National Conference of Insurance Legislators (NCOIL) Adopt Transportation Network Companies Guidance, Storm Chaser Roofing Fraud Model
Jul 20, 2015
Above: Colodny Fass’ Donovan Brown Notes NCOIL’s adoption of TNC, Storm Chaser Model Laws This Weekend
At the National Conference of Insurance Legislators (“NCOIL”) 2015 Summer Meeting in Indianapolis that concluded yesterday, July 19, lawmakers adopted two high-profile model laws, among other actions.
Below is a summary of each:
Transportation Network Companies Model Act
The first model adopted entails critical guidance for regulating transportation network companies (“TNCs”) like Uber and Lyft. It imposes rules related to coverage requirements, financial responsibility, licensing, disclosure and other concerns. Entitled the “Model Act to Regulate Insurance Requirements for Transportation Network Companies and Transportation Network Drivers,” it also reflects a recent compromise between Uber and the insurance industry that is currently circulating among states.
Ohio State Representative Michael Stinziano, the Model’s sponsor, explained that it addresses core issues confronting policymakers nationwide.
“The NCOIL language will help states overcome the divisiveness that has made it difficult to pass legislation, allowing TNCs to continue offering consumers a product they enjoy, while updating state laws to regulate the unique TNC market to eliminate gaps that may disadvantage TNC drivers and riders,” he said.
According to Indiana State Representative Matt Lehman, NCOIL’s Property-Casualty Insurance Committee Chairman, “With more than half the states having enacted TNC laws, it was important that NCOIL weigh in now, when a significant number of legislatures remain undecided on a TNC regulatory approach. The NCOIL model and the Uber-insurer compromise can take the debate in a new and possibly more effective direction.”
The adopted TNC Model was the result of significant committee discussion on July 18, when legislators, together with representatives from Uber, property casualty insurers and others debated issues ranging from the credit ratings of surplus lines insurers writing TNC coverage, to whether TNC drivers are independent contractors or TNC employees.
Similar to a new Indiana law that incorporates Uber-insurer compromise language, the NCOIL Model requires primary auto liability insurance purchased by the TNC driver and/or by the TNC to cover (1) the period in which the TNC driver is logged into the TNC’s online system and is available to receive a transportation request and (2) the period during which the TNC driver is transporting a rider. Under the NCOIL Model, auto insurers could exclude personal lines coverage for losses that take place during those periods.
NCOIL’s Model requires certain disclosures to TNC drivers, as well as requires a TNC to have a state-issued permit before commencing operations. It also establishes rules on who can serve as a TNC driver and, among other provisions, specifies that a TNC may meet its insurance requirements by purchasing coverage through an insurer that is highly rated by A.M. Best, Demotech, or a rating agency recognized by its state’s department of insurance.
During discussion, the Property-Casualty Committee added a drafting note to the Model that encourages states to consider appropriate lienholder language in order to coordinate with their respective existing laws.
The discussion continued into July 19, punctuated by NCOIL’s Executive Committee adopting the TNC Model ater that day.
NCOIL’s exploration of TNC issues began in mid-2014 and has included input from the American Insurance Association; California Department of Insurance; National Association of Insurance Commissioners; National Association of Mutual Insurance Companies; Property Casualty Insurers Association of America; the Taxi, Limousine and Paratransit Association; and Uber.
To view the TNC Model as it was presented this weekend, click here.
“Storm Chaser” Roofing Fraud Model Act
Also on July 19, NCOIL unanimously adopted the “Storm Chaser Consumer Protection Act,” a model law intended to safeguard homeowners from individuals posing as legitimate roofing contractors. The proposed model takes aim at fraud that occurs after natural disasters and extends NCOIL’s efforts to address consumer and insurance market catastrophe issues.
“Storm chasing is an unfortunate consequence of hurricanes, tornados, floods, winter storms, and other natural events, and that means that state legislators are obligated to weigh in,” Chairman Lehman said.
Arkansas Senator Jason Rapert, NCOIL Treasurer and co-sponsor of the Storm Chaser Model Law with Georgia State Representative Rich Golick, explained that the Model is critical to ensuring that vulnerable homeowners are not harmed even further in the wake of a disaster.
“It is shameful that some people take advantage of consumers who are truly in need and who trust in others to repair their homes and help them return to normal lives,” Senator Rapert said. “The NCOIL model’s comprehensive provisions will prevent roofing companies from chasing after natural disasters, from traveling state-to-state in order to commit civil and criminal acts.”
In a letter sent prior to the Summer Meeting, Senator Golick urged lawmakers to support the proposed Storm Chaser Model, saying that roofing contractor fraud ” . . . increases overall costs, takes business away from reputable contractors and ultimately drives up insurance costs. As a result, model legislation is needed to help protect consumers, the reputable roofing contractor industry and the insurance market from these unprincipled individuals.”
The Storm Chaser Consumer Protection Act requires various disclosures, including an approximate cost estimate of a contract. It also allows a consumer to cancel the contract if the consumer’s insurer denies all or part of the claim and requires a contractor to return any payments or deposits that the consumer made to the contractor, except for cost of providing emergency services if the consumer cancels the contract.
The Storm Chaser Model requires roofing contractors to maintain certain insurance coverages; establishes contractor prohibitions, penalties, and registration requirements; and allows certain exemptions. Among other provisions, the Model calls for registration fees to help fund its enforcement and includes a streamlined registration process for contractors who are registered in good standing in another state.
As a result of further discussion over the weekend, the Model now includes a drafting note that encourages states to consult their attorneys’ general offices to determine if a criminal penalty should be included in the Model or if adjusting the criminal penalty section in existing state code is more appropriate.
To view the Storm Chaser Model as it was presented this weekend, click here.
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