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 Property and Casualty Insurance Advisory Council.
Rick Parks of Society Insurance served as chair of the meeting, and welcomed Commissioner Mark Afable. The Commissioner said he appreciates the diverse participation on and feedback from the Council.
National Association of Insurance Commissioners (NAIC)
Cybersecurity. Richard Wicka, OCI's Chief Legal Counsel, reported that OCI is working with a Department of Agriculture, Trade, and Consumer Protection task force on general cybersecurity issues. On issues specific to insurance, an OCI working group marked up the NAIC Insurance Data Security Model Law, and OCI is working with the legislature to introduce the law in next year's short session.
Wisconsin Legislative Update
OCI Technical Bill. Olivia Hwang, OCI's Director of Public Affairs, noted that OCI's technical bill had been signed into law to set the due date for the first corporate governance annual disclosure at June 1, 2020, and enact some solvency provisions for fraternals.
Corporate Governance Annual Disclosure. Richard Wicka reported that OCI just sent what should be the final rule to the legislature. He said the Commissioner sees corporate governance as important to sound operation, so he hopes the disclosure is taken seriously. The first disclosure should be done right, as only updates are required after that. The disclosures are given OCI's highest level of confidentiality.
Agent Licensing. Tim Cornelius, an OCI attorney, reported that changes to modernize and streamline the agent licensing process are almost ready for the Governor's review. There were no changes since the comment period.
Wisconsin Insurance Plan. Mr. Cornelius noted that changes to the rule governing Wisconsin's property insurer of last resort have been approved by the Governor and sent to the legislature. The changes include an increase in some limits and more flexible references to the trade associations making appointments to the governing board.
Public Adjuster Licensing. Mr. Cornelius reported that proposed legislation would license public adjusters - persons who assist insureds with property insurance claims - like insurance agents, and includes consumer protection elements like regulation of contracts and conflicts of interest. Olivia Hwang noted that the bill has passed the Assembly and is awaiting a hearing in the Senate. The NAIC is discussing how to handle reciprocity, because some states license adjusters and some do not, and OCI will report to the Council on developments there.
ATV Insurance. Olivia Hwang initiated a discussion of this topic by noting that state laws vary quite a bit, thanking the Alliance for a survey of such laws that circulated to the Council. Members seemed to agree that the market seemed to be in a good place at the current time, with a good supply of coverage and reasonable prices, and that the main need seemed to be educating agents and consumers on coverage issues (e.g., possible lack of coverage when you leave your own property, remembering to add coverage for an ATV when purchased). OCI's market regulation bureau Director Rebecca Rebholz noted that OCI had not received complaints on the subject, and wondered about data on usage. Ms. Hwang said that OCI is coordinating with other state agencies on data and consumer education, and will work on a possible survey of insurers.
Richard Wicka said that OCI is continuing work in this area, including following the NAIC working group and considering a regulatory framework. However, regulators are behind on developments and often do not have the resources or expertise to evaluate those developments (though the NAIC is helping to close the gap). In response to a question, Mr. Wicka noted that the NAIC focus is more on use of data as opposed to its collection, and attendees said that the National Conference of Insurance Legislators is also involved, and that other issues include responsibility for the accuracy and security of data (which often comes from third or fourth parties).
Prescription Drug Task Force
OCI policy advisor Jennifer Stegall reported that this Governor's task force met for the first time on November 20, and heard a presentation from the National Governors Association on the supply chain and actions being taken by other states. The meeting was recorded for Wisconsin Eye, and the task force has a mailing list. OCI's representative on the task force is Deputy Commissioner Nathan Houdek. The task force plans to make recommendations by August.
Tim Cornelius noted that he and OCI's workers compensation point person attended a meeting of the Department of Workforce Development task force on this subject to discuss workers compensation insurance and policy audits. OCI wants audits to find a balance between a proper review and not being intrusive. OCI recently penalized a subcontractor for issuing a fraudulent certificate of insurance. In response to a question about what prompted the task force, Mr. Cornelius mentioned that the issue of employees vs. independent contractors is an important issue, and that this task force follows up on a previous one.
Governor’s Council on PFAS Contamination
Olivia Hwang reported that, in the absence of federal action, this Council is looking to determine safe levels of per- and polyfluoroalkyl substances (PFAS), especially in public drinking water. PFAS are human-made chemicals that are used in industry and consumer products worldwide, including non-stick cookware and firefighting foam, and appear in 98% of the U.S. population. Ms. Hwang noted that there is little information on PFAS contamination, but other states are looking at the issue also.
She is on the Council to advise on liability and other insurance issues (e.g., the known contaminant exclusion). OCI may want to survey insurers and will share information from the Governor's Council. Members of the Advisory Council noted that pollution coverage is a narrow part of the industry, as most insurers do not have the ability to cover it, and that products liability insurance may also be implicated.
Rebecca Rebholz reported that her bureau has organized data on OCI complaints in various lines of business for 2017, 2018, and the first three quarters of 2019. There seems to be a downward trend, but OCI is not sure why. In response to a question, Ms. Rebholz noted that good communication between the insurer and insured can make a huge difference in resolving complaints, and OCI often just facilitates that communication.