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PIA to Participate in NAIC Summer Meetings August 14-17

The National Association of Insurance Commissioners (NAIC) will hold its Summer National Meeting from August 14-17 in Seattle addressing a wide range of critical issues...
August 9, 2010

The National Association of Insurance Commissioners (NAIC) will hold its Summer National Meeting from August 14-17 in Seattle addressing a wide range of critical issues affecting producers, including licensing, federal regulation, health insurance and managed care, and natural disaster preparedness. PIA National's Executive Vice President & CEO Len Brevik and Assistant Vice President David Eppstein will attend the meetings. Brevik will build on the conversations he had with commissioners this spring on how PIA can be a partner with NAIC to keep making progress on modernizing state-based insurance regulation. Here is a brief preview of some of the issues at the upcoming NAIC meetings:

Preserving the Role of Agents in Healthcare: PIA will continue to be involved in all the discussions surrounding implementation of the new health care law at the NAIC. One of our key goals for this meeting is to meet with the regulators and work with them to preserve the role of the independent agency system in health insurance delivery. We will also be partnering with our regulators to help them answer any questions they may have about setting up exchanges in their state.

One of the major tasks looming for the states will be the establishment of the new health insurance exchanges. PIA is involved in this process, working with the NAIC as a member of an ad-hoc task force it has formed to examine ways to continue ensuring that agents will continue to be involved in the healthcare market even after the new health insurance exchanges begin operation in 2014. At the same time, PIA has been having discussions with the NAIC focusing on what new Medical Loss Ratio (MLR) definitions will mean to health insurance producers and the way they will be compensated under the new rules.

Section 2718 of the Patient Protection and Affordable Care Act (PPACA) requires certain health insurance issuers to submit to the Secretary of Health and Human Services a report concerning the percentage of total premium revenue that such coverage expends, among other areas, for activities that improve health care quality. PIA members are concerned that "activities that improve health care quality" may be defined so narrowly as to render them meaningless. We believe that Congressional intent was to broadly consider all such activities as "activities that improve health care quality" under the definition of MLRs.

Federal Insurance Office: In addition to health reform, the regulators will be discussing the impact of the new financial reform legislation. We were relieved to see that the newly created federal insurance office will mainly serve as a conduit for gathering information from state regulators and not have broad preemptory powers. We are going to work with the regulators and state legislators to make sure the federal insurance office serves its intended purpose of gathering insurance information at the federal level, without taking away the authority of state regulators.

The Producer Licensing (EX) Task Force will meet on Monday, August 16 to receive updates from the Producer Licensing Coalition, NIPR and various working groups.

PIA is working with the regulators and interested parties to help streamline the business entity process. A main goal for this meeting is to work with the regulators and interested parties on a workable solution to our problems with business entity licensing. We have heard from our members that the lack of uniformity in this area is causing them major problems, particularly if they have to register with the secretary of state as a foreign corporation. We are encouraged by the progress we've been making on this issue and are hopeful this can be resolved quickly.

The Crop Insurance (C) Working Group will meet on August 14 to discuss regulators' concerns with the inevitable preemption of crop insurance adjuster licensing. Congress, through the Risk Management Agency (RMA), could preempt certain states' licensing authority in this area beginning as early as July 1, 2011. The NAIC previously surveyed all states to assess whether they could allow a third-party to test crop adjusters to obtain a license. These results indicated that as many as 14 states could be preempted. Delaware testified that they are working on a regulation to avoid preemption.

The working group will receive an updated report from NAIC staff on states' efforts to avoid federal preemption of crop adjuster licensing. All affected states plan to implement changes so that federal preemption will not occur. Working Group members will receive a report from the RMA on the Crop Adjuster Proficiency Program (CAPP) of the National Crop Insurance Services (NCIS). PIA members have been active in these discussions by assisting our regulators and legislators as they prepare for the new RMA regulations.

Address comments or questions to David Eppstein, Assistant Vice President for Regulatory Affairs.

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