P&C Legislative Round-Up: October 2019
The latest insurance-related legislative news from Maryland, California, Florida and more.
Editor’s Note: At the start of each month, we publish insurance legislative and regulatory news and updates from around the nation.
National updates
The U.S. House of Representatives passed HR 1595, the SAFE Banking Act of 2019, in a 321-103 vote. The bill contains key provisions that allow financial services, including credit cards and savings accounts, to become available to legitimate marijuana businesses in states where such business is legal. The bill will now head to the Senate for a vote.
“Thousands of employees, businesses, and communities across this country have been forced to deal in piles of cash because of the conflict between state and federal law. After six years of working on this bill, the SAFE Banking Act will go a long way in getting cash off our streets and providing certainty so financial institutions can work with cannabis businesses and employees,” said U.S. Rep. Ed Perlmutter (D-Colo.) in a statement.
The Department of Labor announced changes to the white-collar overtime exemption in the Fair Labor Standards Act that will make approximately 1.2 million workers eligible for overtime pay. The final rule will take effect Jan. 1, 2020, and updates the earnings thresholds necessary to exempt executive, administrative, and professional employees from the Act’s minimum wage and overtime pay requirements and allows employers to count a portion of certain bonuses or commissions toward meeting the salary level.
Congress approved an extension of the National Flood Insurance Program (NFIP) in a federal funding continuing resolution (CR) that was signed by President Trump on Monday. The extension will fund the NFIP and other federal programs until Nov. 21, 2019, marking the 13th extension of the program since 2017.
The Federal Reserve System proposed rule-making on risk-based capital (RBC) that would amend the existing Regulation Q. The proposal will implement the requirement under the Dodd-Frank Wall Street Reform and Consumer Protection Act that minimum capital requirements be imposed on depository institutions (DIs) holding companies. If the new rules become final, they could impose new capital burdens on insurers.
State updates
The Supreme Court of Kentucky ruled in Holcim v. Swinford that the 2018 amendments to workers’ compensation statute KRS 342.730(4) — which limits income benefits to age 70 or four years after the employee’s injury or last exposure, whichever occurs later — apply retroactively.
The Kentucky Department of Insurance announced the approval of the 2019 rate filing used to develop rates for workers’ compensation coverage. According to loss costs figures submitted in the filing, the average reduction across the class codes used in the state is 9%; however, not all employers will see a decrease in their loss cost, which is the average cost of lost wages and medical payments of workers injured during their employment. The approved rate filing goes into effect Oct. 1.
Louisiana Insurance Commissioner Jim Donelon announced that State Farm Mutual Insurance Company filled for a statewide average of -2.6% reduction in premiums, which is expected to be implemented by November 25, 2019, and impacts 1,014,960 policyholders.
SB 570 was signed into law by California Governor Gavin Newsom. The legislation, which was created by co-partners Sen. Susan Rubio (D) and Insurance Commissioner Ricardo Lara, continues a statewide affordable auto insurance program for low-income individuals, as well as opening it up to more students. It also changes the sunset deadline for the California Low Cost Auto Insurance Program to Jan. 1, 2025, and aligns statute with current practice to allow eligible emancipated 16-and 17-year-olds to access the program.
New Jersey Governor Phil Murphy signed Executive Order No. 83 on gun safety. The Order directs the New Jersey Department of Treasury, the Division of Purchase and Property, and the New Jersey Department of Banking and Insurance to promote responsible gun safety practices for gun vendors and financial institutions providing services to the state. It also takes action against insurance policies that encourage the use of firearms.
The North Carolina Department of Insurance negotiated a settlement for a lower homeowners insurance rate with the North Carolina Rate Bureau, which represents companies writing property insurance in the state. The settled rate is an overall statewide insurance of 4%, which will vary by territory and cap at 10%. The original proposed rate was an overall 17.4% increase statewide with a 30% cap. The new increased rates will take effect on new and renewed policies starting May 1, 2020.
A proposal by the Oregon Department of Consumer and Business Services will decrease workers’ compensation costs for the seventh consecutive year. Employers can expect to pay an average of $1.02 per $100 of payroll for workers’ compensation insurance in 2020, down from $1.11 in 2019. The pure premium rate will decrease an average of 8.4%. The changes to pure premium will take effect Jan. 1, 2020, and employers will see changes when they renew policies in 2020.
California passed Assembly Bill 5 to classify gig economy workers, like Uber and Lyft drivers, as employees instead of independent contractors. As a result, employees are entitled to more rights, such as minimum wage laws, sick leave, and more. The law will take effect Jan. 1, 2020; however, it will not automatically give on-demand workers employee status. Employers must apply a new three-prong test outlined by the California Supreme Court to determine if they can continue treating workers as independent contractors.
The Oklahoma Insurance Department and Commissioner Glen Mulready approved a 5.1% decrease in workers’ compensation insurance loss costs for 2020 — the ninth consecutive filing with a decrease. The new loss costs will go into effect Jan. 1, 2020.
Nevada SB 220 will become effective Oct. 1 and will give consumers the right to opt-out of having the operator of a website or online service sell their personal information by submitting a verified request.
The New Hampshire Insurance Department approved a filing to lower the loss costs insurers use to develop workers’ compensation prices. The rate proposal filed by the NCCI will decrease voluntary loss costs by 9.6% and will go into effect Jan. 1, 2020.
On Oct. 1, hundreds of new laws will take effect in Maryland, including:
- SB 707: This bill prohibits the sale of bump stocks.
- HB 116: Requires all jails to screen inmates for opioid use disorder.
- HB 604: House Bill 604 states emergency workers, such as fire and rescue employees, will be covered under workers’ compensation if they invest at least 10 years of service and suffer occupational diseases.
- HB 679: Under this law, employees and contractors of elected officials will now be able to file complaints about employment discrimination.
- HB 748: Categorizes electric low-speed scooters the same as bicycles, giving users the same rights and responsibilities as bicyclists.
- SB 4600: This bill increases the fine drivers face if they fail to stop for pedestrians from $500 to $1,000.
- HB 707: This law creates more severe consequences for driving under the influence, with longer sentences and higher fines for those with prior convictions.
Twenty-seven new state laws will go into effect in Florida on Oct. 1, including:
- HB 107: Although the bill originally went into effect in July, starting Oct. 1, it will require drivers to use hands-free devices in school and work zones. It also allows law enforcement to begin pulling drivers over for using their handheld cell phones while driving in a designated school crossing, school zone, or active work zone.
- HB 7047: This bill removes scheduled repeal of exemption from public record requirements for particular information received by the Department of Legal Affairs relating to security breaches.
- HB 7091: House Bill 7091 eliminates scheduled repeal of exemption relating to certain information related to trade secrets used to design an insurance hurricane or flood loss model.
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