NAMIC Says N.D. Legislative Enactments to Significantly Impact Industry

Legislation enacted by the North Dakota legislature will have “a fundamental and immediate impact” on how insurers conduct business in the state, according to a spokesman from the National Association of Mutual Insurance Companies (NAMIC).

“While approving measures that will be a definite benefit to consumers and insurers, the legislature also enacted an initiative that would seem to make more difficult the task of accurately setting rates,” stated NAMIC State Affairs Manager Joe Thesing.

Among the key developments during the 76-day session, which ended April 23, were proposals to restrict an insurers’ use of loss-history reports and to create a terrorism exclusion to the state’s Standard Fire Policy (SFP).

SB 2186 restricts the use of loss-history reports in personal insurance. Gov. John Hoeven signed the bill into law on April 22 and it will become effective on August 1 of this year. The legislation will prohibit insurers from surcharging, canceling, nonrenewing or declining coverage for personal insurance under the following circumstances:

* An insured’s inquiry into the type or level of coverage or an inquiry into whether a policy will cover a loss;

* An insured’s inquiry regarding coverage for a loss if the insured files no claim;

* A claim if the insurer conducts no investigation of a claim or initiates no other claim activity and the claim does not involve deceptive practices on the part of the insured;

* A claim if the insurer makes no payment to or on behalf of the insured and the claim does not involve deceptive practices on the part of the insured;

* A first-party property claim resulting from wind or hail if the insured had no previous wind or hail claim on that property within the previous five years regardless of the insurer unless the insurer can provide evidence that the insured unreasonably failed to maintain the property and the failure to maintain the property contributed to the loss; or

* A claim if the claim is more than 10 years old, unless the insurer can provide evidence that the insured unreasonably failed to maintain the property and the failure to maintain the property contributed to the loss.

“The industry worked hard with the Department of Insurance to come to agreement on the loss-history bill. We appreciate their interest in crafting an alternative; however, in the end we were unable to support the bill because of its restrictions on the use of loss-history reports,” Thesing stated.

Thesing praised Commissioner Jim Poolman for his support of SB 2094 which creates a terrorism exclusion in the state’s Standard Fire Policy (SFP). “Passage of the terrorism exclusion addresses coverage issues the SFP created for insurers in the age of terrorism,” he said, noting that of the 28 states that have SFP language in their statutes, 12 have adopted the exclusion.

Other enactments important to insurers according to NAMIC include SB 2200 mandating that information contained on motor vehicle event data recorders may not be retrieved by any person other that the registered owner.

The event data recorders or “black boxes,” are computer chips that store information on such things as speed and seat belt use. The bill will require automobile manufacturers to disclose by model year 2007 the presence, capacity and capabilities of these recorders. Persons other than the registered owner will only be able to retrieve the data under limited circumstances such as service and repair or under a court order. At least seven other state legislatures are currently debating this issue.

In other enactments of note:

* House Bill 1500 allows a person who believes he has been a victim of identity theft to have a fraud alert placed on his credit report for a period of 90 days. Such persons may initiate a law enforcement investigation by reporting the identity theft to local authorities.

* SB 2251 requires businesses that own computerized personal data to disclose to consumers when a security breach has occurred involving a consumer’s electronic personal information;

* House Bill 1501 modifies and expands the territorial limits of county mutual insurance companies;

* House Concurrent Resolution 3059 urges Congress to oppose legislation that would impair, erode, and limit the ability of state governments to regulate the business of insurance; and

* Senate Bill 2047 makes multiple changes to provisions of the state’s no-fault system.