Calif%2E Regulators May Cancel Policy Approvals

California Department of Insurance officials say the agency can act “unilaterally” to revoke approval of policies that fail to meet new specifications.[@@]

Insurance industry groups are protesting, saying the California department has no authority to revoke policy approvals without giving notice or opening a formal comment process.

California recently claimed the unilateral approval revocation powers in an effort to impose new standards on disability insurers. The new standards would require disability insurers to use more generous definitions of key terms, such as “total disability,” and eliminate some common benefits eligibility requirements, such as mandatory rehabilitation requirements.

America’s Health Insurance Plans, Washington, one group that represents disability insurers, is talking to members and other trade groups about its response, AHIP spokesman Larry Akey says.

“All options remain on the table, including legal action,.” Akey says.

“We remain concerned about the unintended consequences arising from the department’s unprecedented action,” Akey says.

AHIP has commissioned an actuarial study that suggests that implementing the proposed California disability policy standards could lead to a big increase in rates.

Disability industry executives met with California regulators earlier this month.

Gary Cohen, general counsel for the California department, described the meeting as “helpful.”

“We’re going to go back and take another look at what we had discussed and see if want to do anything differently,” Cohen says.

Cohen says the California department will hold similar meetings with employers and with plaintiffs’ lawyers.

Although the meetings are “less formal” than the formal rulemaking process, “in many ways more helpful,” Cohen says.