California’s Flood Mitigation Initiative, Workers’ Comp Insurance Fraud, Over $300,000 in Compliance Fines

Differences in state-by-state laws, compliance regulations, industry transparency, and general regulatory culture can give one the impression that keeping up with industry changes is like herding cats. So, what better way to debunk some of the local insurance issues than the Regulatory Roundup?

On an ongoing basis, in no particular order or degree, we are dealing with various changes in laws, compliance actions, and commission decisions in our organization. As a disclaimer: There is a lot going on at any given time here in the United States, so this is not a complete picture of state-level action by any means. Think of it, instead, as a sampler platter of regulation.

Another important thing to note: When we repeat the definitions of legal decisions, these are speculations of a certain insurance policy and are not legal advice at all. If you the need legal advice, get a lawyer.

California pilots pioneered a parametric system in a flood-prone city

Try saying that three times fast! Of all the worst things, however, weather-induced flooding is a constant concern for people throughout the Golden State. With more than seven million California residents at risk of flooding, the state is busy spreading awareness and preparing property owners for the upcoming flood season in any way they can.

For Iselton, a small flood-prone city in the Sacramento-San Joaquin Delta, a community-based flood insurance program can make it easier for people to get back on their feet after a disaster. The pilot project, led by the California Department of Insurance and funded by the California Department of Water Resources (DWR), is the first of its kind in the state. The innovation approach follows a parametric insurance policy design to provide payouts to Iselton residents when flood waters reach a predetermined depth.

Speaking about the threat of climate-induced flooding in the state, California Commissioner Ricardo Lara says, “We need to help our communities become more resilient to climate change and protect them from the devastating effects of flooding. Insurance is key to financial stability, and we need to think creatively about how new insurance drivers like this Delta community project can be tested and scaled to help our most vulnerable communities.”

According to a news release from the California Department of Insurance, payments from this program, in addition to any existing coverage Isleton residents have through the National Flood Insurance Program, should be sufficient for community members to survive a major flood. Payments may also be used to address major property damage and evacuation costs such as lodging, food, transportation, and business interruption for Iselton residents.

This project is an exciting step towards a resilient industry and we look forward to seeing it come to fruition. For more information on parametric insurance as a cost management tool, check out our Ebook: The Future of P&C Insurance: The Race to Contain Costs Amid Rising Catastrophic Losses.

Staffing companies’ program raises $200,000 in fraudulent claims

At this point, is it a collection of laws without an insurance fraud case? In this case, the owner of a for-profit vocational school in Fresno, CA was charged with 11 counts, including falsifying insurance claims totaling $200,000.

Paul Steve Ramirez, owner of P. Steve Ramirez Vocational Training Centers, Paul Steve Ramirez, is accused of fraudulently billing workers’ compensation voucher services and failing to provide adequate training at his for-profit school.

Ramirez, who also owns a career counseling business, thought he had found a quick and no-nonsense way to increase his income by sending students to the counseling center directly at his institution. He also fraudulently collected Supplemental Job Displacement Benefit (SJDB) vouchers from 37 different students over a three-year period and billed insurance companies for services even when students did not meet minimum academic qualifications.

As a result, most of the injured workers Ramirez worked with were unable to complete their studies and receive their benefits. The Fresno County District Attorney’s Office is prosecuting this case, and we can only hope that justice is served for the employees affected by Ramirez’s brutal actions.

The Washington Commissioner issues a fine of over $300,000

Washington state Insurance Commissioner Mike Kreidler emphasized the importance of complying with your law by issuing fines totaling $302,500 during the months of July, August, and September.

More than 20 insurance companies, agents, brokers, and other unlicensed entities received fines from the Commission during the summer months. Charges ranged from $250 for each licensee who provided inaccurate, misleading, incomplete, or false information on their license application to $150,000 for a health insurer that improperly denied claims based on gender-specific practice codes.

Some notable penalties include:

• $50,000 to a carrier for selling travel insurance and acting as an insurer in the state of Washington without a valid license or certificate of authority.
• $10,000 to an organization for operating as an insurance agency without a valid license during an 11-year period
• $20,000 to carrier for allowing 12 producer appointments to expire more than 30 days

While some of these violations were the result of incompetence, others may have been the result of poor channel management. We get it – keeping up with ever-changing state insurance laws and regulations for all of your dealerships is no easy task. That is, unless you have an automated distribution channel management solution that flows the latest manufacturer data and regional compliance nuances right into your daily workflow.

Learn how AgentSync can help you avoid fees like these by simplifying compliance. And thanks again to Washington for showing how much you can save by staying compliant!

Other state regulatory changes

Alabama The declared invoices for the renewal of the appointment of the insurance company will be available for payment from the date of Jan. 6, 2025 – March 1, 2025. Deadline for completion is Dec. 31, 2024.

In Colorado Commissioner Michael Conway adopted new regulations regarding the Children’s Dental Coverage Requirements. The new requirements restrict carriers from selling a health benefits plan that does not contain the provision of essential health benefits for children to consumers with children under 19 years of age in the individual or minority market without obtaining reasonable assurance that the product has been purchased.

Connecticut established the Climate Mitigation and Resilience Advisory Council to help strengthen homes and businesses against climate-related hazards. The council, which includes a diverse team of subject matter experts, will evaluate mitigation plans and provide recommendations to improve the state’s resilience to extreme weather events such as floods.

In Florida provided a 60-day continuing education extension for all licensees with CE credits due in October, November, and December 2024 for any agents and repairers affected by recent hurricane activity.

Massachusetts use new transaction types to process Name Change (Demographic) updates. This came into effect on October 18, 2024.

Montana The Commissioner of Safety and Insurance (CSI), Troy Downing, is pleased to report that State Farm has reviewed 18,000 additional claims after facing a $4 million fine for unfair claims settlement practices. According to a press release issued on Oct. 17, 2024, Updates found an additional $5.2 million in refunds to Montanans affected by State Farm’s improper payment of claims.

In New Mexico declared a state of emergency after heavy flooding devastated Chavez County. New Mexico Governor Michelle Grisham issued an executive order requiring insurance companies that write health policies in New Mexico to provide a grace period for insurance premium payments to any policyholder whose residence was affected by the flooding.

New York Treasury Department Superintendent Adrienne Harris released new guidance to assist regulated businesses in addressing and combating artificial intelligence-related cybersecurity risks. This guidance takes a risk-based approach to assist the financial services industry in mitigating AI-specific cybersecurity risks such as social engineering, advanced cyber attacks, theft of non-public information, and increased vulnerability to supply chain dependencies.

In Oklahoma released a report on new requirements enacted by Senate Bill 543, which creates the Insurance Data Security Act. Key requirements include an obligation for certain licensees to submit annual information security program reports beginning July 1, 2025 and an obligation to notify the Insurance Commissioner of any cyber security incidents involving non-public information within 3 business days when certain conditions are met.

Vermont revises its appointment and termination fees to $80 for out-of-state carriers and free for in-state carriers for Life and Accident & Health Groups, Casualty and Property Grouping, and Personal Lines, Variable Life and And flexible. Annuity, Car Lease, Credit, Self Storage, Travel, Title, and Portable Electric LOAs. The changes take effect on Jan. 1, 2025.

While these points of interest are not exhaustive, our knowledge of the insurance producer and dealer license of flexible lines and the maintenance of legal compliance. See how AgentSync can help you look smarter today; head over to the Compliance Library and tackle state-by-state regulations and additional legal updates.

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California Fraud Legislation Flood Workers Compensation