Consumer Protections Proposed.

Health insurers face deadline on standardization of electronic documents; property/casualty commercial rates increase steadily.

Banking regulators have proposed consumer-protection rules that include key disclosures for the sale of insurance products and annuities by banking-related institutions, as called for by the Gramm-Leach-Bliley Act.

The proposed regulations were put together jointly by the Department of the Treasury, Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corp. and the Board of Governors of the Federal Reserve System.

The agencies are taking comments on the proposal until Oct. 5, and the regulations must be finalized by Nov. 12, as called for in the Gramm-Leach-Bliley Act, signed into law by President Clinton last year. The act reformed financial services by ending decades of separation among the insurance, banking and securities industries.

The proposed consumer regulations would apply to retail sales practices, solicitations, advertising or offers of any insurance product by a depository institution, or any person offering insurance products or annuities to a consumer at an office of the institution or on behalf of the institution.

National banks, which are supervised by the 0CC; state member banks, supervised by the Board of Governors of the Federal Reserve System; state nonmember banks, supervised by the FDIC; and savings associations, supervised by the OTS, would have to adhere to the regulations.

Disclosures called for in the regulations would have to be made in writing and verbally, before the sale of the insurance product or annuity is completed. There is also a rule that calls for the consumer to acknowledge in writing that the disclosures were received. Electronic disclosures can be made if the consumer agrees to it, and as long as the consumer can retain or later obtain the disclosure by printing or downloading it.

The disclosures include informing the consumer that the insurance product or annuity is not insured by the FDIC or any other agency of the United States, the institution or an affiliate; the insurance product or annuity is not a deposit or other obligation of, or guaranteed by, the depository institution or its affiliate, and if the insurance product or annuity involves an investment risk, consumers must be told there is a risk and informed of the possible loss of value.

The depository institution may not extend credit on the condition that the consumer buy an insurance product or annuity from that institution or any of its affiliates. Nor may the institution place a condition on the consumer to agree not to obtain insurance or an annuity from another institution.

Even the physical location of insurance and annuity activities are addressed in the proposed regulations, which call for them to be segregated from areas where retail deposits are accepted from the general public.

Insurers Have 2 Years to Comply With HIPAA Rules

With the release of the first wave of federal regulations, the clock is ticking for health insurers to come into compliance.

Insurers will have a little more than two years to meet the new regulations, which are due to be published by the U.S. Department of Health and Human Services.

The first batch of regulations aim to standardize the transfer of electronic documents as required under the Health Insurance Portability and Accountability Act of 1996.

"This is the biggest impact on the industry since Medicare," said Greg DeBor, national practice leader for Computer Sciences Corp., a consulting group. "This will require sweeping changes nationally."

The regulations will standardize coding so all health insurers and providers will refer to procedures and diagnoses by the same code. The department has yet to release regulations dealing with security and privacy, which are expected by the end of the year, DeBor said. Also, the department will issue identifier numbers so every insurer, employer and provider will be known by a single number.

"Virtually no one is in compliance today," DeBor said, referring to insurers.

The Health Insurance Association of America estimated that there are 4,000 different electronic ways to send a claim today. The industry handles some 5 billion claims annually, according to HIAA.

CIAB Survey: Commercial Rates Continue to Rise

Property/casualty rates for small, medium and large commercial lines continue to rise across the United States, according to a trade group's quarterly survey.

The Council of Insurance Agents and Brokers' Market Index Survey shows nearly universal rate increases through June 30. Including results from July 1 policy renewals, the data show rate increases in four of the five commercial lines: commercial auto, workers' compensation, property and general liability, the council said in a statement. Only umbrella coverage remained fairly constant, the statement said, although even that showed a slight trend upward.

The most notable increase was in rates for medium-sized commercial accounts, the council reported. Ninety-six percent of survey respondents reported higher prices within the last 90 days, and 44% reported that rates have increased more than 10%.

The council's latest quarterly survey polled 250 council members from across the United States in July