NAHU submitted a comment letter to the National Association of Insurance Commissioners  this week in response to proposed changes to the NAIC’s Unfair Trade Practices Model Act, a law that regulates each state's insurance industry.

The NAIC is currently reviewing a model state regulation to address improper marketing of insurance plans and unscrupulous actors in the health insurance market. As a part of this process, the NAIC’s Improper Marketing of Health Insurance Working Group has proposed amendments to the Unfair Trade Practices Model that seeks to improve state-based regulation of entities that are inappropriately marketing health insurance products.

The NAIC’s exposure draft adds a definition of “insurance lead generator” to mean “any marketing-related activity or entity that publicizes the availability of an insurance, or what purports to be an insurance product or service.” The draft would also amend the Model by expanding the prohibition on unfair trade practices to insurance lead generators in addition to insurers It would also expand the scope of what is “false advertising” to include online advertisements, including those posted generally on the Internet and electronic-mail advertisements. Additionally, “insurance lead generators” would be required to maintain their books, documents and other business records related to both marketing and customer complaints for at least two years so that they will be accessible and retrievable for examination by a state’s insurance commissioner.

NAHU noted that there are bad-faith actors in the insurance system that engage in misleading marketing efforts directed at potential health insurance beneficiaries, including certain Medicare call centers, and that additional regulation to curb those practices is warranted. However, we also pointed out that licensed and certified agents and brokers provide beneficiaries with direct and personalized service while abiding by  federal Medicare requirements and marketing rules and state-level market conduct and licensing standards.

NAHU also expressed our concerns that the proposed definition of “insurance lead generator” is too broad and may inadvertently encompass entities that are already regulated, such as state-licensed health insurance producers – much like CMS’ overly broad definition of third-party marketing organization (TPMO) has done. Because of this, NAHU suggested that the definition of “insurance lead generator” be “any marketing-related activity or entity that publicizes the availability of an insurance, or what purports to be an insurance product or service, that is not a regulated entity already subject to [State Unfair Trade Practices Statute].”

NAHU CEO Janet Trautwein testified in front of the NAIC during the association’s Summer Meeting in August. Trautwein brought the issue of the Medicare marketing rule to the NAIC’s attention, highlighting the potential damage that regulation could cause if implemented as written. This week’s comment letter is a continuation of our efforts to ensure that regulation on improper insurance marketing is executed in a way that does not bring unnecessary burdens to the licensed agent and broker community.