Paul C. Latchford, Esquire Vice President: Law & Governmental Affairs

1. “THE COMPLEX WORLD OF INSURANCE DIRECT MARKETING COMPLIANCE”The 6th Annual Insurance Direct Marketing Forum 2008: Tools for Success Paul C. Latchford, Esquire Vice President: Law & Governmental Affairs AEGON Direct Marketing Services, Inc September 16, 2008.

2. The Legislative and Regulatory Environment--- • Federal • State • NAIC

3. THE FEDERAL SCENE: • National Do-Not-Call Registry- Permanence of Phone Numbers on the Registry • FTC- Prerecorded Telemarketing Calls • The Insurance Information Act- H.R. 5480 • NARAB II- H.R. 5611 • Final Rule on CAN-SPAM Act • MEDICARE- NAIC Changes Finally Adopted • Federal Elections • Health Issues in Federal Elections

4. STATE ISSUES--- • Universal Health Care • Dependent Children Coverage • California- 10133.8- Authority over Translated Materials • Regulatory: Multi-State Settlements

5. THE NAIC SCENE: • Modernization

6. DO NOT CALL REGISTRANTS MADE PERMANENT • Do-Not-Call Improvement Act of 2007 that became law in February 2008—phone number on the National Do-Not-Call Registry will remain on the list ad infinitium rather than be deleted after five years as originally provided for when the Registry was created

7. FTC- Prerecorded Telemarketing Calls • New Rules governing prerecorded telemarketing calls-which in most cases require prior written signed consent of the called party in order to place such calls and an automated interactive opt-out mechanism in cases where such prerecorded calls are permissible • Rules will not affect non-telemarketing calls, such as surveys, customer care, appointment/refill-reminders and similar purely “informational messages” that are not part of and that do not incorporate a plan, program or campaign to sell goods or services or to solicit charitable contributions.

8. FTC- Prerecorded Telemarketing Calls cont’d : • The signed, written agreement must specify the phone number(s) at which the prospective call recipient agrees to be called and constitutes consent only for such number(s). • Electronic means of obtaining “signatures” authorized by the E-SIGN ACT qualify for purposes of the prior written/signed consent requirement and include those obtained via email or website, telephone keypress, voice recording, or electronic point-of-sale devices. • Agreement/consent to service prerecorded calls is non-transferable from one company to another but rather the written/signed agreement must specify the seller to which consent is given and each seller must negotiate its own agreement with the consumer.

9. FTC Prerecorded Telemarketing Calls cont’d: • The prohibition on prerecorded calls (absent prior written/signed consent) applies regardless whether the prerecorded call is answered by a person or by an answering machine or voicemail. • All permitted prerecorded messages must (1) allow the phone to ring at least 15 seconds or four rings before disconnecting a call as unanswered; (2) begin the prerecorded message within two seconds of a completed greeting by the consumer who answers; and (3) disclose at the outset of the call that the recipient may ask a company-specific do-not-call request at any time during the message, and facilitate that request by complying with a new automated opt-out requirement.

10. THE INSURANCE INFORMATION ACT (H.R. 5480)--- • Would create an Office of Insurance Information within the Treasury Department • Optional Federal Charter- Top Priority in the next Congress for Representative Barney Frank, Chairman of the House Financial Services • All lines of insurance except health insurance

11. NARAB II- H.R. 5611--- • Would reestablish the National Association of Registered Agents • Would help agents obtain multiple state licenses more easily and quickly

12. FTC- Final Regulations Implementing Four Provisions of CAN-SPAM Act • In its Final Rule under the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, the FTC adopted the following provisions: • Modified the Term “sender” to address emails with content from multiple advertisers • Defined the term ”person” to include legal entities • Clarified what qualifies as a “valid physical postal address” that senders must include in commercial emails • Prohibited senders from imposing certain requirements on commercial email recipients in order to process opt-out requests

13. FTC- CAN-SPAM ACT cont’d--- • Most significant rule change in the Final Rule is modification of the term “sender”– a “sender” of commercial emails must provide the recipient with a mechanism for opting out of receiving future emails and is subject to other obligations • In a Multiple-sender scenario- multiple marketers may designate a single “sender”– provided they are the person identified in the “from” line of the email

14. THE MEDICARE IMPROVEMENTS for PATIENTS and PROVIDERS ACT of 2008 • Sets co-payments from mental health services to match other outpatient medical care • Ends the sale of Medigap plans that are redundant as a result of the drug benefit, and modernizes Medigap benefits to better meet seniors’ needs • Eliminates penalties for late enrollment in the drug benefit by low-incomeseniors • Blocks a cut in physician payments for Medicare services, and increases payments by 1.1% in 2009 • Eliminates the “double-payment” made to Medicare Advantage plans based on local costs for care at teaching hospitals, as teaching hospitals already received extra payment directly for their sophisticated care

15. MEDICARE IMPROVEMENTS for PATIENTS and PROVIDERS Act of 2008 cont’d--- • Prohibits certain sales activities of Medicare Advantage Plans and Part D drug plans, including door-to-door sales, cold calling, free meals and cross-selling of nonhealth-related products, effective for the 2010 year. Also it requires the Secretary to limit co-branding, gifts and commissions. Requires a plan to abide by the state appointment laws affecting agents and brokers.

16. MEDICARE IMPROVEMENTS for PATIENTS and PROVIDERS ACT of 2008 cont’d--- • Requires prescription drug plans to pay pharmacies within 14 days for clean claims submitted electronically, and 30 days for clean claims submitted otherwise and imposes a monetary penalty on prescription drug plans that fail to pay on time. • Requires Medicare Part D Prescription Drug Plans to update the drug pricing standards used for pharmacy reimbursement on at least a weekly basis, with an initial update on January 1 each year • Certifies the HHS Secretary’s current guidance on coverage of the “Protected Classes” of drugs under Part D

17. FEDERAL ELECTIONS--- • 435 House seats and 35 seats are up for election • House: • Expected Results: Democrats- 233 Republicans-176 (A) 203– Solid Democratic 15– Likely Democratic 15– Leaning Democratic (B) 133– Solid Republican 32– Likely Republican 11– Leaning Republican C) 26– Toss-Ups

18. SENATE: • 35 Seats Contested this year A) Democrats - 10– Solid Democrats - 2– Likely - 3– Leaning B) Republicans - 11- Solid Republicans - 2- Likely - 2- Leaning C) - 5– Toss-Ups

19. HEALTH ISSUES in FEDERAL ELECTION Issue John McCain • Stated Goal Provide access to affordable health care for all by paying only for quality health care, having insurance choices that are diverse and responsive to individual needs and encouraging personal responsibility • Overall Approach Remove the favorable tax treatment of employer-sponsored insurance and provide a tax credit to all individuals and families to increase incentives for insurance coverage and promote insurance competition • Features - Portability - Reward Good Health Care Providers for developing real results - Interstate Competition

20. HEALTH ISSUES in FEDERAL ELECTION--- Issue Barack Obama • Stated Goal Affordable and high-quality universal coverage through mix of private and expanded public insurance • Overall Approach Require all children to have health insurance and employers to offer employee health benefits or to contribute to the costs of the new public program • Features - End of discrimination on the basis of pre-existing conditions - Portable Insurance - Allowing the Secretary of HHS to negotiate directly for lower drug prices - Permitting the importation of medicines from other developed countries

21. STATE ISSUES- UNIVERSAL HEALTH • Massachusetts • California

22. DEPENDENT CHILDREN COVERAGE • Typical health insurance policy allows eligibility until dependent attain 19 years of age, or full-time students, until they attain 23 years of age • Recently, states have enacted laws to address coverage for potentially uninsured dependent children by: - raising the age to which eligibility for coverage must extend - requiring continuation of coverage for college students during a medical leave from school - requiring policies to extend coverage for adult children who neither reside with nor financially depend upon an insured parent

23. CALIFORNIA- Commissioner’s Authority over Translated Materials-- • The commissioner shall, on or before January 1, 2006, promulgate regulations applicable to all individual and group policies of health insurance establishing standards and requirements to provide insureds with appropriate access to translated materials and language assistance in obtaining covered benefits.

24. CALIFORNIA- Commissioner’s Authority over Translated Materials cont’d--- (b) The regulations described in subdivision (a) shall include the following: (1) A requirement to conduct an assessment of the needs of the insured group, pursuant to this subdivision. (2) Requirements for surveying the language preferences and assessment of linguistic needs of insureds within one year of the effective date of the regulations that permit health insurers to utilize various survey methods, including, but not limited to, the use of existing enrollment and renewal processes, newsletters, or other mailings. Health insurers shall update the linguistic needs assessment, demographic profile, and language translation requirements every three years. However, the regulations may provide that the surveys and assessments by insurers of supplemental insurance products may be conducted less frequently than three years if the commissioner determines that the results are unlikely to affect the translation requirements.

25. STATE REGULATORY: MULTI-STATE SETTLEMENTS--- • Special Targeted Market Conduct Exams • Settlements: - United HealthCare - Conseco

26. NAIC • Modernization

27. New Model Law Framework • NAIC adopts new model law development framework which will streamline the NAIC model law regulation • Going forward, no NAIC model law should be promulgated unless it meets the following two-pronged test:

28. New Model Law Framework cont’d--- 1.The issue that is the subject of the model law necessitates a national standard and requires uniformity among all states; and 2. Where NAIC members are committed to developing significant regulator and association resources to educate, communicate and support a model that has been adopted by the membership

29. New Model Law Framework cont’d--- • Once a model law is adopted by the NAIC, the goal is to have it adopted by a majority of states within 3 years

30. QUESTIONS