2015 legislative priorities

Independent Review Organizations (IROs) for Long-Term Care Insurance Disputes

Z-Draft-0224.1(PDF 27KB) and Z-Draft-0223.1(PDF 18KB)

This bill would create an impartial review process for consumers who have disputes with their long-term care insurers. It would:

  • Allow consumers to take appeals to IROs when long-term care insurers deny, modify, reduce, or terminate coverage or payment for long-term care services.
  • Give people the same IRO appeal rights that they have with health insurance.

The Office of the Insurance Commissioner (OIC) would be required to:

  • Adopt rules to implement the new IRO appeal rights.
  • Certify eligible IROs to hear long-term care appeals and to establish and use a rotational registry system.
  • Develop a fee schedule that IROs would be required to charge long-term care insurers for the reviews.

Insurance Holding Company Act (amended)

This updated model act will become part of the National Association of Insurance Commissioners' (NAIC) accreditation standards starting Jan. 1, 2016. If Washington fails to adopt this act into state law, the OIC will lose accreditation in 2016. The model act:

  • Allows new disclosure regarding enterprise risk and supervisory colleges.
  • Updates the provisions for acquisitions, divestitures and examinations.
  • Updates intercompany agreement requirements between insurers and their affiliates.
  • Updates confidentiality provisions of holding company filings and information.

Credit for Reinsurance Model Act (amended)

This model act would bring our laws up to date with the latest version of NAIC's model act. It has been adopted in 23 states as of August 2014 and will:

  • Provide a process for previously unauthorized reinsurers to become certified reinsurers.
  • Provide an objective methodology to allow reduced reinsurance collateral. Reinsurers must prove they have collateral to guarantee payment of claims.
  • Create the concept of "qualified jurisdiction" where alien reinsurers may be domiciled. Once the NAIC certifies a country as a qualified jurisdiction, reinsurers from that country may apply for certified reinsurer status in the United States, which may include qualifying for reduced collateral requirements.

Standard Valuation and Standard Nonforfeiture Model Act (amended)

Principles-based reserving (PBR) modernizes life insurance reserve requirements. The model act is part of NAIC's accreditation standards and has been adopted by 18 states to date. Principles-based reserving has three components: The Model Standard Law, amended in 2009, the Standard Nonforfeiture Law for Life Insurance, amended in 2012 and the valuation manual, adopted in 2012.

Principles-based reserving:

  • Allows companies to use the actual experience of policyholders rather than a formulaic table when calculating statutory claims reserves (claims liabilities).
  • Gives companies more flexibility.
  • Benefits consumers. As costs are more accurately determined based on experience, the result may be lower costs and innovative products.

Own Risk Solvency Assessment (ORSA) Act

This model act creates a new requirement for insurers that write more than $500 million in premiums or are part of a holding company system with more than $1 billion in group premiums. It requires insurers to adopt a risk assessment within their holding company system to mitigate potential risks that may affect the financial solvency of the insurers. The act requires insurers to report this confidential information to the OIC.

Budget request

The Office of the Insurance Commissioner (OIC) is requesting the authority for five new employees and an additional $926,000 in the agency’s 2015-2017 budget.

  • Two of the employees would review health care provider contracts and the networks that health insurers submit to us for approval. Insurers are building new types of networks of health care providers, with changes in how consumers access services . These networks must be carefully reviewed to meet access standards. Otherwise, consumers might not have access to medically necessary treatments.
  • Three of the employees would help our insurance fraud investigation efforts. We’ve experienced a 50 percent increase in insurance fraud referrals to our office since the last budget cycle. The types of fraud we’re seeing are becoming increasingly sophisticated and result in higher costs to consumers.

Updated 12/04/2014

See also

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