NAIC Approaching the Finish Line on Health Insurance Lead Generators

The Antifraud (D) Task Force of the National Association of Insurance Commissioners (“NAIC”) met on October 20, 2023, to discuss comments received on the August 20 draft revisions to the Model Unfair Trade Practices Act (#880) which would expand the regulatory reach of state insurance regulators to health insurance lead generators, which are not registered or licensed by state insurance regulators. The October 20 meeting became a drafting session as member regulators negotiated textual revisions in real time. Draft new language was uploaded to the NAIC website the evening of Thursday, October 26, 2023, for a one-week comment period closing on Friday November 3, 2023. Despite potential procedural hurdles around public comment periods and open-meeting requirements, the expectation remains that final revisions will be adopted at the Fall National Meeting.

In their current form the revisions to Model 880 mostly pertain to new definitions and the inclusion of “health insurance lead generator” to existing prohibitions. New defined terms are proposed for “health insurance lead generator” and “lead generating device” while a new term “recording” is added that would include “all sales and verification calls, including all virtual technology calls, in their entirety, used in the marketing of insurance.” The term “health insurance lead generator” is included in various sections prohibiting unfair trade practices alongside sections imposing recordkeeping requirements as well as within the definition of “person” so as to establish the regulatory authority of state regulators over health insurance lead generators. At the October 20 meeting, some regulators proposed broader language to extend authority over other potential types of lead generators, but that proposal was shelved as the current charge from the Market Regulation & Consumer Affairs (D) Committee only extends to health insurance. Whether a new broader charge will be forthcoming in 2024 or at a later date is to be determined.

As the Unfair Trade Practices Act is ‎statutory, the revisions will require action from state legislatures which is anticipated in upcoming ‎legislative sessions. Once adopted by the states, the revised act will extend the prohibited ‎practices of Section 4 to health insurance lead generators and impose upon them record keeping ‎requirements subject to examination by state ‎regulators.