Regulatory Roundup: Florida Warns of Crypto Scam, Louisiana Helps with $129 Million in Additional Claims, Connecticut Weighs in on Federal Subsidies
State by state variations of laws, compliance protocols, industry transparency, and general regulatory cultures can lend one the impression that keeping up with industry changes is a little bit like herding cats. So, what better way to wrangle some of the more localized insurance news than in a Regulatory Roundup?
On an ongoing basis, in no particular order or rank, we’re wrestling the various regulatory changes, compliance actions, and commissioner decisions into our roundup. As a disclaimer: There’s a lot going on at any given time in these here United States, so this isn’t a comprehensive picture of state-level action by any means. Think of it as, instead, a sample platter of regulation.
Crypto still headlining financial scam alerts with ‘pig butchering’
Florida Chief Financial Officer Jimmy Patronis issued an alert to Florida consumers about the dangers of investing in unvetted cryptocurrencies. The newest scam, the alert said, is “pig butchering,” in which scammers encourage investors to pump up the stock with contributions and “fatten them up.” Just as investors begin to feel confident that their money will pay handsomely, the scammer will drain the account and disappear.
According to Patronis’s office, these scams are most frequently perpetuated on social media or via dating sites, where new prospective lovers will encourage their dates to pay in crypto or invest in crypto to give them a shared interest.
“Reports say cryptocurrency scams have bilked millions out of unsuspecting crypto investors; many of which were scammed through online dating apps over the course of several months,” said Patronis. “You may as well kiss your money goodbye… Always remember, if an opportunity sounds too good to be true, it is.”
Louisiana Department of Insurance helped policyholders collect $129 million
In the aftermath of Hurricane Ida, policyholders faced chaos for filing claims. Many insurance companies, keen to weed out possible scams, denied legitimate claims. The Louisiana DOI reported the department worked with thousands of policyholders who complained about carriers improperly denying claims to resolve disputes, ultimately resulting in $129 million in additional payouts for fiscal year 2021-2022 – that’s $129 million beyond the amount carriers paid in typical claims.
In the Louisiana DOI news release, Commissioner Jim Donelon said the department received 8,819 complaints, with nearly 5,000 related to Hurricane Ida alone.
“Our Office of Consumer Services staff are hardworking and compassionate in their efforts to help policyholders get the answers they need and the money they deserve,” Donelon said. “Although we are approaching the peak of the 2022 hurricane season, our office has not forgotten about those still struggling after Hurricane Ida and the 2020 hurricanes that impacted our state. If you’re having issues with your insurance claim process, contact us for help.”
The state’s news release said the DOI takes an average of 45 days to resolve claims complaints, giving ample time for both insurers and policyholders to make their cases and come to as amicable a resolution as possible.
Insurance consumers can file a formal complaint by submitting a paper form or visiting www.ldi.la.gov/fileacomplaint.
Connecticut Commissioner Mais calls for extended ARPA credits
Throughout the last several Regulatory Roundups, we’ve reported on states announcing health insurance carrier rate requests. While some of them are presented without commentary, others have included explanations from the DOI about how general market conditions such as inflation affect insurance rates.
Connecticut Insurance Commissioner Andrew Mais in his state’s news release specifically tackled federal health subsidies. With the American Rescue Plan Act (ARPA), Congress extended tax credits for health insurance and removed upper income limits on who could qualify for them.
Credits were originally set to expire on Jan. 1, 2023. However, states had to set health insurance rates well before that, since the open enrollment season for state and federal healthcare exchanges is upon us.
Many states chose, then, to proceed with rate setting as though the tax credits will expire. Mais’s department is taking a different approach.
“CID did not ask the health carriers to assume the ARPA extension would expire on Jan. 1, 2023. To the contrary, we had already asked each carrier to explain how they used the assumption of the federal subsidy in their data projection of premium for 2023 so that we have the information and flexibility to quickly address any changes,” said Mais.
Instead, Mais called on Congress to extend the ARPA credits. His assumption could have resulted in a scramble to reset rates before the open enrollment period on Nov. 1. 2022, but ended up being a fortuitous gamble as Congress extended the ARPA expansion credits in its Inflation Reduction Act of 2022.
Other state updates
Delaware has adopted NAIC Actuarial Guideline XLVIII, effective Sept. 1, 2022. If it seems pedantic, the long and short is that the guidelines establish a standardized way of calculating credit for life insurers that have ceded policies and purchased reinsurance. The calculations should make it more uniform for life insurers that transact across multiple states.
Rhode Island passed a bill in June that went into effect in July to regulate self-storage insurance. Per the bill summary, it exempts self-storage companies and their representatives from needing producer licenses to sell limited insurance policies to storage users, as long as the self-storage insurance carrier provides proper oversight.
Maryland now has a new law proposed to go into effect in early 2023 mandating title producers take 13 title-specific hours of CE, and producers who hold both life and health and property and casualty licenses must take a minimum of six hours specific to property/casualty, and six hours specific to life/health.
Ohio issued a bulletin to remind life insurance producers and businesses that there are limitations on their non-cash gifts, items, donations, or other inducements for policy sale or retention. In this case, effective in July 2022, the total per-policy expenditure can’t exceed $250 per year.
Colorado has adopted new legislation aligning its annuity regulations with the NAIC’s model. This aligns the state with a slew of others that have adopted the model regulation for a best interest rule of annuity sales. If you’re interested in a breakdown of roles and responsibilities, check out our analysis of the model as enacted in Mississippi. The state is also seeking volunteers to reach out to Coloradans who may be DACA recipients or undocumented to enroll them in the state’s health insurance initiatives.
Connecticut added a Third Party Administrator Registration line of authority for both individuals and firms. To operate as a TPA, you must have a license or registration; for more, check out the state’s Third Party Administrator page.
Louisiana issued an advisory letter clarifying the requirements for title licenses, from creating an “affiliated business” definition to clarifying who’s a “full-time employee,” and giving direction on what constitutes a principal place of business.
FINRA issued a reminder to all firms that they have an obligation to look out for forgery and document falsification, even and especially when those documents are being signed and approved via digital signature. FINRA requires firms to establish supervisory procedures for preventing these situations in the first place. However, the agency reported it has seen an uptick in concerns from consumers and firms alike that registered representatives aren’t waiting for consumers to open accounts or approve transactions.
While these points of interest aren’t comprehensive, our knowledge of producer license and compliance maintenance is. See how AgentSync can help make you look smarter today.
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