Technological And Information Concerns Highlight NAIC Spring 2016 National Meeting

The National Association of Insurance Commissioners (NAIC) Spring 2016 National Meeting, which was held from April 3 - 6 in New Orleans, offered insight into numerous issues being considered by state commissioners nationwide. There were some notable developments in the areas of surplus lines, health care regulatory reforms, life insurance, producer licensing, and accreditation standards. However, the spring meeting will likely be remembered for highlighting technological and information concerns, including the use of big data, the sharing economy, and cybersecurity.

The NAIC's consideration and development of these issues are discussed in more detail below.

Sharing Economy (C) Working Group Meeting

Work Plan Focusing on Small Peer-to-Peer Platforms Adopted

The Sharing Economy Working Group adopted a work plan for 2016, and heard from ISO and AirBnB regarding the insurance coverage implications of home sharing during their morning meeting on April 3. For the remainder of 2016, the Working Group plans to focus on (i) insurance risks posed by smaller, less well-known sharing platforms, such as peer-to-peer car-sharing services (e.g., Getaround and Turo), ride-sharing services for children (e.g., HopSkipDrive), and handyman services (e.g., Handyman on Demand), all of which will be discussed at the Summer National Meeting in San Diego; and (ii) an update on Transit Network Company (TNC) issues, which will be discussed at the Fall National Meeting in Miami.

The Working Group heard a report from ISO regarding endorsements for sharing economy issues, including an update on TNC endorsements and a discussion of endorsements to the homeowners' forms for home sharing (such as AirBnB). ISO's private passenger auto endorsements, which either exclude or provide coverage for Phase 1 (while the driver has the TNC app open, but before a ride has been requested), have been filed in 48 states and approved by 42 states. ISO is preparing a similar set of endorsements for commercial auto policies, largely in response to the growth of web-enabled delivery services (such as UberRUSH), which it expects to file by mid-year. These endorsements would default to excluding transit network activities such as delivery services, but would allow commercial fleet owners to purchase coverage for their vehicles and drivers while in use for such services.

ISO is also preparing a set of endorsements for the standard homeowners' policy form in response to the rapid growth of home-sharing services. These endorsements would preserve coverage for many perils (such as fire and wind) and would permit homeowners to purchase enhanced protection against perils resulting from home sharing (such as theft and vandalism). The endorsements would provide new coverage for policyholders who travel and are home-sharing service customers as well.

Cybersecurity (EX) Task Force Meeting

Model Law Development Request Adopted

The most significant aspect of the Cybersecurity Task Force's spring meeting occurred before the Task Force actually convened in New Orleans: on Monday, the Executive (EX) Committee adopted the Task Force's Model Law Development Request for the development of the Insurance Data Security Model Law. The Executive Committee approved the request on the basis that revision of the Insurance Information and Privacy Protection Model Act and the Privacy of Consumer Financial and Health Information Regulation is no longer an adequate response to the NAIC's cybersecurity concerns. Commissioner Hamm then described a timeline for drafting and adopting the model law, which he hopes will result in its inclusion in the NAIC's 2017 package.

When the Task Force convened an hour after the Executive Committee meeting, it received brief verbal comments from industry representatives. These included:

A concern that the draft model law will not be uniformly adopted by individual states A concern that the draft model law, which would make other state and federal laws regulating data security inapplicable to licensees subject to the model law, raises unworkable federal preemption issues Requests that the Task Force collaborate more with industry stakeholders to better understand the burdens the Model Law would impose. Surplus Lines (C) Task Force-

Flood Insurance Market Parity and Modernization Act Will Be Major Focus in 2016

While the Surplus Lines Task Force did not take any notable actions at its meeting, a...