June 2, 2026 · Insurance Committee · 9,624 words · 11 speakers · 109 segments
House Insurance Committee to order. Mr. Friend, would you please call the roll? Chair Lampton?
Here.
Vice Chair Craig?
Here.
Ranked Member Hall?
Aye.
Representatives Barhorst, Cockley, Daniels?
Here.
Dieter?
Here.
Jerroles?
Here.
John?
Here.
King?
Here.
Representative Lorenz is excused.
Representatives Peterson and Sweeney.
Right committee. We have a quorum present and we'll proceed as a full committee. I would like to welcome Representative Jerroles back to insurance. Good to see you, my friend. The minutes from the previous meeting are on your iPads. We'd like to approve those minutes without objection. And hearing no objection, the minutes are approved. I now call forward House Bill 593 forward for its fourth hearing. The chair recognizes Vice Chair Craig for a motion.
Chairman, I move to amend House Bill 593 with amendment number 2404.
Thank you, Vice Chair. Craig, will you please explain the amendment?
Certainly. Chair, this is a technical amendment that makes clarifications based on feedback from ODI, the Ohio Department of Insurance. It limits the insurers that may offer paid family leave insurance to those licensed in the state that offer disability income insurance or life insurance. It specifies that the department can adopt rules for administering and enforcing this bill, and that insurers offering this insurance are subject to all other applicable laws. This is simply cleanup that ODI recommended to make sure that this bill is more workable. Thank you.
The amendment has been distributed to the committee. We'd like to approve the amendment without objection. And hearing no objection, the amendment has been accepted. What is the pleasure of the committee? The chair recognizes. Vice Chair Craig for a motion.
Chairman, I move to favorably report House Bill 593 and recommend its passage.
Mr. Friend, will you please call the roll?
Chair Lampton?
Yes.
Vice Chair Craig?
Yes.
Ranking Member Hall?
Aye.
Representative Barhorst?
Yes.
Representative Cockley?
Yes.
Representative Daniels?
Yes.
Representative Dieter. Yes.
Representative Jerrolds. Yes.
Representative John. Yes.
Representative King. Yes.
Representative Peterson. Yes.
Thank you. With 11 affirmative votes and 0 negative votes, House Bill 593 has been favorably reported out of committee. This will conclude the fourth hearing of House Bill 593. I now call forward House Bill 453 forward for its third hearing. The chair recognizes Vice Chair Craig for a motion.
Chairman, I move to amend House Bill 453 with amendment number 1779.
Vice Chair Craig, would you please explain the amendment?
Thank you, Chair. because the bill sponsor is not here at the moment. I want to offer this and explain it. It eliminates the option for an individual to practice as an exam-eligible technician under the supervision of a board-certified assistant behavior analyst. And it clarifies that an exam-eligible technician does not achieve certification as a registered behavior technician within 90 days. The individual may not engage in applied behavior analysis.
Thank you The amendment has been distributed to members of the committee I like to accept the amendment without objection In hearing no objection the amendment has been accepted This concludes the third hearing of House Bill 453. At this time, I'd like to call forward House Bill 709 forward for its first hearing, sponsor testimony. This morning we have Representatives Brownlee and our own, sorry, I'm in the middle of something here, dude. Representatives Brownlee and Representative Craig. Welcome to insurance. The floor is yours.
Good morning and thank you. Chair Lampton, Ranking Member Hall, and members of the House Insurance Committee, thank you for allowing us to provide sponsor testimony on House Bill 709, a bill that would require private insurers to cover telehealth services for outpatient behavioral health services, the same as they would for in-person behavioral health services. During the pandemic of 2020, the behavioral health field took a sharp and necessary turn towards virtual behavioral health therapy sessions. Though many therapists, myself included, were very reluctant to move to virtual therapy sessions, we pivoted to continue to serve our clients as we worked from home. Despite our initial concerns with online therapy sessions, we found that they worked just as well, if not better, for many of our clients. Over the course of the past five years, behavioral health care providers have integrated virtual therapy sessions into their treatment models. They developed and strengthened standards to ensure privacy and confidentiality of patients. They developed professional training and guidance on virtual therapy to ensure behavioral health care providers could deliver high-quality practice standards via telehealth. Since the end of the pandemic, many Ohioans have chosen to access their behavioral health care virtually. For convenience, many patients prefer virtual sessions as a way to fit therapy conveniently into their day and to save valuable travel time and expense. For therapeutic reasons, from a therapeutic level, patients are often more comfortable and able to fully participate in therapy from the comfort of their own homes. Access. For many Ohioans living in behavioral health care deserts, which are in 75 of our 88 counties, virtual sessions are the only option for ongoing treatment. House Bill 709 ensures that Ohio behavioral health patients, no matter where they live in the state, will have access to behavioral health care. Insurance coverage for medical telehealth care is already required in the Ohio Revised Code 3902.30. House Bill 709 is a simple bill that creates parity for behavioral health care in the recognition that behavioral health care treatment plays a critical role in improving health outcomes for Ohioans. And Chair Lambton, Ranking Member Hall, members of the Insurance Committee, thank you for your time listening to me. I will now pass the baton over to Rep Craig.
Yeah, thank you, Chairman, Ranking Member Hall, members. I'll make this quick. My joint sponsor, Representative Brownlee, did a great job outlining the efficacy of this bill. Just want to jump into what this bill does and clarify some things So I can emphasize enough this bill is not a new insurance coverage mandate Instead it establishes clear parity within the coverage that already exists under Ohio law today So the General Assembly, as Representative Brownlee pointed out, already enacted legislation to ensure that telehealth services are a covered option in Ohio's insurance market. However, ambiguity remains in how the coverage is applied, particularly in behavioral health. This bill simply ensures that an insurer covers behavioral health services when delivered in person, those same services have to be delivered via telehealth. It ensures that patients are not penalized or discouraged from using telehealth. And in practice, it means the mode of delivery, whether in person or virtual, does not determine whether a covered behavioral health services is accessible to the patient. So this clarity, as Representative Brownlee pointed out, it's very critical for rural communities across Ohio. In many parts of the state, individuals face real and persistent barriers to accessing mental health care. We all know about the provider shortages, long travel distances, limited transportation options, and extended wait times for appointments. Telehealth has become a critical tool in bridging that gap, allowing patients to connect with licensed providers without having to leave their home communities or miss work and school obligations. Ensuring true parity in telehealth behavioral health coverage strengthens access and removes barriers to care. Again, I want to emphasize this bill does not expand the scope of covered services, and it does not require insurers to add new benefits. In conversations with business groups and stakeholders, there is strong recognition of the value of telehealth in supporting workforce stability, reducing absenteeism, and improving access to timely care. Many of these groups have expressed enthusiasm about the clarity this legislation provides, and I fully expect continued engagement from them as this bill moves through the process. Thank you so much, members, and we both are happy to answer any questions you all may have.
Thank you very much for your testimony this morning. First up, we have Representative Gerrals.
Thank you, Chair. Thank you, representatives, for this bill. Actually, I actually do like this bill. I have a couple of maybe some background questions and then maybe go into the particulars of your legislation here. And I guess just for clarity for me, one, shout out to my therapists who work with me and via telehealth. But beyond telehealth therapy, when you say parity, what are the other services that currently are being done in an in-person behavioral setting but are not currently being done in a telehealth setting?
Thank you for your question through the chair. So right now, insurance companies are not required to, if they cover outpatient behavioral health care, they are not required to cover outpatient behavioral health care via telehealth. So there are some insurers who are not allowing for their patients, their consumers, to get that coverage for outpatient behavioral health care. And this is, there are different levels of care, of course, and I could go into sort of all of the levels of care. it really depends on the client and the acuity, the intensity of treatment as to whether or not telehealth is an appropriate delivery method for that patient. And so this is not requiring that insurance companies cover things that shouldn be given via telehealth It just if they are already covering this outpatient behavioral health therapy in person then they should cover it also through telehealth.
Follow up? Yes, thank you, Chair. Just for scale, how many Ohioans currently utilize telehealth, And have you seen that number grow multiple times over over the years?
Yeah, definitely over the last few years it has grown significantly because the behavioral health profession has professionalized telehealth. And so about 40% of behavioral health outpatient services are actually done via telehealth. We don't have great numbers on other types of services being done via telehealth, like intensive, outpatient, or anything like that. But the national average, Ohio average, is at around 40%.
And one more question, Chair? Follow-up, yeah. And I guess my last question will be around outcomes. Again, I have a great therapist, therapists, multiple. But the reality is I do recognize that for a lot of people, it takes a number of sessions to really understand whether this is the best fit for you. Can you talk a little bit about outcomes? What has been documented in data related to telehealth services? Have we seen the similar levels of outcomes versus being in an in-person setting? Just want to get that perspective. And that's all I have. Thank you, Chair.
You sure you don't want to answer that one?
Okay.
Okay, as the resident therapist, and shout out to therapists, but through the chair. So there has been clinical research done through National Institute of Health and NAMI showing that telehealth for behavioral health is just as effective as in person. Of course, for anybody, and I will say, I really do want to give a special shout out. For those of us who serve in this body, our time is extremely limited. And so if we do wish to access therapy, telehealth might be the only way to do so, just from a day-to-day standpoint. And so, yes, there is a growing body of research that shows the efficacy of telehealth for treatment. Finding the right therapist, of course, is always something that is personal. You know, I certainly wasn't the right therapist for everybody. Some clients wanted something different, and that's okay. So having those conversations with your therapist is really important. If you are accessing your behavioral health through telehealth, I think it's really important that therapists set ground rules and expectations, as do the clients, to make sure that this is working. It does not work for everybody, but for people in behavioral health care deserts, it may be the only opportunity they have. So I certainly want to make sure that we have as wide coverage as possible. Thank you.
Representative Cochley.
Thank you, Chair. I'm also a big fan of online therapy. Part of it is because of our demanding schedule. It's one of the ways that I can get behavioral health resources. So also shout out to my therapist. Why do you believe insurers have treated behavioral health, telehealth, differently from medical telehealth?
Sure. Sure. Representative, I would clarify. I think a lot of insurers are covering it. We're just simply trying to codify that and make sure it's as clear as possible in our state statute. So certainly don't want to paint a picture that they're not. I think a lot are. We're just trying to ensure that continues to be the case.
Very good follow-up. Yes, please. Thank you. Have other states adopted similar parity requirements, and what has their experience been regarding costs?
Okay, Chairman, my representative, my joint sponsor is a lovely stat here that I'll read. 24 states require that insurance providers cover telehealth for behavioral health at the same rates as in person. and again this simply is you know MAPEA the federal MAPEA law this is another way that we can try and strengthen that and ensure parity across the board so if medical services are being offered via telehealth I'm not sure why we would treat behavioral health any differently
very good thank you if I may
through the chair and I think behavioral health has just been a newer line of billing and so that's why we're seeing this lack of parity The great news about behavioral health is that it integrates, when it's integrated with medical health, it really does bring costs down overall because people are able to get over these barriers to care and create healthier communities.
Thank you.
Representative Barhorst.
Through the chair, thank you, sir. To the witnesses, just a quick question. I noticed on some of my most recent online experiences on Zoom and meetings, there's this AI thing that automatically starts recording. I just want to, I'm sure you have either considered this or maybe you need to. I just want to make sure that that technology doesn't put a stigma to scare people from talking about their mental health on these meetings. And that, you know, it's just done right. I support the bill and the concept in general, I actually like it. I just, that kind of gave me pause, and I started seeing things being recorded without anybody really knowing. So if we could just deal with that, I'd appreciate that. If you have any questions or feedback, that'd be great.
Sure. Through the chair, thank you for your question. When we began, I mean, I was really thrown into, I worked with children. So, you know, children may not be the most effective for younger kids, but we had to do it anyway, and we figured it out. And after, you know, we tried multiple different platforms to deliver that telehealth, especially at first, and security was, and HIPAA privacy confidentiality was the number one concern. In fact, when my agency contracted with Zoom and, you know, you're trying to teach a whole bunch of therapists how to be techie, which was somewhat hilarious. But one of the immediate first things we did was to disable any recording on that Zoom function. I mean, that's just a non-starter. I know it could still happen, but going through all of the training guidelines, ethics of it is incredibly important before you ever set foot into a telehealth therapy session.
Thank you. No follow-up.
Any other questions from committee? Vice Chair Hall, or Ranking Member Hall?
I got promoted and changed parties.
Welcome.
Right, right, roger that.
We've got a team coach today.
It's good to be here, right?
Yeah.
Thank you, Chair, I appreciate it. I just had a couple, I think just a few quick questions. One, you mentioned earlier in your testimony that this doesn't mandate additional coverage. I just curious do we know how many Ohioans in general have behavioral health coverage that would be impacted by something like this Just ballpark I mean chairman I kind of want to call you vice chair now but I a ranking member
I think it's hard. It's hard to know what coverage everyone has, right? Like that's not necessarily something that's tracked. So that's a really hard number to pinpoint. you could look overall the uninsured rates and kind of dive down from there but it's hard it's hard quantifying that data
Roger that, thank you Vice Chair and then through the chair I just have one more question what about my ability so again I'm not a behavioral health specialist I'm not a psychiatrist or a psychologist obviously I just I guess my question is are there types and kinds of conditions where I may miss something in a telehealth environment that maybe I would see they were there in person?
Do you want to go first? Sure. Through the chair to the representative. So first of all, this doesn't require that providers see people via telehealth if it is not the right fit. And if there are concerns particularly about safety or just misdiagnosis, mistreatment, That would certainly be something that the therapist should be talking about with the client and making different arrangements. In terms of liability and safety, after confidentiality, that was next. And making sure we knew where people were, that had to be part of the session. Tell me where you are physically so that I know what resources are available should I need to call for emergency help was an immediate concern that we addressed, and that has been professionalized and placed into guidelines and ethics for our providers. Wonderful. Any other questions from committee?
Very good. Seeing none, thank you very much for your testimony this morning. This concludes the first hearing of House Bill 709. I now call forward Senate Bill 306 for its second hearing, all testimony. We have the Mike Farley on behalf of the Ohio Insurance Institute to testify on behalf of Senate Bill 306. Mr. Farley, welcome to committee.
The floor is yours. Mr. Chairman, I don't get that kind of treatment at home, and I pay the mortgage, and tuition. Good morning, and thank you for having me this morning. It's an honor to testify on Senegal 306. I am Michael Farley, and the distinct honor of serving as Vice President of Government Affairs and General Counsel at the Ohio Insurance Institute. I'll skip that paragraph. I've read it a couple times for you, and you have a long committee and a long couple weeks left. As Senator Ling mentioned in his sponsored testimony, this may be the most boring legislation you consider during the 136th General Assembly. But nonetheless, it's vitally important. It's so critical that Ohio's insurance regulatory codes are kept up to date and the ancillary statutes that support the insurance industry. Perhaps more now than ever, technology plays a central part in the progress of insurance. I'll briefly highlight some critical components of Senegal 306. the towing statute. So just about nine years ago, and this is where term limits come in, because many of you weren't here when we did this. So just over nine years ago, Ohio General Assembly created a process by which insurers were allowed to go into municipal court or county court and seek gain prompt possession of vehicles kind of held hostage by some unscrupulous towers Now, the best part is we worked with the scrupulous towers to get control of the unscrupulous towers. So we don't want to say that all of them are bad, but we are some really good actors in the place as well. So after nine years, a little refreshing, although we discovered that there's some critical areas that need to be addressed. in consultation with our colleagues and the towers. We bring forward a couple of enhancements. We're going to extend that notice period from 30 to 45 days. We just found that people like to talk to each other instead of going to court. I know that's a novel concept. But, you know, an extra two weeks will do that for you. And sometimes mail doesn't hit. So, you know, we're just going to give a couple extra weeks there. We're going to prohibit a towing service or storage facility from adding additional storage or related fees once an insurer secures possession of the vehicle. We're going to add written notice that includes a copy of the complaint. It may be used to provide service to facilitate release of a vehicle. And so everybody who's a non-attorney, this is easy, right? We're just going to step on a complaint. We're just going to go legal fiction, counselor. We're just going to go and just pretend like it's a thing. But it's a written notice that we filed the complaint. The attorney is under the authority of the court. Once you have filed a complaint, we're just going to hand that to them with a written notice. The mail is not real reliable right now. We're finding that more and more all the time. and both sides have a vested interest in getting these vehicles back to the consumers. The bill adds a statement of public policy that the section's revised code is enacted to promote prompt return of vehicles to the consumers. We've had some municipal judges in the state decide that this wasn't a very important component of their docket, and after about a year and a half, remember, the towers have two days to turn these vehicles over, and when they don't do that's when we have the court action. to a year and a half later. That's not necessarily what you and the General Assembly intended nine years ago. It's going to expand the definition of storage facility to comport with a recent decision out of the First District Court of Appeals, Geico versus Glendale Body Shop. We felt it, I mean, the court already said the definition of storage met what we had in the bill. I would love to say that I knew that case was coming when I drafted that section, but my paranormal abilities are only so much limited. in this event. Electronic signatures, we've done this a couple times, Mr. Chairman, but now we're just going to say once and for all, if an insurer is required by somewhere in the revised code to have a signature, it can be done electronically. Every time we try to tackle that, this will be your third time, Mr. Chairman, every time we try to tackle that, we find there's an area that didn't get caught into that. So now it's just a blanket statement, Title 39, that applies to all of us. As a first principle discussion, insurers deal with many reputable repair shops all over Ohio. I recently had a couple of repairs in my own right. My insurer sent me to that particular repair shop, and it was phenomenal. I actually refer them to people now when they have non-insured coverage. However, insurers are finding some consistent themes that stand in the way of consumers from receiving their vehicles promptly. This bill does the following in this arena. A repair facility may not require a consumer to sign a contract that does any of the following. It can't interfere with your policy of insurance. It can't limit, interfere, or prohibit an insurer or consumer from commencing a civil action against a towing service, which is that towing action we talked about before, or the good old one we learned in law school we're plevin. Sort of like the rule against perpetuities. We don't remember that when we need to. And it requires the consumer to pay legal fees of the repair facility for filing any action designed to return the vehicle to the consumer You can require that That prohibited And it prohibits the consumer from transferring the title of the vehicle and the consumer Those are all provisions they can put in the contract Your vehicle's totaled. We usually take care of that for you. We take possession of the vehicles and insure. There were contractual provisions that said you couldn't do that, so they could sit there and keep those storage fees piling up on those repair shops. This legislation prohibits a repair shot or the agent of a repair shot from obtaining the assignment of benefits or power of attorney. Once a vehicle has been deemed a total loss, the repair facility can no longer add additional fees to the bill. Repair shop is required to provide prompt access to the vehicle by the insurer for the purposes of inspection and valuation of the vehicle to determine the state of loss. The access is limited to normal business hours. You're not requiring to come in on Sunday afternoon, but you would be surprised how difficult it is to go see that vehicle to say, hell yeah, that is a total loss. And language is added to make clear the violations are unfair and deceptive practices and subject to the Ohio Consumer Sales Practice Act. These actions largely fell inside of that, we believe. This is just a clarification for consumers. We've talked about the Ohio State Risk Plan in the past. We've made several additions to the statute, to a best-in-class statute for the country. The Ohio State Risk Plan is a statutorily created market of last resort for automobiles and trucks in Ohio, Now, due in large part to the competitive nature of Ohio's insurance market and nationally leading low premiums, we became a target in recent years for a lot of these unscrupulous players to come in and try to get, particularly in the trucking space and other transport. So several years ago, we started seeing this market increase in applications. Many of these have led us to discover that there are real efforts all over the country to defraud the respective markets of last resort to gain cheap coverage where they otherwise were uneligible. To properly gain access to the OARP, an applicant must have been denied coverage by five insurers or as many as their receptive agent represents. The language in 306 in several instances codifies practices already established under our Manual of Operations. The Manual of Operations is approved by the Ohio Department of Insurance as we've attempted to deal with those suspected to committing fraudulent activity involving the plan. We have found a need to codify these provisions to assist in preventing future harm to the plan. A submitting agent must attest that all information submitted in the application is true and accurate. If an agent is found to have submitted an application with false and accurate information, the plan manager may prevent them from submitting future applications. Sort of like when your kid wants ice cream and they don't do their chores, you don't give them ice cream anymore. Significantly, the amended language allows the plan to underwrite more like a traditional insurance company. The plan will now be able to seek additional information and proof of that information and require the use of post-underwriting controls like the inclusion of safety devices and other underwriting restrictions. We are doing this now under the plan, and it's been developed that way, but this is going to codify those things so when they come after you can't do that, well, the law says we can. And if the plan manager discovers an insurer and the admitted or not admitted market would have taken a given risk, the plan manager may place that risk with a given insurer. This is consistent with the principle that this is the market of last resort. Finally, the bill clarifies in Ohio law that knowingly submitting or submitting with the purpose to defraud the plan is subject to Ohio's insurance fraud statute. This insurance submitting, excuse me, this includes submitting false, manufactured, manipulated, or otherwise inaccurate information of the plan. I would encourage if you see my boss, Dean Fidel, he can tell you a lot of great stories of some folks that try to get really clever in this market. and he's getting really clever at catching them. And it all The notes that it's not in my testimony, but the OARP, when there's an assessment due, that goes to all 270 plus property casual riders in the state. So if there's an overage, they all got to pay. So that does hurt each and every one of us who get insurance in the state. So for any insurance theft and fraud is a priority you're going to hear a lot about for our industry in the coming year plus. And this is an instance where we've been able to tackle it on the front end. So we thank you for considering these changes. A couple of other quick hits as we move on. investment law changes. Insurers are heavily regulated and scrutinized as investments they make. It's literally codified in a really extensive chapter of the revised code. This provision modernizes several references to the NEIC's Securities Valuation Office to reflect the actual language now used. This will allow admitted investment into safe vehicles designated by the NEIC SVO. Could that sound like the most bureaucratic statement I've ever made, even when I was a bureaucrat? We have an office The NEIC is the National Association of Insurance Commissioners. That's the trade association for the insurance regulators. They've established an office in New York City that goes and looks at all of these investments and grades them. And depending on the grade is what you get your admitted status for that investment. And this is all geared toward admitting safe yield. Insurers must be permitted additional ability to invest slightly more in foreign corporations because the world's flat. I think the number is from 5% to 7%. The Ohio Department of Insurance was consulted with and approves of this language. Special Purpose Financial Captive Modifications. This change allows the superintendent of insurance to admit an unimpaired asset held by a special purpose financial captive or other affiliate for the purposes of reinsurance. Unimpaired means it's one of those SVO type rated entities. You're not going to have somebody out there if it's impaired. Otherwise, we saw what happened with Enron. Those were heavily impaired assets. These are the ones that aren't debt-induced. We'll give it to you there. Everybody loves it when you mention Enron as an example. Investment advisor, insurance agent. This change provides ODI with the ability to set licensing requirements for investment advisor. insurance agents who may recommend annuity and life products without the need to hold a registration with FINRA as a registered representative. The industry and the department have come together to work on that language, and I was reflected in the amendment that the chairman put forward last meeting, right? Yes, thank you. Last two weeks of session, the time's fungible. But Mr. Chairman, members of the committee, there's a lot in this bill. I've talked to most of you about this bill, and if there's any questions, I'm happy to entertain. But we appreciate the willingness of the General Assembly to continually come back and look at the statute because we candidly have the best statute in the country. And I always like it when other states call me and say, how do you do that? It's because of us. I give you full credit, Mr. Chairman. And your dual vice chairs. I think that's the...
Exactly. That's right. Well, thank you very much for your testimony. Representative Barhorst.
Thank you, Chairman. To the witness, Mr. Farley, thank you for your testimony. As a licensed life and health agent and with a Series 6 Fender license, I don't really have a question or a problem with that part of the bill.
Can you tell me kind of where the issue actually was and what we're solving? I don't understand how you cannot have one license. Is it to service it after you already sold it Just take me through that I just want to understand So this is an area Mr Chairman and Representative that I did not particularly work on I going to have the chairman bail me out in a second I think he waving at me But I think, well, one of the areas of this is, as these products become more sophisticated in the annuity space, you're looking at them more as an investment vehicle than an insurance vehicle. And I think that these folks that are getting swept into this area are going to have those special specialties. and they probably have clients that are high net worth, that are looking for additional yield that perhaps my meager investment portfolio would not need. And so these folks are, traditionally, and you know this as an agent, the more sophisticated the purchaser, the less regulation we require upon them, and we allow them to take some additional risk. I don't think that there's additional risk here. I just think that that's, you know, some of the certifications can go to the side because they have a different speciality. Thank you. If I may, Rep Barhorse, so these fee-only planners have the licenses, can do that, but they're not specifically appointed by any company. As you know, if you're going to make a sale through whatever company, you get appointed through them. So these fee-only, again, they're not paid commissions. So this would permit them from marketing that annuity without having to have that appointment. Because right now they can market the annuity, but then they have to hand it over to someone who is appointed. They have to go through the application process and do all that. It's an added layer to the current process. Passing this would put Ohio in a first. And, you know, this is something that might catch fire, I think, and spread across the country.
Any other questions from the committee? Yes, Representative King.
Thank you, Chair, and thank you for being with us today. So I do have a question regarding the towing and the storage facility. So in the testimony, you mentioned that storage facility, from adding additional storage or related fees once an assure secures the possession of the vehicle. So my question is, theoretically, if they deem it a loss, I mean, the vehicle still sits there, It's going to take some time for the title to change or decide who wants the car, where it's going. So those storage fees keep occurring as long as that vehicle is still there. So how does that work and how realistic is that? Is it to the insurance, the insurer secures the possession of the vehicle, or is it until it's deemed a total loss? And then is there any kind of leeway because that's going to take time. If I get an email at 5 p.m. in my shop and says, well, it's a total loss, and then, you know, today is the cutoff date. How does all that work?
If you could maybe just explain a little bit. Absolutely. Mr. Chairman and Representative, that's a phenomenal question. So 95% of the time, we're going to talk to each other. We're going to talk to the towing facility where the vehicle is. We're going to talk to the repair shop. And we're going to figure that piece out. We're going to say, hey, we're going to total it. We'll pick it up on Thursday. You know, and, you know, some of those folks are charging $35 a day instead of $250 a day. Because I can tell you the tales of woe for high-end sports cars that have a – you've probably heard me in the committee talk, there's no such thing as a $50 bumper cover anymore. Although my daughter did hit a car with a $50 bumper cover. It was a 2000 Toyota Tercel. That why I love my daughter the most because she can do that cheap But in this case they sit on the lot While we haggling a day racks up pretty darn quick and it's economically impractical to repair as the standard for totaling vehicles in Ohio. Well, if you get over $60,000 and the vehicle's only worth $50, we're going to total that vehicle. Even though it's perfectly usable, it has a bumper cover, but we can't economically get access to the vehicle. So to your example on that Friday afternoon, most of the time we're going to call and talk to them. My claims folks are going to talk to them. We have relationships there. It's usually pretty friendly. And there's minority situations where they don't let us have access to the car to tell them it's a total loss. And there's two different standards in the bill. One for the towers. The towers says as soon as we take possession of the vehicle, that's when storage stops. I will tell you the towers love to get rid of vehicles off their lot, so much so that I think they passed a statute in the last three years to help expedite moving that off of their lot. They don't want those vehicles on their lot. So the towers aren't so much the problem in that space. When you get into the repair shop, sometimes this is an easy way of making additional. For some of the unscrupulous minority grouping, this is how they can make a little extra money and not have to perform work. And there's a whole bunch of other things that happen in that space where they tear down the vehicles and they hold you hostage until you put it back together. and there's a whole bunch of things in this space, but the storage is really the number one problem that we're facing now. 99% of it's going to be dealing with by communication, but those who don't want to communicate, they're going to have to give us reasonable access to the vehicle during normal business hours, so we're not coming on Sunday. And as soon as we total that vehicle, we're going to stop incentivizing them from charging additional fees because that's on the repair facility side. It's going to stop right then. Follow-up?
Yes, thank you. So is it realistic if it's determined that it's a total? I mean, it ends that day. They still have to decide, you know, is the body shop going to take it? Is the owner going to take it? Is there a mortgage? There's all that coordination with the title. Is that really a fair, I guess, should there be a grace period? How do other states? I'm a former adjuster, so I'm just processing this through my head. How does that work? How does it look like? and is that really fair or is it realistic? Maybe that's a better question.
So most, Mr. Chairman represented this, it's a phenomenal question, and I think what you're going to see is most likely is going to happen in that scenario. When we total that vehicle, we're going to write a check to the insured. We're going to take care of our insured because we like to keep taking care of it. And we have some, in the administrative code, we have very significant timelines we have to make certain decisions. Rule 54, I think it's either 54 or 56. See, when you quote things, you shouldn't do that. But we have a significant timeline in there. So we're going to go in, and as soon as we can, if it's a total, we're going to write the check. If you have a loan on that, we're going to take care of the lien holder, take care of them, write the check out, everybody's going to be fine. We virtually own that vehicle at that point as an insurer. That has value. And every vehicle still has value because we can go into the salvage market and try to recoup some of those costs. The longer it's held, the time value of money depletes, and even for a month. I mean, there are certain times of the year that salvage vehicles are worth more than others when they go to auction and things like that. And we've gotten pretty good at figuring those things out. So fairness, you're asking the right question, of course. Is it fair to all parties? Yes, because they're going to get paid what they have on the storage side. and we going to no longer incentivize them to charge storage because we want that vehicle back When we get it off their lot they can go to the next vehicle And we still have to pay whatever you know if they repaired the vehicle and things like that if they made repairs, we still haggle in through that. And there's still litigation that happens around that, too, separate from the towing statute. We have a lot of contractual issues that come in there. But for the most part, this is going to be a lot more fair to consumers because this is going to expedite us getting them taken care of and getting onto the property, making those assessments, paying our insureds, paying their lien, and getting access to the vehicle and not having all these deleterious charges keep racking up, which do get passed in the socialized manner of insurance. Follow-up?
Any other questions from committee? All right, very good. Oh, yes, Representative Switney, you're fine.
Thank you, Chair. Thank you for being with us today. Dense bills. Also, when we're talking about the assigned, if I'm understanding correctly, you're attempting to remove the ability for a repair shop to challenge an insurer on behalf of the consumer. So is that going to leave the consumer to fight with their insurance company?
And does that leave us any different off than what consumers have today? Mr. Chairman, I want to try to clarify that. Please. So the assigned risk provisions have nothing to do with towing.
I switched my question.
Oh, yeah, perfect. So I probably got hung up on that.
So you're asking, could you repeat, Mr. Chairman? So is this bill taking out the ability for the repair shops to challenge insurers?
So no, it doesn't do that. No, Mr. Chairman, Representative, we've not taken any remedies away.
Okay.
And as someone who sits in the general counsel's chair, I get to hear about all the litigation they file against us. Actually, what I have done, Representative, is when we drafted this, we took a variety of cases from the 1st and the 10th district, which is the Hamilton County. And we said, oh, well, they said you don't have privity to sue an insurer. They can't sue us directly. Because what they'll do is they'll, if you've had your car repaired, you'll walk in and they give you, now it's on an iPad. But it used to be a stack of the agreement was like this. Nobody reads it. I do because I'm a nerd. But we go through and we're looking at it and it's, oh, I can't give the title away to my vehicle. So after we have that totaling situation, you're giving me the title as an insurer. You're done. I'm going to write you a check. We're probably not going to write you a check until we get the title because we have to have title for it, right? So those things are slowing down for consumers. This is actually inuring to the benefit of consumers. and the insurers and our ability to advocate for our consumers. Because I'll tell you the number one thing when you get in an accident, file your claim, call your agent, and keep all of us accountable. But we're all fighting for you in that situation. Does it take away our repair jobs? No.
Thank you, Chair. So switching in terms of the insurance of last resort, I understand that if there are concerns of people that are gaming the system, how that hurts everybody. And I think we all want to make sure that people are not committing fraud. But could you just tell us if we have any, what evidence of how often this is happening? And what is the recourse if any time we put up new barriers to try to stomp up fraud, there's also the inadvertent risk that you have some wrongfully being denied, what's the appeals process, what's the capabilities. To me, it always should be a balance of not giving more tools to kind of delay the process and give somebody something that they are rightfully eligible for.
Mr. Chairman, Representative, thank you for asking that question, because that's something we balance quite often. Over the last three years, so we're one of the only trade associations that manage the market at a last resort. That's just when they put it in in the 70s, they just put it with us. I don't know how it happened. It's kind of a neat additional thing you get to do once in a while. Our president acts as the plan manager. And I would say it inured to the other side for the long time. It was kind of unless you blatantly showed us something bad, we were going to approve it. It was a market of last resort. But then we started seeing these trends of fraud. And we're still approving applications. I think as recently as last week we had an application approved inside the plant. However, I would say there's a lot less of them approved than there were before. I hate to make this parallel, but I think it's timely. A lot of the same problems you're seeing in the Medicaid fraud space, like, for example, they'll put down addresses for office parks that you can't possibly park seven heavy 18-wheeler trucks at. And I think there might be members of the committee that understand that commercial office spaces don't want you to park 18-wheeler trucks in their parking lot. So we were finding those type of things pop out more routinely, or they would submit fraudulent utility bills. We were trying to make them prove that they're an Ohio business. Because we're not writing these Ohio – we're not writing for Kentucky. We're not writing for Tennessee. Actually, it's usually like Chicago. It's New York. It's Florida and Georgia. And so I would say that balancing effort, we were very, very diligent in that. The first thing we did, we put all these changes that have been codified. This is the third iteration. We put them in the manual of operations that was approved by the Department of Insurance under existing law. Let them sit. How does it work? And then we moved to codify. So it's been a very deliberate, iterative process to ensure fairness, both to the applicant, but also to the insurers and the consumers who get, you know, this cost is passed along. And it's not insignificant numbers. It's millions of dollars that have been passed on because of the fraud.
Follow up? Thank you, Chair. So can you help me understand what is the benefit for somebody who is wanting to take advantage of these last resort? I actually don't know anything about this before you gave testimony. But to me, I would imagine that that is not ideal insurance, that premiums are pretty high, that you're able to maybe not have the same protections as somebody else. So I know one of the provisions in there was that you need to prove that they don't have other. Like, why would somebody, if they could get a better insurance, take less insurance for hire? Or is it that they just shouldn't be eligible at all for any insurance and they're just trying to get in here? Or is it both? I just don't understand why someone would purposefully.
Mr. Chairman, I would like to stipulate that I did not ask the representative to ask this question because now I get to brag about the amazingness of the Ohio insurance market. The work of the General Assembly and having stable regulatory and largely stable judicial environment in Ohio has allowed us to have the lowest premiums in the country So if you're in a state like Illinois and you're looking over to the promised land of Ohio, I'm going to get T-shirts made with that, I think, Ohio is the insurance promised land. But you're looking over here, even with your best rates, our market of last resort was better. in some instances, because all of these great things that you have done in the General Assembly and the regulatory and the judicial market. So that's why you come here. And what we saw is we were the second phase of this because there were other states. I think Iowa was one of the first states. They are in a similar situation. It's a great insurance state. Not as great as Ohio, but still pretty good. And they were kind of targeted first, and then they're coming here. Ohio, largely because the trade was aware of it, because we run it, and our CEO is the plan manager, we were able to take actions to come to the legislature and start codifying these things. We took additional rate for sure when we found out that we needed to increase rates in that plan to be competitive. But even then, we were still receiving applications because we have such an amazing marketplace here. And I know when you're paying your insurance bill, I know I have two teenagers. I know what I'm paying, but if you talk to people in other states, they're paying a lot more. And even in the commercial market, actually precisely in the commercial market, it plays that same device.
So, Representative, just to follow up on his, if a person, an individual, has such a terrible driving record, most of the times they can get what we call high-risk insurance. But if, for example, they cannot, then they go to the plan, and that is that last resort. What's happened is you've got bad actors in other states that are pretending to be domiciled in Ohio. Now they've created this Ohio business that it's all false to get access to that. And basically we end up paying that increased cost because we're thinking, is this a real Ohio company? Well, they've made it up. It's not. But that's because their rates in Illinois, for example, might be twice what they would be here. So it's like, hey, we can get cheaper insurance in Ohio. We just have to pretend to be an Ohio company. That's what happens.
Mr. Chairman, if I may, just to that point, there's a bifurcated plan. One's for personal lines, one's for commercial. The real problem we're seeing is in the commercial space. I'm sure Dean Fidel is watching right now, and he'll tell me if I'm – I think we have one car, maybe two, in the personal lines. I mean, there's a handful at best. So because of what the chairman is talking about, we have a robust offering. We have the competitive – we have over 270 riders on the PNC side, particularly on the personal lines side. You can get insurance in Ohio. It might be a little pricier because you don't know how to drive real well. Or you have other existing factors, but it's called a risk pull and slow down. Or don't drive distracted. There's a whole bunch of good things you can do. So the personal alliance has not been attacked in that way. It's really the coming out of the commercial side. And it a lot like I said there a lot of parallels in that Medicaid space where there six people in the same office and six different LLCs It been eye Mr Chairman and kind of a nerd adventure the last couple of years of dealing with this
Thank you. Any other questions from committee? All right, seeing none. Thank you, Mr. Chairman. Thank you. Mr. Farley, thank you very much for your testimony this morning on the boring topic of insurance. Senate Bill 306. We also have written proponent testimony from Matt Overturf on behalf of NAMIC. that's the National Association of Mutual Insurance Companies. We have proponent testimony from Joe Roth on behalf of the American Property Casualty Insurance Association and from Dan Dodd on behalf of NAFA, which is the National Association of Insurance Financial Advisors. We did not receive any opponent or interested party testimony. This will now conclude the third hearing of Senate Bill 306. At this time, I'd like to call forward House Bill 792 forward for its second hearing, proponent testimony. And testifying in person, we have George Christie on behalf of the Ohio Insurance Agents Association. George, welcome to committee. The floor is yours.
Good morning, Chairman. Chairman Lampton, Vice Chair Craig, Ranking Member Hall, and esteemed members of the House Insurance Committee, Thank you for the opportunity to provide proponent testimony on House Bill 792. My name is George Christie. I'm the Government Affairs Manager for the Ohio Insurance Agents Association, otherwise known as OIA. Our association is the collective voice of over 1,000 independent agencies that employ nearly 11,000 Ohioans. I appreciate the opportunity to speak on behalf of our members and share our support for House Bill 792. This legislation would make meaningful regulatory reforms to Ohio's excess and surplus lines market. The excess and surplus lines market, or ENS market, serves an essential purpose. It exists to ensure risks that are unique, higher risk, or otherwise difficult to place in the admitted market. Under current law, when an agent seeks to place coverage in the ENS market, they are required to obtain up to five declinations from their admitted carriers before moving forward. This is the highest requirement in the country, putting Ohio alongside Puerto Rico. Many states have a three-declination standard, and there have been a movement in other states, like Florida, Virginia, Mississippi, and Louisiana, that have eliminated their declination requirement entirely. We believe that House Bill 792 takes a balanced approach by reducing Ohio's requirement from five declinations to one. This reform recognizes the professional standard of agents in our state. Agents must make a good faith effort to place coverage first in the admitted market. Agents are not placing business in the ENS market unnecessarily. independent agents maintain strong relationships with their admitted carriers and understand their markets well when agents turn to the ens market for their client it is typically because they are seeking specialized or niche coverage that is difficult or impossible to place in the admitted market These may include fire peril only policies cyber liability coverage or unique risks such as coverage for an amusement park at a county fair. The excess and surplus lines market exists to provide flexibility and access to coverage options for these specialized risks. Additionally, House Bill 792 makes an important addition by authorizing the creation of an export list that would be maintained by the Ohio Department of Insurance. More than 20 states currently utilize export lists to identify coverages that are consistently difficult to place within the admitted market. Our neighboring states of Michigan, Pennsylvania, and West Virginia all utilize export lists. Under this system, if a coverage would appear on the approved export list, an agent may access the ENS market without first obtaining that declination. This reform is a practical approach. House Bill 792 does not fully eliminate the declination requirement, but it acknowledges that agents should be trusted to act in the best interest of their clients. It also reduces the administrative burdens that can delay Ohioans from obtaining the coverage that they need. Lastly, it is important to note that House Bill 792 does not change the requirement for agents to properly ensure that their clients are aware that their coverage is being placed in the E&S market and does not have the protection of the Ohio Insurance Guarantee Association. Consumers are still required to sign that they have been made aware of these facts. This legislation is about improving efficiency, modernizing Ohio law, and ensuring consumers can access specialized coverage in a timely manner. Thank you again for the opportunity to testify in support of House Bill 792, and I'd be happy to answer any questions.
Thank you, Mr. Christie, for your testimony. Do we have any questions from the committee? All right. Very good. Thank you very much. We have some written testimony from actual real-life insurance agents. As proponents for this, we have testimony from Mark Willis of the W.E. Davis Insurance Agency. Am I on the right? Yeah. Matt Overturf, also a proponent from the NAMIC, the National Association of Mutual Insurance Companies. the Mike Farley provided proponent testimony from the Ohio Insurance Institute and we have proponent testimony from John Meats of the Wholesale and Specialty Insurance Association this will then conclude the second hearing of House Bill 792 at this time I'd like to call forward House Bill 757 forward for its third hearing, opponent and interested party testimony. We did not receive any testimony. Is there anyone present who would like to provide testimony? Seeing none, this will conclude the third hearing of House Bill 757. And as far as I know, we have no further business, so we are adjourned.