California Opens an Investigation into Legality of Affinity Group Discounts

The California Department of Insurance is investigating the legality of discounts offered affinity groups which they claim cause disparities in auto insurance rates that lead to higher rates for lower-income families and communities of color. According to a study conducted by the Department, affinity groups of white-collar occupations and highly skilled jobs receive premium reductions of 1.5% to 25.9%.

The study went on to show affinity group discounts resulted in greater benefits to residents living in ZIP codes with higher incomes and the least benefits to residents of ZIP codes with lower incomes. The data reflected similar relationships between ZIP codes with predominately non-Hispanic white populations and ZIP codes with large minority populations. The discounts often go to groups with higher educational attainment.

A report and hearings by Consumer Watchdog and other consumer groups sparked the Department to conduct the study. The report argued that California’s Proposition 103 does not allow insurers to offer discounts to drivers based on anything other than their driving records. The consumer groups argue that by offering better rates to individuals based on the affinity groups to which they belong, insurers force the poor, under-educated, and minority groups to subsidize the rates of the wealthy. California has already prohibited insurers from using gender as a factor in setting auto rates.

For any questions regarding California’s investigation or any other regulatory compliance concerns, please contact Westmont Associates, Inc.

Maryland’s Data Breach Reporting Law is Effective October 1

Maryland’s data breach reporting law becomes effective on October 1. Recently signed into law by Governor Larry Hogan, the new law adds insurers, nonprofit health service plans, health maintenance organizations, managed care organizations, managed general agents, and third-party administrators to the types of business mandated to report security breaches. The aforementioned licensees will be required to report breaches to the Compliance and Enforcement Unit at the Maryland Insurance Administration.
While the law expands the types of businesses under its scope, the reporting requirements remain the same. Businesses that maintain or license computerized data must conduct a “reasonable and prompt” investigation if the business discovers a potential breach. If the business finds that a misuse of personal information has occurred, or is reasonably likely to occur, the business must notify the affected individuals and the Maryland Insurance Administration of the breach and potential misuse of information.
On August 29, 2019, Maryland released Bulletin 19-14, further clarifying its position.
For more questions about Maryland data breach reporting requirements, or any inquiries regarding data security concerns, please contact Westmont Associates, Inc.


South Carolina Issues Hurricane Assistance Bulletin

In the aftermath of Hurricane Dorian, the South Carolina Department of Insurance issued Bulletin 2019-08 on September 6, 2019, requiring additional assistance from all licensed entities or individuals. The Bulletin requires insurers, HMOs, and other licensed or authorized entities and individuals to assist and work with South Carolina citizens and business impacted by the hurricane by providing additional relief from certain standard requirements.

The Department provides a non-exhaustive list of examples of relief which it expects insurers to extend to citizens and businesses, including: extending premium payment and proof of loss deadlines, allowing additional time before non-renewals or cancellations, waiving limitations relating to the use of out-of-network providers and one early refill or replacement refill for prescription drugs as well as a waiver of fees and penalties relating to any insured’s temporary inability to submit premium payments or otherwise respond as the result of the declared disaster. While the Department maintains that all licensees must comply with South Carolina law, any exceptions or relief focused on providing additional consumer protections and applied consistently to all insureds directly impacted by the hurricane will not be considered unfairly discriminatory.

For more information about South Carolina’s Bulletin 2019-08, or any other regulatory compliance matters, please contact Westmont Associates, Inc.