The National Association of Insurance Commissioners (NAIC) is likely to adopt several changes to their Unfair Trade Practices Model Law soon to essentially modernize their recommended rebating rules for states. The changes they are likely to make include the following:
- Allowing insurers and agents to provide value-added products and services at no or reduced cost which are not specified in the insurance policy provided they are (1) relate to the insurance coverage (2) are primarily designed to satisfy certain permitted purposes (mitigate loss, reduce claims, provide education about risk, etc. and (3) are reasonable in comparison with the insurance premium. Ohio Department of Insurance Bulletin 2019-04 currently allows this for insurance companies, but not for agents.
- The dollar threshold that would be permissible to spend for commercial clients for meals, gifts, services or for a charitable contribution made on behalf of a customer would not be a specified dollar amount but rather an amount that is “reasonable in comparison to the premium”. A drafting note suggests that states may want to consider a limit for commercial or institutional customers. ODI Bulletin 2019-05 currently allows for items and meals up to $50 per year. Charitable donations are not addressed in this bulletin.
- On the personal lines side, the NAIC language suggests meals, gifts, services or a charitable contribution could made on behalf of a customer as long as the cost does not exceed an amount determined to be reasonable by the insurance commissioner per policy per year. A drafting note suggests that if a state wishes to limit this to a stated monetary limit, an appropriate limit to consider is the lesser of 5% of the premium or $250. ODI Bulletin 2019-05 currently allows for items and meals up to $50 per year. Charitable donations are not addressed in this bulletin.
What This Means for Ohio
The changes likely to come soon at the national level present a great opportunity to modernize Ohio’s laws. OIA is currently reviewing the NAIC proposed changes with other Ohio insurance industry groups. In order to adopt the national changes in Ohio, legislation needs passed. OIA will communicate developments on this initiative as they occur.
Questions or comments? Reach out to OIA’s Government Affairs Manager Carolyn Mangas.