Agent Broker Coalition Bill Tracking Report
INITIATIVES
The Insurance Agents Coalition introduced two legislative initiatives this year. Both were introduced by Senator Michael Hastings (D-Tinley Park).
SB 659 is an initiative of NAIFA that enables the Department, at the discretion of the Director, to grant up to 4 hours of continuing education credits for active participation in a state or national trade association. SB 659 successfully passed the Senate Insurance Committee on a unanimous vote and on an agreed bill list. It is being held in the Senate because the Department believes they currently have the authority to grant such credit. The Department is in the process of developing and implementing a program whereby the various trade associations can submit their Board and Committee leadership to the Department for appropriate C.E. credit. We are hopeful the Department’s program will be in place this year.
SB 904 is an IIA of Illinois initiative to create a permanent Educational Advisory Council to the Department of Insurance. The legislation creates a 5-member panel that would have a regular and formal advisory role to the Department on various producer licensure continuing education issues. The 5 members of the panel are appointed by the Director, at the recommendation of NAIFA-IL, IIA of Illinois, ISAHU, an educational provider, and an insurance carrier. SB 904 passed the Senate Insurance Committee unanimously and awaits action by the full Senate.
DEPARTMENT
The Department of Insurance has initiated SB 1723, sponsored by Senator Munoz (D-Chicago). The legislation creates the Insurance Industry Innovation Act and enables an individual or corporation to petition a newly created Deputy Director of Innovation at the Department for the purposes of being advised on how to overcome barriers to innovation, including laws and regulations in Illinois. The legislation was extremely problematic as introduced. However, after conversations with industry stakeholders, the Department filed an amendment that relieves several, but not all concerns. We maintain concerns but supports the goal of making Illinois the place where innovative insurance products and services can come to market.
HEALTH
HB 311 and SB 70 were initiated by the Illinois State Medical Society to address network adequacy issues in health insurance plans in Illinois. The legislation places significant burdens of including specialist physicians and surgeons in Networks, where they might not be physically located or willing to participate in a hospital or physician’s group network, better yet a health insurance network. In addition, the legislation places all burden of public and consumer notification of medical provider participation in networks, regardless of which party terminates the contractual agreement between insurers and providers. HB 311 passed the House Insurance: Health and Life Committee with the agreement that the Sponsor, Representative Greg Harris(D-Chicago), would bring an amendment back to the committee that would reflect an agreement between the Illinois State Medical Society and the Illinois Life Insurance Council. We oppose the legislation in support of the health insurance community. However, we support the intent of the Legislation to provide adequate notice to the consumer. SB 70 remains in Senate Insurance Committee.
Representative Laura Fine (D-Glenview), Chairperson of the House Insurance: Health & Life Committee has introduced HB 2624 to create the Health Insurance Rate Review Act. The law creates a 5-member panel independent of the Department of Insurance to review and approve Health Insurance Rates. The industry is highly opposed to any form of rate regulation, including HB 2624.
HB 2959 is also sponsored by Representative Fine to prohibit health insurance companies from excluding an individual from coverage to an individual based on a pre-existing condition.
Both HB 2624 and HB 2959 await action by the House Insurance: Health & Life Committee but have yet to be called. It is widely expected that they will be called on March 28, since the Sponsor is the Committee Chair.
HB 1796 was introduced by Representative Greg Harris (D-Chicago) to impose a 1% tax on all health insurance claims paid for the purpose of funding Medicaid in Illinois. The legislation has been sent to a Sub-committee in the House Appropriations: Human Services Committee and is yet to receive a hearing. The industry is adamantly opposed.
HB 2721 is sponsored by Representative Deb Conroy (D-Villa Park) and creates a health insurance mandate for the coverage of treatments for Pediatric Autoimmune Neuropsychiatric Disorders associated with Streptococcal Infections (PANS/PANDAS). The treatment for this rare reaction to a fever associated with strep-throat is still considered “experimental” although highly successful. The science is still awaiting FDA approval. Therefore, health insurers are forced to oppose the mandate. HB 2721 passed the Insurance: Health & Life Committee by a vote of 14-2-0 and is currently being negotiated by the sponsor and the Life Insurance Council and Illinois State Chamber Health Care Council.
Identical bills were filed in both Chambers to mandate physical therapy coverage for Multiple Sclerosis patients. All parties reached an agreement and SB 193 was amended to mandate “medically necessary preventative treatment” of MS. HB 3223 has not yet been amended with the agreed language and has not yet been called for consideration in the House Insurance: Health & Life Committee.
LIFE
Despite the passage last year of P.A. 99-0893, Illinois State Treasurer Michael Frerichs has initiated HB 302 in an effort to impose mandates on life insurance companies that he was not able to obtain in last year’s legislation. Last year’s law requires life insurance companies to search the Social Security Master Death File and make good faith efforts to identify and locate beneficiaries of life insurance policies, prospectively. However, HB 302 was introduced by Representative Martwick (D-Norridge) and would require companies to pay out lapsed and terminated policies, retroactive to 1996. HB 302 passed the House Consumer Protection Committee by a vote of 3-2 with a promise to negotiate with the Life Insurance Council and return to Committee with an amendment. The Agent/Broker Coalition opposes HB 302 in its current form.
In addition to HB 302, Illinois State Treasurer Frerichs has introduced a package of Unclaimed Property Act legislation.
HB 1808 is sponsored by Representative Evans (D-Chicago) and enables the Treasurer and Department of Revenue to share specific information for the purposes of locating individuals that are owed unclaimed property. We are monitoring the legislation and it awaits action by the House Revenue Committee.
In addition, Treasurer Frerichs has initiated legislation being sponsored by Representative Zalewski (D-Chicago) that completely rewrites the Uniform Unclaimed Property Act. HB 2603was introduced to be reviewed by all interested party and discussed over time. Representative Zalewski has no intention of moving the legislation soon. However, I’m certain by next Spring, the Treasurer will expect all issues to have been raised and addressed so that the legislation could be adopted. There have been 3 revisions to the Uniform Unclaimed Property Act since Illinois first adopted the 1962 version that is still the law in Illinois.
Representative Fine has introduced, allegedly at the request of an insurance agent constituent, legislation that would mandate coverage by a group life policy of an employee that does not meet the current “not actively working” standard for coverage. HB 502 seeks to assign responsibility for coverage an employee that is out on approved administrative leave when an employer changes group life insurance coverage as an employee benefit. We oppose this legislation.
P & C
After years of meetings, the Mandatory Auto Insurance Verification Task Force finally issued a report to the General Assembly with a recommendation for enforcing the Act. The Secretary of State’s office initiated HB 2610, with the support of the insurance industry, to implement a mandatory vehicle insurance verification program. The recommendation is to create a real-time, cloud-based database, whereby the insurer will upload the information upon creation or termination of coverage. The legislation is being sponsored by Representative D’Amico (D-Chicago) and passed out of the Transportation: Vehicles & Safety Committee unanimously and awaits action by the full House.
The Insurance Agents Coalition engaged Representative Winger (R-Wooddale) on legislation that would enable Premium Finance Companies to provide notification, such as renewals and cancellations, via electronic document delivery. HB 3244 was modeled after legislation passed in 2015, that was negotiated by the Insurance Agents Coalition and insurers, and that enables insurance carriers to provide electronic notification of non-renewals and cancellations. However, HB 3244 was poorly crafted. We offered an amendment that appropriately included the producer in any communication between the premium finance company and the consumer as well as exempted the producer from liability. HB 3244 passed the House Insurance: Health & Life Committee unanimously, and awaits a second amendment requested by the Trial Lawyers to clarify the liability exemption.
Agent/Broker
Several bills have been filed this year as a part of the Governor’s intention to reform the justice system in Illinois. A couple of those legislative initiatives include the licensing of individuals with criminal backgrounds, especially juvenile offenders and people with sealed, expunged, or impounded records. Currently, applications for licensure of insurance producers asks if the applicant has ever been convicted of a felony. If the applicant answers “yes”, then the application is typically denied out of hand. Very rarely are exceptions made.
HB 2752 was introduced by Representative Evans (D-Chicago) to specifically address licensure of insurance producers with criminal backgrounds and enable the Director to issue a license with monitoring by the Department under specific circumstances, including a record of rehabilitation. HB 2752 passed the Business and Occupational Licenses Committee by a vote of 6-2-0
Representative Evans has also introduced HB 3822, which addresses the same issues in multiple other licensure Acts in Illinois Statute, excluding the Insurance Code. HB 3822 does not, in its introduced language, address licensure of insurance producers. HB 3822 passed the Judiciary – Criminal Committee by a vote of 9-2-2.
Representative Art Turner (D-Chicago) has introduced HB 3395 that is substantially similar to HB 3822 in that it amends multiple licensure laws, including the code to provide that no consideration shall be given to convictions entered prior to the date of the application, where the applicant has completed any sentence imposed for that conviction, including any period of mandatory supervised release. HB 3822 has not been called for a vote in the Business and Occupational Licenses Committee.
Legislation that we negotiated last Spring with the Community Bankers and Credit Union League is advancing this year. Both HB 759 and SB 692 were introduced as identical measures to clarify that financial institution employees could enroll individuals in and provide administrative functions of group credit life insurance without being licensed under the Insurance Code. Both measures passed out of their respective Committees unanimously and await consideration by the full Chambers of origin.
Taxes
The scariest legislative initiative of 2017 is probably HB 3078, sponsored by Representative Hernandez, an initiative to impose a 1.3% tax on the premiums and fees charged any and all insurance policies. The legislation is assigned to the House Insurance: Property and Casualty Committee, which is yet to hold a hearing, at all.
Regulatory
We have been engaged with the Department on two regulatory initiatives. The first was an initiative of the Insurance Agents Coalition to reform and revise the regulations on Premium Fund Trust Accounts. We took advantage of an initiative of Governor Rauner to eliminate antiquated and overly burdensome regulations. We asked the Department to repeal this Regulations. That request was denied. However, the Department replied with specific direction on what components of the PFTA regulations were necessary, in their ability to be a regulatory entity, and that everything else could be removed. Weprepared draft regulations to the department last month to simplify and streamline the regulation, and we are awaiting a response from the Department. We are confident that it will ultimately dramatically reduce the burdensome regulation regarding Premium Fund Trust Accounts.
The second initiative was introduced by the Department to enable the Department to share currently confidential information, obtained in an investigation, with other government agencies, law enforcement, or criminal justice agency. We expressed concern that the regulation was too broad and vague. We requested the scope of the regulation be limited specifically to criminal activity and specific information that may be shared and what shall remain confidential, in particular, if information was provided by an accused in an effort to be cooperative. The Department is currently reviewing public comments.