California — Insurance Groups Sue Jones
The Association of California Insurance Companies (ACIC) and the Property Casualty Insurance Association of America (PCI) has sued California Insurance Commissioner Dave Jones. Arguments have been heard in the California Supreme Court over — what the ACIC says — regulations and misleading issues around insurance costs by Jones and previous state insurance commissioners.
In arguing before the court the two groups said he and other commissioners have overreached “their mandates with data calls and regulations that go beyond their mission and authority.”
In a news release, the PCI said, “The consumer-protection regulation was developed under Commissioner Steve Poizner and issued by Commissioner Dave Jones to address the problem faced by homeowners, whose homes were damaged or destroyed in the Oakland Hills and other fires, after discovering they were underinsured because the replacement cost estimates from their insurers left out key elements of the cost to rebuild their homes,” it said.
And the PCI conclusion is, “This regulatory overreach trend is driving up costs for insurers and their customers in addition to impairing insurers’ ability to effectively serve their customers.”
The two groups want the court to decide this: “Does the Unfair Insurance Practices Act give the Insurance Commissioner authority to promulgate a regulation that sets forth requirements for communicating replacement value and states that noncompliance with the regulation constitutes a misleading statement, and therefore an unfair trade practice, for purposes of the act?”
And second: “Does the Insurance Commissioner have the statutory authority to promulgate a regulation specifying that the communication of a replacement cost estimate that omits one or more of the components in subdivisions (a)-(e) of section 2695.183 of title 10 of the California Code of Regulations is a 'misleading' statement with respect to the business of insurance?”
Jones — as expected — disagrees. In his own news release, Jones said, “Yesterday the Attorney General's office presented a strong defense before the California Supreme Court that our consumer-protection regulations are lawful. This lawsuit is yet another example where insurers want to block an important consumer-protection regulation and seek to limit the ability of the Insurance Commissioner to protect consumers,” he said.
Source link: Northern California Record
Idaho — Zenefits Licensing Scheme
This came to us from the Idaho Department of Insurance.
The Idaho Department of Insurance issued a stipulated order for an administrative penalty of $25,000 to Zenefits FTW Insurance Services on October 25 for knowingly allowing employees to sell insurance in Idaho without proper licensing.
“Knowingly accepting insurance business from employees who are not licensed is a practice that cannot be tolerated,” says Department Director Dean Cameron. “Zenefits has been unlawfully doing business in Idaho and several other states and has been fined thousands of dollars by several states.”
Zenefits has been licensed in Idaho since 2014. In November 2015, after a request from the Department and after other states had opened investigations, Zenefits reported to state regulators nationwide that many of producer compliance issues had been identified. They agreed to conduct an internal audit which revealed systemic flaws in Zenefits oversight and licensing procedures. The report discovered that employees were conducting the business of insurance without licenses and that some licensees had access to a technology tool that would misrepresent the hours studied for licensing exams. These findings were reported to the Department in March of this year.
To ensure compliance with licensing requirements, Zenefits now requires all employees whose job function is to sell, solicit, or negotiate insurance to obtain licenses, and has implemented new administrative and technical licensing controls. The technology tool previously accessible is no longer available, and all producers are required to complete 52 hours of continuing education courses, including ethics.
In addition, Zenefits has replaced top leadership, hired a Chief Compliance Officer, and established a compliance team to monitor compliance with state licensing requirements. A national accounting firm has been retained to test the operations of the new licensing controls and report the results to the Department.
Cameron said, “It is important for consumers to have confidence that they are dealing with reputable agents or firms who have studied, passed exams, and obtained licenses legitimately before conducting any insurance business in Idaho. We will continue to work diligently to enforce that requirement.”
The stipulation can be read in its entirety on the Department website.
New Mexico — Insurance Back Taxes Update
New Mexico Insurance Superintendent John Franchini the audit saying his department failed to collect $190 million in taxes from insurances is not exactly correct.
Franchini sent a letter to New Mexico Attorney General Hector Balderas and asked him to review the audit. He says Balderas will find his department did its work correctly and that the audit by Clifton, Larson & Allen used incorrect data in its analysis. The files they reviewed — Franchini said — were not verified as complete or accurate.
New Mexico Auditor Tim Keller says the request is “misguided” and Franchini ought to focus on recovering the funds and not this.
Source link: Insurance Journal
Oregon — Rulemaking
The Oregon Division of Financial Regulation recently announced the following Proposed Rulemaking:
Definition of Small Employer
ORS 743B.020 requires the Department to adopt by rule the method for determining whether an employer is a small employer for purposes of group health benefit plans. The Department defines small employers in OAR 836-053-0015 as those with "an average of at least one but not more than 50 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year." This definition is applicable from January 1, 2016 through December 31, 2017. The proposed amendment would abolish the sunset provision and maintain the current definition of small employer indefinitely.
Notice of proposed rulemaking — http://dfr.oregon.gov/laws-rules/Documents/Proposed/small-group-notice.pdf
Rule text — http://dfr.oregon.gov/laws-rules/Documents/Proposed/small-group-text.pdf
Statement of need — http://dfr.oregon.gov/laws-rules/Documents/Proposed/small-group-need.pdf
Public comment: The agency requests public comment on whether other options should be considered for achieving the rule's substantive goals while reducing the negative economic impact of the rule on business.
Last day for public comment: January 12, 2017, 5 p.m.
For more information on this proposed rule, please visit the Division's website:
Washington — Kreidler's fraud investigators earn law enforcement accreditation
This from the Washington Department of Insurance.
Insurance Commissioner Mike Kreidler’s Special Investigations Unit (SIU) has earned accreditation from the Washington Association of Sheriffs and Police Chiefs, joining the 20 percent of law enforcement agencies in the state to have it. The accreditation means Kreidler’s insurance fraud investigations unit is certified as operating under industry best practices and standards and recognizes SIU as a professional law enforcement agency.
“Working toward accreditation was an intensive process to make sure we are following industry best practices,” said Kreidler. “Our goal is to increase public confidence and credibility in our agency and the work we do to combat insurance fraud in Washington state.”
Earning accreditation was a 25-month process that started in August 2014. The Association of Sheriffs and Police Chiefs looked at 133 standards in 19 areas, including use of force, health and safety, training, evidence control and code of conduct. SIU will undergo the same process in 2020 to earn reaccreditation.
Kreidler’s 13-person fraud unit employs two prosecutors, six detectives and two research analysts. The unit receives 150 insurance fraud referrals per month from the public, law enforcement, the state Attorney General‘s Office, other states and insurance companies. From May through October 2016, SIU opened 36 criminal fraud investigations, submitted 14 to a prosecutor and saw 10 cases end in convictions. Washington state’s insurance fraud most wanted are posted on the OIC's website.
Kreidler’s SIU works with the state Attorney General’s Office and local prosecutors to prosecute criminal cases. Insurance fraud costs the average family $400 to $700 per year in increased premiums. Consumers can report suspected insurance fraud on the Insurance Commissioner’s website.
Washington — Underinsured Motorist Coverage Rule update
We adopted the Underinsured Motorist Coverage rule, effective December 11, 2016 (R 2016-18). The rule will amend language and add a new section to WAC 284-20-300 to require that the following statement is included in any rejection form when a motorist is rejecting underinsured motorist coverage, “In order to provide for an informed decision of the potential consequences of rejecting underinsured motorist coverage; the undersigned acknowledges that by rejecting underinsured motorist coverage there is exposure to the risk of not being sufficiently insured for injury and/or damages when involved in an accident with a driver of an underinsured vehicle.
For more information, including the adopted rule (CR-103P) and the concise explanatory statement, click here.