"The Independent Insurance Agents of Nebraska has asked for clarification of the Deparment of Insurance Bulletin dated July 30, 2002, regarding the implementation of LB 417 passed in this session of the Nebraska Legislature.
In a notice dated July 30, 2002, the Department of Insurance advised insurers and insurance producers that as a result of LB 417, executive officers of a corporation who own 25% or more of that corporation's common stock will no longer be required to be covered under worker's compensation policies. As a result, after January 1, 2003, these persons must make an affirmative choice to their insurer (not the Nebraska Worker's Compensation Court) if they want to be covered under their workers' compensation policy. The Notice went on to state that LB 417 does not specifically provide a deinitive answer to the issues surrounding policies of workers' compensation insurance with an inception date in 2002 and an expiration date in 2003. The Department declined to take a position on whether an insurers continue to provide coverage on such policies after January 1, 2003 for an officer affected by the law who had not been requested to make an election of coverage as the statue did not include an affirmative statement on this issue.
In response to the request for clarification, it is the opinion of the Department of Insurance that, although LB 417 included no specific statement regarding the applicability of the legislation to existing contracts, case law, including US Brewers' Ass'n Inc. v. State, 192 Neb 328 and Avondale v. Sovereign Camp W.O.W. 134 Neb. 717, indicates that legislative enactments such as lb417 cannot properly be construed so as to impair the obligations of contract. Therefore, it is the opinion of the Department of Insurance that LB 417 only applies to contracts entered into after Janary 1, 2003, the effective date of the legislation."
