Last month’s National Council of Insurance Legislators (NCOIL) Summer Meeting took place in Boston, Massachusetts and was one of their best attended meetings in recent years with 340 registrants (275 in-person) and 66 lawmakers from 29 states. 10 insurance departments were registered and four Commissioners (Idaho, Massachusetts, Mississippi, and Oklahoma) also attended.
As discussed below in more detail, the agenda at this meeting included discussions of several topics in which Zurich has been actively engaged: race in insurance, COVID-19 workers’ compensation claims, remote notarization and ransomware attacks.
Workers’ Compensation Insurance Committee
The Committee heard a presentation titled “Workers Compensation State of the Line Report” from a representative of the National Council on Compensation Insurance (NCCI). He noted that the majority of COVID-19 claims from calendar year 2020 have been filed by healthcare workers and first responders with the average claim costing around $6,000. Despite initial concerns that COVID-19 claims would lead to increased costs to the industry, medical/indemnity costs have moderated and are increasing more in line with the Consumer Price Index (CPI). However, he did caution that many unknowns remain with the long-term effects of COVID-19 that could continue to cause increased costs for the industry.
Special Committee on Race in Insurance Underwriting
Prior to this meeting, the Special Committee held approximately 12 hours of discussions and in the minds of several key lawmakers, had fulfilled its charge to develop a definition of proxy discrimination and to discuss the use of various rating factors. The week before the Summer Meeting, the Special Committee released several draft resolutions for discussion and adoption. All three resolutions were quickly adopted unanimously in one vote with little discussion. The Special Committee was then disbanded with any ongoing issues related to the resolutions handled via the regular committee process.
Set forth below is a short summary of each resolution:
Resolution Regarding the Use of Certain Rating Factors
NCOIL views as contrary to public policy and unfairly discriminatory the use of criminal history information in certain circumstances. It does not view any other factors similarly at this time but notes that certain factors could be discriminatory and that state legislatures may act if fairness and public policy concerns outweigh actuarial justification and predictive value.
Resolution Regarding Insurance Score Transparency
NCOIL finds that greater transparency is needed and assigns its Property & Casualty Insurance Committee the task of developing a model with such work likely beginning at the Annual Meeting in November.
Resolution Regarding the Use of Artificial Intelligence in Underwriting
NCOIL finds the use of artificial intelligence by insurers is increasing and that NCOIL should undertake a review of the use of artificial intelligence in insurance underwriting through its committee process to ensure that such use is not unfairly discriminatory.
Commissioners from Idaho, Mississippi and Oklahoma were the only ones present as most commissioners were still at the NAIC commissioners-only retreat. On matters pertaining to the NAIC’s Special Committee On Race and Insurance, Director Cameron (Idaho) said there are a variety of commissioner opinions, that the Committee’s work has taken much longer than expected as reflected by the Committee’s charges, and that the NAIC needs to move beyond charges and move to collecting data. Unlike at the last NCOIL meeting, there was no pointed back and forth, but instead a summarization of the activities in which both organizations have engaged as well as a desire for both the NAIC and NCOIL to remain engaged on this topic.
During this discussion, Director Cameron (Idaho) announced that another “letter committee” on cyber, artificial intelligence and big data will be formed with bylaw changes coming at the NAIC Summer Meeting in August. He then said that regulators and consumers need to know what is in the “black box” to be able to explain and justify the rates being charged by insurers.
Business Planning Committee & Executive Committee
As part of its membership in the Industry Education Council (IEC), Zurich asked the IEC representative to suggest a topic for a “General Session” during the NCOIL Annual Meeting in November. Zurich suggested the topic: Apprenticeships and the Connection to Diversity & Inclusion. The Committees made no final decision as to whether to include the topic.
The next meeting will be held in Scottsdale, Arizona from November 17-20, 2021.