The National Conference of Insurance Legislators is an organization founded with the goal of helping legislators make informed policy decisions. Over the course of three yearly meetings, members of NCOIL, including state legislators, regulators, and stakeholders, evaluate and discuss the nation’s most pressing insurance issues. At 2014’s final meeting, held Nov. 19-23 in San Francisco, a record 99 legislators from 32 states attended.

R Street was well represented in San Francisco, with both myself and Ian Adams, our California director, in attendance.

The major agenda item for R Street was a transportation network company panel on Saturday morning. The panel featured representatives from Uber, the California Department of Insurance, the Property Casualty Insurance Association of America, James River Insurance Co. and the Taxi, Limousine & Paratransit Association.

The consensus position among the insurance-related panelists was that there is no desire to frustrate new technology, but that insurance questions need to be answered in as uniform a manner as possible. For this reason, the panel focused largely on a recently passed California law which is being touted as a model for other states to follow.

“Period one” of the TNC ride, the point from which the TNC app is tuned on until a connection with a fare is made, was of particular concern. Because TNC services are so new, there is not a great deal of actuarial information concerning activity during that period. The representative of the CDI speculated that California’s law may need to undergo revisions, because period one might be more dangerous than the subsequent periods.

The position of the taxi representative was a marked departure from his fellow panelists. He stated emphatically that the period-based construct for insurance liability is unnecessary because, in his view, TNC activity is commercial and should be subject to commercial livery insurance standards.

The sparks that flew during the TNC panel were in stark contrast to many of the more staid, though similarly informative, proceedings. One such panel focused on federal health care insurance exchanges.

Panelists hailed from three states to discuss the varied implementation challenges faced by California, Nevada and Idaho. The different scales of the exchanges were immediately apparent. For instance, California has a 700-person staff and does all of its “navigation” and enrollment plus marketing and “market shaping” in-house. Meanwhile, Idaho functions with a four-person staff responsible for everything from providing consumer information to qualifying insurance companies for inclusion in the exchange.

Not surprisingly, the cost of Idaho’s exchange infrastructure is substantially less than California’s. Per policy, Idaho charges a 1.4 percent fee while California makes an assessment of 4 percent.

In addition to hosting panels, NCOIL also develops model legislation. The major model under consideration by the Property-Casualty Committee for the past three meetings has concerned lawsuit lending practices. What was touted as a compromise model was taken under consideration. That version contained language specifying that transactions are not actually loans. It also included a cap of 45 percent per-year for repayment (hardly a relief, given that a transaction repaid from lawsuit proceeds after a year and a day would carry the equivalent of 90% interest as a fee).

Opposition to the model was based on existing practices that border on unconscionable. A State Farm representative gave several real world examples of actual cases, including a recovery of more than $100,000 where the plaintiff ended up with roughly $100 after  attorney and transaction fees were paid

Ultimately, the “compromise” version failed to be adopted, in a very close vote.

NCOIL model acts require periodic renewal. NCOIL’s credit scoring model was a renewal candidate. Interestingly, the act’s renewal was delayed for further study due to concerns about data mining and other privacy issues that have surfaced since the model was developed and adopted several years ago. A claim that Internet search histories are being used to impact credit scores, while dubious, prompted lawmakers to pause to investigate.

The final foremost concern of the November meeting was about the extent to which international bodies are usurping the regulatory sovereignty of states. Recently, the United States failed to present a unified voice on the topic at an International Association of Insurance Supervisors meeting. There was a great deal of conversation, and even a sense of betrayal at NCOIL, about the Federal Insurance Office voting with the European bloc to close international discussions to stakeholder engagement.

In her presentation to the NCOIL legislators, a representative of the National Association of Insurance Commissioners expressed the position that insurance regulators feel they are fighting a losing battle to avoid the imposition of, essentially, international banking regulation on the insurance industry. Everybody agreed that reigning in the FIO and pursuing a unified “Team USA” approach is going to be necessary to prevent that from happening.

The proposed topics for next year include: insurer ownership of pharmacy benefit managers; telemedicine liability; skyrocketing air ambulance charges; another look at credit scoring; and a fourth bite at the litigation financing apple. For our part, R Street will continue to follow all of these issues closely by attending NCOIL meetings and engaging closely with its participants.

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