Paul C. Latchford, Esquire

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THE COMPLEX WORLD OF INSURANCE DIRECT MARKETING
COMPLIANCEThe 6th Annual Insurance Direct
Marketing Forum 2008 Tools for Success

• Paul C. Latchford, Esquire
• Vice President Law Governmental Affairs
• AEGON Direct Marketing Services, Inc
• September 16, 2008.

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The Legislative and Regulatory Environment---

• Federal
• State
• NAIC

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THE FEDERAL SCENE

• National Do-Not-Call Registry- Permanence of
  Phone Numbers on the Registry
  
• FTC- Prerecorded Telemarketing Calls
• The Insurance Information Act- H.R. 5480
• NARAB II- H.R. 5611
• Final Rule on CAN-SPAM Act
• MEDICARE- NAIC Changes Finally Adopted
• Federal Elections
• Health Issues in Federal Elections

4
STATE ISSUES---

• Universal Health Care
• Dependent Children Coverage
• California- 10133.8- Authority over Translated
  Materials
  
• Regulatory Multi-State Settlements

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THE NAIC SCENE

• Modernization

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DO NOT CALL REGISTRANTS MADE PERMANENT

• Do-Not-Call Improvement Act of 2007 that became
  law in February 2008phone number on the National
  Do-Not-Call Registry will remain on the list ad
  infinitium rather than be deleted after five
  years as originally provided for when the
  Registry was created

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FTC- Prerecorded Telemarketing Calls

• New Rules governing prerecorded telemarketing
  calls-which in most cases require prior written
  signed consent of the called party in order to
  place such calls and an automated interactive
  opt-out mechanism in cases where such prerecorded
  calls are permissible
• Rules will not affect non-telemarketing calls,
  such as surveys, customer care,
  appointment/refill-reminders and similar purely
  informational messages that are not part of and
  that do not incorporate a plan, program or
  campaign to sell goods or services or to solicit
  charitable contributions.

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FTC- Prerecorded Telemarketing Calls contd

• The signed, written agreement must specify the
  phone number(s) at which the prospective call
  recipient agrees to be called and constitutes
  consent only for such number(s).
• Electronic means of obtaining signatures
  authorized by the E-SIGN ACT qualify for purposes
  of the prior written/signed consent requirement
  and include those obtained via email or website,
  telephone keypress, voice recording, or
  electronic point-of-sale devices.
• Agreement/consent to service prerecorded calls is
  non-transferable from one company to another but
  rather the written/signed agreement must specify
  the seller to which consent is given and each
  seller must negotiate its own agreement with the
  consumer.

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FTC Prerecorded Telemarketing Calls contd

• The prohibition on prerecorded calls (absent
  prior written/signed consent) applies regardless
  whether the prerecorded call is answered by a
  person or by an answering machine or voicemail.
• All permitted prerecorded messages must (1) allow
  the phone to ring at least 15 seconds or four
  rings before disconnecting a call as unanswered
  (2) begin the prerecorded message within two
  seconds of a completed greeting by the consumer
  who answers and (3) disclose at the outset of
  the call that the recipient may ask a
  company-specific do-not-call request at any time
  during the message, and facilitate that request
  by complying with a new automated opt-out
  requirement.

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THE INSURANCE INFORMATION ACT (H.R. 5480)---

• Would create an Office of Insurance Information
  within the Treasury Department
  
• Optional Federal Charter- Top Priority in the
  next Congress for Representative Barney Frank,
  Chairman of the House Financial Services
  
• All lines of insurance except health insurance

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NARAB II- H.R. 5611---

• Would reestablish the National Association of
  Registered Agents
  
• Would help agents obtain multiple state licenses
  more easily and quickly

12
FTC- Final Regulations Implementing Four
Provisions of CAN-SPAM Act

• In its Final Rule under the Controlling the
  Assault of Non-Solicited Pornography and
  Marketing Act of 2003, the FTC adopted the
  following provisions
• Modified the Term sender to address emails with
  content from multiple advertisers
  
• Defined the term person to include legal
  entities
  
• Clarified what qualifies as a valid physical
  postal address that senders must include in
  commercial emails
  
• Prohibited senders from imposing certain
  requirements on commercial email recipients in
  order to process opt-out requests

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FTC- CAN-SPAM ACT contd---

• Most significant rule change in the Final Rule is
  modification of the term sender a sender of
  commercial emails must provide the recipient with
  a mechanism for opting out of receiving future
  emails and is subject to other obligations
• In a Multiple-sender scenario- multiple marketers
  may designate a single sender provided they
  are the person identified in the from line of
  the email

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THE MEDICARE IMPROVEMENTS for PATIENTS and
PROVIDERS ACT of 2008

• Sets co-payments from mental health services to
  match other outpatient medical care
  
• Ends the sale of Medigap plans that are redundant
  as a result of the drug benefit, and modernizes
  Medigap benefits to better meet seniors needs
  
• Eliminates penalties for late enrollment in the
  drug benefit by low-income seniors
  
• Blocks a cut in physician payments for Medicare
  services, and increases payments by 1.1 in 2009
  
• Eliminates the double-payment made to Medicare
  Advantage plans based on local costs for care at
  teaching hospitals, as teaching hospitals already
  received extra payment directly for their
  sophisticated care

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MEDICARE IMPROVEMENTS for PATIENTS and PROVIDERS
Act of 2008 contd---

• Prohibits certain sales activities of Medicare
  Advantage Plans and Part D drug plans, including
  door-to-door sales, cold calling, free meals and
  cross-selling of nonhealth-related products,
  effective for the 2010 year. Also it requires
  the Secretary to limit co-branding, gifts and
  commissions. Requires a plan to abide by the
  state appointment laws affecting agents and
  brokers.

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MEDICARE IMPROVEMENTS for PATIENTS and PROVIDERS
ACT of 2008 contd---

• Requires prescription drug plans to pay
  pharmacies within 14 days for clean claims
  submitted electronically, and 30 days for clean
  claims submitted otherwise and imposes a monetary
  penalty on prescription drug plans that fail to
  pay on time.
• Requires Medicare Part D Prescription Drug Plans
  to update the drug pricing standards used for
  pharmacy reimbursement on at least a weekly
  basis, with an initial update on January 1 each
  year
• Certifies the HHS Secretarys current guidance on
  coverage of the Protected Classes of drugs
  under Part D
  

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FEDERAL ELECTIONS---

• 435 House seats and 35 seats are up for election
• House
• Expected Results
• Democrats- 233
• Republicans-176
• (A) 203 Solid Democratic
• 15 Likely Democratic
• 15 Leaning Democratic
• (B) 133 Solid Republican
• 32 Likely Republican
• 11 Leaning Republican
• C) 26 Toss-Ups

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SENATE

• 35 Seats Contested this year
• A) Democrats
• - 10 Solid Democrats
• - 2 Likely
• - 3 Leaning
• B) Republicans
• - 11- Solid Republicans
• - 2- Likely
• - 2- Leaning
• C) - 5 Toss-Ups

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HEALTH ISSUES in FEDERAL ELECTION

• Issue John McCain
• Stated Goal Provide access to affordable health
  care for all by paying only for quality
  health care, having insurance choices that are
  diverse and responsive to individual needs
  and encouraging personal responsibility
• Overall Approach Remove the favorable tax
  treatment of employer-sponsored insurance and
  provide a tax credit to all individuals and
  families to increase incentives for insurance
  coverage and promote insurance competition
• Features - Portability
• - Reward Good Health Care Providers for
  developing real results
  
• - Interstate Competition

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HEALTH ISSUES in FEDERAL ELECTION---

• Issue Barack Obama
• Stated Goal Affordable and high-quality
  universal coverage through mix of private and
  expanded public insurance
  
• Overall Approach Require all children to have
  health insurance and employers to offer
  employee health benefits or to contribute to the
  costs of the new public program
• Features - End of discrimination on the basis of
  pre-existing conditions
  
• - Portable Insurance
• - Allowing the Secretary of HHS to negotiate
  directly for lower drug prices
  
• - Permitting the importation of medicines
  from other developed countries
  

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STATE ISSUES- UNIVERSAL HEALTH

• Massachusetts
• California

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DEPENDENT CHILDREN COVERAGE

• Typical health insurance policy allows
  eligibility until dependent attain 19 years of
  age, or full-time students, until they attain 23
  years of age
• Recently, states have enacted laws to address
  coverage for potentially uninsured dependent
  children by
  
• - raising the age to which eligibility for
  coverage must extend
  
• - requiring continuation of coverage for college
  students during a medical leave from
  
• school
• - requiring policies to extend coverage for
  adult children who neither reside with nor
  
• financially depend upon an insured parent
  
  

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CALIFORNIA- Commissioners Authority over
Translated Materials--

• The commissioner shall, on or before January 1,
  2006, promulgate regulations applicable to all
  individual and group policies of health insurance
  establishing standards and requirements to
  provide insureds with appropriate access to
  translated materials and language assistance in
  obtaining covered benefits.

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CALIFORNIA- Commissioners Authority over
Translated Materials contd---

• (b) The regulations described in subdivision (a)
  shall include the following
  
• (1) A requirement to conduct an assessment of
  the needs of the insured group, pursuant to this
  subdivision.
  
• (2) Requirements for surveying the language
  preferences and assessment of linguistic needs of
  insureds within one year of the effective date of
  the regulations that permit health insurers to
  utilize various survey methods, including, but
  not limited to, the use of existing enrollment
  and renewal processes, newsletters, or other
  mailings. Health insurers shall update the
  linguistic needs assessment, demographic profile,
  and language translation requirements every three
  years. However, the regulations may provide that
  the surveys and assessments by insurers of
  supplemental insurance products may be conducted
  less frequently than three years if the
  commissioner determines that the results are
  unlikely to affect the translation requirements.

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STATE REGULATORY MULTI-STATE SETTLEMENTS---

• Special Targeted Market Conduct Exams
• Settlements
• - United HealthCare
• - Conseco

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NAIC

• Modernization

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New Model Law Framework

• NAIC adopts new model law development framework
  which will streamline the NAIC model law
  regulation
  
• Going forward, no NAIC model law should be
  promulgated unless it meets the following
  two-pronged test

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New Model Law Framework contd---

• 1.The issue that is the subject of the model law
  necessitates a national standard and requires
  uniformity among all states and
  
• 2. Where NAIC members are committed to developing
  significant regulator and association resources
  to educate, communicate and support a model that
  has been adopted by the membership

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New Model Law Framework contd---

• Once a model law is adopted by the NAIC, the goal
  is to have it adopted by a majority of states
  within 3 years

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