Zoning In - Spring 2024

Northeast Zone

Connecticut

The Insurance Department’s Notice dated March 19, 2024 advises insurers of the Department’s position concerning the extent of roof damage needed to support underwriting action and the acceptable use of aerial imagery technology to evaluate such damage. The three specific areas addressed in this Notice are Natural Discoloration and Streaking, Underwriting Guidelines, and Nonrenewal Notices. Regarding Natural Discoloration and Streaking: “It is the Department’s position that cosmetic roofing conditions such as natural discoloration and streaking do not support taking homeowner or dwelling fire nonrenewal action. Insurers must have evidence of material degradation of or damage to a roof that increases or changes the propensity for loss to support nonrenewal action. Furthermore, it is the Department’s position that aerial images alone showing discoloration, streaking or other cosmetic damage may not be used to support nonrenewal actions based on roofing degradation. Aerial images that unequivocally show material damage, however, may be appropriate to support nonrenewal action.” The Notice also indicates that in contrast to cosmetic damage mentioned above, “it is the Department’s position that conditions such as roof ponding, incomplete patching or tarping covering the roof would generally support taking underwriting action.”

Regarding Underwriting Guidelines, the Department further reminds insurers that they are required to file homeowners underwriting guidelines used to determine whether or not to underwrite/renew a policy. It also addresses “appropriate guardrails pertaining to the use of aerial imagery” that are needed to protect consumers from unsupported underwriting action. Regarding nonrenewal notices and the days’ notice and specific reasons requirements, the Department “encourages insurers to provide as much advance notice as possible in light of challenges associated with scheduling roofing contractors and completing repairs within a 60-day period. By providing specific reasons concerning the scope of roofing damage, the insured will be in a better position to take the necessary remedial action or to seek replacement coverage from other companies.”

Maine

Bulletin 471, dated Mar. 26, 2024, addresses the use of Medicare marketing materials by producers, agencies, and insurers. The Bureau of Insurance references Public Law 2023, Chapter 243, An Act to Require a Disclaimer on Promotional Materials for Medicare, Medicaid and MaineCare Products by Private Entities, which added provisions that explicitly prohibit the use of any advertisement, solicitation, informational brochure, mailer or any other promotional material that uses the term “Medicare,” Medicaid,” or “MaineCare” and mimics official notices or otherwise implies that it is an official document from a state or federal agency. Additional new provisions require any printed marketing materials for Medicare products to:

• Include a statement printed on the top and both the front and back of the material, in a type size no smaller than the largest type size used in the material, stating: “This is an advertisement and solicitation.” The type color may not be in grayscale or other faded tone and may not mimic or be similar to a font used in an official document from a state or federal agency;

• Include a statement, in a type size no smaller than the second-largest type size used in the material, stating “[Name of person sponsoring the promotional material] is a private company that is not Medicare, Medicaid or MaineCare and is not a governmental agency;” and

• Print any other disclaimer contained in the material in a type size no smaller than the second-largest type size on the material.

The Bulletin further provides for stated exemptions for certain informational material. The applicability of this new law is as follows: “applies to all printed materials marketing Medicare products, including “lead cards,” which are post cards, mailers, or other written communications encouraging consumers to respond to the sender and supply their contact and other personal information. Producers and insurers should also review the requirements and cautions applicable to solicitations of all insurance products discussed in Bulletin 403,  “ Use of Lead Cards by Producers and Agencies.”

Vermont

The Department of Financial Regulation (DFR) issued Insurance Bulletin No. 230 dated May 1, 2024, titled “Health Insurance Mandates Checklist and Mental Health Parity Data Collection.” The Bulletin indicates that its purpose is to provide guidance to insurers and other health plans subject to the DFR’s oversight (collectively, issuers) seeking to demonstrate compliance with mental health parity requirements.

Specifically, “the Division requires issuers to file all certificates for health insurance policies to be offered, issued or renewed in Vermont through the System for Electronic Rates & Forms Filing (SERFF). Beginning on Jan. 1, 2025, the Division will require issuers to:

• Include a completed Vermont Major Medical Checklist, specifically identifying compliance with Vermont insurance mandates, in certificates filed on SERFF prior to plan approval.

• File Vermont’s Non-Quantitative Treatment Limitations (NQTL) self-compliance worksheet with the Division within 90 days of certificate form approval.”

The Bulletin further provides information on filings concerning the Vermont Major Medical Checklist, as well as the Vermont NQTL self-analysis worksheet.

Southeast Zone

Virginia

Effective July 1, 2024, HB 1060 enacts §38.2-5206.1 requiring insurers that provide long-term care insurance policies to issue a written notice to each policyholder detailing the insurer’s filing for a rate increase within 60 days of making such a filing. The written notice is to include the following:

• The reasoning for which the insurer is requesting a rate increase;

• The amount of the rate increase requested, expressed as a percentage;

• Directions on how to obtain information about the State Corporation Commission’s review of the rate case via the Commission’s website;

• Contact information for the Commission, including the Commission’s website, email address, and toll-free telephone number;

• A statement informing the policyholder of his right to provide comments to the Commission on the proposed rate increase and how to submit such comments to the Commission, including all available options via phone, website, and mail;

• Information on how to contact the insurer for more information, including the insurer’s website, email address, and toll-free telephone number; and

• A statement that the notice provides information on a proposed rate increase and that the insurer will notify the policyholder of the Commission’s approval or denial of the proposed rate increase.

Additionally, the 38.2-5206.1 requires additional policyholder notices within specific timeframes upon Commission rate increase approvals and denials.

West Virginia

HB 4786 created a new article in the insurance code cited as the “Delivery Network Company Insurance Act.” Specific operational definitions are included as well as the article’s interaction with other federal or state laws, insurance requirements, disclosures to delivery network drivers, and exclusions in motor vehicle liability insurance policies. Among the specific insurance requirements is a section on policy minimum limits: “During the delivery service period and delivery available period, the delivery network driver, delivery network company, or any combination of the two shall maintain insurance that insures the driver for liability to third parties of not less than $50,000 for damages arising out of bodily injury sustained by any one person in an accident, of not less than $100,000 for damages arising out of bodily injury sustained by all persons injured in an accident, and of not less than $25,000 for all damages arising out of damage to or destruction of property in an accident: Provided, that no provision in this article relieves the DNC and driver from the requirements of §17A-1-1 et seq. and §17D-1-1 et seq. of this code and from the uninsured motorists’ coverage requirements of §33-6-31 of this code.”

Regarding exclusions in motor vehicle liability insurance policies, HB 4786 specifically provides that an authorized insurer that writes motor vehicle liability insurance may exclude any and all coverage and the duty to defend or indemnify for any injury or loss that occurs during the delivery available period and the delivery service period, including, but not limited to: (1) Liability coverage for bodily injury and property damage; (2) Uninsured and underinsured motorist coverage pursuant to §33-6-31 of this code; (3) Medical payments coverage; (4) Comprehensive physical damage coverage; and (5) Collision physical damage coverage. Additional provisions on exclusions are also included.

Midwest Zone

Illinois

Company Bulletin 2024-10 addresses the new requirements for all insurance companies under the Illinois Insurance Data Security Law, which became effective Jan. 1, 2024. Included in this Bulletin are the requirements applicable to the initial notification of cybersecurity event to Department of Insurance and the annual certification of compliance filing. Detailed information concerning the notification process including content of the notification, email address and timeframe are set forth. The annual certification of compliance filing was required to be filed by Apr. 15, 2024, as were requests for exemption.

Michigan

Bulletin No. 2024-09-INS, dated Mar. 6, 2024, states that the use of price optimization in ratemaking is not permitted under Michigan law. The Bulletin further reminds insurers that the “Director closely reviews all rate filings to ensure that price optimization is not occurring. Companies making rate filings must also attest that they do not utilize price optimization. DIFS will take appropriate administrative action against any companies employing price optimization in any form.”

Western Zone

Alaska

Bulletin B 24-05, dated Apr. 12, 2024, sets forth current filing requirements for a Closing Protection Letter (CPL) in the business of title insurance. “Pursuant to Alaska Statute §§ 21.66.450(a) & (b), the Division now requires a CPL to be filed as closing protection to an insured if the title insurer issues a commitment or title insurance policy.” The Bulletin further indicates that the filing of CPLs is effective Apr. 12, 2024 and that any new title insurance policy that includes a CPL issued after June 1, 2024, must comply with this Bulletin.

New Mexico

HB 33 enacted the “Prescription Drug Price Transparency Act,” which has various operative dates in 2025. The stated purpose of this Act is to increase transparency across the prescription drug supply chain and includes reporting requirements for prescription drug manufacturers, pharmacy services administrative organizations, health insurers and pharmacy benefits managers. The reports will be submitted to the superintendent of insurance. In furtherance of the stated transparency goal, the superintendent of insurance is required to collect and publicly report aggregate information on prescription drug price trends. Regarding the confidentiality of the specific reporting, except for the superintendent’s reporting requirements set forth in the Act, “the superintendent and a person acting on behalf of the superintendent, including staff and third-party contractors, shall keep confidential all of the information provided pursuant to this section, and the information shall not be subject to the requirements of the Inspection of Public Records Act. The superintendent shall include in every contract for services related to the Prescription Drug Price Transparency Act a requirement that contractors and subcontractors do not disclose confidential information to any persons other than the superintendent or a person acting on behalf of the superintendent.”

Washington

Effective Jun. 6, 2024, SB 5986 establishes protections for consumers facing charges for out-of-network health care services by prohibiting balance billing for ground ambulance services and addressing coverage of transports to treatment for emergency medical conditions. Definitions for “ground ambulance services” and “ground ambulance services organizations” and specific requirements including those concerning cost-sharing, refunds, operational dates, and rates are also set forth in the bill.

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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.