Legislators historically gather in private rooms called, “Cloak Rooms,” which are located just off the floor of the House and Senate to discuss pending and enacted legislation. This special edition of The Way takes you inside the Cloak Room to highlight significant legislation before Congress and the state legislatures affecting the risk and insurance industry.
Creating its most diverse demographic makeup in history, voters in the 2018 mid-term election gave Democrats control of the House of Representatives to begin the 116th Congress in January. At the same time, today’s Senate remains staunchly GOP controlled. A divided legislative branch will have to find a way to create bi-partisan legislative solutions to the issues facing the nation. This week, we pause to look at the current state of political and policy matters affecting the risk and insurance industry.
Several pressing claims and risk issues are pending in Washington, D.C. The expiration of the Terrorism Risk Insurance Act (TRIA) will occur on December 31, 2020. There is another impending expiration of the National Flood Insurance Program on May 31st of this year. And, next week, there are landmark hearings on a proposed pathway to legalized cannabis, including less restrictive banking and benefit claim payment requirements. We’ll see if these measures traverse the aisle in the nation’s capital. Then again, Former House Speaker Tip O’Neil famously reminds us that “all politics is local.”
And apparently, Mr. Speaker, partisan. Not since 1914 has there been only one state (this term it’s Minnesota) to have a divided legislature—one chamber controlled by the Democrats and one by the GOP. Last November, a “Blue Wave” resulted in Democrats reclaiming more than 250 seats and taking functional control of seven more legislatures, thereby doubling the party’s total number of trifectas (single party control of both chambers and the executive branch) to 14. These states include California, New York, and Illinois. This compares to 22 GOP trifectas including Florida, Texas, and Ohio. As we plan our 2019 off-cycle election coverage, we note that upcoming gubernatorial and state legislative elections could affect existing Republican trifectas in Kentucky and Mississippi and the Democratic trifecta in New Jersey. New trifectas could form in Louisiana and Virginia. These kinds of majority arrangements influence state policy, particularly in the areas of employee benefits and the business climate.
WORKER CLASSIFICATION INCREASING
In California, Assembly Bill 5, seeks to codify and clarify a groundbreaking state Supreme Court decision from last year called Dynamex, which set forth a three-part test called, the “ABC test” for employment status. We are currently following an amendment to Assembly Bill 5 that would exempt doctors, insurance agents, financial advisers, and direct sellers from the test. Of significant note, workers in the Gig economy are actively seeking exemptions from this expansive definition of employee. There is also a countervailing bill in the California Senate (SB 238) that would liken California’s independent contractor test to the multi-factor test promulgated by the United States Department of Labor. Today’s working definition of “employee” remains front page news.
Earlier this spring, the Illinois General Assembly passed a bill that would allow certain injury claims to bypass the Workers’ Compensation Commission and the occupational disease system. Senate Bill 1596 challenges the doctrine of “exclusive remedy” and would expose some employers to civil actions filed by injured workers. The bill awaits Governor Pritzker’s action. In Maine, more than 20 bills under consideration would reverse 1992 reforms and remove caps and restrictions on benefits; increase the allowable time for workers to apply for benefits; lower the burden of proof to claim mental health injuries; and increase cost-of-living adjustments to payments. In New York, a bill based on the Governor’s proposed budget would expand access to medical providers for injured workers by adding three new types of medical professionals as providers under the workers’ compensation system: nurse practitioners, acupuncturists, and licensed clinical social workers. Again this term, the adequacy of benefits is on the collective agenda.
EXPOSURES CAUSING CANCER AND PTSD
Earlier this session, Montana passed legislation to create a presumption of benefits for first responders who contract certain cancer associated with chemical exposure. We have seen similar strides in Florida’s bill for first responder cancer presumption. In North Carolina, we are tracking a bill that would entitle first responders and emergency management personnel to workers’ compensation benefits for mental or nervous injuries — regardless of whether they are accompanied by physical injuries. The Maryland General Assembly unanimously passed a medical presumptions bill for diseases and cancers suffered by firefighters to include blood cell, brain, testicular, or breast cancers presumptively caused by contact with a toxic substance at work. We’ll keep you updated as the rest of the session unfolds.
International and Domestic Cyber Policy
This month marks the one-year anniversary of the enforcement phase of the European Union General Data Protection Regulation (GDPR). Across Europe, nearly 60,000 breaches were reported in its first 8 months. Officials have levied few, but no less significant penalties for breaches. That said, one of the more sweeping effects of the GDPR is a wave of governmental activity in privacy matters worldwide and in the U.S. At present, we are tracking emerging state-level “GDPR copycat” measures in at least Washington (SB 5376), Hawaii (SB 418), Massachusetts (SD 341), Nevada (SB 220), Maryland (SB 613), and, of course, California.
When it goes into effect next year, the California Consumer Privacy Act (CCPA) will be America’s strongest privacy law. In advance of the CCPA’s effective date, we are monitoring a series of follow-on amendments, which could require companies to ask consumers to opt-in to data collection rather than opt-out and would restrict not only the selling, but also the sharing of personal information—two provisions that are opposed by industry groups. The California Assembly’s Privacy Committee has backed six bills supported by the tech industry, including measures that would allow employers to retain personal data on employees and enhance the power of companies to compel consumers to pay for privacy protections. These data privacy regulatory frameworks are increasing traffic at the intersection of governmental affairs and the risk and insurance industry.
Making Our Way Around the Countr(ies)
This year we have closely followed the Brexit proceedings between the United Kingdom and the European Union. Based on the initial timelines, the UK’s negotiated exit from the EU was to occur at the end of March. Both sides negotiated an extension, which “shall last only as long as necessary” and no longer than October 31, 2019, to allow for the ratification of the withdrawal agreement. The UK is expected to hold the elections to the European Parliament on May 22, unless it can approve its own withdrawal agreement first. The European Council reiterates there can be no reopening of the withdrawal agreement negotiations. The insurance industry remains ready to adapt to changes brought on by Brexit, if and when they occur.
The Way tracks legislative, regulatory, and now judicial actions related to opioid use. Last month, the Workers’ Compensation Insurance Rating Bureau (WCIRB) released a report showing the use of opioids has significantly and continuously declined in the California workers’ compensation system since 2012. According to the WCIRB, roughly 2.5 percent of all Accident Year 2013 claims with any opioid prescription involved high-risk opioid use within 12 months of the date of the injury compared with 1.4 percent of Accident Year 2016 claims. This spring, we saw a United States Attorney file a first-of-its-kind criminal action against a former CEO of a drug distributor in the United States. And on the civil side, we have been following the state Attorneys General Multi-District Litigation and the Oklahoma Attorney General’s efforts to try a civil action against opioid drug makers for public nuisance and injury to public health.
And lastly, we are following an emerging workplace safety matter, as Secretary of Labor R. Alexander Acosta called for an increase in OSHA inspections in testimony on Capitol Hill last month. The DOL leader expects that an influx of newly-hired inspectors will drive increased enforcement. In a related development from earlier this year, citing a concern over potential public disclosure of sensitive worker information, OSHA eliminated a requirement that businesses with 250 or more employees complete annual electronic reporting of every employee injury or illness, proposed during the end of the Obama administration. We’ll stay on top of these and other stories throughout the year. In the meantime, work safe and stand down for safety.
SHIPPING OUT OF BOSTON
The RIMS Annual Conference and Exhibition connects leaders from across the risk and insurance industry and from around the world. It was our sincere pleasure to be with so many of our friends, colleagues, and readers of The Way in Boston. We are pleased to do our part to bring you the state and federal affairs that affect the industry and the way you do business. If you are still at the conference as of this morning’s inbox delivery of the Cloakroom Report, please stop and look for us at GB’s booth #877 before shipping out! Until we meet at the next tea party, we’ll see you along The Way.