Insurance Law

New Hampshire Enacts New Property and Casualty Insurance Laws

July 2008

By Donald J. Pfundstein*

Although 2008 was a fairly quiet legislative session as far as property and casualty insurance is concerned, the New Hampshire legislature did enact a few new laws that insurers should be aware of. The legislature also referred a number of property and casualty insurance bills for interim study.

New Insurance Laws Enacted

Workers’ Compensation Audits (HB1244). This bill requires workers’ compensation insurers to complete audits no more than 120 days after the expiration or cancellation of a policy, provided that there is no bona fide dispute. If there is a bona fide dispute, the insurer can toll the 120-day time period by notifying the insured of the dispute in writing. A bona fide dispute may include the insured’s failure to cooperate with the audit. Once the dispute is resolved, the insurer must complete the audit within the time remaining in the 120-day period.

Use of Credit (HB1246). This bill is important for all homeowners and private passenger auto insurers that use credit. HB1246 requires insurers that use any information from credit reports, credit histories or credit scoring models to have procedures in place to promptly correct and adjust underwriting or rating decisions that are based on incorrect credit information. Even more importantly, HB1246 gives the Insurance Commissioner the authority to adopt rules regarding the obligations of insurers with respect to the use of credit in underwriting and rating homeowners and private passenger auto insurance. As most insurers that use credit probably already know, the New Hampshire Insurance Department is currently in the process of soliciting comments on proposed changes to the credit scoring rules.

Administrative Fines (HB1376). Under this bill, any person who knowingly violates any statute, rule, regulation or order of the Insurance Commissioner may be subject to an administrative fine not to exceed $2500 per violation. The prior law made no reference to the fact that the fine could be assessed on a per violation basis.

Applications and Worker Misclassification (SB500). This bill requires applications for workers’ compensation and property and casualty insurance to include the written or electronic signature of the producer and the applicant. In addition, every certificate of insurance issued pursuant to a workers’ compensation policy must include: (1) a list of all states for which coverage is provided; (2) the names of all excluded executive officers and members or a written notation that there are no exclusions; and (3) the names of all sole proprietors and partners who have elected to be covered under the policy or a written notation that no sole proprietors or partners are covered.

This bill also establishes a task force to study worker misclassification. The task force is required to make interim reports on its findings and any recommendations for proposed legislation on or before December 1, 2008, October 1, 2009 and June 1, 2010. A final report is due by December 1, 2010.

This bill makes numerous changes to the insurance fraud provisions contained in the criminal code. For example, a person convicted of certain types of insurance fraud related to workers’ compensation may be prohibited from participating in any public works projects for a period of one to three years.

Permanent Impairment Awards (SB501). Prior to the enactment of this bill, health care providers were required to use the “most recent” edition of the AMA Guides to the Evaluation of Permanent Impairment (“Guides”). SB501 requires health care providers to use the 5th edition of the Guides, even though a 6th edition is now available. The bill also establishes a committee to study the issues associated with the 6th edition of the Guides. The committee is required to report its findings and make any recommendations for proposed legislation by November 1 of this year.

Bills Referred for Interim Study

The legislature also referred a number of bills for interim study. The House Commerce Committee will study a bill that would prohibit the use of an individual’s social security number, education level or occupation in rating or underwriting auto insurance. The Commerce Committee will also study a bill that would make it an unfair trade practice for an insurer to unreasonably refuse payment of storage and towing claims in certain circumstances.

The House Health and Human Services Committee is studying a controversial bill that seeks to extend privacy protections beyond those provided by HIPAA. Because this bill would allow a patient to elect not to disclose protected health information for the purpose of treatment, payment or essential health care operations, it has garnered a significant amount of attention from the medical community as well as insurers.

Looking Ahead to 2009

Several senators in key leadership positions, including David Gottesman and Joseph Foster, have announced that they will not run for reelection. With those senators leaving and the promise of many new members being ushered in by the November elections, property and casualty insurers will need to keep an eye on Concord in 2009.

*Donald Pfundstein is admitted in New Hampshire.

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