AB376 - Revises provisions relating to insurance. (BDR 57-1009)

- 83rd Session (2025) Assembly Bill No. 376–Assemblymembers O’Neill, Gray, Dickman, DeLong; and Gallant Joint Sponsor: Senator Buck CHAPTER.......... AN ACT relating to insurance; requiring the Commissioner of Insurance to establish and administer the Regulatory Experimentation Program for Insurance Product Innovation; setting forth requirements for the operation of the Program; authorizing certain property insurers to file a proposed increase in a rate for certain lines of insurance through a program of flex-rated filing; revising requirements relating to insurance coverage for the peril of wildfire; revising certain requirements for reciprocal insurers; revising provisions relating to captive insurers; revising requirements relating to insurance coverage for common-interest communities; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law requires the Commissioner of Insurance to regulate insurance in this State and enforce the provisions of the Nevada Insurance Code. (NRS 679B.120) Section 9 of this bill requires the Commissioner to establish and administer the Regulatory Experimentation Program for Insurance Product Innovation, which is a 4-year program to enable an authorized insurer who offers at least one insurance product that provides property insurance coverage for real or personal property located in this State outside of the Program to test a qualified insurance product in this State without complying with certain provisions of the Nevada Insurance Code or certain regulations adopted pursuant thereto that would otherwise be required outside of the Program. Section 7 of this bill defines “qualified insurance product” to mean an insurance product that provides property insurance coverage for real or personal property located in this State. Section 12 of this bill sets forth the process by which an authorized insurer may apply to participate in the Program. Section 12 requires the application of the applicant to include, among other information, an explanation of any exemption from the provisions of the Nevada Insurance Code or the regulations adopted pursuant thereto that the applicant is requesting. Section 13 of this bill requires the Commissioner to approve or deny an application within 90 days after the completed application is received. Section 14 of this bill requires the Commissioner to provide written notice of the approval or denial of an application. Under section 15 of this bill, if an application is approved, the qualified insurance product offered or provided through the Program, with certain exceptions, is exempt from the provisions of the Nevada Insurance Code and the regulations adopted pursuant thereto for which an exemption was requested in the application to participate in the Program. Section 15 also limits the period of testing for a qualified insurance product under the Program to 36 months, with one extension of not more than 12 months if approved by the Commissioner. Section 10 of this bill requires the Commissioner to adopt regulations to carry out the Program. – 2 – - 83rd Session (2025) Section 11 of this bill requires certain disclosures to be provided before providing a consumer a qualified insurance product through the Program. Section 16 of this bill sets forth certain requirements relating to the retention of records and reporting by a participant in the Program. Sections 17 and 26 of this bill set forth certain requirements concerning the confidentiality and disclosure of records relating to the Program. Section 18 of this bill requires the Commissioner to submit a report to the Legislature concerning the Program on or before January 1, 2029. Sections 19 and 20 of this bill authorize the Commissioner to take certain actions against a participant in the Program who commits certain violations or engages in any act or omission that the Commissioner determines is inconsistent with the health, safety or welfare of consumers or the public generally. Sections 3-8 of this bill define certain words and terms relating to the Program. Under existing law, with certain exceptions, insurers and certain rate service organizations are required to file with the Commissioner all rates and proposed increases thereto, as well as the forms of policies to which the rates apply, supplementary rate information and any changes or amendments to the rates. Existing law requires that such a filing be filed not less than 30 days before the proposed effective date of the filing, with certain exceptions. (NRS 686B.070) Existing law sets forth procedures by which the Commissioner is required to approve or disapprove a proposed increase or decrease in a rate for any kind or line of insurance, other than certain health plans. (NRS 686B.110) Sections 20.3 and 21 of this bill provide an alternative method by which certain insurers may make a filing for a proposed increase in a rate for certain types of insurance. Section 20.3 requires the Commissioner to establish a program of flex-rated filing to allow an insurer that issues certain lines of property insurance to make a filing for that line of insurance if the proposed increase does not exceed certain thresholds established by the Commissioner and certain other requirements are met. Section 20.3 sets forth certain requirements for making a filing for a proposed increase in a rate to qualify to be filed under the program of flex-rated filing. If the Commissioner finds, within 15 days after the filing is made, that the filing fails to meet such requirements, section 20.3 authorizes the Commissioner to treat the filing in the same manner as other proposed increases in a rate filed outside the program of flex-rated filing. If the Commissioner does not make such a determination within that time, the filing is deemed to be approved. Section 20.5 of this bill applies the definitions set forth under existing law governing rate filings to the provisions of section 20.3. Section 20.7 of this bill excludes property insurance for business and commercial risks from the provisions of section 20.3. Section 25.1 of this bill authorizes an insurer that issues a policy of property insurance to exclude the peril of wildfire from the coverage provided under the policy. Section 25.1 additionally authorizes an insurer to issue a policy of property insurance that solely covers the peril of wildfire. Existing law sets forth various requirements and restrictions for the operation of a reciprocal insurer. (Chapter 694B of NRS) Existing law sets forth certain rules that the Commissioner is required to apply in determining the financial condition of a reciprocal insurer, including rules concerning the computation of reserves. (NRS 694B.150) Section 25.3 of this bill revises those rules concerning reserves to require instead that the reserves of a reciprocal insurer be maintained as required by section 25.2 of this bill. Section 25.2 requires a reciprocal insurer at all times to maintain an unearned premium reserve in a certain amount and sets forth the manner in which that amount must be calculated. If, at any time, the amount of the unearned premium reserve maintained by a reciprocal insurer is less than $100,000, section 25.2 requires the reciprocal insurer to maintain cash or securities acceptable – 3 – - 83rd Session (2025) to the Commissioner in an amount that, when added to the amount of the unearned premium reserve maintained, equals not less than $100,000. Existing law provides for the licensure and regulation of captive insurers. (Chapter 694C of NRS) Section 25.5 of this bill removes provisions prohibiting a captive insurer from directly providing homeowners’ insurance coverage. Section 25.5 authorizes an association captive insurer to insure the risks of individual homeowners who combine into an association for the purpose of procuring homeowners’ insurance or the risks of individual units’ owners in a common- interest community so long as the association captive insurer is owned by the association created by the homeowners or the unit-owners’ association, as applicable. Sections 25.4 and 25.5 of this bill authorize a sponsored captive insurer to insure the risks of individual homeowners who elect to become a participant of a protected cell of a sponsored captive insurer. Existing law requires a unit-owners’ association in a common-interest community to maintain certain insurance coverage, including property insurance on the common elements of the community. Existing law requires such property insurance for buildings with units divided by certain boundaries to include the units to the extent reasonably available. (NRS 116.3113) Section 25.6 of this bill provides that the requirement concerning the inclusion of the units in the property insurance coverage does not apply to property insurance maintained by an association which covers the peril of wildfire and which coordinates with or subrogates individual policies of property insurance maintained by the units’ owners that cover the peril of wildfire. EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 679B of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 20, inclusive, of this act. Sec. 2. As used in sections 2 to 20, inclusive, of this act, unless the context otherwise requires, the words and terms defined in sections 3 to 8, inclusive, of this act have the meanings ascribed to them in those sections. Sec. 3. “Consumer” means any person who purchases a qualified insurance product. Sec. 4. (Deleted by amendment.) Sec. 5. “Participant” means an authorized insurer whose application to participate in the Program has been approved by the Commissioner pursuant to section 14 of this act. Sec. 6. “Program” means the Regulatory Experimentation Program for Insurance Product Innovation established and administered by the Commissioner pursuant to sections 2 to 20, inclusive, of this act. – 4 – - 83rd Session (2025) Sec. 7. “Qualified insurance product” means an insurance product that provides property insurance coverage for real or personal property located in this State, including, without limitation, any residential or commercial property. Sec. 8. “Test” means to offer or provide a qualified insurance product through the Program. Sec. 9. The Commissioner shall establish and administer the Regulatory Experimentation Program for Insurance Product Innovation to enable an authorized insurer who offers at least one insurance product that provides property insurance coverage for real or personal property located in this State outside of the Program to test a qualified insurance product in this State, identified in an application to participate in the Program pursuant to section 12 of this act, without complying with any provision of this title or any regulation adopted pursuant thereto except as otherwise required by the Commissioner pursuant to section 15 or 20 of this act. Sec. 10. The Commissioner shall adopt such regulations as he or she deems necessary to carry out the provisions of sections 2 to 20, inclusive, of this act. Sec. 11. 1. Before providing any qualified insurance product to a consumer, a participant or a producer of insurance providing the qualified insurance product shall disclose to the consumer: (a) The name and contact information of the participant; (b) The registration number applicable to the qualified insurance product, as issued by the Commissioner pursuant to section 15 of this act; (c) The fact that the qualified insurance product may be exempt from certain provisions of this title and certain regulations adopted pursuant thereto, except as otherwise required by the Commissioner pursuant to section 15 or 20 of this act; (d) The fact that the participant has been approved to provide the qualified insurance product pursuant to sections 2 to 20, inclusive, of this act but that the qualified insurance product is not endorsed or recommended by the Commissioner or any governmental agency; and (e) The fact that the qualified insurance product is provided as part of a test and may be discontinued at or before the end of the test, with the date on which the test is expected to end. 2. The Commissioner may condition approval of an application to participate in the Program on, or require at any time thereafter, the disclosure by a participant of information – 5 – - 83rd Session (2025) relating to a qualified insurance product in addition to the disclosures required by subsection 1. The Commissioner shall give written notice to the participant of any additional disclosures required pursuant to this subsection. 3. The disclosures required by subsections 1 and 2, as applicable, must be clear and conspicuous and must be provided in English and Spanish. If the qualified insurance product is provided through an Internet website or mobile application, the consumer must acknowledge receipt of the disclosures before the completion of any transaction. Sec. 12. 1. An authorized insurer who desires to participate in the Program to test a qualified insurance product must submit a written application in accordance with this section, in the form prescribed by the Commissioner. A separate application must be filed for each qualified insurance product proposed for testing. 2. The application must show that the applicant offers at least one insurance product that provides property insurance coverage for real or personal property located in this State outside of the Program and will at all times during the test continue to offer at least one insurance product that provides property insurance coverage for real or personal property located in this State outside of the Program. 3. The application must include: (a) A description of the qualified insurance product proposed for testing and an explanation of: (1) Any exemption from the provisions of this title or the regulations adopted pursuant thereto that the applicant is requesting, which must not include any provision of this chapter or chapter 686A of NRS, and a justification for each such exemption; (2) Any benefit of the qualified insurance product; (3) Any risk of harm to consumers associated with the qualified insurance product; and (4) The manner in which participation in the Program will facilitate a successful test of the qualified insurance product. (b) A statement of the proposed plan for testing the qualified insu [Text truncated for display. Full text available on LegiScan.]