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Regulatory Update

Delaware wants health reinsurance fund. SEC adopts new broker-dealer rules.
  • July 2019
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Health Reinsurance: Yet another state is moving to secure a federal waiver allowing it to establish a reinsurance plan for its individual health exchange insureds. According to a statement from the office of Insurance Commissioner Trinidad Navarro, Delaware's individual marketplace has experienced repeated rate increases and significant deterioration in membership since 2015.

The average benchmark premium in Delaware in 2014 was $289, and jumped to $684 in 2019, Kaiser said.

The reinsurance program is expected to reduce marketplace rates by 20% for plan year 2020 and increase enrollment in the ACA individual market by as much as 3.2%, it said.

Malpractice Insurance: The Washington State Bar Association recently voted down a proposal to require mandatory malpractice insurance for lawyers.

The bar's Board of Governors voted 9-5 against the mandate, according to a recording of its most recent meeting.

The vote at least temporarily sidelines the work of a state task force, which recommended mandatory malpractice coverage.

The task force found 14% of Washington lawyers in private practice do not carry insurance, it said in its final report.

“This lack of protection poses a distinct risk to clients,” it said. “Uninsured lawyers create an access-to-justice problem: Their clients are typically unable to pursue legitimate malpractice claims against them because plaintiffs' lawyers cannot afford to bring actions against uninsured practitioners.”

According to the American Bar Association, Oregon and Idaho are the only states that mandate malpractice insurance for lawyers.

Life and Health Insurance: Companies serving clients in Maine are now operating under new regulations, some of them informed by the personal experiences of the individual who signed them into law—Gov. Janet Mills.

Mills recently signed a host of bills, including measures mandating health reviews for life and health insurance policies be done by medical professionals. A second measure bans the use of discretionary clauses in life and health policies.

The medical review law was one that touched Mills personally. The law requires a health insurance carrier's medical reviews, including utilization reviews and case management, be conducted by a health professional who is board certified and in active medical practice in the same specialty as typically manages the medical condition or care under review.

“After my late husband Stan suffered a stroke, insurance companies would sometimes deny claims for care without any explanation,” the governor said in a statement. “Medical professionals with the same training as the patient's own doctor should be conducting medical reviews for claims, not an insurance company official.”

Securities and Exchange Commission: A package of new rules for brokers, dealers and investment advisers was adopted by the SEC to overhaul conflict-of-interest standards and supplant the defunct Department of Labor's fiduciary rule that was broadly criticized by the retirement industry.

American Council of Life Insurers' President and Chief Executive Officer Susan Neely applauded the SEC's Regulation Best Interest or Reg BI rule.

“Reg BI raises consumer protections to a new level,” Neely said in a statement. “It builds on current rules to ensure consumers receive professional financial guidance and information that is in their best interest. It's a rule with real consequences for bad actors who put their own interests above their customers' interests.”

Health Insurance: Nevada Gov. Steve Sisolak has signed into law a measure that requires health insurers to cover maternal care for surrogate mothers.

According to a legislative digest of the bill, existing law generally prohibits an individual or group insurance plan from denying coverage or restricting benefits for any length of stay in a hospital in connection with childbirth to less than 48 hours after a vaginal delivery or 96 hours after a cesarean section.

The new measure prevents health insurers from denying, limiting or seeking reimbursement for maternity care because the insured acts as a gestational carrier. It also requires a child carried by a gestational carrier be considered the child of the person or persons who intend to be the legal parent of the child, for purposes of health insurance coverage.

The law becomes effective Jan. 1. Kim Surratt, an attorney and lobbyist who wrote the bill, said insurers had been covering surrogates' maternal care in the immediate period after the passage of the Affordable Care Act, but slowly began pulling back from coverage. It got to the point in Nevada, she said, where no insurers would cover surrogates' care. “Part of it is a misunderstanding of what surrogacy is or isn't,” Surratt said.


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