Industry News & Updates
Harrisburg, PA - Insurance Commissioner Jessica Altman today commended Congress for passing a pro-consumer amendment concerning air ambulance services, as part of the Federal Aviation Administration (FAA) re-authorization bill.
“This bill includes language establishing an advisory committee to make recommendations for a rule-making at the federal level that would provide more consumer protection for people who use air ambulance services,” Altman said. “This proposal would bring greater transparency to the air ambulance services invoices, which I believe is a good first step in helping protect consumers from sometimes huge balance bills they receive when they use air ambulance services.”
The advisory committee is to make recommendations for a rule-making to require air ambulance operators to clearly disclose charges for air transportation services separately from charges for non-air transportation medical services provided while onboard an aircraft, and to provide other consumer protections for customers of air ambulance operators. The committee will include the federal Secretary of Transportation as well as representatives of other relevant federal agencies, and representatives of the air ambulance industry.
“Significantly, this committee will also include a state insurance regulator, a representative of a health insurer, and a representative of a consumer group, making certain the voices of consumers and insurers who pay these bills, and state regulators who deal with health insurance billing issues daily, are heard when any federal rule-making on protecting consumers is written,” Altman said.
Altman said the bill does not specify what consumer protections should be in the federal rule, but includes specific references to allowing states to refer allegations of unfair or deceptive practices or unfair methods of competition by air ambulance operators to the federal Secretary of Transportation. Altman noted she has heard from consumers and state legislators about the problem of air ambulances not affiliated with a hospital and not in an insurer’s network.
“Air ambulances, by their very nature, are transporting a patient in an emergency situation. The consumer often has no choice over whether they are transported by air ambulance, or what air ambulance service is used to get them or their loved one to a facility that can provide the care needed as quickly as possible. Consumers are often faced with a balance bill from the air ambulance service, with these bills typically running into the tens of thousands of dollars. These bills can be financially devastating for consumers and their families, who are often already dealing with catastrophic events and significant health care needs,” Altman said.
Examples of huge balance bills consumers reported to the Insurance Department after using air ambulance services include a patient involved in a car crash that rendered this person unconscious. The individual, while unconscious, was flown by air ambulance to a trauma center. His insurer characterized the situation as “not life threatening,” and consequently the individual, who had no say in this transport, had a $40,000 bill.
In another situation, parents reported that their son suddenly became ill, and was diagnosed with a large brain tumor. He was life-flighted to another hospital and underwent surgery. The parents were told had they arrived a few hours later their son would have died. The couple’s insurer paid $10,675 of a $47,759 bill because the air ambulance service was out-of-network, and the parents were left with a $37,083 balance bill.
While she views the advisory committee language included in the FAA Re-authorization bill as a positive step, Altman urged Congress to permit states to regulate air ambulance services. This regulation is now pre-empted by the federal Airline Deregulation Act of 1978. The National Association of Insurance Commissioners supports giving states this authority.
“We must find a way to protect consumers from experiencing these crippling bills at such vulnerable times in their lives. And, as we work to contain the cost of health care, air ambulances must not be overlooked. These vital services save lives but must be affordable to the consumers who need them,” Altman said.
STANFORD, Calif. (Oct. 11, 2018) — This week in Silicon Valley state insurance regulators met with entrepreneurs and technology experts to explore developments in autonomous vehicles and cybersecurity, two very different challenges for the insurance sector. The thought-leaders first met Tuesday, Oct. 9 in Santa Clara for demonstrations and discussions of autonomous vehicles. Then, on Wednesday, Oct. 10, the group made its way to Stanford University for a forum on cybersecurity.
"Innovations in technology and other industries are injecting exciting ideas into the insurance marketplace," said Eric A. Cioppa, NAIC President-Elect and Maine Insurance Superintendent. "It is incumbent upon those of us who supervise the industry that we encourage the new ideas that fuel progress while keeping our pledge to the consumers we protect."
The Silicon Valley events follow closely on the heels of InsureTech Connect, the largest conference of its kind to focus on technology innovation in insurance. More than 50 insurance regulators attended the two-day forum. The NAIC convened a session bringing entrepreneurs and regulators together to discuss paths to market.
"The NAIC is committed to facilitating collaboration among regulators, industry and insurance innovators to effectively regulate the evolving insurance marketplace," said Andy Beal, NAIC COO and CLO. "These events improve everyone’s ability to understand the risks and opportunities these exciting technologies bring."
In 2017 the NAIC released a three-year strategic plan State Ahead, an ambitious blueprint to modernize its technology platforms and provide new and improved resources for regulators. State Ahead addresses core data architecture, information technology infrastructure, training, culture and additional expertise to increase the state insurance regulatory system’s analytic and processing abilities.
"We’re improving the state insurance regulators’ tool kit," said NAIC CEO Mike Consedine. "And while infrastructure and expertise improve, speaking with the idea-makers and ground-breakers gives us a head start in understanding and supervising the industry’s adoption of the next big idea that comes along."
The Silicon Valley events are part of a series of forums and symposiums organized by the NAIC’s Center for Insurance Policy and Research (CIPR) to highlight and advance the thought-leadership role of state insurance regulators. Information about upcoming NAIC events is available at https://meetings.naic.org.
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Early insurance industry estimates of Hurricane Michael’s destruction put the insured damage as high as $8 billion—below the $10.5 billion in Florida losses from last year’s Hurricane Irma. The projection was made by Boston-based Karen Clark & Co. Officials say that nearly half of the estimated losses, which include insured wind and storm surge damage to residential, commercial and industrial properties and automobiles, will come from the two Florida counties of Bay and Gulf. The estimate does not include policies from the National Flood Insurance Program (NFIP). Initial estimates from the Property Casualty Insurers Association of America (PCI) were between $2 billion to $4.5 billion, which also excluded NFIP policies. Figures from PCI estimated residential losses of $1.5 billion to $3 billion, with projected commercial losses ranging from $500 million to $1 billion. A.M. Best said it does not anticipate many rating actions related to Hurricane Michael but will be monitoring the aftermath closely. Palm Beach Post 10/11/2018
Written by Curt Schroder, President, Pennsylvania Coalition for Civil Justice Reform
Every business in Pennsylvania should be paying close attention to the recent regulations put forth by the Pennsylvania Attorney General. These regulations attempt to create state anti-trust enforcement through regulation. The problem is that Pennsylvania law does not contain an anti-trust statute and therefore the Attorney General is not empowered to enact such broad, sweeping regulations!
Published August 11, 2018, the proposed rulemakingventures well beyond the scope of authority provided byPennsylvania’s Unfair Trade Practices/Consumer Protection Act. The terms and language in the proposed regulations are themselves so vague and open ended that the Attorney General would have virtually unlimited power and authority over commercial transactions should these regulations be adopted. Perhaps even more concerning is that under the “private action” provisions of the statute, individuals would be able to bring civil lawsuits under the new anti-trust regulations, making this a bonanza for plaintiffs’ attorneys seeking to sue Pennsylvania businesses!
Section 311.3 “General provisions – unfair market trade practices” attempts to accomplish through regulation what advocates have never been able to accomplish through statute, namely, enacting a state anti-trust act. This section enumerates a list of unfair market trade practices involving fixing minimum prices, stabilizing prices, allocating marketing territories, monopolization, as well as other practices sought to be prohibited.
Section 311.4 creates a “Catchall” provision which would now include “unfair or deceptive conduct.” “Unfair Conduct” is defined in the proposed regs as a method, act or practice …. which violates public policy as established by “any statute, the common law, or otherwise within at least the penumbra of any common law, statutory, or other concept of unfairness; which is unscrupulous, oppressive or unconscionable; or which causes substantial injury to a victim.” This overly expansive definition would give the Attorney General and his trial lawyer allies carte blanche to determine what is unfair by arguing that a certain activity falls within the “penumbra” of any other concept of unfairness!
In addition, Section 311.5 of the proposed regulations states that the enumeration of the unfair methods of competition and unfair or deceptive practices under Section 2(4) of the act are not exhaustive! The very existence of a “catch-all” provision in the act demonstrates that the enumerated methods are in fact exhaustive. Moreover, the proposed regulations combine this unwarranted and extreme interpretation of the Consumer Protection Law with a vast expansion of the Bureau of Consumer Protection’s subpoena power. Such unfettered powers will be ripe for abuse, inflicting significant costs and disruption on businesses.
Written by Vincent Philips, President, Phillips Associates
This week, the House of Representatives resumes work after its summer recess. The Senate returns September 24.
Rep. Tim Briggs (D-Montgomery) is the new Minority Chair of the House Health Committee. He replaced former Rep. Flo Fabrizio (D-Erie) who passed away over the summer. Should you wish to reach Rep. Briggs about a legislative matter, he is found at email@example.com, 717-705-7011
On September 18, the Senate Veterans Affairs & Emergency Preparedness Committee is holding a voting meeting on Senate Bill 1131 sponsored by Senate Minority Leader Jay Costa (D-Allegheny). SB 1131 creates a state-run insurance mechanism to deal with landslides and is structured somewhat similar to mine subsidence insurance. Licensed insurance agents may be utilized in placing coverage.
The House has three active insurance bills on its calendar: House Bill 1286 (Metzgar-R-Bedford) on a punitive damages study of medical malpractice punitive liability (MCARE); Senate Bill 257 (Ward-R-Westmoreland) allowing dentists to be paid directly by insurance carriers; and Senate Bill 373 (Eichelberger-R-Blair) establishing a uniform health insurance claim form.
A fourth bill is technically on the House calendar. House Bill 1576(Pickett-R-Bradford) establishing a limited travel insurance line of authority but is moot give enactment of Senate Bill 630 (Reschenthaler-R-Washington/Allegheny) as Act 26 of 2018.
Written by Ron Gallagher, President, PAMIC
The Insurance Department requested PAMIC’s help in jump-starting the movement of SB 1205 sponsored by Senator Laughlin (R, Erie). SB 1205 is the industry agreed upon language to the NAIC’s model law dealing Corporate Governance Annual Disclosures. The bill currently sits in the Senate Banking and Insurance Committee.
On September 11, 2018, a memo from PAMIC was sent to the Leadership of the Banking and Insurance Committee and the Senate asking for the bill to move before the General Assembly session ends. I received feedback from the Senate that there was an agreement to move SB 1205 ASAP (meaning the week of September 18, 2018). However, there are only six legislative days for both the Senate and the House to consider the bill. If the law cannot cross the finish line before this legislative session ends, there will be a strong push during the new session that starts in January 2019 to expedite the bill.
Our arguments for moving the movement of the Bill center around the Department’s accreditation program (this bill is a mandatory requirement for accreditation) and the need for you to prepare your disclosures.
A special shout out to Mike Yeager, President, and CEO, Community Insurance Company for helping on this effort.
The bill requires all carriers to submit their disclosures by June 2020. Besides, there is additional language that constrains the Department from using outside vendors to review the disclosures. These constraints include company size (premium), licensing status, and corporate complexity.
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