Category: Regulatory

Regulatory

Policyholders Join Regulators in Casting Light on Shadow Insurance

The issue of “shadow insurance” has been the subject of increasing regulatory and governmental scrutiny. Policyholders are now joining the effort via five class action lawsuits against three different insurance companies, MetLife, AXA Equitable and Lincoln National, for their use of shadow insurance.

Shadow insurance usually refers to an insurance company’s attempt to re-allocate reserve and collateral funds.  The New York State Department of Financial Services describes shadow insurance as follows:

In a typical shadow insurance transaction, an insurance company creates a “captive” insurance subsidiary, …

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Regulatory

New York Amends Controversial Provisions of Replacement Regulation

After almost two decades, the New York Department of Financial Services (DFS) has approved amendments to New York Insurance Regulation 60, which will now permit insurance agents to immediately bind coverage where an existing life insurance policy or annuity contract is being replaced. The Third Amendment to Regulation 60, effective April 21, 2015, will allow insurers to begin underwriting new applicants on an expedited basis and will make buying insurance over the internet more feasible. Insurance agents and insurers will have to decide whether they …

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Regulatory

NY Dept. of Financial Services Requests Detailed Cyber Security Reports From Insurers

Cyber security is clearly one of the highest priorities — if not the top concern — for regulators in 2015. Late last month, the New York Department of Financial Services (DFS) sent more than 160 licensed insurers a New York Insurance Law Section 308 Letter seeking a detailed report regarding their cyber security practices and procedures. The Section 308 Letter — to which there is now less than three weeks to respond — also provides greater insight into the scope of cyber security examinations that …

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Regulatory

NAIC Seeks Comment on Proposed Principles for Effective Cybersecurity Insurance Regulatory Guidance

The NAIC has released a draft of its proposed Principles for Effective Cybersecurity Insurance Regulatory Guidance, developed by the Cybersecurity (EX) Task Force. According to the NAIC, “it has become clear that it is vital for insurance regulators to provide effective cybersecurity guidance regarding the protection of the insurance sector’s data security and infrastructure. The insurance regulators commend insurance companies for conducting a review of their cybersecurity policies, regulations, and guidance with the goal of strengthening the insurance sector’s defense and response to cyber-attacks. …

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Regulatory

Massachusetts Proposes Amendments to Its Annuity Suitability Regulation

Massachusetts has proposed amendments to its Consumer Protection in Annuity Transactions Regulation with the intent of improving consumers’ understanding of annuity products for which recommendations have been made. The newly revised Massachusetts regulation conforms it to the 2010 revisions made by the National Association of Insurance Commissioners (NAIC) to the Suitability in Annuity Transactions Model Regulation. The 2010 revision of this model regulation addressed several issues, including producer training and insurer responsibility for ensuring the suitability of annuity purchases, regardless of whether the insurer …

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Regulatory

New York Department of Financial Services Seeks Stronger Cyber Hacking Defenses From Insurers

On February 4, 2015, Anthem Inc. disclosed that as many as 80 million customers’ sensitive personal information may have been compromised by criminal hackers. As a timely coincidence, but prompted in part by the breach, on February 8, the New York Department of Financial Services (DFS) issued its Report on Cyber Security in the Insurance Sector (DFS Report). DFS also announced its intention to take measures to ensure that insurers have strong cyber hacking defenses in place.

The measures to be taken by DFS …

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Regulatory

Cyber Breaches Prompt Government Action

The recent data breach at health insurer Anthem has sparked new legislation in Connecticut.   During the breach, at least 80 million records were stolen.  According to NBC News, among the 80 million victims, tens of millions of American children had their Social Security numbers, dates of birth, and health care ID numbers stolen.  In response, Connecticut state legislators are proposing legislation that would require health insurance companies to encrypt their customers’ data.   Connecticut’s proposed legislation is similar to recent legislation passed in New Jersey …

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Life, Health, Disability & ERISA / Regulatory

Midland Life Insurance Company Pays $1.3 Million to California Department of Insurance for Improper Annuity Sales

The recent $1.3 million dollar settlement between Midland National Life Insurance Company (“Midland”) and the California Insurance Department – based upon Midland’s inappropriate sales practices in marketing annuities to seniors – is a strong indication that life insurance companies may need to re-examine the various regulations that were issued over the last several years related to annuity suitability. The Midland settlement came after a market conduct examination revealed that the company’s agents had engaged in improper sales and replacement transactions, particularly with senior citizens. In …

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Emerging Issues / Regulatory

California Issues Emergency Regulation on Access to Healthcare Providers

During his second inauguration, California Insurance Commissioner Dave Jones, announced a new emergency regulation relating to access to healthcare providers.  According to an accompanying press release,

The emergency regulation . . .  addresses the problems identified with access to doctors, hospitals, and other medical providers in 2014, as many health insurers reduced their medical provider networks and/or shifted to offering Exclusive Provider Organization (EPO) health insurance products with no out-of-network benefits. Consumers complained of having trouble getting appointments with doctors, traveling long distances to …

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Regulatory

Insurance Doomsday Averted – TRIA Extension Passes Congress

Under the cloud of the tragic terrorist attack in France, the U.S. Congress passed H.R. 26, an extension to the Terrorism Risk Insurance Act (TRIA).  The House passed it overwhelmingly by a vote of 416-5.  The Senate passed it by a vote of 93-4.  This despite a rider which amends Dodd-Frank.

Among its provisions, the bill extends the program for six years and gradually increases the trigger from $100 million to $200 million in increments of $20 million over the course of …

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