Around the PIA Western Alliance States – Week of October 28, 2024

Montana — Montana Consumers Gain $5 Million from State Farm: Troy Downing, the Montana Commissioner of Securities and Insurance (CSI), is pleased to report that State Farm Mutual Automobile Insurance Co. (State Farm) has reviewed an additional 18,000 claims after being fined $4 million in a CSI administrative action for unfair claims settlement practices.

These reviews resulted in an additional $5.2 million paid to Montanans impacted by State Farm’s improper settling of comparative negligence and loss of use claims.

“We applaud State Farm for diligently reviewing the claims and working with our agency to make good on the February 2024 consent agreement,” said Commissioner Downing. “We will continue to work together to ensure the money is rightfully being returned to Montana consumers.”

In February 2024, the CSI announced the settlement, in which State Farm agreed to pay a $2 million fine and to be subject to an additional suspended fine of $2 million, which will be discharged upon State Farm satisfactorily implementing corrective actions.

“I am proud of the work of our agency, which continues to hold companies accountable on behalf of Montana consumers,” Commissioner Downing said.

Below is the February 2024 news release.

Troy Downing, the Montana Commissioner of Securities and Insurance (CSI), announced a settlement with State Farm Mutual Automobile Insurance Co. (State Farm), wherein State Farm agrees to pay a $2 million fine and to be subject to an additional suspended fine of $2 million that will be discharged upon State Farm satisfactorily implementing corrective actions.

“Today we send a clear message that Montana will not tolerate unsupported fault being placed on victims of auto accidents,” said Commissioner Downing. He continued, “I expect insurance companies to complete a full, fair, and transparent examination of the facts and law and to pay what is owed as required by law.”

 The settlement arises out of CSI’s two-year examination of State Farm’s claim handling practices that revealed State Farm had underpaid some drivers who were in accidents with State Farm’s insureds from November 1, 2018, through April 15, 2022. This is one of the largest settlements of its kind in the CSI’s history.

In addition, CSI’s settlement and associated order will require State Farm to re-evaluate all affected claims between November 1, 2018, through the end date of the examination, in a manner consistent with Montana law and pay any additional money that may be owed to Montana consumers. As a result of the CSI’s examination, State Farm reports that it has already reviewed over 2,436 Montana claims and made an additional $1,182,927.43 in payments to Montana consumers.

While Commissioner Downing is “troubled by State Farm’s past conduct,” he expressed his appreciation to State Farm for their cooperation with CSI and efforts “to make this right.”

MONTANA

State Farm returns millions to policyholders

Settlement reached on unfair claim practices

State Farm returns millions to policyholders

Insurance News

By Camille Joyce Lisay

Oct 24, 2024

State Farm Mutual Automobile Insurance Co. has paid back $5.2-million to Montana policyholders after completing a necessary 18,000 claim reviews as part of a settlement with the Montana Commissioner of Securities and Insurance (CSI).

The settlement, which was concluded in February 2024, addresses unfair claim practices discovered in a two-year review of the company's methods by the state regulator. The carrier was penalized $4 million as part of the settlement with the potential deduction of $2 million in lieu of compliance measures.

CSI alleged failure to conduct reasonable investigations or provider adequate explanation for claims denial in some instances.

The company has now made all its necessary updates in policy and training of its staff as of August, thus achieving a $1 million deduction. A follow-up exam to begin in 2025 will determine the fate of the second $1 million suspension according to CSI, contingent on an error rate below 8%.

“We remain committed to paying what we owe,” State Farm spokesperson shared via email. “State Farm is cooperating with the Montana Commissioner of Securities & Insurance and actively working to resolve the issues identified in the market conduct examination report.”

The review covers accidents that occurred between November 2018 and April 2022, with State Farm having already paid an additional $1.18 million on 2,436 previously reviewed claims.

Montana Commissioner of Securities and Insurance Troy Downing applauded State Farm for diligently reviewing the claims and working with CSI to make good on the February 2024 consent agreement, ensuring the money is being returned to Montana consumers.

State Farm has the largest market share in Montana's private passenger auto insurance market with 22.63%, while Progressive Insurance Group follows with 19.96%. The company has an A++ (Superior) Best's Financial Strength Rating.

Customers in Montana who believe they have a claim that falls within the bounds of this settlement should contact the office of the Montana Commissioner of Securities and Insurance or their State Farm agent. More information about the claims process and eligibility can be found at csimt.gov/claims.

Washington — Essential Health Benefits: Washington state Insurance Commissioner Mike Kreidler has announced that expanded coverage for human donor milk, hearing aids and artificial insemination will be included in the state’s essential health benefits plan.

Some benefits were also revised to ensure plans do not discriminate based on disabilities or health conditions. The changes take effect in plan years starting on or after January 1, 2026.

The benefits include:

    Coverage for human milk for inpatient use, when an infant is unable to receive maternal milk or when the parent is unable to produce maternal milk in sufficient quantities or caloric density.

    Coverage for hearing exams, or hearing aids in each ear, every three years.

    Coverage for artificial insemination in vivo, a fertilization treatment in which fertilization occurs internally as opposed to externally and in a lab.

“These benefits could be necessary for parents, or prospective parents, and are important coverages to add to our health plans,” Kreidler said. “My office has worked hard to strengthen health insurance coverage and to the people who will need them, these will be crucial changes.”

The Affordable Care Act requires individual and small group health plans to cover a set of essential health benefits, but states can make additions to their specific benchmark plan by submitting an application to the Federal Centers for Medicare & Medicaid Services (CMS).

The Office of the Insurance Commissioner received approval for the changes from the CMS on October 7.

Washington — Gray and Oregon Road Fire Victims Under-Insured: An analysis of the insurance claims paid out after the Gray and Oregon Road fires show that most of the homes destroyed were under-insured.

The fires burned more than 20,000 acres, and destroyed 366 homes, outside of Spokane in August of 2023.

Washington state Insurance Commissioner Mike Kreidler’s office initiated a data call in June of 2024 to collect information from insurance companies that had a loss associated with the fires.

The results showed 355 significant dwelling claims — consisting of $10,000 in dwelling loss and $10,000 in personal property loss. Of those claims, 244 had paid out 100% of their coverage for damage and 162 are still open and ongoing.

Washington — Implementation of SSB 5986 and updates to the Balance Billing Protection Act proposed rule posted: We have released the proposed rule language on (R 2024-01). The purpose of the proposed rule is to implement Substitute Senate Bill 5986, which was enacted on March 19, 2024. The legislation adds ground ambulance balance billing protections to the Balance Billing Protection Act (BBPA). Before the passage of this legislation, the BBPA only applied to emergency services, air ambulances, and certain services at in-network facilities. Rulemaking is necessary to revise Chapter 284-43B WAC to include reference to ground ambulance services. The rules will facilitate the implementation of the law changes by ensuring that affected entities understand their rights and obligations under the new law. Rulemaking is also necessary to update the BBPA rules, including but not limited to consideration of arbitrator fees and revisions to the arbitration process for arbitration authorized under RCW 48.49.135. A new chapter is being added to Chapter 284-170 WAC to address network access standards and contracting for behavioral health providers as it relates to transport to emergency crisis behavioral health centers as alternatives to emergency departments.

We scheduled a public hearing on the rule:

When: November 26, 2024 at 9:00 am

Where: Register in Advance

Comments on the proposed rule language are due by 12:00 noon on November 26, 2024. Please send them to rulescoordinator@oic.wa.gov.

For more information, including the proposed rule language (CR-102), please visit the Implementation of SSB 5986 and updates to the Balance Billing Protection Act (BBPA) (R 2024-01) webpage.

Washington — Relating to health care benefit managers (R 2024-02)

We have released the proposed rule language on R 2024-02, related to health care benefit managers. The rule revises Chapter 284-180 Washington Administrative Code (WAC) and implements E2SSB 5213 (Chapter 242, Laws of 2024).

We scheduled a public hearing on the rule:

When: November 26, 2024, at 11:00 a.m. Pacific Time Zone

Where: Virtual

Comments on the proposed rule language begin October 23, 2024 and due by November 26, 2024 at 2 p.m. Pacific Time Zone. Please send them to rulescoordinator@oic.wa.gov.

For more information, including the proposed rule language (CR-102), please visit relating to health care benefit managers (R 2024-02) webpage.