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.