Northwest Chapter Association of Insurance Compliance Professionals

1. Northwest Chapter Association of Insurance Compliance Professionals Hot Topics at the Oregon Insurance Division Gayle L. Woods November 7, 2005

2. Workers’ Compensation Division Oregon Occupational Safety and Health Division (Oregon OSHA) Building Codes Division Insurance Division Division of Finance and Corporate Securities Workers’ Compensation Board Oregon Medical Insurance Pool Office of Minority, Women, and Emerging Small Business Ombudsman for Injured Workers Small Business Ombudsman Office of Regulatory Streamlining Department of Consumer and Business Services

3. Insurance Division – Action Plan 2005-2007 • Affordability and availability of health insurance • Look for ways to address the high rate of medical inflation and the effect it has on the availability and affordability of health insurance. Work with insurers, hospitals, and other providers to make information on the cost and quality of health care more readily available to the public, both to enhance competition and accountability in the health care system and to facilitate consumer choices in the marketplace.

4. Insurance Division – Action Plan 2005-2007 • Affordability and availability of health insurance • Evaluate prior health insurance reforms and determine whether further reforms could help ensure that the small group, individual, and portability insurance markets are competitive, fair, affordable, and accessible.

5. Insurance Division – Action Plan 2005-2007 • Affordability and availability of health insurance • Implement mental health parity requirements for health insurance, as created by SB 1.

6. Insurance Division – Action Plan 2005-2007 • Consumer protection and customer service • Implement homeowner insurance consumer protections created by SB 118. • Determine whether “total loss” and vehicle valuation practices in auto insurance are fair to consumers or if changes are needed.

7. Insurance Division – Action Plan 2005-2007 • Consumer protection and customer service • Improve consumer and industry access to Insurance Division services through use of technology; expand electronic licensing and rates and form filing, use checklists for product standards, and process complaints and filings promptly.

8. Insurance Division – Action Plan 2005-2007 • Consumer protection and customer service • Work with the Department of Human Services to find options that will make long-term care insurance a more viable alternative to dependence on the state for nursing home care.

9. Insurance Division – Action Plan 2005-2007 • Consumer protection and customer service • Analyze whether new standards are needed for variable and equity-indexed annuities and in viatical and life settlements to ensure fair treatment of consumers

10. Insurance Division – Action Plan 2005-2007 • Consumer protection and customer service • Work with the Building Codes Division to provide staff support and expertise to assist the Construction Claims Task Force, created by HB 2078, with questions surrounding the affordability and availability of contractor liability insurance.

11. Legislative Update - Life • HB 2092 Deregulation of charitable annuities • http://oregoninsurance.org/docs/company/gift_annuities-deregulation.pdf • HB 2978 Judicial revocation of beneficiary designation

12. Legislative Topics under Discussion for 2007 - Life • Viatical Settlements • Long-term Care Insurance • Company-owned Life Insurance

13. Legislative Topics under Discussion for 2007 - Life • Viatical Settlements • Current law: governs sale of life policies by terminally ill policyholders • Extend regulation to sale of life policies by healthy policyholders?

14. Legislative Topics under Discussion for 2007 - Life • Viatical Settlements • Continue existing regulation of securities side of this business by Division of Financial and Corporate Securities? • Regulation of trade practices

15. Legislative Topics under Discussion for 2007 - Life • Long-term Care Insurance • Current law enacted in 1989 • Amend to track with NAIC model Act • Change focus from requiring specified services • Require minimum combination of services: skilled nursing plus • Reduce minimum coverage period from 24 months to 12

16. Legislative Topics under Discussion for 2007 - Life • Long-term Care Insurance (cont’d) • Add requirements for producer training and continuing education? • Other efforts relating to long-term care • Governor’s task force on long-term care • Ongoing consultation with consumers

17. Legislative Topics under Discussion for 2007 - Life • Company-owned life insurance • Possible legislative topics • Require continuing insurable interest? • How to ensure that insurance proceeds will be used for the benefit of employees • Create right of employee to cancel or to take over coverage and payment when the employee leaves employment?

18. Legislative Topics under Discussion for 2007 - Life • Company-owned life insurance • Possible rulemaking, separate from legislation • Require direct insurable interest in employees in connection with benefit plans • Require disclosure to employees • Informed consent, in writing, by employees?

19. Property/Casualty Overview • 2005 Legislative highlights • Emerging issues • Rulemaking

20. 2005 Legislative Highlights • Bulletin 2005-2 at insurance.oregon.gov • SB 118, Homeowner Bill of Rights • SB 151, PIP benefits • SB 207, Electronic transactions • SB 573, Credit scoring • HB 2078, Task Force on Construction Claims

21. SB 118, HO Bill of Rights • No penalty for mitigated claims • Protection for first claims • No penalty for inquiries • Limited look-back period • Disclosure of database use • Limits on mid-term policy cancellations • 30 day notice of renewal or nonrenewal

22. SB 151, PIP Benefits • 2003 legislation linked PIP reimbursement to workers comp fee schedule • SB 151 revises hospital reimbursement so that the adjusted cost-charge ratio is at least 90% • Insurers may deny PIP claims to an insured who misrepresents a material fact

23. SB 151, PIP Benefits cont’d • Funeral expenses increased to $5000 • Per day child care expenses increased to $25/day with a total cap of $750 • Hospital reimbursement effective for claims occurring on or after 1/1/2006 • Additional PIP/fee information online “What’s New” link at insurance.oregon.gov

24. SB 207, Electronic Transactions • An insurer may use electronic cancellation only if notice is sent with return receipt and consumer responds • If the receipt is not returned, the insurer must send written cancellation to the consumer • Applies to P/C only

25. SB 573, Credit Scoring • 2003 legislation prohibits insurers’ use of credit scoring on existing customers • Questions arose around how certain changes in family status could impact premium • SB 573 prohibits rerating an existing policy or customer in the event of a death or divorce

26. HB 2078, Task Force on Construction Claims • Task force charged with studying • Construction claims • Construction industry practices • Causes of construction defects • Consumer protection • Availability and affordability of liability insurance for contractors

27. HB 2078, Task Force on Construction Claims cont’d • Nine task force members, five appointed by DCBS Director Cory Streisinger • Two members represent the insurance industry: Jim Vavrek, VP for commercial insurance at Liberty Northwest and Elsie Jones, commercial agent with Jones, Kendall Sauer

28. HB 2078, Task Force on Construction Claims cont’d • DCBS specifically charged with providing an expert to study insurance reforms, alternatives and prices, loss control discounts and designation of single private insurer • Timeline calls for consultant to be on board by January 2006; draft report due May 2006

29. Emerging Issues • Total loss • OIGA recoupment • Under review

30. Total Loss • Leading cause of consumer complaints • Introduction of SB 935 in 2005 Legislature • Rulemaking in 2006 with focus on fairness, simplicity and best practices • Vendor valuations: the beginning or the end?

31. OIGA Recoupment • 2003 legislation directed insurers to recoup OIGA assessments directly from consumers • Division adopted rules in 2004 to implement • Consumers continued to call Division about assessment into 2005 • Market analysis surveyed insurers May 2005

32. OIGA Recoupment cont’d • Findings included variations in recoupment balances and how to address excess collections • Division to modify existing rule and clarify how insurers will address excess collections • Potential solutions include returning the funds to either policyholders or the OIGA or applying the funds in reduction of rates.

33. Under Review • Evaluating how other states approach auto minimum limits variances • Fair valuation of residential structures • Assessing NAIC credit personal property model act

34. 2006 Rulemaking • Total loss • OIGA Recoupment • To be announced

35. Mental Health Parity • Senate Bill 1 • Full parity for “nervous and mental conditions” and chemical dependency • Applies to group health coverage in Oregon

36. E-NOTIFY • www.oregoninsurance.org/docs/enotify.htm • Oregon makes available electronic notification of current activity such as statute and administrative rule changes, new or revised bulletins, administrative and enforcement actions, and updates to product standards checklists. There is no cost and no restriction as to who can sign up to receive these announcements.

37. Rates and Forms Status Checks • To learn the current status of a filing, please either email your inquiry to www.dcbs.ratesforms@state.or.us or call the Rates and Forms unit at (503) 947-7983.

38. Rates and Forms Staffing • Health Unit • Life/Annuity Analyst

39. Hot Topics at the Oregon Insurance Division Questions?