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AICP Phoenix 2009- ET Session #47 &67 1
Association of Insurance
Compliance Professionals
EXTRATERRITORIALITY
What is ET anyway?
Ana Smith-Daley Texas Department of Insurance
Ginny McHugh McHugh Consulting Resources, Inc.
David Simon,CLU Compliance Research Services, LLC
October 2009
Phoenix, Arizona
AICP Phoenix 2009- ET Session #47 &67 2
IMPORTANT NOTICE
The information presented is intended to provide general information and discussion only. Nothing presented should be relied upon without independent research, application to specific facts, and/or consultation with legal counsel. The opinions and positions discussed do not necessarily represent common agreement or position of the Association of Insurance Compliance Professionals or its members, Compliance Research Services, McHugh Consulting Resources, or even the presenters.
AICP Phoenix 2009- ET Session #47 &67 3
EXTRATERRITORIALITY
What is ET anyway?
Overview – Scope of this Presentation
– What is Extraterritoriality (ET)
– Why is ET important?
– How to determine if a requirement is ET
– Filing and administration
– Other ET concerns
– ET and COA
Q&A
AICP Phoenix 2009- ET Session #47 &67 4
EXTRATERRITORIALITY
What is ET anyway?
Scope of this presentation
– General overview of ET as it applies to all
types groups and products.
– And a Texas DOI perspective
AICP Phoenix 2009- ET Session #47 &67 5
EXTRATERRITORIALITY
What is ET anyway?
What is Extraterritoriality?
The extent to which laws other than those
of the “situs” affect the legality, validity,
interpretation or operation of a group
insurance policy.
AICP Phoenix 2009- ET Session #47 &67 6
EXTRATERRITORIALITY
What is ET anyway?
Why is ET important?
– Insurers must be aware of ET requirements
to maintain compliance.
– Insureds are entitled to the applicable
benefits.
– Insurance Departments are charged with
responsibility to assure that insurers are
operating according to the laws.
EXTRATERRITORIALITY
What is ET anyway? How to determine whether a requirement
is ET? Depends on:
– Laws, Regulations, Bulletins, DOI Websites of
the policy situs state.
– Laws, Regulations, Bulletins, etc. of the group
and individual insured.
AICP Phoenix 2009- ET Session #47 &67 7
AICP Phoenix 2009- ET Session #47 &67 8
EXTRATERRITORIALITY
What is ET anyway? What do you look at to determine if ET
authority?
– General requirements applying to residents
– How the laws, regs etc. define “policy”
– Type of group
– Percentage of group residing in the state
– Type of product
– Method of marketing
– Unique industry filing experience
AICP Phoenix 2009- ET Session #47 &67 9
EXTRATERRITORIALITY
What is ET anyway?
Considerations by type of group
– Employer/employee, union groups
Large group vs. small group
MET’s
EXTRATERRITORIALITY
What is ET anyway? Considerations by type of group – Association groups-
bona fide/non- bona fide (typically discretionary groups)
Employer associations
AICP Phoenix 2009- ET Session #47 &67 10
EXTRATERRITORIALITY
What is ET anyway? Considerations by type of Group – Blanket groups
– Discretionary Groups
– Affinity Groups
– Texas Considerations by type of group
AICP Phoenix 2009- ET Session #47 &67 11
EXTRATERRITORIALITY
What is ET anyway? ET Considerations by Product
– Group Life/AD&D vs. Group Life with accelerated
benefit
– Disability Income,Dental, Vision
– Hospital Indemnity & other fixed payment plans
– Critical Illness/specified disease vs. Accident only
– Major Medical vs. Limited Benefit/Supplemental plans
( mini-med plans)
AICP Phoenix 2009- ET Session #47 &67 12
EXTRATERRITORIALITY
What is ET anyway?
ET Considerations by Product
– Long Term Care/Medicare Supplement
– Consumer Choice Medical plans
AICP Phoenix 2009- ET Session #47 &67
13
EXTRATERRITORIALITY
What is ET anyway? ET Considerations by filing experience – Company positions
– Unique industry filing experience
– Market Conduct exams
AICP Phoenix 2009- ET Session #47 &67
14
EXTRATERRITORIALITY
What is ET anyway?
AICP Phoenix 2009- ET Session #47
&67 15
AICP Phoenix 2009- ET Session #47 &67 16
EXTRATERRITORIALITY
What is ET anyway?
Difference between ET Filing Requirements vs. ET Mandates – May not need to file but may need to comply
– Applicability may be to: “Policies/Certificates issued in xxx state”
Policies “insuring residents of xxx state”
Definition of “policy” in xxx state
“Insuring risks” in xxx state
AICP Phoenix 2009- ET Session #47 &67
17
EXTRATERRITORIALITY
What is ET anyway?
When benefits conflict which requirements
apply? Those of master group contract situs or
where the individual certificate is issued?
Do you apply both, or the better of the two?
What about mandates that apply to the employer
or the group vs mandates that apply to the
individual?
What is issued to the certificate holder?
AICP Phoenix 2009- ET Session #47 &67 18
EXTRATERRITORIALITY
What is ET anyway?
Other ET considerations other than
mandated benefits:
– Unfair claim practices act
– Unfair trade practices act
AICP Phoenix 2009- ET Session 47& 67 19
EXTRATERRITORIALITY
What is ET anyway?
ET and Licensed Authority
– Issuing certificates of coverage in a state
without a Certificate of Authority (COA)
Actively marketing vs. passive presence
“Moved to” states
Employer in State A – employees in State B
ET mandates may apply regardless
Statutes may be clearly worded (or not-
examples discussed)
AICP Phoenix 2009- ET Session #47 &67 20
Association of Insurance
Compliance Professionals EXTRATERRITORIALALITY
WHAT IS ET Anyway?
Session 47 & 67
Questions
Answers
AICP Phoenix 2009- ET Session #47 &67 21
Association of Insurance
Compliance Professionals EXTRATERRITORIALALITY
WHAT IS ET Anyway?
Session 47 & 67
THANK YOU!
