LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 7213 NOTE PREPARED: Mar 12, 2020
BILL NUMBER: HB 1372 BILL AMENDED: Mar 11, 2020
SUBJECT: Various Insurance Matters.
FIRST AUTHOR: Rep. Carbaugh BILL STATUS: Enrolled
FIRST SPONSOR: Sen. Bassler
FUNDS AFFECTED: X GENERAL IMPACT: State & Local
X DEDICATED
FEDERAL
Summary of Legislation: This bill has the following provisions:
(1) Requires a state employee health plan, a policy of accident and sickness insurance, and a health
maintenance organization contract to provide coverage for pediatric autoimmune neuropsychiatric disorders
associated with streptococcal infections (PANDAS) and pediatric acute-onset neuropsychiatric syndrome
(PANS), including treatment with intravenous immunoglobulin therapy.
(2) Makes changes in the law concerning the permissible investments of life insurance companies and
casualty, fire, and marine insurance companies.
(3) Provides that an insurance administrator may pay claims via electronic payment.
(4) Exempts an individual from the prelicensing course, state license examination, and continuing education
requirements for licensed independent adjusters if the individual holds a current claims certification issued
by a national or state claims association whose certification program meets certain conditions.
(5) Provides that a Multiple Employer Welfare Arrangement (MEWA) may be established through an
interlocal cooperation agreement.
(6) Adopts the insurance data security model law, which requires certain holders of an insurance license,
authority, or registration to maintain an information security program and meet other requirements.
(7) Establishes an affirmative defense to a tort civil action for a licensee that satisfies the requirements of
the insurance data security model law.
(8) Adopts a new model law on credit for reinsurance.
(9) Provides that a rejection of uninsured motorist coverage or underinsured motorist coverage in an
underlying personal policy is also a rejection of uninsured motorist coverage or underinsured motorist
coverage in a personal umbrella or excess liability policy.
(10) Urges the Legislative Council to assign to an appropriate interim study committee the task of studying
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medical payment coverage, including: (a) whether medical payment coverage should be supplemental to the
benefits: (i) to which a covered individual is entitled under a health plan; and (ii) that are the same as or
similar to benefits available to the covered individual under the medical payment coverage; and (b) whether
a health plan should be prohibited from requiring the use or exhaustion of medical payment coverage as a
condition of payment of benefits under the health plan for health care services rendered to a covered
individual.
Effective Date: July 1, 2020.
Explanation of State Expenditures: Summary - This bill may increase state expenditures to finance the cost
of any state-mandated services that are required to be included in health insurance plans offered through the
Health Insurance Exchange (HIX) but not included in the federal definition of essential health benefits. The
additional General Fund expenditures to finance coverage for intraveneous immunoglobin therapy for
children with PANDAS and PANS is estimated to be between $65,000 and $130,000 per year, with $32,500
to $65,000 occurring in the latter half of FY 2021, and the full estimated cost range occurring in FY 2022.
Annual costs thereafter would depend on how many new cases of PANDAS and PANS are diagnosed and
treated.
The bill could increase Department of Insurance (DOI) workload to provide oversight of insurance
companies’ compliance with the requirements of the bill. Additionally, the bill could indirectly increase costs
of the state employee health plan.
Additionally, if an interim study committee were to hold additional meetings to study medical payment
coverage, there would be additional expenditures for legislator per diem and travel reimbursement for the
committee members. Any additional expenditures must be within the committee’s budget, which is
established by the Legislative Council.
Additional Information - PANS/PANDAS Coverage: Requiring coverage for immunoglobin therapy is not
included in plans offered through the HIX. As a result, the state would be responsible for the costs of
including this coverage to all health plans offered through the HIX. For the 2018 open enrollment period,
the HIX issued health plans to cover approximately 148,400 affected individuals. Of these insureds, an
estimated 13 individuals under the age of 19 could require coverage for PANDAS and PANS during CY
2021. The estimated cost of treatment was reported to be between $5,000 and $10,000 per case. The
estimated annual cost to the state of the mandated coverage in the bill is expected to be between $65,000 and
$130,000 per year. Because additional costs would fall on a calendar year schedule, it is expected that half
of the initial year increase in costs would fall in the latter half FY 2021, with the full impact occurring in FY
2022.
The State Personnel Department (SPD) reports the provisions of the bill are not expected to impact health
insurance coverage offered to current and former state employees and their survivors.
DOI Workload: The bill could increase the workload of the DOI to receive certifications from insurers
confirming compliance with the requirements of the bill. Additionally, the workload of the DOI could
increase to the extent they assess insurers’ compliance with the bill’s requirements and discover violations
that could be actionable. For violations that are not covered with a criminal penalty, the DOI could pursue
remedy against violators as an unfair and deceptive act. Agency workload could also increase to investigate
allegations and provide adjudicative proceedings to determine if an unfair or deceptive act has been
committed. Increases in workload are within the routine administrative functions of the agency and expected
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to be accomplished within existing resource and funding levels.
Additionally, the bill could decrease the workload of the DOI to process new and renewal licensure
applications for insurance adjusters.
Reinsurance: The bill repeals the chapter governing reinsurance requirements for insurers in the state and
replaces these requirements with National Association of Insurance Commissioners model language. The
change could impact DOI workload to assess insurers’ compliance with the new requirements. However,
given the DOI currently regulates reinsurance requirements, these new requirements are expected to be
accomplished within existing resource and funding levels.
Explanation of State Revenues: Summary: This bill could impact health insurance premiums paid in the
state. Any impact on health insurance premiums could impact General Fund revenue from insurance premium
and adjusted gross income (AGI) tax collections.
Additionally, the bill could increase General Fund revenue from criminal and unfair and deceptive act
penalties as well as revenue to the Common School Fund from criminal penalties. Total increases in General
Fund and Common School Fund revenue are expected to be small.
The bill could also decrease revenue to the DOI Fund by exempting certain insurance adjusters from
licensure fees. Revenue losses are expected to be minimal.
Additional Information - Insurance Adjuster Licensure: To the extent individuals who currently hold a claims
certification issued by a national or state claims association pay licensure fees to the DOI, revenue to the DOI
Fund would decrease in future years by exempting these individuals from licensure fees. The application and
renewal fee for a independent adjuster license is $40 paid biennially to the DOI for deposit in the DOI Fund.
For FY 2019, the DOI Fund received a total of $10.9 M in revenue from new and renewal licensure fees.
Information Security Programs: Insurance companies could decide to pass on costs of information security
programs to insureds in the form of increased annual premiums. To the extent insurance premiums increase
in the state to finance these programs, the state could receive additional General Fund revenue from the
insurance premium or AGI tax.
Personal Liability Insurance Umbrella Policies: Additionally, by codifying that the refusal of underinsured
and uninsured motorist coverage for a personal insurance policy is also a rejection for a personal umbrella
or excess liability policy, total insurance premiums paid for property and casualty insurance plans could
decrease in the state. It is not known to what extent insurers would include underinsured and uninsured
motorist coverage in an umbrella or excess liability policy after refusal to include underinsured and uninsured
motorist coverage for a personal insurance policy. As a result, this requirement is expected to have a minimal
impact on revenue to the General Fund from insurance premium or the AGI tax.
Revenue from Insurance Premiums: Domestic insurers have the option to pay taxes on insurance premiums
written in the state or to pay the AGI tax. Foreign insurers are required to pay taxes on premiums written in
the state, and some foreign insurers are assessed additional retaliatory taxes. In these cases, the minimum tax
rate would be 1.3% of written premiums. Revenue received from the AGI and insurance premium tax is
deposited in the General Fund. For FY 2019, the insurance premium tax generated approximately $251.6 M
in revenue.
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Investment Regulation: The bill increases maximum investment options for insurers. As a result, fewer
insurers could violate the maximum investment specifications. Under current law, individuals who violate
certain provisions of insurance law could be subject to Class C infraction judgments or Class C misdemeanor
violations if they have a prior insurance-related conviction within a five-year time frame.
Penalty Provision: If additional court cases occur and fines are collected, revenue to both the Common
School Fund (from fines) and the state General Fund (from court fees) would increase. The maximum fine
for a Class C misdemeanor is $500. The maximum judgment for a Class C infraction is $500, which would
be deposited in the state General Fund. However, any additional revenue is likely to be small.
Unfair and Deceptive Act: If this bill increases the number of unfair and deceptive acts discovered by the
Department of Insurance, revenue to the General Fund will increase from civil penalties paid by violators.
The penalty for engaging in an unfair and deceptive act is one or more of the following: (1) a civil penalty
between $25,000 and $50,000 for each act or violation and (2) revocation of a person's license or certificate
of authority if they knowingly engaged in an unfair or deceptive act. Actual increases in revenue are
unknown.
Explanation of Local Expenditures: Coverage for PANS/PANDAS: This bill could also increase local unit
of government expenditures to the extent the coverage requirement in the bill increases local unit of
government group health insurance premiums on plans offered to employees.
Penalty Provision: A Class C misdemeanor is punishable by up to 60 days in jail.
Explanation of Local Revenues: Penalty Provision: If additional court actions are filed and a judgment is
entered, local governments would receive revenue from court fees. However, any additional revenue is likely
to be small.
State Agencies Affected: State Personnel Department, Department of Insurance.
Local Agencies Affected: Trial courts, local law enforcement agencies, local units that offer health
insurance coverage for employees.
Information Sources: National Association of Insurance Commissioners. IC 27-7-3; IC 27-1-2-4; Kaiser
Family Foundation; US Health and Human Services, National Institutions of Health; Hayes Incorporated
Medical Technology Directory; Christy Tittle, SPD.
Fiscal Analyst: Bill Brumbach, 317-232-9559.
HB 1372 4


Statutes affected:
1. Introduced House Bill (H): 27-1-12-2, 27-1-12.1-9, 27-1-13-3, 27-7-5-2
2. House Bill (H): 27-1-12-2, 27-1-12.1-9, 27-1-13-3, 27-1-28-15, 27-1-28-16, 27-1-28-19, 27-7-5-2
3. House Bill (S): 27-1-12-2, 27-1-12.1-9, 27-1-13-3, 27-1-28-15, 27-1-28-16, 27-1-28-19, 27-7-5-2
4. Engrossed House Bill (S): 27-1-12-2, 27-1-12.1-9, 27-1-13-3, 27-1-28-15, 27-1-28-16, 27-1-28-19, 27-7-5-2
5. Enrolled House Bill (H): 27-1-12-2, 27-1-12.1-9, 27-1-13-3, 27-1-28-15, 27-1-28-16, 27-1-28-19, 27-7-5-2