Group Disability Still On Hold For Interstate Compact

The Interstate Insurance Product Regulation Commission (IIPRC) is in the process of developing product standards for individual disability income products. Once product standards are adopted by the Compact, insurers may file that product for approval by the Compact, which then reviews and approves the filing for marketing in all the states that make up the compact (38 at last count).

A compact official told me last week, however, that it will be well into 2012 before the compact begins working up product standards for group disability products. Next up on the Compact’s docket is doing product standards for group life.

See the Compact’s website for further information at http://www.insurancecompact.org/.

AICP New England Chapter Annual Education Day

The New England regional chapter of the Association of Insurance Compliance Professionals (AICP) is holding its annual Education Day next Friday, May 13th at the Marriott Hotel in Windsor, CT. I will be part of a panel discussion on "Life and Health Hot Topics."

Hope to see you there!

4 Biggest Myths About Disability Insurance

I recently saw an interesting little piece on disability insurance on a website that runs some decent insurance industry news and feature pieces.

http://www.insurancenetworking.com/blogs/disability_income_insurance_agents_advisers_myths-27841-1.html?ET=insurancenetworking:e1841:55178a:&st=email

Massachusetts Legislative Session Brings Barrage of Disability Proposals

Massachusetts has been somewhat of a sleeping giant when it comes to group disability regulation. There are few MA laws focused specifically on group disability and the state does not require group disability policy forms to be filed for prior approval.

All that may be changing. Last year, the MA Division of Insurance required disability insurers to respond to a comprehensive state survey regarding insurers’ disability products and their existing books of disability business. The stated intent of the survey was to enable the Division “to understand the market for disability income insurance, and also to evaluate the effectiveness of laws and regulations governing Massachusetts’ marketplace for disability income insurance.”

Now we see that this year’s MA legislative session has brought no fewer than 6 proposals that would impose new requirements or prohibitions on disability products: a ban on discretionary authority provisions (SB 427), a prohibition on LTD offsets for Social Security disability benefits (SB 445), a “mental health parity” type requirement (HB 1147), guidelines on what insurers can require of claimants with regard to the frequency and locale of required medical exams (HB 2038) and a couple gender-based bills (SB 414 and SB 413).

While these proposals must still pass through the legislative review and political process at the MA state house, the flurry of proposal activity nonetheless seems to signal that the giant is stirring.

RI Insurance Regulators Propose New Rule On Trusts

The Rhode Island Insurance Division proposed a new rule last week to regulate the issuance of group policies to RI-based insurance trusts and associations, as is a common practice in the group insurance industry. Proposed Insurance Regulation 117 would require that policies issued by insurers that issue insurance through a RI trust or association must comply with applicable insurance laws of the state where an insured covered under the RI trust or association policy resides. The proposal would also require that forms issued to the RI trust or association include a provision granting regulatory jurisdiction to the regulatory agencies or courts in the states where insureds reside. While the proposal may yet encounter some thorny jurisdictional issues (extraterritoriality, anyone?), the regulation would have pretty significant implications for the continued use of trust vehicles in RI; at a minimum, the proposal seems to indicate that RI insurance regulators may be changing their views on RI trust usage. The rule would apply to individual and group policies issued or renewed on or after June 1, 2011.

Nebraska Proposal Breaks New Ground on Discretionary Authority

One of my resolutions for 2011 was to see if I could go a month without a post on discretionary authority, which has become a favorite topic of mine out here. Well, since January is now behind us (and hopefully with it, any more monster CT snow storms) …. Here goes!

A bill has been introduced in the Nebraska legislature that would adopt the NAIC Model Act prohibiting discretionary clauses. Nothing earth-shaking there. But the bill would make a violation of the proposed new act an “unfair trade practice in the business of insurance,” and thus subject to a financial penalty. While an increasing number of states have been acting on discretionary authority provisions in recent months, this is the first proposal I’m aware of that builds the restriction on discretionary authority provisions into state laws on unfair trade practices. It will be interesting to see where this one goes.

On the Home Front in Connecticut

State legislators across the country are beginning to formulate proposed bills for consideration by their fellow solons. In CT, rising like a phoenix from the ashes, is another proposal to prohibit offsetting LTD benefits by the amount of dependent Social Security payments. There is a similar proposal to bar LTD offsets for pension benefits received. Similar Social Security offset bills were defeated in the last couple CT legislative sessions, though a fairly rigorous disclosure requirement bill was passed. If approved, these offset proposals would result in rising LTD premium costs and probably lead to more employers dropping their LTD programs or passing along more of the cost to employees.

I also see in my local paper (I’ll admit it, I’m a holdout for the black newsprint with my morning coffee) that CT’s newly elected Governor Malloy supports a paid sick leave bill that was defeated in the CT legislature last session. The proposal would require employers to grant employees up to five paid sick days per year. While the duration of the bill’s benefits are not on the same scale as the state-mandated STD programs in CA, HI, NJ, NY, PR and RI, supporters nonetheless claim it would be the first state-mandated sick leave program in the nation.