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State Regulation
States Expected to Face COVID-19 Regulation and 2020 Backlog in New Year

Questions about risk-based pricing and issues related to racial justice also are likely to fill legislative and regulatory agendas across the country.
  • Timothy Darragh
  • February 2021
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The COVID-19 pandemic will continue to dominate in 2021, but a backlog of unfinished business—such as risk-based pricing and racial justice issues—also will fill state legislative and regulatory agendas this year.

Part of the backlog stems from how states managed workflows during the initial phase of the pandemic, said Frank O'Brien, vice president, state government relations, American Property Casualty Insurance Association.

“You had several states that stopped meeting, states that met remotely and others that met in a hybrid model,” he said. “Some states attempted to tackle a full range of issues, others prioritized just COVID and others only did the absolute highest priority items.”

Wes Bissett Independent Insurance Agents and Brokers of America

COVID will continue to impact legislatures in a significant way and will likely limit the number of bills, the types of issues they will consider.

Wes Bissett
Independent Insurance Agents and Brokers of America

All states find themselves a year closer to the 2022 deadline to approve a credit for reinsurance measure following the NAIC model approved in 2019, O'Brien said. The approvals would make state laws consistent with the provisions of covered agreements with the European Union and United Kingdom regarding reinsurance collateral requirements.

Risk-based pricing will get a bigger spotlight, as regulators and lawmakers were already making moves to restrict tools used in underwriting, long before protests over the killing of George Floyd and others set off a wave of reflection within the industry.

Insurers should expect a flood of risk-based pricing bills, perhaps more than 100 in 2021, said Erin Collins, vice president of state affairs, National Association of Mutual Insurance Companies. “We anticipate that—not in every state, but it's going to be close,” she said.

She noted Washington Insurance Commissioner Mike Kreidler's long push to eliminate credit scoring as a risk factor. Washington Gov. Jay Inslee said recently he would back legislation to eliminate it, as part of an effort to provide more equity across the state.

“We've seen legislation [restricting underwriting factors] in Rhode Island the past several years,” APCIA's O'Brien said. “That will be back. We expect to see it in a number of states.”

In addition, the 2020 elections will bring in new legislators who may need educating on how risk is assessed, what tools insurers have to calculate risk and rates, and how they drive competition into the marketplace, Collins said.

Collins also expects “a multitude” of bills to provide a COVID-19 liability shield to businesses—which, she noted, NAMIC favors.

Expect “some controversy” over whether states should offer immunity and if so, how broad it should be, said National Council of Insurance Legislators Executive Director Tom Considine.

Based on input he has gotten nationally, Considine said, state houses also should be busy with regulations covering telemedicine, insurance business transfers and whether air ambulance subscription services should be regulated as insurance products.

NCOIL, like other trade and member organizations, will continue work on racial justice issues with a special committee it established this summer, Considine added.

Former National Association of Insurance Commissioners President Ray Farmer said its special committee on race will present recommendations on “actionable steps” for insurers and regulators to better serve historically underrepresented groups. “The Committee recommendations, which are expected before the end of 2020 or in early 2021, will set the stage for the NAIC's long-term engagement on the issues of race and diversity,” he said at the Fall National Meeting.

At the American Council of Life Insurers, members will be focused on the Economic Empowerment and Racial Equity Initiative, spokesman Whit Cornman said. The plan targets expanding access to financial protection products in underserved communities and investing in them. It also looks to improve financial education and grow more diverse companies and boards of directors.

NAIC's annuity suitability model that was finalized this year is another key state issue for 2021, said Cornman.

Expect to see states once again take up bills to mandate retroactive business interruption coverage for companies hammered by the pandemic, said Howard Mills, an independent consultant for Deloitte.

Bills written in 2020 requiring insurers to cover pandemic-related losses “don't seem to be going anywhere,” said Mills, a former New York superintendent of insurance. “But that won't stop legislators from introducing them.”

Likewise, legislators are feeling pressure to “do something” about the insurance market in wildfire-prone areas, he said. Insurers said actions to prevent them from making decisions about operating in wildfire areas in California will work against communities' interests.

COVID-related measures will be at the top of the list for America's Health Insurance Plans, CEO Matt Eyles said on an AHIP podcast looking at 2021 issues. The leading issue will be continuing to provide insureds with no-cost diagnostic testing and no-cost vaccinations, he said.

However, Eyles said, health insurers will continue to resist covering all public health surveillance or routine testing of those who work with vulnerable populations. “I don't know that's a role that health insurance should play,” he said.

States also may find new opportunities to improve services provided through the Affordable Care Act, now that an ACA-friendly administration under President Joe Biden will be in Washington, Erik Smith, a partner at public relations firm Seven Letter, said on the podcast.

On the regulatory side, Mills said he expects states to undertake numerous market conduct exams due to most of 2020 work being done remotely for the first time.

These exams “are the best way to determine a consumer is being treated as they should be,” he said, especially for life insurance and annuity products. Marketing and selling them online-only demonstrates “a very dramatic change in the way these products are being sold,” Mills said.

The NAIC will continue to work with companies and regulators dealing with COVID-19 issues, but also will work on sustainability, resilience, mitigation and solutions to climate risk and long-term care insurance concerns, Farmer said. The NAIC also will develop and present in 2021 a multiyear blueprint, State Ahead 2.0, he said.

The coronavirus may stifle new business, as nonvirus issues will likely be put on the back burner, said Wes Bissett, senior counsel, government affairs and state relations, Independent Insurance Agents and Brokers of America.

“COVID will continue to impact legislatures in a significant way and will likely limit the number of bills, the types of issues they will consider,” he said.

State houses also likely will be consumed by bills to amend state election codes after the rancor over the recent presidential election, he said. Redistricting, following the 2020 Census, also will crowd out other bills, he added.

Timothy Darragh is an associate editor, BestWeek. He can be reached at

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