With each new year comes a rash of proposals, and 2013 has been no different. Claims Magazine recently spoke with Kathy Donovan, senior compliance counsel for Insurance Compliance Solutions at Wolters Kluwer Financial Services, to review the legislative activity to date and what regulations and claims-specific provisions might be in store. Here's what she had to say:
Insurers' operational efficiency goals in both underwriting and claims often embrace electronic alternatives, including delivery of certain insurance documents. Last year, the industry witnessed Delaware's HB 223, effective May 22, 2012, which allowed for insurance notices and documents to be delivered by electronic means in accordance with the specified conditions.
Now flash forward to this year, and we see that Florida's HB 157 proposes to amend 627.421 by inserting language allowing for the electronic delivery of policies. HB 157 also provides that “consent of the insured is not required for electronic transmission of a policy.”
However, it does state that a paper copy of the policy must be sent to the insured, or to the person “entitled thereto at his or her request.” Similarly, Hawaii's introduced SB 496 has a stated purpose of:
- Permitting a party to consent to electronic delivery of insurance notices and documents.
- Requiring an insurer to obtain the consent of a party prior to sending a party electronic notices and documents.
- Permitting a party to withdraw consent for electronic notices and documents.
The bill's provisions also specifically proved the electronic delivery outlined is considered equivalent to any delivery method required under applicable law, including first class mail and certified mail.
In Indiana, SB 170 essentially seeks to protect innocent co-insureds. It aims to prohibit insurers from denying coverage for damage to an insured individual under P&C policies if that individual is determined to be an innocent co-insured. A specific definition of an “innocent co-insured” is contained in the introduced bill, which also looks to establish adverse underwriting consumer protections.
Click on “Next” at the bottom right for a summary of claims-related legislation in the works.
A Connecticut bill, SB 675, proposes a requirement that auto insurers notify a policyholder when a claim has been filed against his or her automobile insurance policy. The bill would further require that insurers allow the policyholder to contest such a claim.
Below is a summary of the trends and topics that will likely remain at the forefront of the claims legislative dialogue in the months to come:
Q: What are some key topics impacting claims that you have seen in legislative bills or regulatory proposals so far this year?
A: With the focus in 2012 on personal injury protection (PIP) benefits in Florida and New Jersey and upcoming changes in New York's Regulation 68, it's likely that we could see initiatives in 2013 looking to adopt revisions to this same area of motor vehicle insurance. Oregon's current HB 2821 seeks to modify the amount of reimbursement to a PIP provider when total benefits exceed damages. It also aims to extend PIP benefit coverage for certain expenses from one year after the date of injury to 2 years after the date of injury. While it's still too soon in the legislative year for Michigan, given the reorganization in state government creating the Department of Insurance and Financial Services (DIFS) which becomes effective in March, it would not be surprising to see a focus on automobile insurance reforms there as well.
Q. Are you seeing anything different from what the industry dealt with in 2012?
A: So far, I have not seen any significant changes in the claims focus, as there were additional consumer protection efforts instituted in 2012 and that focus continues. An example of some recent initiatives can be seen with the adoption of changes in California's standards in the settling of auto claims, including repair estimates and the use of non-OEM parts. We also saw motor vehicle glass repairs addressed in both Massachusetts and South Carolina, and on the actual payment side, New Hampshire's NH Regulation INS §1002.08 set forth specific requirements to ensure that claimants and insureds are allowed ready access to claims funds.
Q. What are the major regulatory challenges for this year?
A: Certainly the ongoing volume of introduced bills that need to be evaluated for impact on P&C claims processes is a challenge. Successful identification of these bills and tracking them, where applicable, through to enactment requires resources so that immediate steps can be taken to implement required systems changes. It is also, of course, important to maintain awareness of regulatory directives such as the recent offshoring bulletin, impacting workers' compensation insurers, issued by the Illinois Department of Insurance. The bulletin provides guidance that third-party administrators (TPA) and UR organizations (URO) performing services regarding Illinois insureds are prohibited from conducting their activities offshore.
Q. What technologies or training should claims departments put in place (or at least consider) to address emerging compliance issues?
A: Claims professionals can take steps now to ensure compliance, with both staff training and technology playing key roles. First, organizations must have a current and complete notification system that permits the ready identification of the legislative and regulatory activity that impacts the P&C industry. Secondly, it is imperative that there be adequacy of staff trained to evaluate the business impact of pending and adopted requirements. Finally, technology can provide tools to greatly assist in tracking the identified records through to successful implementation in the claims processing systems.
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