summarize," and insurers need to automate the job to be cost-conscious and efficient.

Wolters Kluwer's study looked at state and federal statutes, regulations and administrative orders–a universe of nearly 270,000 items, including individual sections of law and regulation, plus advisory documents, such as bulletins and attorney general opinions.

Kathy Donovan, Wolters Kluwer Financial Services senior compliance counsel, said while the legislation, predominantly at the state level, dealt with health insurance and Medicare issues, there was plenty of activity on the property and casualty side.

She mentioned measures dealing with credit information use in rating and underwriting, requirements for vehicle claim settlements and those dealing with underwriting actions such cancellations and non-renewals.

Ms. Donovan said that much of the legislation had been brought by insurance departments reacting to complaints about claims handling due to the public's frequent confusion about the process.

With the economy in its current condition, Ms. Donovan said she suspects it is sparking additional legislative activity because there has been "concern not only to make claimants whole, but to ensure that the process is clearer."

According to Wolters Kluwer Financial Services' research, nearly 26,000 state and federal laws and regulations pertaining to the U.S. insurance industry will change or be created this year. Additionally, about 30 percent of the regulatory activity through July of this year affects all lines of insurance business.

Wolters Kluwer said costs from legislative activity can be direct, such as increased exam activity and associated fines that result from non-compliance. The firm added there are also hidden costs, including possible future lost business due to higher profile instances of non-compliance.

The report said that for the first six months there were 169 more bills in Congress on insurance than for the period last year.

The complete research report, "Trends and Developments in Legislative and Regulatory Activity," is online at: http://img.en25.com/Web/WKFSInsurance/TrendsAndDevelopments_6.pdf.