Legislative Report

February 21, 2014 BOSE PUBLIC AFFAIRS GROUP INSURANCE BULLETIN XIV, NUMBER 7

In This Issue

GENERAL ASSEMBLY OVERVIEW

Many committees held their final meeting of the 2014 session this week, while a few others continue to hold hearings on a variety of legislation. The House committee report deadline is Tuesday and the Senate committee report deadline is Thursday. Indiana State Fair guests might soon be able to purchase and consume alcohol at the annual event. Senate Bill 339 repeals a state law prohibiting alcohol sales during the Indiana State Fair. Alcohol is sold on the state fairgrounds at various events during the rest of the year. The State Fair Commission will be in charge of crafting a responsible program of alcohol sales at the fair, including location, hours and more. Fair officials have said the fair would focus on the agricultural link to Indiana wine, beer and spirits and will be contained in a confined area where the alcohol could be consumed. As reported in last week's overview, in a rare move Governor Pence testified in front of the Senate Education Committee in support of House Bill 1004. The proposed legislation passed overwhelmingly by the House created a framework for a preschool pilot program. It would have served about a thousand four-yearolds in five counties, with funding to kick in next year. However, this week the Senate Education Committee approved an amendment that instead sends the issue to an interim study committee this summer. The study will review several facets of pre-k education, including corporate partnership possibilities, parental involvement and preschool standards in other states. House Joint Resolution 3 has hit the end of the road for the 2014 session as the measure received third reading approval in the Senate by a vote of 32-17. This vote ensures that there will not be a ballot question in 2014 whether Indiana should include the definition of marriage as one man and one woman in the constitution. As you may recall, the House voted to remove the second sentence of HJR 3 which would have banned civil unions. The Senate did not add back the second sentence so that language failed to pass either house. The resolution would not be able to go to voters until 2016 at the earliest, since proposed constitutional amendments have to pass two consecutive, separately elected legislatures with the exact same wording.

General Assembly Overview Unclaimed Life Insurance Benefits IDOI Bill Tax Credits Electronic Delivery of Insurance Documents Motor Vehicle Financial Responsibility Pollution Exclusion Lawsuit Lending Workers Comp Abortion Coverage Mandate Biosimilar Drug Bill Welfare Drug Testing

Useful Links House Committee Schedule Senate Committee Schedule Contact Your Legislator Indiana Register Contact Us 111 Monument Circle Suite 2700 Indianapolis, IN 46204 317-684-5400 www.bosepublicaffairs.com

Follow Bose Public Affairs Group on Twitter Get timely updates on the legislative session by following the Bose Public

UNCLAIMED LIFE INSURANCE BENEFITS

SB 220, authored by Sen. Travis Holdman (R), requires insurers to use

Affairs Group on Twitter @BosePAG or visit http://www.twitter.com/bosepag

the SSAs Death Master File or a database as inclusive to help with the accurate administration of unclaimed death benefits for policies and contracts issues or entered into after June 30, 2015. During committee, the AGs office expressed concern that with the prospective language it would only allow the AG to conduct audits on policies issued after June 30, 2015. The AGs office offered a clarifying amendment, which would give them the power to continue conducting audits on all inforce policies. The amendment was rejected and the bill passed out of committee with the prospective language. However, discussions between the author, AGs office and life industry continue. It appears that the bill may be amended back to its original form, i.e., applies to all in-force policies and contracts.

IDOI BILL
HB 1206, authored by House Insurance Chairman Matt Lehman (R), does the following: (1) removes a requirement for life insurers to submit individual investments to the Department of Insurance; (2) removes a requirement that a foreign or alien insurer submit an application for admission to do business in Indiana in duplicate; (3) changes from March 15 to July 1 of each year the due date for certain insurance holding company filings; (4) adopts ORSA; (5) repeals a provision requiring the Commissioner to examine and publish a foreign or alien insurers annual condensed statement of assets and liabilities; and (6) specifies requirements for service contracts. The bill was heard in Senate Insurance Committee yesterday and was amended in committee to include (1) removal of IC 27-1-1316(c) regarding the requirement to stamp envelope if residential policy if coverage has been reduced, restricted or removed; (2) a $2,500 registration fee for captive insurers doing business in Indiana; (3) clarifying language regarding service contracts. As amended, the bill passed out of committee 8-1.

TAX CREDITS LIKELY HEADED TO CONFERENCE COMMITTEE

SB 367, originally filed as a property tax bill, was amended late in the Senate committee process and now includes a sunset on numerous tax credits; including, a sunset of the following: Indiana Life and Health Guaranty Association Tax Credit (12/31/17), Indiana Insurance Guaranty Association Tax Credit (12/31/17) and the Indiana Comprehensive Health Insurance Association Tax Credit (1/1/17). A repeal of these credits will certainly have a negative financial impact on insurers that have already paid assessments and that have assessments coming in the future. The bill was heard in Ways and Means on Tuesday morning. At the start of the committee hearing, Chairman Brown indicated he was going to remove all the credit sunsets from the bill. Currently, the bill still remains in Ways and Means and the sunsets have not been

removed from the bill. The bill is scheduled to be heard again on Monday. As a result of Chairman Browns intention to remove the credit sunsets, Sen. Hershman (Chair of the Senate Tax & Fiscal Committee and author of SB 367), placed all the credit sunsets in HB 1020 with a revised sunset date of 1/1/20. HB 1020 passed out of Senate Tax & Fiscal while the above mentioned Ways and Means was going one. HB 1020 was engrossed on second reading in the Senate yesterday and will be on third reading next week. Were told indiscussions with key leaders that this language is not likely to survive as they understand the substantial negative effect of allowing these credits and offsets to expire but were working closely with legislators to make sure that happens.

ELECTRONIC DELIVERY OF INSURANCE NOTICES AND DOCUMENTS

HB 1058 (Rep. Peggy Mayfield) provides for the electronic delivery of insurance notices and documents instead of other modes of delivery otherwise required for such notices and documents. The bill requires a recipient's consent to electronic delivery and a method to withdraw consent. It also includes provisions regarding electronic posting of documents on an insurers website. The bill passed out of the Senate Insurance Committee unanimously on Thursday.

MOTOR VEHICLE FINANCIAL RESPONSIBILITY

HB 1059 (Rep. Matt Lehman) makes various changes to the motor vehicle financial responsibility law, including the: (1) definition of "registration" to include the license plate issued in connection with the registration of a vehicle; (2) requirement of proof of financial responsibility and reinstatement fees; (3) suspension of a registration as a consequence of operation of the vehicle without financial responsibility in effect; and (4) requirement of proof of future financial responsibility for five years related to operating a vehicle without financial responsibility in effect. The introduced version of this bill was prepared by the interim study committee on insurance. The bill was heard on Tuesday in the Senate Homeland Security, Transportation, and Veterans Affairs Committee and passed by a vote of 6-0.

POLLUTION EXCLUSION
HB 1241, authored by Rep. Martin Carbaugh (R), is a resurrection of last sessions HB 1269, which clarifies when environmental coverage is excluded from a commercial general liability insurance policy. Amendments were adopted on second reading in the House which include additional consumer notification provisions as well as

language that would apply the bill prospectively. The bill is scheduled for hearing next Thursday (2/27) in the Senate Insurance Committee.

LAWSUIT LENDING
HB 1205, authored by House Chairman Matt Lehman (R), regulates the practice of lawsuit lending subject to the jurisdiction of the Indiana Department of Insurance. It caps the interest rate at 38%. The bill has been removed from the Senate Civil Law Committee schedule and the author may be looking for another home to advance the bill.

WORKERS COMP
SB 294 (an encore to HEA 1320 from last year) contains more restrictive language relative to repackaged drugs, clarification with respect to the definition of a medical service provider, and prohibition of double billing for implants. The bill passed out of the House Employment and Labor committee this week. It was then amended on the House floor by Rep. Lehman to remove language requiring company officers to be covered by workers comp. As amended, the bill was engrossed on second reading.

ABORTION BILL AMENDED, MOVES FORWARD

A bill requiring that abortion coverage is offered only as a separate rider to a major medical policy was heard in the Senate Insurance Committee Thursday and amended to accommodate insurer compliance timeframe. HB 1123 mandates that abortion coverage be offered as an election to a health plan and not a part of essential coverage. The effective date is July 1, 2014 for the law and as it passed the House the bill required that plans renewed on or after June 30, 2014 reflect the new offering mandate. Some insurers were concerned this timeframe was too aggressive to accommodate the system updates required to implement the policy. The committee changed the effective date for compliance to plans offered on or after January 1, 2015.

BIOSIMILAR BILL PASSES HOUSE COMMITTEE

A biosimilar substitution bill that has been historically controversial passed the House Public Health Committee 11-0 on Wednesday. SB 262 establishes a process by which a pharmacist could substitute a brand name drug for a biosimilar. The substitution is limited to drugs the FDA has determined are interchangeable and can only occur if a prescriber permits substitution on the prescription. The pharmacist must also notify the physician of the substitution within five days.

The bill will be on the House floor for amendment and final vote next week. No changes were made in the House committee so if none are made on the floor the bill will go straight to the governor.

WELFARE DRUG TESTING BILL SCALED BACK

A bill placing limits on benefits for people receiving TANF benefits was scaled back in the Senate this past week. HB 1351 originally required FSSA to administer a drug testing program and curb benefits for those who test positive for drugs. A similar bill nearly passed in 2013 but was derailed in the late hours of the final night of the session in the Senate. This week the bill was watered down and drug testing requirements under the bill as currently written will apply only to those who have a misdemeanor drug conviction in the past ten years. They will be required to take a drug test upon qualifying for benefits and annually as they continue in the program. Democratic Senators continue to oppose the measure; the bill now moves to the Senate for further amendment.

For more information

Trent Hahn tfhahn@bosepublicaffairs.com Mike OBrien mobrien@bosepublicaffairs.com Telephone: 317/684-5400 Fax: 317/684-5432