Zoning In - Winter 2025

Northeast Zone

Maine

Bulletin 481, dated Dec.11, 2024, addresses the guaranteed issue rights for consumers when their Medicare Advantage Plan is discontinued in their service area This bulletin reminds insurers “that pursuant to Rule Chapter 275, a consumer is eligible for guaranteed issue of any Medicare Supplement plan currently sold in Maine if the consumer is enrolled in a Medicare Advantage Plan that ceases to provide benefits in the consumer's service area. This is true regardless of how long the consumer was enrolled in the Medicare Advantage plan before its termination.” Additionally, under Rule Chapter 275, “consumers have 90 days from the date of Medicare Advantage plan termination to enroll in the Medicare Supplement plan of their choice. The policy must be issued without underwriting or the imposition of any pre-existing condition exclusion.”

Massachusetts

Bulletin 2024-11, dated Dec. 9, 2024, provides guidance regarding managing the financial risks associated with climate change with reference to the Massachusetts Executive Order No. 604 titled “Establishing the Office Of Climate Innovation and Resilience Within the Office Of the Governor.”  The Climate Chief (a state cabinet-level position tasked with implementing a whole-of-government approach to addressing climate change) recommended that the Division of Insurance "continue to engage with other states and regulatory standard-setting bodies and accelerate its efforts to coordinate an appropriate climate-related risk and resiliency framework for the regulation and oversight of the Massachusetts insurance market." Bulletin 2024-11 further provides that the Division “expects insurers to take a strategic approach to managing climate risks that considers both current and future risks and identifies actions necessary to manage those risks in a manner proportionate to the nature, scale, and complexity of insurers' businesses. In accordance with this Bulletin, an insurer should:

• Integrate the consideration of climate risks into its governance structure at the group or insurer entity level. The insurer's board should understand climate risks and maintain oversight over the management team responsible for managing climate risks. The roles of the board and management should be reflected in the company's organizational structure and define its risk appetite and risk tolerance;

• Incorporate climate risks into the insurer's existing financial risk management. This should include embedding climate risks in its risk management framework and analyzing the impact of climate risks on existing risk factors;

• Be prepared to discuss climate risks with the Division at the insurer's annual meeting, or as requested by the Division. Annual meeting topics will include, but not be limited to, strategy around investment and underwriting activity;

• Appropriately disclose its climate risks and engage with the Task Force on Climate Related Financial Disclosures ("TCFD"), the NAIC Climate Risk Disclosure Survey (if applicable), and other initiatives when developing its disclosure approaches;

• Ensure compliance with the NAIC's Own Risk and Solvency Assessment ("ORSA") Guidance Manual, if applicable; and

• Use scenario analysis to inform business strategies and risk assessment and identification. Scenarios should consider physical and transition risks, multiple carbon emissions and temperature pathways, and short, medium, and long-term horizons.”

The Division’s expectations regarding proportionate approach and materiality, as well as risk culture and board governance, risk appetite, organizational structure, risk management and controls, risk reporting and communication, public disclosure, and timeline for implementation are also detailed in this Bulletin

New York

AB 10344 creates a new section in the New York Insurance Code, numbered § 3416, titled Parametric insurance. Specific requirements concerning policyholder disclosures and applicability became effective Jan. 12, 2025. Those requirements are as follows: Except as provided in § 3416 (b), an insurer that issues a parametric insurance policy shall disclose the following information in the application for the insurance policy and in a prominent writing upon policy issuance and renewal:

• The policy is not a substitute for property insurance or flood insurance, as relevant, which generally provide more comprehensive coverage in the event of a loss; and

• A mortgagee or loss payee may not accept a parametric insurance policy.

The reference to exceptions under § 3416 (b) above reads as follows: An excess line broker who procures a parametric insurance policy pursuant to section two thousand one hundred five of this chapter shall provide the disclosures required by subsection (a) of this section on behalf of the insurer.

Southeast Zone

Georgia

Directive 24-EX-12, dated Dec. 30, 2024, announces to all insurers offering plans on Georgia Access (the state’s program for Georgians to shop for and enroll in health insurance) a “waiver of de minimis premium balance.” Specifically, the Directive states “Under O.C.G.A. § 33-1-23, the Office of Commissioner of Insurance and Safety-Fire (OCI) is empowered to create or amend policies and guidelines to implement, establish, create, administer, or otherwise operate an exchange. To provide the most flexibility for Georgia citizens in purchasing such plans from the Georgia Access Marketplace, the Department will allow for Issuers to waive de minimis premium amounts of less than one dollar per month.”

North Carolina

The Memorandum, dated Nov. 20, 2024, address “disclosures which insurers and insurer representatives handling claims for damages to a motor vehicle are required to make to the claimant pursuant to N.C.G.S. § 58-3-180(b1) whenever recommending the use of a particular repair service or source.” Regarding the issue of steering, the Memorandum notes that N.C.G.S. § 58-3-180(b1) does allow insurers and insurer representatives to recommend the use of a particular motor vehicle repair service to repair damage to a covered motor vehicle. “However, in order to protect the claimant's right to select the repair service or source for the repair of the damage to his or her motor vehicle and to ensure fair and transparent processes in the repair of motor vehicles following motor vehicle accidents, N.C.G.S. § 58-3-180(b1) requires that any insurer or insurer representative who makes such recommendation "clearly inform the claimant that (i) the claimant is under no obligation to use the recommended repair service, (ii) the claimant may use the repair service of the claimant's choice, (iii) the amount determined by the insurer to be payable under the policy will be paid regardless of whether or not the claimant uses the recommended repair service, and (iv) that the insurer or insurer representative has, at the time the recommendations are made, a financial interest in the recommended motor vehicle repair service.” North Carolina law provides that the term insurer representative includes an insurance agent, limited representative, broker, adjuster, and appraiser.

Puerto Rico

Effective Jan. 16, 2025, new Rule 109, titled "Rules On Advertising For Insurance Life And Annuities," establishes minimum standards and guidelines for advertising life insurance policies and annuity contracts to consumers. Rule 109 states that it is established in accordance with the criteria promulgated by the NAIC in the Advertisements Of Life Insurance and Annuities Model Regulation (Model 570). Rule 109 further states in its Executive Summary that “the provisions of this Rule are necessary to establish the minimum standards and requirements to ensure the veracity of commercial advertising and to ensure that it is correct and does not lead to confusion. Through this Rule, insurers and the authorized representative or general agent are held responsible for the content of the advertising and are charged with implementing a system of control and prior approval of the advertisement by the insurer for the dissemination of commercial advertising for life insurance or annuities.”

Midwest Zone

Indiana

Effective Nov. 29, 2024, the Indiana Department of Insurance adopted new regulations under Rule 83 titled "All payer claims database submission requirements." These regulations, found in 760 IAC 1-83, set forth detailed guidelines for the submission of healthcare claims data to the Indiana all payer claims database (APCD). The rules apply to various entities identified as health payers, including but not limited to Medicare, Medicaid, insurers, health maintenance organizations, pharmacy benefit managers, third-party administrators, and other entities as specified. The regulations include definitions of key terms as well as requirements for health payers regarding data submission to the APCD.

Michigan

Bulletin No. 2024-26-INS, dated Nov. 8, 2024, addresses depreciation of nontangible items and supersedes Bulletin 2024-18-INS that was previously issued on July 3, 2024. The Department of Insurance and Financial Services (DIFS) indicates that some insurance policies include depreciation of labor and certain other nontangible items in the definition of "Actual Cash Value 500.2236" (ACV). This Bulletin references MCL 500.2236(5) that provides the following: “Forms may not contain inconsistent, ambiguous, or misleading clauses, or contain exceptions and conditions that unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the policy. Because nontangible items are not ordinarily considered to deteriorate, age, or decline in value, policies that depreciate labor or other nontangible items may confuse, mislead, or deceive insureds. Insurers that depreciate nontangible items must ensure that there is transparency regarding the practice.”

Regarding the inclusion of depreciation of nontangible items in certain insurance policies, Bulletin No. 2024-26-INS sets forth the following requirements: “To facilitate greater transparency and mitigate the risk of insureds being confused, misled, or deceived as to their coverages, for personal lines homeowners or dwelling policies issued or renewed effective July 1, 2025 or after, insurers that wish to depreciate nontangible items as defined herein must do so by a standalone endorsement specifically identifying the nontangible items subject to depreciation, rather than through definitions found in the policy form. Such endorsements must be an optional coverage. Because this endorsement reduces coverage, it must be offered for a commensurate reduction in premium.”

Bulletin No. 2024-26-INS further defines nontangible items as labor, taxes, fees, and overhead and profit and addresses the possible depreciation of other nontangible items: “Personal lines homeowners and dwelling insurers that depreciate any other non-physical items that do not deteriorate, age, or decline in value must include those items in a standalone endorsement that meets the requirements described in this bulletin and must obtain prior approval from DIFS.”

Wisconsin

Bulletin dated Dec. 19, 2024 addresses “Agent Terminations for Cause” and serves as a reminder to insurance companies about the requirements applicable to the reporting agent appointments and terminations. Statutory and regulatory references provide specific reporting timeframes, with insurers required to submit notice of agent terminations within 30 calendar days of the termination date in a manner prescribed by the commissioner. The Bulletin further indicates that “to meet these requirements, insurers must submit notice of agent terminations electronically through nipr.com or an NIPR-authorized business partner. This applies even if the agent has also been reported for fraud through the OFRS portal. Termination Reporting Requirements:

• Timing: Notices of agent terminations must be filed within 30 calendar days of the termination date;

• For Cause Terminations: If termination is "for cause," insurers must submit supporting documentation within 30 days. This documentation does not need to prove a violation but should outline situations where violations may exist. Refer to the Termination for Cause Submission Checklist (i.e. terminations requiring "for cause" notification are defined in Wis. Admin. Code §§ Ins 6.59(5)(d) and Ins 6.57(2)(b) for required documentation.);

• If new reportable information is discovered after the initial filing, insurers or their representatives must promptly notify the commissioner in writing.”

  
  
  
  

Western Zone

California

Effective Dec. 12, 2024, Title 10 of the California Administrative Code includes provisions applicable to the use of catastrophe models in newly adopted § 2644.4.5. These provisions address permitted uses, wildfire exposure, and additional lines or exposures. Regarding permitted uses for the earthquake and flood lines, projected annual aggregate losses may be based on catastrophe models. § 2644.4.5 further states that “the catastrophe adjustment for the fire following earthquake exposure, and for terrorism exposure, in lines other than earthquake and flood may be based on projected annual aggregate losses derived from catastrophe models.”

Regarding wildfire exposure, “the catastrophe adjustment for wildfire exposure for commercial property insurance may be based on catastrophe models, provided that the insurer complies with the provisions of Section 2644.4.8 that are applicable to commercial property insurance. The catastrophe adjustment for wildfire exposure for “qualifying residential property insurance,” as that term is defined in Section 2644.4.8, may be based on catastrophe models, provided that the insurer complies with the provisions of Section 2644.4.8 that are applicable to such qualifying residential property insurance. For an insurer that thus complies with Section 2644.4.8 with respect to such qualifying residential property insurance, the catastrophe adjustment for wildfire exposure covered under a renter’s insurance policy, an HQ-6 policy, or the equivalent of an HQ-6 policy, may also be based on catastrophe models.”

Provisions for the use of catastrophe models for additional lines or exposures where limited historic insurance data is available are also included. Allowed use is at the Commissioner’s discretion as further described in § 2644.4.5(c).

Nevada

Effective November 15, 2024, LCB File No. R109-23 includes new regulatory requirements that incorporate the provisions of the “The Suitability in Annuity Transaction Model Regulation” adopted by the National Association of Insurance Commissioners and revised in February of 2020. Revised provisions include the best interest standard, system of supervision, and producer training requirements. Additionally, adoption of this regulatory change revises the definition establishing the transactions that constitute the replacement of a life insurance policy to match the definition set forth in Section 13 of LCB File No. R109-23 for the replacement of an annuity.

Utah

Bulletin 2024-12, dated Dec. 4, 2024, provides guidance and also reinforces the suitability in annuity transactions requirements. Referencing Utah Admin. Code R590-230, Suitability in Annuity Transactions, the Utah Insurance Department reminds insurers and producers of the best interest standard: “When making a recommendation for the sale of an annuity, including an exchange or replacement of an annuity, an insurer and producer shall act in the best interest of the consumer under the circumstances known at the time the recommendation is made, without placing the producer's or the insurer's financial interest ahead of the consumer's interest. Before issuing an annuity, a producer shall comply with the best interest obligations in Subsection R590-230-4(1).”

The Bulletin further advises that, “in the case of an exchange or replacement of an annuity, the producer shall consider the entire transaction, which includes taking into consideration whether the consumer:

• will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits, or be subject to increased fees, investment advisory fees, or charges for riders and similar product enhancements; or

• has had another annuity exchange or replacement, including an exchange or replacement within the preceding 60 months.”

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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.