Zoning In - Winter 2024

NORTHEAST ZONE

Delaware

The Domestic/Foreign Insurers Bulletin 144, dated Dec. 14, 2023, provides filing guidance for the development of paid family and medical leave plans (“PFML”). Bulletin 144 reminds carriers that Delaware’s PFML provisions become effective Jan. 1, 2025 with standards codified at 19 Del.C. § 3716. The Department of Insurance “requests that carriers complete and submit concurrently with any PFML filing the checklist attached to this Bulletin, which will aid in the Department’s review to confirm that the policy forms comply with the standards required by 19 Del.C. § 3716.”

Bulletin 144 also includes filing submittal information such as specific provisions pertaining to the filings in SERFF, the required copy of the certification to be provided to the Delaware Department of Labor, and prohibited provisions in policy forms. Regarding a carrier opting to offer separate paid family leave policies and paid medical leave policies in addition to PFML policies, the Department of Insurance indicates that each of these policies must be filed as separate products with separate form identifiers.

New Jersey

Bulletin 23-08, dated Dec. 29, 2023, reminds private passenger auto insurers of certain underwriting and pricing considerations. By way of background, the Department of Banking and Insurance had previously issued Order No. A23-01 and Bulletin No. 23-04. That Order required that all insurers with private passenger automobile policies in force on Apr. 6, 2023 provide the Department with copies of their private passenger automobile underwriting guidelines applicable between Jan. 1, 2023 and Apr. 6, 2023. Order No. A23-01 also required any additional changes to be filed in accordance with the specified dates. Bulletin 23-08 further provides: “In accordance with Order No. A23-14, issued simultaneously with this Bulletin, the Department has ordered that that all authorized and admitted property/casualty insurers that have private passenger automobile policies in force on the date of Order No. A23-14 shall continue to submit to the Department any changes made to its underwriting guidelines. Any changes implemented between the date of Order No. A23-14 and prior to December 31, 2024 shall be submitted to the Department within five days of implementation. Documents shall be e-mailed to market.analysis@dobi.nj.gov.”

New York

Proposed Insurance Circular Letter, dated Jan. 17, 2024, addresses the “Use of Artificial Intelligence Systems and External Consumer Data and Information Sources in Insurance Underwriting and Pricing.” This proposed Circular Letter outlines the Department of Financial Services’ expectations regarding how insurers develop and manage the integration of external consumer data and information sources (“ECDIS”), artificial intelligence systems (“AIS”), and other predictive models to mitigate potential harm to consumers. Detailed requirements are included in this Proposed Circular Letter including expectations that insurers will:

• Analyze ECDIS and AIS for unfair and unlawful discrimination;

• Demonstrate the actuarial validity of ECDIS and AIS;

• Maintain a corporate governance framework that provides appropriate oversight of the insurer’s use of ECDIS and AIS; and

• Maintain appropriate transparency, risk management, and internal controls.

The Department of Financial Services also includes a request for feedback on all aspects of this Circular Letter. Interested parties are encouraged to provide feedback on the proposed guidance by March 17, 2024. Comments should be submitted to innovation@dfs.ny.gov. Please use “Proposed Circular on the Use of AI and ECDIS in Insurance Underwriting and Pricing” in the subject line. Comments may be subject to public inspection and should not include any sensitive or confidential information.

SOUTHEAST ZONE

Tennessee

Bulletin 23-07 dated Dec. 13, 2023, reminds insurers to submit the required annual report of all fire losses on property insured in Tennessee on or before Feb. 1, 2024. The report should cover all losses between Jan. 1, 2023 and Dec. 31, 2023. The bulletin notes that the Commissioner will accept reports from insurance companies via the ISO ClaimSearch© database or by submitting data using Microsoft Excel. For insurance companies that elect to submit their reports directly to the Department, please email Michelle.Price@tn.gov. The following information about fire losses to be included in the report:

• The owner and occupant of the premises burned;

• The date, location, and cause of fire;

• Occupancy of the affected property;

• Amount of insurance;

• Sound value of the property; and

• The amount of loss paid.

West Virginia

Bulletin No. 2024-01, dated Jan. 9, 2024, addresses the “Prior Authorization Prohibited for Prescription Drugs at Inpatient Discharge” in West Virginia’s prior authorization law. The Offices of the Insurance Commissioner (“OIC”) states that under West Virginia’s prior authorization law “any prescription written for an inpatient at the time of discharge usually requiring a prior authorization may not be subject to a health insurer’s prior authorization requirements and shall be immediately approved for not less than three days, provided that the cost of the medication does not exceed $5,000 per day.” Additionally, “a physician or health care practitioner must note on the prescription, or notify the pharmacy, that the prescription is being provided to a patient at discharge. After three days, a prior authorization shall be obtained. To comply with the relevant provisions of West Virginia’s prior authorization law, an electronic portal should include an option to bypass or forego the usual prior authorization requirement for a three-day supply of a prescription drug at the time of an inpatient discharge so long as the cost of the prescription drug does not exceed $5,000 per day.”

Regarding recent statutory updates, this Bulletin references an additional enforcement section that became effective on Jan. 1, 2024 providing that the OIC “may assess a civil penalty for a violation of West Virginia’s prior authorization law pursuant to W.Va. Code §33-3-11.” Pertinent prior authorization citations are identified as W.Va. Code §§ 33-15-4s(n), 33-16-3dd(n), 33-24-7s(n), 33-25-8p(n), 33-25A-8s(n), and 5-16-7f(n).

MIDWEST ZONE

Michigan

Bulletin No. 2024-01-INS, dated Jan. 8, 2024, reminds issuers of health insurance policies of the requirement to provide coverage for cancer therapies that meet the criteria set forth under MCL 500.3406e and the reasonable cost of their administration.

The Department of Insurance and Financial Services provides specific provisions in MCL 500.3406e which require “coverage for any United States Food and Drug Administration (“FDA”) approved drug regardless of whether the specific neoplasm for which the drug is being used as treatment is the specific neoplasm for which the drug has received approval by the FDA if all of the following conditions are met:

• The drug is ordered by a physician for the treatment of a specific type of neoplasm.

• The drug is approved by the FDA for use in antineoplastic therapy.

• The drug is used as part of an antineoplastic drug regimen.

• Current medical literature substantiates its efficacy and recognized oncology organizations generally accept the treatment.

• The physician has obtained informed consent from the patient for the treatment regimen that includes FDA-approved drugs for off-label indications.”

The Department further indicates that it will disapprove any health insurance policy form that limits or restricts coverage for cancer therapies, including genetic therapies or immunotherapies, including but not limited to CAR-T (CAR-T cell therapy), that meet the criteria identified in the Bulletin.

Wisconsin

Senate Bill 362 (2023 WISCONSIN ACT 78) establishes provisions for permitted insurance plan electronic transmission under employer-sponsored health insurance policies and plans. Included in those provisions are sections pertaining to employer consent.

Section 610.63 was created by SB 362 and provides in Section 610.63 (2) (a) that “Notwithstanding s. 610.60 (3) (a), an insurer or health maintenance organization insurer may agree to deliver all communications related to an insurance policy, plan, or contract to a covered person by electronic means when the covered person’s employer consents to electronic delivery of documents on behalf of the covered person under the insurance policy, plan, or contract pursuant to par. (b).”

The referenced paragraph (b) states that: “An employer may consent to the delivery of all communications related to an insurance policy, plan, or contract to covered persons by electronic means if the employer confirms all of the following for each covered person:

• The covered person routinely uses electronic communications during the normal course of employment.

• The covered person was given an opportunity to opt out of delivery by electronic means and will be given an opportunity to opt out of delivery by electronic means on an annual basis.

Regarding confirmation of compliance, “An employer that consents to the delivery of all communications related to an insurance policy, plan, or contract by electronic means under par. (b) must confirm that all new covered persons will routinely use electronic communications during the normal course of employment and be given an opportunity to opt out of delivery by electronic means when added to the insurance policy, plan, or contract.”

WESTERN ZONE

California

Bulletin 2023-7, dated Dec. 21, 2023, addresses “Requirements for Complete Rate Applications and Issuing Good Driver Discount Policies.” This Bulletin noted that the California Department of Insurance had received numerous consumer complaints regarding waiting periods, questionnaires, and other practices instituted by personal auto insurance companies while writing new and renewal personal auto insurance coverage. Such complaints could indicate violation of various provisions of Proposition 103 and/or other California laws. Bulletin 2023-7 provides detailed information on the following mandates:

• All admitted property and casualty insurers must publicly file all changes to rates, rating rules, eligibility, renewal, and underwriting guidelines prior to implementation; and

• All personal auto insurers must write all qualified good drivers.

Colorado

Bulletin B-10.001, dated Dec. 4, 2023, addresses inquiries from life insurers concerning attestations for life insurers that do not use external consumer data and information sources (“ECDIS”). This Bulletin provides guidance regarding the manner and format of the attestation required by Insurance Regulation 10-1-1 when an insurer does not use ECDIS, or algorithms or predictive models that use ECDIS, in any insurance practice. The Division of Insurance has not prescribed a specific format for the attestation but does indicate that life insurers may independently develop the format of the attestation. Regarding the attestation format, the Bulletin states that “the attestation must be signed by an officer of the insurer and unambiguously state the insurer does not use any ECDIS, or any algorithm or predictive model that uses ECDIS, with any insurance practice, as defined in Colorado Insurance Regulation 10-1-1.” The attestation should be submitted by email directly to the Division’s Big Data and AI Policy Director, Jason Lapham, at jason.lapham@state.co.us.

New Mexico

Bulletin 2023-038, dated Dec. 26, 2023, addresses requirements for blanket insurance forms. Noting the underlying statutory authority, the bulletin indicates that existing approvals for blanket insurance forms and rates remain in effect and that such previously approved products may continue to be sold in New Mexico. However, the Bulletin further indicates that the Superintendent has identified blanket insurance as a priority for rule promulgating in the coming year. Additionally, the Bulletin provides that “pending a final rule-making that sets specific standards for blanket insurance, the Superintendent shall not accept any new Blanket Insurance products for review and approval under NMSA 1978 §59A-18-12. Any new blanket insurance product submitted for approval will be administratively withdrawn, unless it is submitted for review against the current version of 13.10.34. Carriers may adjust rates for existing products, when necessary, pursuant to NMSA § 59A-18-13.3.”

Utah

R590-230 titled “Suitability in Annuity Transactions” is revised effective July 1, 2024. Revisions include the requirement for a producer to act in the best interest of the consumer when making a recommendation of an annuity. Additionally, insurers will be required to establish and maintain a system to supervise recommendations so the insurance needs and financial objectives of a consumer at the time of the transaction are effectively addressed. Other revised requirements address the duties of insurers and producers and producer training.

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Kathy Donovan is Senior Compliance Counsel, insurance with Wolters Kluwer Financial Services. Kathy has more than two decades of experience in insurance compliance. Her expert commentary on legal and regulatory issues affecting the insurance industry is widely published and she is a regular presenter at various industry events.