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Regulatory Update

Best Interest proposal, COVID liability shield and reduced auto assessment.
  • January 2021
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Best Interest: Insurance trade groups support proposed rule amendments in Delaware that would hold insurers selling annuity products to a standard that puts consumers' best interests first.

The office of Commissioner Trinidad Navarro proposed the rule change that would follow the model updated in February by the National Association of Insurance Commissioners. The revisions clarify that all recommendations by agents and insurers must be in the best interest of the consumer, and agents and carriers may not place their financial interest ahead of the consumer's interest in making recommendations.

If the proposed regulations are adopted, agents (producers) and carriers must satisfy four obligations: care, disclosure, conflict of interest, and documentation, the proposed regulations said. The revisions also include enhancements to the current model's supervision system to assist agents (producers) and carriers in complying with the regulations, it said.

The proposal “would give retirement savers peace of mind that the information they receive from financial professionals about an annuity is in their best interest,” American Council of Life Insurers President and Chief Executive Officer Susan Neely and National Association of Insurance and Financial Advisors-Delaware Government Relations Committee Chair Joshua Shaver said in a joint statement.

COVID Liability Shield: Florida Chief Financial Officer Jimmy Patronis ramped up a promised effort to convince state lawmakers to draw up and pass a bill establishing a COVID-19 liability shield for businesses.

“As a former small-business owner myself, I've spent most of my life in the restaurant industry and I know how hard it is to make payroll on a good day, much less when hampered by the financial impacts of COVID-19,” he said in a statement following a rally in Orlando.

In May Patronis said he would push for a bill to “get Florida back to work by taking away incentives for lawyers to engage in predatory 'sue and settle' tactics, and shield small businesses from liability for COVID-19-related claims, while still allowing legitimate lawsuits based on 'reckless disregard for human life' to move forward.”

Auto Assessment: The Michigan Catastrophic Claims Association has cut its annual assessment charged on automobile insurance policies by 14%, the second consecutive year the MCCA reduced the charge.

Michigan drivers had been paying the highest U.S. auto insurance rates until the implementation of provisions from a 2019 auto insurance reform bill, Gov. Gretchen Whitmer said in a statement.

The reduced assessment of $86 per vehicle will take effect July 1, 2021. Before the reform measure, the assessment was $220 per vehicle. Additional provisions, including the personal injury protection medical fee schedule, will take effect in 2021, Whitmer's office said.

Erin McDonough, executive director of the Insurance Alliance of Michigan, said legislators need to let the law stabilize the marketplace.

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