PIA Weekly Report

On By Corey Weeks, Manager, Government Relations

PIA Report Summary

  • North Carolina enacted the nation’s first outright ban on third-party litigation funding, signing House Bill 315 into law with near-unanimous legislative support (House 112-0, Senate 45-1), going far beyond disclosure requirements to prohibit litigation investment entirely, a landmark development insurers are hailing as a potential model for other states.
  • H.R. 7128, the TRIA Program Reauthorization Act of 2026, is scheduled for House floor consideration this week under suspension of the rules during the week of June 29, making it the most directly insurance-relevant federal floor action of the period.
  • The NAIC suffered a significant cyberattack via an Oracle PeopleSoft zero-day vulnerability on June 11, exposing sensitive regulatory filings from state insurance commissioners and prompting ratings agencies to suspend data feeds to the NAIC, a serious blow to state regulatory infrastructure.
  • Neptune Insurance Holdings doubled its residential flood coverage limit to $15 million, directly responding to NFIP strain, the federal program carries $22.5 billion in debt and has been reauthorized on a short-term basis for the 34th time since FY2017.

Federal Insurance Office & State Regulation

  • The NAIC’s cybersecurity breach is the most consequential state regulatory infrastructure event in recent memory. The attack, executed via an Oracle PeopleSoft zero-day vulnerability on June 11, exposed sensitive regulatory filings submitted by state insurance commissioners to the NAIC’s centralized systems. The breach was severe enough that ratings agencies suspended their data feeds to the NAIC in response. The NAIC serves as the primary coordinating body for state-based insurance regulation, and its data systems house confidential insurer financial filings, market conduct data, and licensing records. A compromise of this infrastructure undermines the foundational information-sharing architecture that state regulators depend on to monitor insurer solvency and market conduct. Independent agents and their carrier partners should be alert to potential downstream disruptions in state licensing and filing workflows while remediation is underway.The incident arrives at a moment when the state-based regulatory model is already under pressure from federal encroachment debates. Any perception that state regulatory systems are less secure than federal alternatives could be weaponized in ongoing arguments for expanded FIO authority or federal preemption of state insurance oversight. PIA should monitor whether the breach triggers congressional interest in federal cybersecurity standards for state insurance regulators.
  • The Supreme Court issued a 7-2 ruling in Monsanto v. Durnell holding that the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) expressly preempts state-law failure-to-warn claims where EPA has approved a label that omits the contested warning. Justice Kavanaugh, writing for the majority, held that FIFRA’s preemption clause bars state common-law claims that would require a label “in addition to or different from” what EPA has approved, overturning a $1.25 million Missouri jury verdict against Bayer/Monsanto. The decision resolves a longstanding circuit split and is the first time in roughly two decades the Court has addressed FIFRA’s preemption scope. The ruling’s implications extend well beyond pesticide litigation. Bloomberg Law noted that the preemption principle could benefit the medical-device, cosmetic, and food industries, which operate under federal labeling regimes structured similarly to FIFRA. For the insurance industry, the decision is a double-edged development. On one hand, it reduces product-liability and excess exposure tied to glyphosate claims, Bayer has paid more than $10 billion settling Roundup claims since 2018, with an estimated 60,000 to 65,000 claims still outstanding. On the other hand, the ruling’s broad preemption logic could be invoked in future arguments for federal preemption of state insurance regulations, a perennial concern for PIA and the state-based regulatory model. Justice Thomas filed a concurrence raising federalism and separation-of-powers concerns about FIFRA’s structure, while Justice Jackson dissented alongside Justice Gorsuch, arguing the majority “reads into FIFRA a labeling requirement that does not exist”.

Medicare Advantage & Agent Commissions

  • The MA overpayment issue has attracted congressional attention, with scholars testifying before Congress on actionable solutions. Meanwhile, U.S. healthcare spending spiked 7.3% in 2025 to reach $5.7 trillion, driven by soaring hospital services spending and prescription drug costs including GLP-1s — the third consecutive year of spending growth exceeding 7%.

Medicare spending is projected to grow at the fastest rate of any payer type over the next decade, at 7.7% annually through 2034, as Baby Boomers age into the program. CMS actuaries project national health spending will swell from 18% of GDP in 2024 to 20.6% in 2034, when it will account for $9 trillion. These macro trends intensify the scrutiny on MA plans and their billing practices, with direct implications for independent agents who sell and service MA products. The DOJ announced criminal charges against 455 people as part of a two-week healthcare fraud crackdown involving more than $6.5 billion in false claims submitted to insurers — a signal that enforcement intensity is not abating. Separately, the FBI returned a fugitive accused of helping mastermind a $3.7 billion Medicare fraud scheme after his capture in Turkey, the second high-profile Medicare fraud fugitive return in less than a week.

Third-Party Litigation Funding

  • North Carolina has become the first U.S. state to impose an outright ban on third-party litigation funding, signing House Bill 315 — the Prohibit Litigation Investments Act — into law this week. Governor Josh Stein signed the legislation, which makes it unlawful for outside parties to finance civil litigation in exchange for a financial stake tied to a case’s outcome. The law passed with overwhelming bipartisan support: the state House voted 112-0 and the Senate 45-1. The attorney general is authorized to seek injunctions and civil penalties of up to $50,000 per violation, and injured parties may recover treble damages based on the value of an unlawful litigation investment. Contracts violating the statute are rendered unenforceable.

The law carves out standard arrangements: insurers’ contractual obligations to defend or indemnify policyholders, traditional contingency-fee agreements, nonprofit and legal-aid funding, financial support from immediate family members, and direct loans whose repayment is not contingent on case outcome. This is a critical distinction for independent agents — the insurer defense obligation carve-out means the law does not disrupt standard liability coverage mechanics.

The North Carolina action goes further than any prior state measure. Other states have enacted disclosure requirements, registration mandates, or foreign-funding restrictions, but none had previously imposed an outright prohibition. California, Colorado, and Illinois are currently weighing restrictions on funder control over attorneys, and Senator Chuck Grassley reintroduced the Litigation Funding Transparency Act in February with co-sponsors including Senators Tillis, Kennedy, and Cornyn, which would require disclosure in federal class actions and MDL proceedings but stops short of a ban. North Carolina’s action is expected to intensify pressure on other states to choose between disclosure, tighter regulation, or prohibition.

Crop Insurance

  • The Risk Management Agency released three significant documents this period that directly affect crop insurance agents’ compensation structures and program planning for the 2027 crop year. PM-26-032 covers the 2027 Appendix III Standard Reinsurance Agreement (SRA) and Livestock Price Reinsurance Agreement (LPRA), the foundational documents governing the financial relationship between USDA and approved insurance providers (AIPs), including the fund allocation and underwriting gain/loss sharing provisions that ultimately shape agent compensation structures and AIP capacity to write business. PM-26-031 addresses 2027 crop year price factors for organic oats and organic rye, providing the actuarial pricing inputs that agents need to quote and place specialty crop policies accurately. Actuarial Release 26-024 provides broader actuarial data updates relevant to 2027 program year underwriting. Agents should review these releases carefully as they set the parameters within which A&O expense reimbursements and program economics will operate for the coming crop year.

USDA also announced disaster assistance for Louisiana agricultural producers impacted by flooding, providing a direct relief pathway for agents serving affected farm client. On June 25, President Trump signed an Executive Order advancing regenerative agriculture, and USDA Secretary Rollins simultaneously announced a final Regenerative Feedstock Rule establishing a framework to connect regenerative agriculture practices to biofuel markets for corn, soybeans, sorghum, and spring canola. The rule establishes field-level carbon intensity quantification, mass balance chain-of-custody standards, and auditing requirements. While not directly an insurance program change, the rule creates new market incentives that could affect farm operation structures and, in turn, the risk profiles and coverage needs of crop insurance clients.

Legislative Activity

  • H.R. 7128, the TRIA Program Reauthorization Act of 2026, is scheduled for House floor consideration during the week of June 29 under suspension of the rules, the most directly insurance-relevant federal floor action this period. The Terrorism Risk Insurance Act program provides the federal backstop for insurer losses from certified acts of terrorism, and its reauthorization is essential to the continued availability of terrorism coverage in commercial lines. Independent agents with commercial clients in high-value or high-profile property segments should track this bill’s progress closely. Suspension of the rules requires a two-thirds majority for passage but limits floor amendments, suggesting leadership expects broad support.

Looking Ahead

  • Week of June 29: H.R. 7128 TRIA Program Reauthorization Act of 2026 on House floor under suspension of the rules — passage expected but watch for any amendments or procedural complications.
  • Week of June 29: H.R. 8800, National Defense Authorization Act for FY2027, on House floor pursuant to a rule — monitor for any insurance-relevant riders, particularly on terrorism risk or federal contractor coverage requirements.