Assembly Bill 74 (1st Reprint)

State of NevadaDepartment of Business and IndustryDivision of Insurance

Presented by Insurance Commissioner Brett J. Barratt

Brian Sandoval, Governor Terry Johnson, Director

Presentation to the 76th Session of the

Nevada State Legislature

Senate Commerce, Labor & Energy

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Significant Areas

External Review Model Act ( 2, 3, 7-9, 48, 50, 52, 65-67, 69,

70, 79, 80, 88, 91, 92, 94, 101-104, 107, 110, 112-116, 118, 123-127 and 129-132)

Group Health Rate Regulation ( 33, 35, 49 and 65.5)

Long-Term Care Insurance ( 4, 36 and 37)

Annuity & Life Insurance ( 38-42)

Credit – Extraordinary Life Events ( 30-32)

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Other Proposed Legislation Evidence of Insurance ( 53)

Manufactured Home Valuation ( 56, 57)

Electronic Insurance Transactions ( 1, 10, 11, 20, 29, 44-47, 59, 60, 121 and 122)

Service Contracts ( 54, 55)

Captive Insurers ( 63, 64)

Third-Party Administrators ( 9.5)

Clean-up and Clarification ( 3, 5, 6, 12, 13-26, 34, 43, 51, 58, 61, 68, 119, 120 and 128)

Proposed Amendments ( 12, 33, 56, 57, 65, 115, 118)

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External Review Model Act (Chapter 223, 287, 422, 616, 679B, 680C, 683A, 689, and 695) ( 2, 3, 7-9, 48, 50, 52,

65-67, 69, 70, 79, 80, 88, 91, 92, 94, 101-104, 107, 110, 112-116, 118, 123-127 and 129-132)

Requires health plans to comply with the federal external review process mandated by the Affordable Care Act (ACA)

Adopts NAIC’s Uniform External Review Model Act

In instances in which current Nevada law exceeded Model Act provisions, the Nevada law was maintained

Applies to all fully insured health plans and PEBP

Establishes Conformity with National Standards

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Group Health Rate Regulation (NRS 686B.010, 686B.030, 687B.120, 689B.026, and 695C.180) ( 33, 35, 49, and 65.5)

Adds Rate and Form Review Process Consumer Protections

Adds rate review authority over PPO small

group health insurance products

Establishes an effective rate review process

for small group products

Originally contemplated no approval

authority over large employer HMO and

PPO plans. Now eliminating Amendment

#6 to Section 65.5 to maintain jurisdiction

over large employer HMO plans.

Health plans issued through associations

are subject to policy form review

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Long-Term Care Insurance (NRS 681A.040,

Chapter 681A and 688A of NRS) ( 4, 36 and 37)

Allows for the marketing of long-term care

insurance bundled with certain other products

Annuities Life insurance

Preserves consumer protections for each

separate product

Consumer and Business Friendly

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Annuity & Life Insurance (Chapter 688A of NRS) ( 38-42)

Aligns Nevada’s laws with national standards set by the Interstate Insurance Product Regulation Compact (AB 23)

Clarifies that the 10-day review and return period applies to annuities

Provides a 30-day review period upon purchasing a replacement annuity contract or life insurance policy

Promotes the uniform application of nonforfeiture laws applicable to annuities

Strengthens consumer protections regarding minimum nonforfeiture values that must be provided under an annuity contract upon death or surrender

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Credit – Extraordinary Life Events (Chapter 686A of NRS) ( 30-32)

Nevada’s unemployment and home foreclosure rates are ranked as some of the highest in the Nation

Addresses the use of credit information in insurance underwriting and rating when a consumer’s credit is adversely affected by extraordinary life events

Follows National Conference of Insurance Legislators (NCOIL) credit scoring model act

Adds Consumer Protections Responding to Today’s

Environment

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Credit – Extraordinary Life Events (Chapter 686A of NRS) ( 30-32)

Provides reasonable exceptions from the use of credit

information in underwriting or rating if adversely

impacted by certain catastrophic events

Event declared by the federal or state government

Serious illness or injury to self or family member

Death of spouse, child or parent

Divorce

Identity theft

Temporary involuntary unemployment

Military overseas deployment

Other events as determined by the insurer

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Evidence of Insurance (NRS 690B.023) ( 53)

Allows for the issuance of fleet evidence of insurance cards

The vehicle must be covered under a fleet policy written on an “any auto” or “blanket policy” basis

Consistent with current industry practices throughout the nation

Business Friendly

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Manufactured Home Valuation (Chapter 691A of NRS) ( 56 and 57)

Enables the Commissioner to adopt necessary related regulations

Adds “manufactured home” to the provisions governing coverage of a “mobile home”

Requires an insurer to offer an insured the option to purchase replacement value

property coverage on a home manufactured within the preceding 15 years, including

reasonable costs for:

Debris removal

Cost to transport the home

Setup cost of the replacement home

Insured has the option of accepting the offer or requesting lesser or restricted

coverage for a lower premium

Great Consumer Protections

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Electronic Insurance Transactions (Chapters 679B, 683A, 684A, 689, 692B, and 697) ( 1, 10, 11, 20, 29, 44-47,

59, 60, 121 and 122)

Enables a faster settlement process by clarifying that claims practices are included under the Commissioner’s existing authority

to adopt regulations regarding electronic transactions

Authorized lines of insurance (NRS 679B.136)

Surplus lines (NRS 685A.210)

Facilitates electronic submission of fingerprints with applications to sell, solicit or negotiate insurance

Fingerprints are submitted to the Central Repository for Nevada Records of Criminal History for submission to the Federal Bureau of Investigation

Background check is performed

Promotes Efficiency

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Service Contracts (Chapter 690C of NRS) ( 54, 55)

Limits the required financial security to obtain or retain a service contract license from three to two options:

Maintain a contractual liability insurance policy insuring each service contract’s obligations

The company or its parent must maintain a net worth or stockholder equity of $100 million

Protects Consumers from Companies that are Financially

Unsound or Conduct Business Contrary to Law

Allows the Commissioner to suspend, limit or revoke a service

contract provider’s certificate of registration for statute or regulation

violations or conducting business in an unsuitable manner

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Captive Insurers (Chapter 694C of NRS) ( 63, 64)

Clarifies the process used by captive insurers to pay dividends from their capital and/or surplus and the determination of an insurer’s surplus adequacy

Specifies the penalties for material false statements and failure to file the annual reportC

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Third-Party Administration (NRS Chapter 683.025) ( 9.5)

Business Friendly

Allows an insurer to administer claims on behalf of its Nevada licensed affiliates without requiring a separate

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Continuous Care Coverage Clarifies the definition to be a policy issued jointly with a

health policy by insurers covering the same employer. Clarifies producer licensing requirements to market continuous care. (NRS 681A.022) ( 3,12)

Qualified Actuary Updates the definition in accordance with the American Academy of Actuaries’ standards; limits the qualified actuary’s liability

(NRS 681B.200, 681B.250) ( 5,6)

Producer Lines of Authority Adopts additional portions of the NAIC Uniform Licensing Standards Model Act (NRS 683A.261) ( 12)

Adjuster Licensing Eliminates residency requirements for adjusters in compliance with the U.S. District Court decision Reitz v. Kipper, 674 F. Supp. 2d 1194 (2009) (Chapter 684A of NRS) ( 13-26)

Insurance Guaranty Association Clarifies the definition of an association member as an insurer authorized to transact insurance in Nevada (NRS 687A.037) ( 34)

Viatical Settlement Adds the word “provider” as it applies to proof of required financial responsibility, which was inadvertently omitted from 2009 Legislative Session amendments (NRS 688C.200) ( 43)

Clean-up and Clarification ( 3, 5, 6, 12, 13-26, 34, 43)

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Clean-up and Clarification ( 51, 58, 61, 68, 119, 120 and 128)

Small Employer Health Insurance Defines employee leasing company and includes leasing

company employees as eligible under small employer health plans (NRS 689C) ( 51)

Title Insurance Countersignature Amends the surety bond template countersignature blank by

eliminating the discriminating restriction of “resident” to comply with Council of Insurance Agents &

Brokers v. Molasky-Arman, 522 F.3d 295 (9th Cir. 2008) (NRS 692A.1041) ( 58)

Holding Companies Adopts additional changes from model law (Chapter 692C of NRS) ( 61)

Risk Retention Groups In compliance with the Liability Risk Retention Act of 1986, reinforces

the restriction that only RRG owners may be members and insureds of an RRG (NRS 695E.110) ( 68)

Medical Discount Plans Changes annual registration renewal date from the anniversary date to a

standard date of March 1 and allows for consistent enforcement of the statute by removing the cap on

aggregate fines for similar violations (Chapter 695H of NRS) ( 119, 120)

Employee Leasing Companies Reverses change made in the 2007 Legislative Session regarding the definition of an employer for purposes of ERISA pursuant to Payroll Solutions Group; Limited Inc., et al. v. Molasky-Arman, 2010 WL 3167071 (D.Nev.); Molasky-Arman v. Payroll Solutions Group; Limited Inc., et al., Nevada Supreme Court, Case No. 50678 (Non-published Order of Reversal and Remand issued February 16, 2010). (NRS 616B.691) ( 128)

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Proposed Amendments

External Review Restores NRS 683A.373 language regarding an

annual list of independent review organizations. This language was based

upon NAIC Uniform External Review Model revisions and was inadvertently

omitted by Amendment No. 442

Continuous Care Coverage Clarifies licensing requirements to sell,

solicit or negotiate continuous care coverage (NRS 683A.367) ( 12.5)

Manufactured Homes Allows insurers to set reasonable policy limits for mandatory replacement value offer of coverage on manufactured or mobile homes (NRS 691A.020) ( 56, 57)

Captive Insurers Adds language to enable Nevada to become more competitive as a “single-parent” captive insurance domicile by eliminating regulatory examinations every three years. (NRS 694C.210, 694C.400, 694C.410)

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Proposed Amendments

Consistency in Regulation and Terms

Moves credit accident and health insurance premium rate regulation

from NRS Chapter 686B to Chapter 690A for consistent treatment of all

lines of consumer credit insurance ( 33)

Corrects the large group employer definition to reflect Nevada’s statutes

rather than the federal Affordable Care Act (ACA) definition (NRS

689C.095) ( 33 and 65.5)

Restores the proper term “adverse determination” in NRS Chapter 695G

( 115)

Replaces the term “managed care organization” with “health carrier” for

correct and consistent use of the terms within NRS Chapter 695G ( 118)

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