H.B. 58 Insurance Code Modifications: transcript

Thank you. Chairman Malloy. So, house Bill 58 is the insurance department bill. It contains a variety of technical amendments, clarifications, and some policy changes. The commissioner and I will hit the highlights of the policy changes. So the, the department goes out and does financial examinations of insurers, and we have some in, and their insurers are supposed to pay for that financial exam. We have occasionally an insurer who, insurer, who refuses to pay for the exam. And so what this bill would allow is the department to take the payment for the exam out of the reserves. That has to be held with the department, and then the insurer would be required to, uh, restore the reserve. Another thing it does is it, uh, streamlines the financial examination process for insurers. So that's a, a streamline, which we, I like that it allows the, uh, department to make rules that will preserve homeowners title insurance records after the agency closes. Imagine that you've bought a piece of property and you go and use a title company, and you assume that that record's there, and then they close. There's, there's no requirement currently, what's gonna happen to the records. So this provides a method that the department can require, uh, that those records be maintained even when the agency closes. And then it raises by $19,000 or 19. Yeah. Thousand dollars is statutory cap on the department's captive division spending authority. This is money that's brought in by license fees from the captives. And it's a, it is actually a growing industry and has been for a number of years in our, in our state. This gives them additional $19,000 to pay for the cost of regulating them. And the commissioner will hit some other highlights.

Thank you. John Pike. Insurance Commissioner. Uh, this bill also would require title insurance agencies and agents to report wire fraud to their insurers and the commissioner. Um, we've had some issues with that, so we're clarifying that requirement. And then maintain $500,000 of coverage for theft of escrow proceeds, again, learning through the school of hard knocks that we need to, uh, up that. Then another item is it would adopt consumer protections on contracts, disclosures, and compensation from the National Association of Insurance Commissioners' Model Law regarding public adjusters. Uh, and those amounts would be because this has been of some interest to people, those limits would be 10% for catastrophic events and 20% for non catastrophic events. It also requires a non-resident title, insurance producer, uh, to deposit escrow funds in a Utah depository institution. We think that's fair. And then it establishes licensing assessment and investment standards for risk retention groups. Thank you, Mr. Chair. That's our representation.

Thanks, Mr. Chair. Um, I like the bill. I think it's, uh, necessary from what I've read and seen, but not being an insurance person. I do have a question reference the, uh, fiscal note under individual and businesses that says that the enactment of legislation will, will cost title insurance providers between 505,000 annually. Um, what does that look like for, for an individual being serviced by one of these companies? Mr. Do you see a major increase?

I, I neglected to say, I'm speaking to the first sub, the first substitute. We took that out. So I appreciate Representative Burton. That piece has been taken out, so, uh, understood. I apologize. I was speaking to the first sub. Excellent. Thank you. I even wrote myself speak to the first sub. I didn't read it. It's okay.

Thank you, Mr. Chair. Thank you, uh, representative Wayne. Thank you, Mr. Chair. I'm just curious, what is the cost when the examination shall pay?

It, it, uh, if I could answer, it really depends a lot. It's, it's like anything else. It it, it's, it depends on the nature, how big the company is and the nature of the investigation. Um, we do a lot of those investigations in house, uh, and then, but there are some, we have to go outside when we need extensive or, or more knowledge base than our own staff has. So that's really what we're talking about. So it could be, you know, as, as little as five or 10,000, but it could also be, you know, in the 50, a hundred thousand dollars or more, depending on the nature of that investigation.

So just so I understand, it is an equivalent to an audit that is happening

Very similar.

And it was an involuntary audit that, that your commission decides need to look into this particular insurance company. And the insurance company then has to pay for that audit themselves. Is that right?

That's correct. We're required to do examinations of all domestic insurance companies every three to five years. We can do them more frequently if needed, if we see a reason, but typically every three to five years

Is one more question. Is that pretty typical of, of industry standards?

Is the It is. Examinee has pay the cost Of that office. This is very typical throughout the 50 United States.

There we go. Can you hear me okay? Yeah, we got you. Go ahead. Thank you. Okay. Uh, good afternoon, honorable Chairman Malloy and the members of the House Business Labor and Commerce Committee. I am Steve McCaffery with the American Association of Public Insurance Adjusters National. I'm the national director located in Washington, DC I'm honored today to speak at one of the best committees in Utah. So I hear, um, I wanna Thank Representative it's a major committee. Thank you, Mr. Chairman. Um, I want to thank, uh, Representative Dunnigan and Commissioner Pike for their collaboration with the industry to put forth changes to the public justice regulation that strengthens consumer protection for your citizens, while preserving the access to a very important service. I'm here today to support House Bill, uh, 58 S one. Thank you.

Thank you, Mr. Chair. Uh, court asked soon. I am, I am, uh, resident of the newly incorporated Ogden Valley and, uh, represent the Utah Land Title Association. We did have a, a great opportunity to work with the Department of Insurance on the title, insurance related pieces of this bill. We worked with them as well on the, some of the substitution, uh, highlights that you see in the first sub. So we, uh, are here to speak in favor and appreciate the department's willingness to work with us and, and, uh, try to get this right, protect the consumers better than they've been protected in the past. Thank you.

Yes. Motion to adopt for substitute of HP 58. Insurance code modifications.

Move that we adopt the first substitute of the first sub HB 58. We adopt The sub. Alright, I move that we have proof. Aly, I recommend that we favorably ac approve, uh, the first sub of, uh, HB 58.

You Mr. Chair. I would honorably request that we adjourn.

Uh, Representative Dunnigan house Bill 58. First substitute and insurance code and modifications. Thank you, Mr. Chairman. Committee members, uh, with me, I have read Stringham from the insurance department. This is the insurance department. Bill contains some clarifications, technical cleanup, and some policy changes. So we'll highlight, um, go through the policy changes. It strengthens the department's ability to recover the cost of a financial exam from an insurer that refuses to pay according to law. It streamlines a financial examination process for insurers. It authorizes the department to make rules that will preserve the homeowner's title. Insurance records after title agency encloses raises by $19,000, a statutory cap on the department's ca uh, captive division spending authority. And it requires title insurance agencies and agents to report wire fraud to the insurers. And they're also need to maintain 500,000 for coverage of theft, uh, of escrow proceeds. And I'll let Mr. Stringham cover a few items.

Reed. Reed Stringham Insurance Department, the National Association of Insurance Commissioners, recently passed a law that regulates public adjusters. Um, and, uh, the bill adopts a lot of those, um, provisions in that model law. They involve consumer protections, contract, uh, requirements, disclosures, and compensation. They act, they, they, it does limit compensation for a public adjuster to, uh, 10% for catastrophic kinds of claims that they adjust. And then 20% recovery on, on, uh, non catastrophic claims. It requires a non-resident title, insurance producer or agency to keep the escrow money that they take in in a Utah depository institution. We think this helps protect Utah, uh, home buyers and Utah consumers by having that escrow money in Utah. And then lastly, it addresses, uh, risk retention groups. Those are, uh, groups that get of, of companies that in involve similar activities. They get together and, and set up a system to, to ensure their, uh, some of their risks. It's a risk retention groups are a creature of federal statute. We've discovered that some of the state laws that govern them we're not consistent with federal law. And so we've gone in and cleaned those, those state laws up.

Thank you, Mr. Chairman. That's our presentation.

Um, good morning. My name's Christopher Ames.

I'm a public insurance adjuster. Okay. Um, in the state of Utah. Um, I've been a licensed insurance adjuster for, uh, 14 years, uh, working for insurance companies, uh, 12 years of that. Um, I became a public adjuster in, uh, about three years ago. Got my license in that side of things and started my own small business. Um, uh, overall, uh, I, I think there's a lot of good things in the bill that, uh, make sense. We, we need good regulations. We need good people, um, helping insureds and representing them in, in, um, good ways. Uh, public adjusters definitely need good, um, regulation. I think. Um, uh, I sent out, I, I apologize. I just recently learned of the bill and, um, tried to catch myself up on it, um, fast as I could. I, I sent out, um, some emails to folks just with, um, uh, some letters about, um, I think a few areas that would need to be, um, addressed in the bill just for some practical, practical aspects to make sure that, um, uh, those of us as public adjusters representing insureds and trying to assist them in the claims process, uh, still are able to do so in, um, in an efficient and, and, um, proper manner. Um, uh, it, my bullet points I sent on are I, I feel, are hopefully a little bit more clear. Um, I'm not great at public speaking, um, but, uh, uh, let me see here. Try to be very quick. Um, uh, the things of support, um, requiring, you know, good clean public adjusting contracts, I do think that that's important. People need to know what they're signing up for. You know, they need to have a good idea of what they're, um, expecting for fees, um, mandating, um, uh, let's see, uh, you know, expense transparency. That's something I try to do on my end when I'm working with, with insureds. Um, let's see. Um, couple of the areas with the bill that, um, uh, just seem problematic. Um, one is, uh, let's see. I'll just try to read this. Um, the consumer, you know what, I'm, I'm just gonna leave it that I sent you guys something in an email. Sorry, I'm just not, not, not, uh, comfortable speaking in the public like this. So, uh,

Senator Ipson. Thank you, Mr. Chair. I make a motion that House Bill 58 insurance code modifications pass this committee with a favorable recommendation, the full Senate Okay.

So thank you, uh, for your time. I, I will say that we have been working with the National Association of Public Adjusters. They've asked for some changes in the bill, which we've made, and they are supportive of the bill. Thank you. Okay.

Thank you Mr. Speaker. I move to circle Our motion is an orderable. May I Speak to that? Please speak to that. Yes. Representative. So The reason I'm circling is we're going to have a tutorial on this bill tomorrow, one 30 in the caucus room. It will be the highlight of your session and so I hope you come and join us. Thank you Mr. Speaker.

Rep Adam Reading Clerk

Thank you Mr. Speaker. This bill's the insurance, uh, department annual bill has a number of technical amendments, sought clarifications and some policy changes. So I'm gonna hit the highlights of the policy changes. It strengthens the department's ability to recover the cost of the financial exam from an insurer who refuses to pay according to law. So by law, they're required to pay for the financial exam. We have some insurers are refusing to. This gives the, the department some additional tools to recover that money that they is owed. It also clarifies and streamlines the financial examination process for insurers. It authorizes the department to make rules that will preserve homeowners title insurance records after a title agency closes and it raises by $19,000 the statutory cap on the department's captive division spending authority. Their fees more than cover that this, the, this, uh, division is growing and they need this additional money for the additional, uh, business and workload that's coming to Utah. It also requires title insurance agency and agents to report wire fraud to their insurers and the commissioner. We've had cases of wire fraud in the title agencies that have not been reported to the commissioner and it also requires those same licensees to maintain $500,000 of coverage for theft and escrow proceeds. It adopts consumer protections on contracts, disclosures, and, and compensation from the NAIC model. Law from public adjusters puts a 10% compensation cap for public adjusters on catastrophic claims, or 20% cap for on non catastrophic claims requires a non-resident tile insurance producer to deposit escrow funds in a Utah deposit to institution instead of a depository institution outside of Utah and establishes licensing assessment and investment standards for risk retention groups. And without Mr. Speaker, I'm open to questions.

Thank you Mr. Speer. I will waive

Uh, this is the, the annual insurance bill that we worked with the insurance agency on. Um, it started out as a committee bill. It had, there had been some modifications, so it's lost that moniker, but the bill contains technical amendments. Clarification. Policy changes to insurance code. Some of the highlights. It strengthens the Depen Department's ability to recover the cost of a financial examination from an insurer that refuses to pay pay according to law. It clarifies and streamlines the financial examination process for insurers. It authorizes the department to make rules. It will preserve homeowners title insurance records. After a title agency closes, it raises by $19,000 the statutory cap on the department captive division spending authority. This ensures the department will be legally able to spend what the legislation appropriates and requires title agencies, insurance agencies, and agents to report wire fraud to their insurers. And the commissioner maintain a $500,000 of coverage for theft of escrow proceeds, proceeds, adopts consumer protections on contracts, disclosures, and compensation for the NAIC model Law on public adjusters and requires a non-residential title insurance producer deposit escrow funds in a Utah depository institution and establishes licensing assessment and investment standards for risk retention groups. With that, I'm open for questions. Thank you for the presentation.

Thank you Mr. President ProAm. I would waive summation move the first substitute house bill 58. Be read a third time And the question is, shall first substitute House bill 58? Be read for a third time. Roll call vote.

Senator Vickers Baldry Lewin Aye. Brammer bus Fillmore Aye. Escamilla Aye. Fillmore Grover. Aye. Harper Aye. Kins Aye. Ipsen Aye. Johnson. Aye. K. Juab McKay Mikel Milner Musselman Owens Pitcher Lum McKay Rebe Sandal Stevenson Stratton. Yes. Bickers miler Aye. Wilson Aye. Winterton President Adams

Thank you Mr. President Pro House Bill 1 72 Aligns, uh,

Yeah, the difference is, uh, this is the insurance bill that comes from Insurance department every year and, um, it, there's a couple of changes in in the sub. It adds a regulatory framework for ambulance membership plans including financial reserving requirements and it also expands, uh, Utah's jurisdiction to include coverage in is issued outside of Utah when 10% or more of the insured are residents of this, of Utah and the dental services were provided in Utah and allows Aden dentist to bill a patient for a non-covered service when the insurer fails to issue a compliant explanation of benefits. So with that, Mr. President, that's, that's the changes I'd like, like I say,

I moved to a delete title and body and adopt the substitute.

All the substitute does is just adjust, uh, the appropriations so as soon as it's adopted it'll switch, it'll flip to yellow. Okay. Thank you. That's the only change. Thank you.

Uh, this bill is the technical corrections and other updates to the insurance code. And it does a number of things. And the substitute was actually an attempt to bring a couple of other insurance related issues that the department had been looking on and looking at in other bills and consolidating them into one bill so we can cut down the number of bills that we're running. Um, you know, it, the bill improves the process for examining insurers. Gives the department more power to collect cost of an examination from an examined insurer. Clarifies the process for hiring experts. Authorize rule making to preserve a title, insurance agency's record after it closes. There are a number of other things within the original version, and then the, the substitute adds a couple of things. It adds a regulatory framework for ambulance membership plans including financial reserve requirements, uh, expands Utah's jurisdiction to include coverage issued outside of Utah when 10% or more of the insured are residents of Utah and the dental services were provided in Utah and allows the dentist to bill a patient for non-covered services when the insurer fails to issue a compliant explanation of benefits. Like I said, this is the one that we typically look at. Uh, it's a usually an interim bill that we try to look at all the insurance issues and, and like I say, the substitute, there was a, there was a bump in the road early on and there was some corrections in the first substitute. The second substitute just was combining a couple of other, uh, insurance issues together to reduce the number of bills. So with that, I'm open for questions.

You Mr. President Pro tem. Happy birthday. I would move that, uh, second substitute house bill 58 passed. And the question is, shall second substitute house bill? 58 pass. Roll call vote.

Senator Vickers. Baldy. Lewin Brammer Aye. Bus? Aye. Colmore Escamia. Aye. Fillmore Aye. Grover Aye. Harper Aye. Kins. Aye. Ipson Johnson Aye. Quan McKay? Aye. Mikel Aye. Milner Musselman Owens pitcher Plum Bie Sandal Stevenson Stratton Vickers Aye. Weiler Wilson Winterton, president Adams

Thank you Mr. President Pro Tem. This bill requires hospitals to do some reporting

Representative Dunnigan. Thank You Mr. Speaker. I move to Concur with the Senate amendments.

That motion is in nor words like to speak to. Yeah, The bill does the change those a couple things. It provides a framework for an ambulance insurance company to operate in your Utah. What this would be is it's insurance company that pays for your ambulance ride and some other types of services. And then it also, uh, expands Utah's jurisdictions to include coverage issues outside of Utah when employees residing in Utah. If the employer outside Utah is more than 10% of their workforce in Utah and then it removes the additional long-term care continuing ed requirement, uh, that we placed in there a few years ago. But the still overall or continuing ed requirement remains in place. Thank you Mr. Speaker.