While the insurance industry witnessed intense interest in its business at both the state and federal levels in 2009, the upcoming year is expected to continue to present challenges in terms of significant legislative and regulatory activity. Consumer protection interest in life settlements was evident this year in many states and 2010 may see additional states enacting laws to further define required steps in the life settlement process and to prohibit Stranger Originated Life Insurance transactions. Additionally, restrictions on the use of senior designations and consumer disclosures in the life and annuities selling processes were key developments.
From a health insurance perspective, ongoing concern with insurers’ practices related to policy rescissions and post-claims underwriting should continue to result in legislative and regulatory consideration. Also, consumer and patient advocates continued their efforts to expand mandated benefits in 2009, with no apparent sign of a lower intensity level expected for 2010.
The use of credit scoring information should continue to be a “hot” topic in many states in 2010, possibly with a focus on additional restrictions or outright prohibition on its use. One area that may see legislative activity relates to states making sure that insurers provide exceptions in their use of credit information that has been directly influenced by extraordinary life events. These events are generally based on a recent amendment to the National Conference of Insurance Legislators (NCOIL) Credit Scoring Model and include a catastrophic illness or injury; the death of a spouse, child, or parent; temporary loss of employment; divorce; identity theft; and military deployment overseas. States interested in this Model Law’s consumer protection benefits would look to implementing provisions that would require insurers to either consider only credit information that has not been affected by the event or assign a neutral credit score to such data.
With the recent adoption of a Credit Default Insurance Model by the National Conference of Insurance Legislators (NCOIL), states collectively have taken a significant step towards ultimate regulation of credit default swaps. While federal proposals continue in Washington, upcoming state legislative sessions will have the opportunity of evaluation of this latest Model Law.
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