2014 STATE LEGISLATIVE & REGULATORY PRIORITY ISSUES
To see a list of all state and federal issues which have the potential to affect NAMIC members companies, and to learn more about them, please visit the Legislative & Regulatory Issues page.
NAMIC’s top agenda priority remains adoption of modernization laws creating rate-approval standards less restrictive than prior approval. This year, NAMIC led successful efforts to adopt a modest improvement in Nevada's rate filing statute (from 60 to 30 day waiting period). Also, Florida adopted commercial lines modernization which expands the number of commercial lines products that are exempt from the rate filing and review requirements. NAMIC continues to engage legislators and regulators in dialogue over flex-rating in multiple states including Alabama, North Carolina, and Pennsylvania.
In 2014, NAMIC will engage with legislators to identify and eliminate redundant and inefficient laws affecting insurance companies. This effort is part of our continued focus on reforming and modernizing state regulation. Read more >>
Efforts to ban or severely limit the use of credit-based insurance scoring and other underwriting tools were relatively limited in 2013. Proposals to ban or severely restrict use of this valuable tool were introduced in 16 states but none of them advanced out of the house of origin. NAMIC continues to work with legislators and regulators in Alaska to expand use of insurance scoring to policy renewals. Thanks in part to NAMIC, legislation in Nevada that would have created burdensome disclosure standards regarding a company's use of insurance scoring were averted. We believe that at least a moderate level of opposition to insurance scoring will persist for the foreseeable future.
A few important tort reform proposals were adopted in 2013. Florida adopted legislation providing that a witness qualified as an expert by knowledge, skill, experience, training, or education may testify in form of an opinion as to facts at issue in a case. This bill was a priority for the business community. In Louisiana, the legislature enacted a proposal providing that a class action cannot be obtained if the court would be required to look at the merits of any individual class member's claim to determine whether or not the individual would fall within the defined class. And, in Texas, legislation was enacted which provides a mechanism for Texas asbestos and silica courts to dismiss long dormant claims on the inactive docket while preserving a claimant's ability to re-file a dismissed case should the claimant develop an impairing condition. It’s also worth noting that there were few serious efforts to move anti-civil-justice-reform legislation. NAMIC monitored every threat from inception and also helped to ensure the quiet death of a few troublesome bills. That being said, continued diligence will be necessary.
NAMIC continues to lead insurance industry advocacy efforts on third-party litigation funding and our issue analysis, "Third-Party Litigation Funding: Tipping the Scales of Justice for All," continues to serve as a valuable resource for legislators. Third-party litigation funding, also known as litigation financing or lawsuit lending, refers broadly to the practice of providing money to a party to pursue a potential or filed lawsuit in return for a share of any damages award or settlement.
NAMIC is working in conjunction with industry partners to ban or severely restrict this practice. Thanks in part to NAMIC’s efforts, most the 12 legislative proposals introduced this year would subject litigation lenders to a state's fair lending laws thereby cap the interest rates that they can charge. Many of these proposals would also require that a plaintiff disclose the existence of a litigation loan to the opposing party. Although none of the above mentioned proposals were adopted in 2013, we believe that momentum is now swinging in favor of the business community. For example, Indiana did pass legislation requiring the legislature to further study litigation loans and Oklahoma adopted a proposal that may allow regulators to place reasonable restrictions upon these lenders.
The aftermath of "Super storm Sandy" created challenges for the insurance industry up and down the East Coast. Additionally, increased CAT activity over the past few years may be resulting in increased regulatory scrutiny of farm mutual insurance companies. NAMIC worked diligently throughout the region affected by Sandy to educate regulators and legislators about the negative impacts of enacting overly restrictive regulations and legislation pertaining to property insurance markets. Thanks in part to NAMIC's efforts, the most egregious proposals were either dropped or defeated. NAMIC also continues to promote proposals based on actuarially sound rating and loss mitigation in all coastal zones. New Jersey was one of the state's hardest hit by Sandy, so the threat of legislative and regulatory over reaction was a very real threat. The legislation ultimately adopted in New Jersey, which requires insurers to provide policyholders with a brochure explaining hurricane deductibles, notable coverages, and other information, was tame compared to the possibilities. In New York, a package of twelve burdensome and dangerous bills, including a proposal to ban the use of Anti-Concurrent Causation Clauses, ultimately died. It is fair to assume that attacks on the use of Anti-Concurrent Causation Clauses will persist next year in a few states. Furthermore, NAMIC will encourage and promote the adoption and enforcement of strong statewide building codes.
The NAIC is currently engaged in a substantial effort to enhance solvency regulation. The first two important pieces that are becoming active in the states are changes to the Model Holding Company Act and the Own Risk and Solvency Assessment. NAMIC made a significant effort this year to convince regulators to provide a compliance threshold for smaller companies related to the Enterprise Risk Report portion of the Holding Company Act. NAMIC advocates met with over 20 insurance departments on this topic. Thanks in part to our efforts, Kansas joined Texas with a $300 million compliance threshold and Idaho and Maine added language to their law providing regulators with clear flexibility to grant exemptions. In anticipation that many states will introduce the ORSA model next year, NAMIC has begun working with regulators and legislators to ensure that the confidentiality language in the ORSA proposal is sufficient and that the legislation is consistent with the provisions of the NAIC model.
Posted: Wednesday, June 27, 2012 2:09:57 PM. Modified: Thursday, January 30, 2014 11:28:02 AM.
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