California — Lara & Auto Insurance News Release: Insurance Commissioner Ricardo Lara today took action to protect California drivers’ access to auto insurance by issuing a Bulletin to personal auto insurance companies throughout the state. The California Department of Insurance continues to receive numerous complaints from consumers who have been having issues obtaining auto insurance coverage.
“These alleged passive-aggressive tactics by insurance companies to slow down drivers’ access to coverage are unacceptable, dangerous, and will not be tolerated,” said Insurance Commissioner Ricardo Lara. “I am taking action today to ensure these insurance companies are acting according to the law and giving drivers the coverage they are paying for at the rate they qualify for. We will continue to monitor the situation and take any and all steps necessary to protect California consumers.”
The consumer complaints that the Department received were regarding waiting periods, questionnaires, and other practices instituted by auto insurance companies that the Department believes could be in violation of existing California law, including various provisions of Proposition 103, resulting in barriers for otherwise qualified drivers to secure and maintain auto insurance.
Auto insurance companies in California are required to submit complete rate applications to the Insurance Commissioner for review and prior approval before implementing any change to existing rates. These consumer complaints revealed that some insurance companies may be taking actions that are not a part of the underwriting guidelines they have previously filed with the Department. Before implementing new practices, like using questionnaires or different filing instructions, insurance companies must file those guidelines with the Department.
Auto insurance companies in California also are required to offer and sell insurance to all persons who qualify as “Good Drivers”, those who have been licensed for at least three consecutive years, have no more than one point on their driving record, and were not principally at fault as the driver in a motor vehicle accident that resulted in bodily injury or death of any person.
The complaints from consumers claim that some insurance companies may not be offering “Good Driver” discounts for all who qualify and may be imposing unreasonable application requirements that are unrelated to set eligibility factors. These requirements in many cases discourage, inhibit, and/or delay Good Drivers from completing an application for insurance and result in failure or refusal by the company to provide the deserved discount, especially in a timely manner.
Some of these requirements include having to complete unnecessarily lengthy and/or confusing questionnaires, verify employment or school information, respond to physically mailed questionnaires despite applicants electing to receive documents electronically, provide information regarding excluded drivers living at the same address, and/or submit copies of applicants’ utility bills, vehicle registrations, and/or photos of driver’s licenses or vehicles, among other examples.
Today’s action by Commissioner Lara sets the stage for future enforcement actions, if warranted. Bulletins are issued by the Department to “clear the air” on any questions that insurance companies may have regarding insurance law and regulations and their enforcement. In general, companies found to be violating insurance law and regulations after a bulletin is issued may be subject to enforcement actions such as market conduct reviews, fines, and other penalties. Once directly informed by the Department, several insurance companies have since stopped their waiting periods, questionnaires, and other practices, filed their revised underwriting guidelines with the Department for review, and reversed several previous actions made on their policyholders to restore their auto insurance coverage.
The Department urges any California driver who is looking for new auto insurance coverage or renewing their current coverage and having concerns over the information they are being asked to share or are seeing changes to their policies to contact the Department at 800-927-4357. In order to avoid cancellations or delays of coverage, the Department does advise policyholders to take the action that their insurance company requires and retain all documentation in order to file a complaint with the Department.
California — Lara Sustainable Insurance Strategy Update: Insurance Commissioner Ricardo Lara told California Assembly members at a legislative oversight hearing that “California is at an insurance crossroads and for many Californians this is an insurance emergency.” He underscored the need for marketplace reforms, with the FAIR Plan reporting 20 percent growth of policies in 2023 and restrictions by major insurance companies pushing more consumers into California’s insurer of last resort. He also outlined progress toward major regulatory and administrative reforms under his California Sustainable Insurance Strategy that he first announced in September.
The following is an excerpt of his prepared remarks to members of the Assembly Insurance Committee at an oversight hearing held at Pasadena City Hall:
“California is at an insurance crossroads and for many Californians, this is an insurance emergency. Consumers are experiencing the impact of growing climate threats, historic inflation, and outdated regulations.
“As the state’s insurance regulator, my focus is safeguarding the integrity of the insurance market, which includes protecting consumers and businesses. In September, I announced my Sustainable Insurance Strategy, which is the largest insurance reform since voters passed Proposition 103 nearly 35 years ago. There is no question that the risks that existed when voters passed Proposition 103 are not the same risks we are facing today. The insurance market we are dealing with today necessitates urgent measures that even the Governor recognizes, as set forth in his Executive Order issued on September 21st.
“My strategy is based on a thorough assessment of today’s insurance landscape with input from wildfire survivors, ranchers and farmers, supportive housing groups, REALTORS, homeowners and condo associations, new home builders, and other insurance consumers most affected.
“We are moving with urgency and deliberately, based on the facts, and we won’t be pressured by entrenched groups seeking to defend a broken status quo that puts their interests ahead of the public’s benefit.
“It is clear that insurance reforms are long overdue and the current system does not address the insurance challenges of today. I am taking action to implement lasting changes that will make Californians safer through a stronger, sustainable insurance market.”
Oregon — Johnson & Johnson Acquires Mid Valley General Agency: Johnson & Johnson Inc. (Johnson & Johnson) will expand its footprint into Oregon, Idaho, Montana, and Washington by acquiring the assets of Mid Valley General Agency, LLC (Mid Valley). The parties completed the transaction effective January 1, 2024.
Based in Salem, Oregon, Mid Valley is a 2nd generation family-owned Managing General Agency. The company has been doing business since 1997 and specializes in providing solutions to retail insurance agents with hard-to-place risks.
Company personnel excels in providing personal service, which is why they have such loyal retail agency partners.
“The acquisition by Johnson & Johnson will provide increased market opportunities for the retail agency partners of Mid Valley along with a more efficient way of doing business with our staff.” Cameron Deiss, Member LLC, Mid Valley General Agency CEO said. “This will accelerate the growth in revenue and profitability of our existing business units and will provide our staff with greater professional development and career advancement opportunities. I could not be more excited about the benefits this acquisition brings to all stakeholders. Our culture and core values line up across the board with Johnson & Johnson, and with their vast resources behind us, we will continue to provide the best products and services to our customers,” said.
Johnson & Johnson is a fourth generation, family-owned Managing General Agency based in Charleston, South Carolina. Founded in 1930, Johnson & Johnson enjoys a long history of providing superior service and products to Independent Agencies while maintaining its family culture. Johnson & Johnson will add a broad portfolio of first-class products and services to agencies and insureds in Oregon, Idaho, Montana, and Washington.
“Adding the Mid Valley team and their agency network to Johnson & Johnson will provide us with a terrific group of employees and agencies which will enhance our ‘service first’ approach to the agents currently served by Mid Valley,” Francis Johnson, Chairman & CEO, Johnson & Johnson said.
Talking about the acquisition, Harry Johnson, President and COO, Johnson & Johnson said, “Together, we plan to bring a new level of passion, commitment and resources to the Independent Agencies in Oregon, Idaho, Montana, and Washington,”
Johnson & Johnson is a full-service MGA which provides E&S markets, standard markets, and premium financing to Independent Insurance Agents within Alabama, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Mississippi, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, and Virginia. In addition, Johnson & Johnson offers Private Flood coverage and certain Program Business products nationwide.
Oregon — New Year, New Laws, a Message from PIA Oregon Lobbyist Lana Butterfield: The new year brings some new laws which take effect immediately. PIA members will be interested in several of these.
SB 82 strengthens consumer protections for homeowners dealing with wildfire-related issues. It requires insurance companies to explain, using property-specific characteristics, why a policy might not be getting renewed or why a rate is going up, and to reflect in rating and underwriting plans how that insurer addresses or considers wildfire risk mitigation actions. These actions could include creation of defensible space, home hardening, and community-based mitigation activities. It also requires insurers to allow up to 36 months to repair, rebuild, or replace damaged or lost property if it was directly related to a fire that was subject of an order under the Emergency Conflagration Act. This bill also prohibits insurance companies from using statewide wildfire risk maps published by the Oregon Department of Forestry as a basis for canceling or declining to renew a policy or increasing premiums.
HB 2982 requires homeowners insurance issuers to offer 70 percent of property contents coverage without requiring policyholders to submit an inventory if a total loss occurs due to a declared disaster.
These and other insurance-related bills were mentioned in a recent press release by the Oregon Division of Financial Regulation recently. Please contact me if you would like to see the full list, which also includes health insurance bills.
Legislative Days in January
The final interim meetings of legislative committees prior to the 2024 short session will be held on January 10 through 12. During this time committees will discuss bills they plan to introduce as a committee in the coming days. We haven’t seen much relating to insurance yet, but PIA will watch to see what may interest our members.
The next Oregon legislative session will begin on February 5 and end on March 10, 2024. A limited number of bills will be introduced, and the timelines are obviously much more condensed than during long sessions. Bills are generally released about a week before the session begins, and PIA will review them to give you a list of bills we will follow. If you have any questions, please let us know.
Many new consumer protection laws go into effect Jan. 1, 2024
When the clock strikes midnight on Jan. 1, 2024, many new laws immediately take effect. The Oregon Division of Financial Regulation (DFR), part of the Oregon Department of Consumer and Business Services (DCBS) – the state’s largest consumer protection and business regulatory agency – is releasing an easy-to-follow guide on new consumer protection laws.
Here’s a look at what’s coming in January:
Senate Bill (SB) 82 strengthens consumer protections for homeowners dealing with wildfire-related issues. It requires insurance companies to explain, using property-specific characteristics, why a policy might not be getting renewed or why a rate is going up, and to reflect in rating and underwriting plans how that insurer addresses or considers wildfire risk mitigation actions. These actions could include creation of defensible space, home hardening, and community-based mitigation activities. It also requires insurers to allow up to 36 months to repair, rebuild, or replace damaged or lost property if it was directly related to a fire that was subject of an order under the Emergency Conflagration Act. This bill also prohibits insurance companies from using statewide wildfire risk maps published by the Oregon Department of Forestry as a basis for canceling or declining to renew a policy or increasing premiums.
SB 192 directs the Oregon Prescription Drug Affordability Board to develop a plan for upper payment limits to contain costs of prescription drugs in the state, requires pharmacy benefit managers to provide price transparency reports to DCBS, expands health insurance company transparency reporting, and makes other technical changes to strengthen DCBS prescription drug pricing programs. Pharmacy benefit managers will report annually to DCBS about certain rebates, fees, price protection payments, and other payments received from prescription drug manufacturers, shedding more light on the effect of industry practices on the prices Oregonians pay for drugs.
SB 536 establishes new disclosure and care obligations for the sale of annuities in Oregon and permits the sale of registered index-linked annuities in the state. Producers and brokers must also complete, at a minimum, a four-hour training course with a continuing education provider that has registered with DCBS.
SB 628 requires health benefit plan coverage of certain treatments for pediatric autoimmune neuropsychiatric disorders associated with streptococcal infections.
SB 797 requires health insurance policies that cover expenses of hospital, medical, or surgical services to cover medically necessary prosthetic and orthotic devices.
SB 1041 prevents group and individual health benefit plans that cover supplemental and diagnostic breast examinations from imposing deductibles, co-insurance, co-payments, or any other out-of-pocket expenses on those services.
SB 1529 passed in 2022 with a delayed implementation date and was amended in 2023 by House Bill (HB) 3008. It requires health benefit plan coverage of three primary care or behavioral health visits with a co-pay of no more than $5 and requires health benefit plan issuers to automatically assign members to primary care providers (PCP) if they do not select a PCP after the first 90 days of the plan year.
HB 2002 establishes a right to make decisions about an individual’s reproductive health and allows any person to bring a civil action against a public body to enforce this right. The bill also establishes a statutory requirement for health benefit plans to cover gender-affirming treatment. It also prohibits medical malpractice insurers from taking adverse action against health care providers for providing reproductive health or gender-affirming care services that are legal in Oregon.
HB 2052 requires data brokers to register with DCBS before collecting, selling, or licensing brokered personal data in Oregon. DFR published a press release on this new law on Dec. 13.
HB 2282 updates the Oregon state law codification of the Affordable Care Act preventive services coverage requirements to ensure access to this coverage in the event of a successful legal challenge to the ACA requirements.
HB 2574 prohibits cost sharing for health benefit plan coverage of post-exposure prophylactic drugs for the prevention of HIV. The bill also requires all Oregon hospitals to have policies and procedures in place for the dispensing of post-exposure prophylactic (PEP) drugs and requires the Oregon Health Authority to provide PEP drugs to Type A and B rural hospitals at no cost.
HB 2982 requires homeowners insurance issuers to offer 70 percent of property contents coverage without requiring policyholders to submit an inventory if a total loss occurs due to a declared disaster.
HB 2994 expands the coverage of bilateral cochlear implants, hearing aids, and other hearing assistive technology. Also, the bill requires health benefit plans to reimburse the costs associated with these services if they are prescribed by a licensed health care professional, requires reimbursement even if over-the-counter products are available, and requires specific information in adverse benefit determination notices related to claims for hearing-related items and services.
Oregon — All licensees transacting annuities in the State of Oregon from the PIA Oregon: Required updated Annuity training for producers engaging in the sales of Annuity products.
As of Jan 1, 2024, Oregon SB 536 (2023) -Sales of Annuities- Insurance producer training will be updated to include Best Interest Standards training. Producers that completed the 4-hour, annuity suitability training prior to January 1, 2024, will have until June 30, 2024, to complete the new 1-hour, Best Interest course.
Other key points:
The required annuity suitability training counts towards your total continuing education hours requirement if it is an Oregon-approved course or if training from another state meets the requirements.
If the one hour course is not completed by June 30th, a full 4 hour course including the best interest standards will be required.
If you are appointed with multiple insurers, check with each insurer to see if the one-time, four-hour course meets its annuity training requirements.
The appointing insurer is responsible to verify that you receive the required training before you sell its annuity products.
Courses may be located at www.statebasesystems.com under lookup and course or provider.
If you have any questions, please contact our Education Coordinator:
Division of Financial Regulation
Oregon — Agent Forum FYI on SB 536 (2023) – Disclosures and Standards of Care for Annuity Recommendations and Sales: As a courtesy, and in case you get any questions from your respective members, we wanted to keep our Agent Forum members in the loop on a temporary rule for SB 536 and a communication we sent to all licensed Life Producers. Also, the Policy Team has communicated directly to the major trades at the national level on this already and to all the Rule Committee Members. The main focus of the update is the requirement of new forms that must be used when selling new individual annuities effective 1/1/2024.
The details of the temporary rule and a copy of the communication sent out broadly are below, and I highlighted an important part of the message:
The temporary rules have been finalized and approved by Commissioner Stolfi and were filed 12/20/2023 with Oregon’s Secretary of State.
The temporary rules, Exhibit 1-3 forms, and Exhibit 1A-3A forms go into effect on January 1, 2024.
Two versions of DFR’s Exhibit 1-3 forms (equivalent to NAIC Model regulation #275, Appendices A-C) have been posted on DFR’s external website this afternoon (additional explanation below).
Lastly, division staff have distributed a message to affected Oregon licensed producers via a Large Volume Communication (LVC) that summarizes the temporary rules and forms, and provides links to the forms on DFR’s website. This communication was to Resident and Non Resident agents.
Included below is a copy of the LVC message, followed by links to the SB 536 forms that are now available on DFR’s website:
Oregon Senate Bill (SB) 536 was adopted in the 2023 legislative session and created disclosure and care obligations for sales of individual annuities to consumers. Starting Jan. 1, 2024, the new law requires insurance producers, insurers, and securities brokers to consider each individual consumer’s circumstances known at the time an annuity product recommendation is made.
Oregon’s current standard of care for annuities sales, codified in administrative rules (OAR) 836-080-0170 to 836-080-0193, are based on product suitability standards. SB 536 adopts a higher level of care based on recent updates to the National Association of Insurance Commissioners (NAIC) Model Regulation #275.
DCBS will issue temporary administrative rules to implement SB 536 while continuing to work on permanent rules. The temporary rules go into effect Jan. 1, 2024. The temporary rules include new forms that are required to be used when selling new individual annuities. DCBS developed two separate versions of the required forms, both of which are like NAIC Model #275, Appendices A-C.
DCBS Exhibits 1-3
Adopts language that is very close to NAIC Model #275, Appendices A-C, making only minor changes to reference state of Oregon and certain Oregon laws.
DCBS Exhibits 1A-3A
Includes all the language used in Exhibits 1-3.
These forms also add language that defines “duty of care” owed to consumers purchasing individual annuities.
The added language highlights requirements provided in SB 536.
These forms use the language DCBS is proposing to include in the permanent rulemaking process.
Because of the complexity and timing of this temporary rulemaking, parties may use either version of the forms during the temporary rules period, which will end June 28, 2024. If possible, DCBS encourages parties to use Exhibits 1A-3A, as we anticipate Exhibits 1A-3A to be adopted as a part of the permanent rulemaking process.
Exhibits for OAR 836-080-0172:
The above links are accessible from this page:
In January, DFR will begin the permanent rulemaking process for SB 536. The permanent rulemaking will provide another opportunity for Rule Advisory Committee members and DCBS staff to collaborate on permanent rule and exhibit language, discuss how well the temporary rulemaking is working, and will create a forum for public comments.
Oregon — New laws for 2024 promote safety on Oregon’s roads: The Oregon Legislature passed hundreds of bills in the last session, revising some existing transportation laws and creating new ones. Many changes went into effect on Jan. 1, 2024.
“We are encouraged that our legislators passed bills that prioritize safety for people who use our transportation system,” said Kris Strickler, director of the Oregon Department of Transportation. “The updates in speed enforcement and impaired driving laws, especially, allow our partners in law enforcement to better deter behaviors that have proven to be dangerous.”
Click the link on each bill name for more detailed information:
HB 2095 – Gives all cities in Oregon the authority to use mobile photo radar for traffic enforcement – as long as they pay their own operational costs – and removes limits on the number of hours it can be used. The bill also allows cities to lower the speed limit on certain streets at up to 10 miles below the statutory speed (but not less than 20 mph).
HB 2316 – The bill changes definitions and potential penalties for driving under the influence of intoxicants. An “intoxicant” now includes any substance, or combination of substances, that can cause mental and physical impairment. Previously, the definition included only alcohol, cannabis, psilocybin, and controlled substances. Some fines are reduced for people convicted of DUII while riding a bicycle.
HB 2099 — The bill makes a variety of changes to transportation laws but notably updates ODOT’s Safe Routes to School program. The bill increases the eligibility radius for Safe Routes to School projects from one mile to two miles, ensures projects serving high schools are equally considered with elementary and middle schools, and allows greater flexibility in determining the grant match requirement for individual projects.
SB 895 – Allows drivers to pass in a no passing zone if the driver encounters an obstruction, including a bicycle or other vehicle traveling at a speed of less than half the posted speed limit. The driver must ensure there are no oncoming vehicles and stay at least 5 mph under the posted speed limit while passing.
HB 2100 – Fees for some DMV services have increased to help recover costs and temporarily avoid service reductions. DMV previously announced the changes, which include fee increases for driver’s license or ID cards, vehicle registration, driver’s tests and other services.
In addition to the new laws, a 2-cent increase in the state fuel tax went into effect on Jan. 1. This is the fourth and final fuel tax increase resulting from HB 2017 (Keep Oregon Moving). The state fuel tax now stands at $0.40 per gallon. Oregon’s fuel taxes are used for the creation, preservation, and maintenance of Oregon’s transportation infrastructure. Learn more about ODOT’s revenue and budget.
Washington — Washington Legislative Session from PIA Washington: With Assembly Days complete, session fundraising freeze in place, and pre-filed bills coming daily, the Washington Legislature ramps up for the start of the ’24 session.
The 2024 session of the Washington State Legislature kicks off in less than a month, on January 8th, and will run for 60 fast-paced days until March 7th. Democrats enter the new session with a 58-40 majority in the House and 29-20 majority in the Senate. House and Senate members were in Olympia in late November and early last week, meeting with advocates and participating in “Assembly Days” work sessions held by the chambers’ fiscal and policy committees. Lawmakers wrapped up their political fundraising for the year, with the 30-day pre-session “freeze” on soliciting or accepting campaign contributions now in place as of Friday. Although all bills introduced but not passed in the ’23 session remain alive in ’24 for possible consideration, over one hundred new bills have emerged, with more each day, during the Legislature’s pre-filing period.
High-level updates for the political and legislative environment headed into session include:
In statewide races, the primary movement this winter was the withdrawal of Public Lands Commissioner Hillary Franz from the race for Governor on the Democratic side, leaving Attorney General Bob Ferguson in a race with Senator Mark Mullet on the Democratic side, and former U.S. Rep. Dave Reichert and a lesser-known candidate, Semi Bird, on the Republican side. Franz left the race to instead campaign for Congress in Washington’s 6th Congressional District, following the announced retirement of U.S. Rep. Derek Kilmer. So far, she will face Sen. Emily Randall, D-Bremerton and Sen. Drew MacEwan, R-Shelton, in the primary. For Attorney General, Sen. Manka Dhingra, D-Redmond, and former U.S. Attorney Nick Brown, a Democrat, remain the only announced candidates. For Insurance Commissioner, Sen. Patty Kuderer, D-Bellevue, has drawn a challenge from fellow Democrat and first-time candidate Bill Boyd, an insurance agent in Spokane. Public Lands remains the hot race, with five Democrats, including current and former state legislators vying against recently announced former U.S. Rep. Jaime Herrera-Beutler on the Republican side.
Initiatives to the Legislature
Petitions have been circulating on six center-right initiatives to the Legislature this fall, with signatures turned in on one, scheduled to be turned in next week, and the other four facing a December 29th deadline to obtain 324,516 valid signatures from registered voters. Signatures are being verified now on I-2117, which would repeal the state’s Climate Commitment Act, the state’s “cap-and-invest” carbon auction policy for emitting industries. A “Parent’s Bill of Rights,” I-2081, is scheduled for signatures to be turned in on Tuesday, and concerns parental rights and notification for elements of the K-12 public education system. The remaining initiatives gathering signatures are I-2109, repealing the state’s tax on capital gains, I-2124, allowing opt-out of the state’s long term care insurance program, I-2113, regarding the legal standard under which law enforcement may engage in vehicular pursuit of suspects, and I-2111, prohibiting the state and local governments from adopting an income tax. Qualified initiatives compel the Legislature to either adopt the initiative as proposed, reject (or ignore) the initiative, in which case it goes to the voters at the fall general election, or approve an alternative to the initiative, in which case both the original and alternative proposals appear on the general election ballot. Because each of the six initiatives take aim at some of the most prominent legislative priorities of the Democratic majority over the last several years, it is highly likely that any of the initiatives that qualify will appear on the fall ballot, either alone or with a legislative alternative.
Governor Inslee’s Priorities
Governor Inslee is expected to release his supplemental budget proposals for 2024 later this week, and in the run-up to the announcement, has been outlining his office’s key budget and policy priorities for his last session in office. The Governor intends to seek $50 million in new spending to combat the fentanyl crisis, including greater treatment and support options for individuals suffering from substance abuse disorder. The Governor will also seek $100 million in new funding to address rapid emergency housing options to address homeless encampments around the state. Finally, Governor Inslee has outlined three climate action priorities for the session, including the use of Climate Commitment Act auction revenue to promote clean energy businesses and provide a utility bill credit for certain consumers, require the Utilities and Transportation Commission to collect and report on transaction, cost, and profit data from oil companies related to retail fuel prices, and to link Washington’s climate program with similar programs in California and the Canadian Province of Quebec.
Addressing the explosive growth of artificial intelligence usage continues to emerge as a priority for legislative leaders in both chambers. Attorney General Ferguson is seeking the creation of a broad task force made up of governmental and private sector members to meet and discuss recommendations related to the regulation of AI, while Rep. Clyde Shavers, D-Oak Harbor, is expected to pre-file a proposal that would ban algorithmic discrimination in matters covered by the state’s Law Against Discrimination, along with a requirement for developers and deployers of AI to create and submit impact statements to the state. Additional legislative proposals covering the use of AI in educational institutions, campaign advertising, and the creation or distribution of explicit imagery are also expected.
Tax and Fiscal Policy
The 60-day session is the Legislature’s opportunity to make course corrections in the biennial operating, capital, and transportation budgets passed in the prior year, starting with the Governor’s proposals. During Assembly Days, lawmakers in the House and Senate fiscal committees received reports from the state’s Economic & Revenue Forecast Council, showing an estimated $191 million in additional revenue above the prior forecast for the current biennium, and $579 million in additional revenue above the prior forecast for the 2025-27 biennium. Lawmakers also heard from the Department of Revenue and Department of Ecology on collections this year from the state’s capital gains tax ($890 million in revenue) and Climate Commitment Act auctions ($1 billion in revenue). With the state’s operating budget in a revenue positive position, it is unlikely that significant new tax measures will gain traction in the short session, although the Legislature still has standing issue of considering a Margins Tax to replace the state’s Business & Occupation tax. This may receive some additional work in the session, but again, is unlikely to advance. Rather, the fiscal committees will be discussing how to appropriate the revenue from capital gains and climate auctions, as well as wrestling with the potential qualification of initiatives that would repeal or substantially limit the Legislature’s taxing authority.
Labor & Employment Issues
Regulation of the employment relationship and expansion of employee benefits was one of the hottest topics of the prior session, and several high-profile issues are likely to be in contention next session. A bill to provide a private right of action to employees to enforce rights to obtain personnel records and reasons for discharge will be on the docket, as well as penalties for an employer’s failure to reimburse employees for work-related expenses. A new version of a bill to prohibit employers from holding mandatory meetings related to unionization has been pre-filed, and it is likely that employers will seek some relief from a large number of “gotcha” lawsuits that have been filed this year seeking penalties for minor violations of the state’s recent salary transparency law for job postings. On the benefits side, a proposal has been pre-filed to expand the state’s paid sick leave mandate to additional reasons for leave, such as weather-related school closures, as well as an expansion of the definition of “family member” for whom leave may be taken. It is also expected that a state-run retirement program for small employers will be proposed, requiring smaller employers to either set up a retirement savings benefit program or enroll in a state retirement account program.
Long Term Care Insurance
In addition to the possibility that I-2124, allowing opt-out of the Long Term Care Insurance program, may qualify for consideration and ultimately the ballot, the Legislature is likely to consider certain recommendations of the LTC Commission, particularly around supplemental insurance products that may be purchased to complement the state benefit. Commission member and Senate Labor & Commerce Committee Chair Karen Keiser, D-Des Moines, has been circulating a draft proposal that would establish a regulatory framework for the sale and contents of supplemental LTC policies.
The Department of Labor & Industries is expected to pursue legislation in ’24 to expand the state’s Stay at Work program, a partial wage reimbursement program for smaller employers insured by the State Fund to find light duty or other suitable work for injured workers in order to maintain the employer-employee connection and cut down on long term disability. Work is underway among stakeholders to correct an omission in the ’23 bill authorizing workers to make audio or video recordings of independent medical examinations, where the inability of examination providers to make their own recordings in such instances has led to considerable disruption and delay in the availability of exams. Finally, labor unions and the claimants’ bar are expected to seek legislation to expand a controversial bill from ’23 applying a “duty of good faith and fair dealing” on public agency employers who self-insure to cover private sector self-insureds as well.
Transportation and Construction
Department of Transportation officials presented to both chambers’ Transportation committees over Assembly Days to sound the alarm about significant funding challenges across various projects, including both new projects, as well as preservation and maintenance and culvert replacement. For new projects like the Portage Bay Bridge and Roanoke Lid project, increased costs and fewer bidders have resulted in a $563 million funding gap. Preservation and maintenance are underfunded, leading to a what Transportation Secretary Roger Millar called a “glidepath to failure” with a $490 million annual shortfall. The culvert replacement program faces a bombshell estimate increase from $3.8 billion to $7.3-$7.8 billion, requiring additional funding for habitat restoration. WSDOT is exploring options such as rescheduling, canceling, or repackaging projects or seeking general fund support to address shortfalls. The agency is also experiencing fewer bids on large design-build projects, with number of bids down but prices up. The agency is looking at breaking large projects up into smaller ones, increasing bid-preparation stipends, and looking at risk-sharing.
Although the Department of Financial Institutions is not seeking agency request legislation in ’24, the Department has been working with legislators on advancing a version of Illinois’ “Predatory Lending Protection Act,” redefining key terms in the Consumer Loan Act to target unlicensed and unregulated lenders. Pre-filed HB 1874, sponsored by House Consumer Protection & Business Committee Chair Amy Walen, D-Bellevue, would expand the definition of lender, adopt a “true lender” test, incorporate anti-evasion provisions, and provide that failure to comply with the regulatory elements of the law would lead to the non-enforceability of a loan. Rep. Cindy Ryu, D-Shoreline, has pre-filed HB 1918 to limit the annual percentage rate for payday lenders and increase regulation for small loans under the payday lending laws. Finally, Sen. Yasmin Trudeau, D-Tacoma, and Rep. Emily Alvarado, D-Seattle, have teamed up to introduce legislation to regulate the use of gift cards and mobile apps, stopping the unused balance on gift cards or mobile apps from returning to the gift card issuer after three years of non-use, instead requiring that such balances become unclaimed property held for consumers by the Department of Revenue.
Both the Senate and House committees overseeing insurance held work sessions during Assembly Days on the health of the property and casualty insurance market in Washington, with presentations by industry leads and the Office of Insurance Commissioner. Much of the focus of the presentations was on risk of loss from wildfires, and mitigation efforts that insurers and homeowners may consider to decrease risk. Legislation may arise from the wildfire discussion around underwriting transparency and discounts and grants for mitigation. Other insurance issues remaining from ’23 or staging for ’24 include online insurance verification, autonomous vehicle liability, the Insurance Commissioner’s request to adopt the NAIC model on holding companies, travel insurance, vehicle impound for repeat uninsured motorists (pre-filed HB 1865), increasing penalties for Certificate of Authority violations (pre-filed bill SB 5797), extending notice requirements for cancellation and non-renewal (pre-filed SB 5798), and modifying the application of the Public Records Act to insurer information held by the Commissioner (pre-filed SB 5806).
Civil Justice & Liability Reform
Significant tort-related bills from ’23 are expected to be back in play in ’24, including a proposal to eliminate the statute of limitations for lawsuits alleging sexual abuse of a minor (HB 1618), and a proposal to allow interest on tort judgments to run from the accrual of a cause of action rather than the entry of judgment (SB 5059). HB 1618 is likely to be narrowed to a prospective-only bill, removing a controversial element of the earlier proposal allowing for the revival of past time-barred claims. SB 5059 may see some attempts at narrowing, for example starting interest the filing of a lawsuit for certain matters, as opposed to the accrual of the cause of action. The current trend of enforcement through litigation, either in a statutory private right of action or through the state’s Consumer Protection Act, is expected to continue as an element of new proposals to regulate employment and commerce. Finally, on Thursday, the Washington Supreme Court declared the state’s statute of repose for medical malpractice claims to be unconstitutional, which may provoke a legislative proposal in response.
Washington — Life Insurance Riders and Disclosure Requirements – Rule Adopted: We adopted the life insurance riders and disclosure requirement rule (R2023-08) on Tuesday, January 2, 2024. The rule takes effect on Friday, February 2, 2024.
The agency is adopting this rulemaking to resolve misalignment identified between authorities in the Insurance Code. The rules in Chapter 284-23 WAC do not align with the laws in Chapter 48.83 RCW, as applied to life insurance policy riders with accelerated benefits for long-term care insurance (LTCi). The rules currently prohibit insurers from offering life insurance policies with riders that have accelerated benefits for LTCi and require disclosure statements communicating this prohibition. This contradicts current law that allows life insurance policies with riders to fund LTCi benefits through the acceleration of the policy’s death benefits under certain conditions (see WAC 284-23-650, RCW 48.83.010(3), 48.83.020(5)(a), and 48.83.080).
For more information, including the adopted rule (CR-103) and the concise explanatory statement, please visit the rule’s webpage. https://www.insurance.wa.gov/life-insurance-disclosure-requirements-r-2023-08
Washington — Washington state lawmakers file bill to improve return-to-work outcomes: Lawmakers in Washington state Thursday filed legislation designed to improve return-to-work outcomes for injured workers.
House Bill 2127 would make various changes to the state’s workers compensation law dealing with temporary disability in cases where workers may be able to return to work with modified duties.
Among other things, the measure would make employers eligible to be reimbursed for an injured worker’s wages for light duty or transitional work for a maximum of 120 workdays within a 12-month period. The current maximum is 66 days.
The legislation would also raise the maximum wage subsidy paid to employers per worker to $25,000, from the current $10,000.
The legislation would also provide funding for training returning injured workers.
Source link: Business Insurance — https://bit.ly/41PNl7q
Washington — Kreidler fines, orders Zion Health to stop selling insurance in Washington: Commissioner Mike Kreidler has ordered Zion Health to stop selling insurance illegally in Washington state and fined the company $50,000.
Kreidler’s office issued an initial cease-and-desist order in February of 2022. The final order was signed on December 19, 2023.
Zion Health, domiciled in Salt Lake City, offered and sold insurance in Washington without being authorized to do so by the Office of the Insurance Commissioner. The company also excluded coverage for pre-existing health conditions for two years and excluded coverage for termination of pregnancy.
“My office, and our state, has established standards that protect Washington’s consumers,” Kreidler said. “Our insurance laws and regulations are in place for a reason, and our staff works hard to address the companies that fail to work within that regulatory framework.”
Zion Health markets itself as a re-imagined medical cost-sharing model and admits it isn’t a healthcare sharing ministry as defined by the Affordable Care Act. It also claimed its membership program — which reimbursed members for medical expenses in exchange for monthly payments — did not constitute insurance, though Kreidler’s office disagreed.
Zion, as of October 2021, had enrolled a total of 984 members in Washington and collected a total of $1,196,652 from those members, while paying out $568,274 in claims.
December fines and consent orders
The $50,000 Zion Health fine was part of the $78,000 total in fines Kreidler’s office issued in December for violations of state insurance laws and regulations. The other fines included:
Allstate Property and Casualty Insurance Company, Northbrook, Ill.; fined $3,000 (order 23-0204).
Allstate didn’t use its legal underwriting name on consumer-facing documents, including payment notification emails, estimates, email signatures and other formal written correspondence.
The Evangelical Alliance Mission, Villa Park, Ill.; fined $10,000 (order 23-0213).
The Evangelical Alliance Mission issued charitable gift annuities before obtaining a certificate of exemption from the OIC and without meeting Insurance Code requirements. The organization issued 33 annuities to 14 Washington residents before receiving an exemption.
AICC, LLC; Philadelphia, Penn.; fined $10,000 (23-0229).
AICC sold insurance to two Washington businesses, and received commissions, without being licensed to do so by the OIC.
Michael Rawlings, Salt Lake City, Utah.; fined $5,000 (order 23-0249).
Rawlings worked as an insurance adjuster in Washington between August 2022 and January 2023 without being licensed by the OIC to do so. In addition to the fine, he was issued a cease-and-desist order.