Navigating 2011 Legislation: Trends & Best Practices for 2012

1. AICP Gulf States – January 2012 1 (866) 845-3658; Participant code: 929109

2. Today’s Agenda • 2011 Legislative and regulatory activity with key trends and issues • 2011 Enforcement Actions and Trends • What to expect in 2012 • Best Practices to help anticipate and manage

3. Current Regulatory Environment • Legislative and regulatory • Intense • Traditional focus • New issues continue to evolve • Market Regulation • Assessment resources • Enforcement activity

4. Looking back…

5. 2011 Activity • Over 11,000 bills impacting the insurance industry were introduced in 2011 • Nearly 22,000 citations were impacted by legislative or regulatory action

6. Legislative & Regulatory Activity “Content” • Underwriting • Claims • Product Filings • Certificates of Insurance • Annuities Suitability • Retained Asset Accounts • Unclaimed Property • Disclosures • Health Care Reform • Mandated Benefits • Trade Practices

7. Property & Casualty

8. Property & Casualty • Cancellation/Nonrenewal • Certificates of Insurance • Credit scoring • Claims

9. Property & Casualty - Underwriting • Florida: lawful ownership, possession or storage of a firearm or ammunition • Maryland and North Dakota: individual’s status as a victim of a violent crime • New York the covered motor vehicle is used for volunteer firefighting • Oregon: personal vehicle sharing

10. Property & Casualty • Total Loss changes: Maryland and Rhode Island • Certificates of Insurance: Arizona, Georgia, Maryland, Massachusetts, Michigan, North Carolina, Utah • Commercial risks: New York, Virginia

11. What to File – “Confidential” Utah • Under the Government Records Access and Management Act (GRAMA) supporting information in a rate filing is considered open for public inspection unless it is classified as private, controlled, or protected • Filer will need to request which specific document the filer believes qualifies under GRAMA when the filing is submitted • The document must include a written statement of reasons supporting the request that the information should be classified as protected • If the filer does not request the information in the document to be classified as protected, the document will be classified as public • DOI will not automatically classify any document in a filing as protected • DOI will not re-open a filing to permit a company to request protected classification of previously filed documents R590-225-11 Effective December 8, 2011

12. All Lines – Privacy Notices • The new Federal Model Privacy Form was developed for use by federally regulated financial institutions to increase consumers’ understanding and ability to make informed decisions regarding the sharing of personal information as required by the privacy provisions of GLBA. • Insurance companies that do business in this state may use the new Federal Model Privacy Form or continue to use other types of privacy notices that differ from the Federal Model Privacy Form to meet the notice content requirements of the Nebraska Privacy of Insurance Consumer Information Act Nebraska Bulletin CB-127

13. Life & Annuities

14. Alaska: 3 AAC 26.770-.789 California: AB 689 Colorado: Regulation 4-1-11; B-4.12 Connecticut: 38a-432a Hawaii: SB 1278; Bulletin 2011-2LIC Illinois: 50 Ill. Adm. Code 3120.20; Bulletin 2011-13 Iowa: Bulletin 11-04 Maryland: COMAR 31-09-12; Bulletins 11-10 & 11-28 New Jersey: NJAC 11:4-59 Texas: HB 2277 New York: Reg 187 North Dakota: 26.1-34.2 Ohio: 3901-6-13 Oregon: 836-080-0170 to 836-080-0190 Rhode Island: R27-12; Bulletin 2011-2 West Virginia: 114-11B Annuities Suitability Activity - 2011

15. Legislative California - SB 713/ SB 599 Indiana – SB 360 Kentucky – HB 309 Maryland – SB 217 New York – AB 683/SB 504 (P) Rhode Island - H5244Aaa/S0045A Pennsylvania – HB 718 (P) Texas – HB 2152 (P) Virginia – HB 1458/SB 1388 Regulatory Colorado – B-4.12 Connecticut – Bulletin IC-27 Illinois - Bulletin 2011-3/2011-03 R Iowa – Bulletin 11-01 Maine – Bulletin 376 Maryland – 31.09.14.05 Nebraska – CB-125 New Jersey – Order A 11-101; NJAC 11:4-61.1 Ohio – Bulletin 2011-01 West Virginia - Informational Bulletin 178A Retained Asset Accounts Activity - 2011

16. Health

17. Discretionary Clauses Existing legislative or regulatory provisions/restrictions: • Alaska, California, Connecticut, District of Columbia, Hawaii, Idaho, Illinois, Kentucky, Maryland, Michigan, New Jersey, New York, South Dakota, Utah, Washington, Wyoming

18. Mandated Benefits • Autism Spectrum Disorder • Telehealth • Cochlear implants • Oral chemotherapy • Hearing aids • Clinical trials

19. Health Care Reform • Rate Filing Authority • Internal Appeals • External Appeals

20. Health Care Reform – Rate Authority Pennsylvania SB 1336 • Establishes health insurance rate authority • Provides for federal compliance for required filings

21. Health Care Claims Virginia • Notification of an adverse benefit to include a statement describing the availability, upon request, of the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning. The health carrier may not consider a request for diagnosis or treatment information, in itself, to be a request for internal appeal • All notices to be provided in a culturally and linguistically appropriate manner; and upon request, any notice in any applicable non-English language • Provision of oral language services, such as a telephone customer hotline, that include answering questions and providing assistance with filing claims, benefit requests, internal appeals, and external review in any applicable non-English language • Inclusion in the English versions of all notices, a statement prominently displayed in any applicable non-English language clearly indicating how to access the language services provided by the health carrier. 14 VAC 5-216-70 (Effective January 1, 2012)

22. Regulatory Environment • Continuum of legislative & regulatory activity • Other initiatives keep growing in number • Regulator and media focus on consumer protection

23. 2011 Enforcement Activity

24. Market Conduct Market Regulation • MCAS • Complaints • Other states’ actions • State “history”

25. Market Conduct Focus: Through the Years • Claims • Underwriting • Producers • Advertising

26. P&C Market Conduct: Underwriting • Failed to provide a compliant Summary of Rights for all homeowner, manufactured home, private passenger auto and motorcycle non-renewals and cancellations.   Arizona (September 2011)

27. P&C Market Conduct: Underwriting • In regard to the company's use of zip codes for territorial rating in Connecticut, a company is not allowed to split a town or city into more than one rating territory. The examiners found that the company's filed and approved rating plan contained instances of a town or city containing more than one rating territory. Connecticut (October 2011)

28. P&C Market Conduct: Underwriting • 42 errors were due to failure to properly document the use of the filed Schedule Rating Plan…files either failed to document the credit/debits applied or did not have documentation supporting the application of the plan • Failure to follow its filed rating plan Georgia (October 2011)

29. P&C Market Conduct: Underwriting • 194 errors were due to failure to limit schedule rating factors to no more than 15% when Schedule Rating reports were not sent to the Commissioner’s Office. • 986 errors were due to failure to limit schedule rating factors to no more than 15% when Schedule Rating reports were not sent to the Commissioner's Office… there were 336 errors involving credits and 650 errors involving debits. Georgia (October 2011)

30. P&C Market Conduct: Underwriting • Sent 905 non-payment cancellation notices to Maine policyholders that did not contain the notice of right to request a hearing. Maine (November 2011)

31. P&C Market Conduct: Underwriting • Issued premium increase notices…failed to contain the Administration's new address at 200 St. Paul Place Suite 2700 Baltimore MD 21202.   • The address became effective January 1, 2010, and “companies” were so notified in March 2009. Maryland (September 2011)

32. P&C Market Conduct: Underwriting • Failing to provide notice to insureds at their policy inception and/or renewal that claims history is considered for purposes of canceling or refusing to renew coverage • Renewal offers failed to advise insureds of the amounts of expiring premiums Maryland (September 2011)

33. P&C Market Conduct: Underwriting • 10,913 Violations Title 75, Pa. C. S. §1791.1(c) • Failed to provide a notice at renewal regarding discounts available for drivers who meet the requirements relating to restraint systems, anti-theft devices and driver improvement course. Pennsylvania (October 2011)

34. P&C Market Conduct: Underwriting • 8,266 Violations Title 75, Pa. CS. §1822 • The Company did not provide the fraud warning at renewal for the 8,266 files noted. Pennsylvania (October 2011)

35. P&C Market Conduct: Underwriting • Issued 152 notices, non-renewing policies because the agent was terminated, which did not contain an offer to continue/renew the policy • Issued 473 cancellation/non-renewal notices which did not contain the correct address for the Wisconsin Automobile Insurance Plan (WAIP) Wisconsin (October 2011)

36. Market Conduct: Documentation • Failed to maintain its books, records, documents, and other business records and to provide relevant materials, files, and documentation in such a way to allow the examiners to sufficiently ascertain the claims handling and payment practices of the Company Missouri (October 2011)

37. Life Market Conduct: Underwriting • “Company” violated the following provision of the Florida Insurance Code: Section 626.9541(1)(dd), Florida Statutes - Refusal of life insurance; refusal to continue the life insurance of; or limiting the amount, extent, or kind of life insurance coverage available to an individual based solely on the individual’s past or future lawful foreign travel plans. Florida (October 2011)

38. Life Market Conduct: Claims • {Company} provided the examiner a sample term life proof of claim form in which the fraud warning notice did not comply with the language required by California law. • {Company} reported that the claim payments made 30 days after the date of death did not specify the rate of interest paid on these claims. California (August 2011)

39. Health Market Conduct: Underwriting/Advertising • Used misleading statements within its advertising • Failed to document the providing of an Outline of Coverage • Failed to document the providing of a Guide to Health Insurance for people with Medicare • Failed to notify terminated insureds’ of their right to a conversion policy Kentucky (August 2011)

40. Health Market Conduct: Claims • Failed to send written notice of an adverse decision to certain members • Failed to provide the correct address, for the Maryland Insurance Commissioner on its adverse decision notices. • Failed to provide its internal grievance process as a component of the adverse decision notice sent to Maryland members and providers. • Failed to include required information on adverse decision notices sent to Maryland members and to providers. • Failed to send a copy of a grievance decision notice after rendering a grievance decision. • Failed to provide the correct address for the office of the Commissioner on grievance decision notices sent to Maryland members and to providers. • Failed to send out a grievance decision notice to some members after rendering a grievance decision in emergency cases. • Failed to include the required information on a grievance decision notice sent to members and health care providers acting on behalf of a member as a result of an emergency case. • Failed to make a determination on whether to authorize or certify additional health care services within one working day after receipt of the information necessary to make the determination. • Failed to authorize or certify an inpatient admission within two hours after receipt of the information necessary to make the determination Maryland (October 2011)

41. 2012 – Activity to Date

42. Regulatory Environment - 2012 • Strong start • Legislative sessions: pre-filed and introduced • Regulatory activity • Enforcement activity

43. Health – Mandated Benefits New Jersey AB 1120 – Enacted1/17/12 • Requires insurers to cover treatment for sickle cell anemia • If the insurance policy provides benefits for expenses incurred in the purchase of outpatient prescription drugs, then the contract shall provide coverage for prescription drug expenses incurred by a covered person for the treatment of sickle cell anemia

44. Health – Mandated Benefits New Jersey SB 1834 – Enacted 1/17/12 • Coverage for expenses for prescribed, orally administered anticancer medications used to kill or slow the growth of cancerous cells shall not be subject to any prior authorization, dollar limit, copayment, deductible or coinsurance provision that does not apply to intravenously administered or injected anticancer medications. • Insurers shall not achieve compliance with the provisions of this section by imposing an increase in patient cost sharing, including any copayment, deductible or coinsurance, for anticancer medications, whether intravenously administered or injected or orally administered, that are covered under the contract as of the effective date of this act

45. 2012 - Introduced Bills

46. Property & Casualty – Credit Scoring Kentucky SB 31 • Insurers shall not use the credit history or the lack of credit history, including a credit score or insurance score, of an insured or an applicant as the basis in whole or in part to decline, refuse to renew, cancel, rate, or determine the premium rate for any insurance policy, contract, or plan of insurance

47. Property & Casualty – Credit Scoring Virginia HB 355/HB 432 • Motor vehicle insurers shall not set rates or make pricing decisions based on a person's credit history, lack of credit history, or credit score

48. Property & Casualty – Credit Scoring West Virginia: HB 2049 Insurers shall not: • Refuse to underwrite, cancel, refuse to renew a risk or increase a renewal premium based, in whole or in part, on the credit history of an applicant or insured; • Rate a risk based, in whole or in part, on the credit history of an applicant or insured person in any manner, including, but not limited to, the provision or removal of a discount, assigning an applicant or insured person to a rating tier, or placing an applicant or insured person with an affiliated company; or • Require a particular payment plan based, in whole or in part, on the credit history of the applicant or the insured

49. Property & Casualty - Underwriting Tennessee SB 2372 • All contracts of insurance issued for delivery after July 1, 2012, shall provide for 10% premium reduction for any renewed insurance policy if a claim has not been filed against such policy that resulted in payment by the insurance company for the previous year

50. Property & Casualty - Claims Kentucky HB 207 • An insurer shall inform a claimant upon notification of a motor vehicle damage claim that he or she has the right to choose the repair facility of his or her choice to repair a damaged vehicle. • After the effective date of this Act, all appraisals shall include the following notice, printed in not less than 10 point, boldfaced type: "NOTICE: UNDER KENTUCKY LAW, THE CONSUMER AND/OR LESSEE HAS THE RIGHT TO CHOOSE THE REPAIR FACILITY TO MAKE REPAIRS TO HIS OR HER MOTOR VEHICLE."