The business and regulatory environment for insurance is constantly changing, and part of our client service platform involves staying on top of those changes. One way we do this is by attending the periodic meetings of the industry-regulator-consumer liaison committees sponsored by the Wisconsin Office of the Commissioner of Insurance (OCI) for life, health, and property and casualty insurance. The following is our report on the discussion from the most recent meeting of the Health and Life Insurance Advisory Council:
Community Work Services Program
Louie Cornelius, Administrator of Funds and Program Management at OCI, explained that this program provides employment opportunities to individuals with developmental disabilities. He noted that OCI participates in the program and encouraged other area employers to do the same.
Complaints Insurance Company Access (CICA)
Barry Haney, Program Manager of OCI’s Complaints Unit, explained that CICA allows OCI and insurers to handle consumer complaints over the web. Once an insurer has registered with CICA, it is notified of complaints by email, and then reviews and responds to the complaint via the CICA web site. Benefits include faster exchanges of information, the ability to respond in various formats (such as audio files), no postage, real time access to the last two years of complaints, and elimination of the need to acknowledge receipt of complaints.
Currently there are 61 insurers participating in the pilot, and invitations will now start going out to another 1,600 eligible insurers. Participation is still voluntary. CICA is not currently available to agents.
Life Insurance Life Claims Settlement. Jason Levine of OCI reported that the National Conference of Insurance Legislators (NCOIL) promulgated a model law, which has been adopted by several states, requiring insurers to review Social Security’s death master file, and follow up on any matches with their insured lives. Now the National Association of Unclaimed Property Administrators is pushing the Uniform Law Commissioners to update the Uniform Unclaimed Property Law to cover life insurance. OCI is concerned about another agency having authority over insurers, and has submitted a letter in opposition to the proposal. Deputy Commissioner Dan Schwartzer testify against it. Industry representatives thanked OCI for these efforts and asked whether the National Association of Insurance Commissioners (NAIC) would act. J.P. Wieske, OCI’s Director of Legislative Relations and Communications, said he hoped the NAIC would adopt a model law, but that there was no consensus.
Contingent Deferred Annuities (CDAs). Richard Wicka, OCI’s Deputy Chief Legal Counsel, said that OCI chaired the NAIC’s CDA Working Group, which revised various model laws to deal with CDAs.The Working Group also drafted guidance for regulators on CDA issues.
Principles-Based Reserving. Robin Jacobs, an OCI attorney, reported that OCI has circulated draft legislation for its technical bill that would require life insurers to change from the current formulaic approach to reserving to a principles-based approach that recognizes the complexity of current products. The NAIC adopted a standard valuation law in 2009 to be used with principles-based reserving, which will take effect when it has been adopted by at least 42 states or states representing 75% of U.S. life insurance premiums, probably next year (so far 18 states representing 28% of premiums have adopted it). Industry representatives expressed concern about issues such as lack of an exemption for small companies that only issue traditional products, and how the IRS will treat principles-based reserves. Long-Term Care. Mollie Zito, OCI’s Chief Legal Counsel, noted that the NAIC’s Senior Issues Task Force changed the long-term care insurance model act and worked on a manual in response to consumer complaints about the cost of the coverage. The NAIC also heard from Congress on the cost issue, as well as the issue of unintentional lapses in coverage (which may result in a requirement for notice of lapse to a third party as well as the policyholder). The Task Force also looked at whether the long-term care partnership program, under which qualifying policies protect the insured’s assets for Medicaid eligibility, needs modification.
Reserve Rule. Richard Wicka reported that OCI will begin revising its rules to require life insurers to use the 2012 Individual Annuity Reserving Mortality Table when determining the minimum standard of valuation for individual annuity and pure endowment contracts. Health Insurance
Navigators.Cari Lee, Director of OCI’s Bureau of Market Regulation, reported that the agent licensing and health units in her bureau worked with navigator award recipients on compliance (the award to the Board of Regents was contracted out), including two conferences with prelicensing education.
FAQ Updates. J.P. Wieske noted that OCI has now updated all of the FAQs on its health insurance reform web page.
Consumer Alerts.J.P. Wieske said that OCI issued a press release on the early open enrollment period for Medicare Advantage, and was anticipating the need for a press release and FAQ on the renewal process under the Affordable Care Act (ACA) due to uncertainty over changes in subsidies. OCI is also concerned that some agents may be unaware of policy changes made on the exchange or at the call center. OCI will also update its health insurer map for 2015.
NAIC Issues.J.P. Wieske noted that the ERISA Working Group was working on a white paper on self-funded small employer health plans and stop loss coverage, and that OCI has some concerns about it. He said that the NAIC is reviewing the Individual and Small Group Market Health Insurance Coverage Model Regulations and the Managed Care Plan Network Adequacy Model Act. There will be regular calls on the latter to work through comments and drafting. See the Property and Casualty Advisory Council report for further information on NAIC activities.
Legislation and Rulemaking
Budget and OCI Technical Bill. See the Property and Casualty Advisory Council report.
Own Risk and Solvency Assessment (ORSA). Gina Frank, OCI Division Administrator, said ORSA will take effect in 2015 for larger insurers, that is, those with more than $500 million in premium (or more than $1 billion of premium in the group). OCI staff is working with the NAIC’s ORSA subgroup and insurers that have volunteered for an ORSA pilot project, and is also taking NAIC and other enterprise risk management training. OCI understands that each company is unique, and does not intend ORSA to be prescriptive. There is an NAIC guidance manual that explains the process. See the Property and Casualty Advisory Council report for further information.
National Association of Registered Agents and Brokers (NARAB). Seethe Property and Casualty Advisory Council report.
Holding Company Rules. Mollie Zito reported that OCI is revising its holding company rules to match the most recent changes in the NAIC model. The biggest changes are the Enterprise Risk Report (Form F) required from an insurer’s parent holding company (with the first one probably due June 1, 2015) and a new notice to OCI prior to acquisition of an insurer. The changes include a small charge for insurers subject to a supervisory college. See the Property and Casualty Advisory Council report for further information.
Credit for Reinsurance Rules. Mollie Zito said OCI will revise these rules after the Governor approves the Statement of Scope. OCI is looking for input on these revisions, including how often to review reinsurance collateral and how to maintain continuity from year to year. See the Property and Casualty Advisory Council report for further information.