What happened to the Pet Insurance Model Law? Why the surprise pull-back?

It’s been three weeks since the pet insurance model law was removed unexpectedly from the agenda of the final 2021 meeting of the National Association of Insurance Commissioners (NAIC) where the law was to be considered and put up for a vote. The Pet Insurance Model Law has been in the works for more than two years.

TCR has been pressing Commissioner Vicki Schmidt of the Property and Casualty Committee (which oversees the Pet Insurance Working Group) for an explanation for why the law will now be delayed at least another five months. The next time it would be able to go up for a vote would be at the Spring Meeting in April.

A non-answer answer

On December 27, a non-answer answer was issued from an NAIC spokesperson who asked not to be named, notably more than a week after the model was “pulled:”

The Pet Insurance Model was pulled from Plenary. We will continue working on the model act and present it for a vote at a later date most likely at the Spring National Meeting.  We have no additional information.

There was no attempt to explain why the Model was pulled, nor why it had clearly occurred unexpectedly. Even Commissioner Schmidt was apparently caught flat-footed. She was forced to note in her remarks that she needed to “improvise because my remarks say, ‘As a member of the NAIC team, I am proud to have helped pass a Pet Insurance Model.’”

Why the surprise pull-back?

“Several regulators asked for clarification on issues associated with implementation of the pet insurance model law,” the same NAIC spokesperson told TCR on January 5, asking not to be named again. “Since there was not enough time to adequately research and address their concerns around producer licensing before the plenary meeting, the decision was made to postpone the vote. The NAIC will hold a public call to discuss this issue and post additional information on naic.org soon,” the person added.

Beyond the fact that the issue pertains to producer licensing, which we had already learned from consumer advocate Birny Birnbaum within hours of the meeting, this is also a non-answer.

Why would Commissioner Schmidt have been unaware of any request for clarification at the time the law was removed? We wish we could ask her. But Commissioner Schmidt refused to respond to a series of requests to explain the sudden removal of the law. She answered one of TCR’s inquiries only to say she was “traveling all afternoon and evening on Thursday” and that she was “so sorry” she was “unable” to reach out, although she was able to write the email saying she was “unable” to respond, and then did not respond to two additional inquiries.

Nor do we have any idea exactly what the issues were that “needed clarification,” or who the “several regulators” were who asked about them.

Did someone decide to read the draft of the two-years-in-the works Model Law for the first time a few hours into the final meeting?

The pet insurance industry’s trade group, NAPHIA, continued to decline comment; Kristen Lynch, the group’s spokeswoman did not respond.

The Pet Insurance Working Group, part of the Property and Casualty Insurance Committee, is tasked with the mission of drafting the model law and states on its website that its purpose is to “complete the development of a model law or guideline to establish appropriate regulatory standards for the pet insurance industry.” The law would require all kinds of insurance disclosures and concessions, such as waiting periods of no more than 30 days, that would, in turn, address the kinds of pitfalls we reported on in March 2020. Which is why the Model Law matters so much.

Without question, it will take years for states to consider the legislation if it’s considered at all, but it would have been an important step forward.

Whether the surprising new delay has to do with licensing or language or whatever, the sentences or paragraphs at issue, and who raised these issues and why, continue to be a mystery. When we find out anything, we’ll let you know.