Election Night for Insurance Geeks: 2020 Edition

We are less than a week from a presidential election, with control of Congress in play. Meanwhile, shifts in state legislatures have the potential to change the direction of policymaking and impact the redistricting process. And, 11 gubernatorial elections are on 2020 ballots. Plenty to watch.

That said, for insurance regulatory stakeholders, the top of the ticket in some respects is those insurance commissioners independently elected statewide. Here’s a rundown on that field.
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Overpayments in LTCi

Overpayments in the long-term care insurance industry become more prevalent with each passing year, in concert with the increase of claims paid. Each year, insurers pay out hundreds of thousands of dollars on LTCi policies that are not owed. This not only results in financial loss, but also leads to over-inflated reserves. The problem persists because it is increasingly difficult for companies making the payments to obtain timely information and to identify issues. Many recipients of overpayments spend what they have been paid and have little else to recoup, while others have since died, and their estates/heirs/next of kin can be impossible to locate or deal with.  If companies do not recognize this quickly, the recoupment process can be more complex.

Overpayments occur for a variety of reasons. The most common is simple mistake, miscalculation or clerical error. More complicated scenarios occur when evidence shows that an insured who has been receiving benefits should not have, for a variety of reasons. This latter occurrence, which may or may not include implications of wrongdoing or fraud, creates a complicating factor that may require a remedy at law if the recipient(s) is unwilling to re-pay the company when asked. We have recently seen a trend in overpayments where insureds have passed away, and their spouse/next of kin (or even caregiver) will request/receive benefits not owed.

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Future of Dementia

There is a possibility that the structural and financial costs of caring for elderly Americans will become the issue that overwhelms all others in importance in the coming decades.  Among the myriad issues and problems facing the United States at present, many politicians and policymakers have focused on issues that appear more immediate. As they do, however, the United States grows older and more infirm, all while birth rates fell to 1.73 births per female in 2018 and net immigration has fallen to the lowest levels this decade. Given the aging baby boomer generation, the current scenario has all of the makings of a serious demographic crisis. Among an aging population, dementia has become a very prevalent, very difficult, and very expensive illness that many confront, and so far little progress has been made on a cure.  Indeed, The Economist, in its August 27, 2020 edition, published a special report on dementia that included the following statistics:

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Catching up on the NAIC Data Security Model Law, Part 2

In this hectic year, insurers shouldn’t lose track of the National Association of Insurance Commissioners’ standards for data security. Which states have adopted the NAIC Model Law, and what approach has each state taken? Insurers should give careful consideration to the complex differences from state to state when it comes to data protection and reporting cybersecurity events.

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The Future of Wellness Programs Offered by Long-Term Care Insurers

Companies are searching for solutions to the increasing demand for next-generation elder care solutions. As chronic conditions like Alzheimer’s Disease and other forms of dementia increase in the elder population, the necessity for in-home care rises. Insurers finding new ways to meet these needs face hurdles in state regulations on insurance rebating and the tax qualified status of wellness policies. The insurance community is keeping a close eye on potential overhaul of anti-rebating provisions and support for programs intended to allow those in need of long-term care to remain at home.

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NAIC’s Artificial Intelligence Working Group Adopts Principles for AI

On June 30, the NAIC’s Artificial Intelligence Working Group approved principles that call on insurers and others using AI to take proactive steps to avoid proxy discrimination against protected classes. While the principles will not have the effect of law, they are expected to serve as a road map for future regulatory workstreams.

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Florida Bill Restricting Life Insurers’ Use of Genetic Information Signed by Governor DeSantis

Florida has enacted House Bill 1189, which prohibits life and long-term care insurers from canceling, limiting, or denying coverage or adjusting premium rates based on genetic information.

As we previously reported, the bill amends Florida Statute 627.4301, which currently prohibits health insurers’ use of genetic information for insurance purposes. As amended, the statute removes former carve-outs for life, disability, and long-term care insurers, but certain carve-outs remain, such as those for accident-only policies, hospital indemnity or fixed indemnity policies, dental policies, and vision policies.

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Regulators Continue to Voice Concerns on Credit Scores

Concerns over the use of credit history in the insurance industry have been on regulators’ radar for some time, and economic uncertainty and increasingly widespread calls to address income inequality and systemic racial discrimination have made the issue all the more timely. Amid this backdrop, Washington Insurance Commissioner Mike Kreidler has asked the state legislature to introduce legislation to amend current law in order to discontinue the use of credit-based insurance scores, which he calls unfair and discriminatory.

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