Nevada committee hears bill to clarify non‑indemnity legal plans are not insurance

Supporters of Assembly Bill 512 told the Senate Committee on Commerce and Labor on Friday that the measure would update Nevada law to treat modern non‑indemnity legal service plans as outside the insurance code, a change they said would expand access to affordable legal help.

Trey Abney, representing LegalShield, and Mark Nelms, vice president and assistant general counsel for LegalShield, presented the bill. "This proposed legislation will simply bring clarity and modernization to the law and will exempt modern non indemnity legal plans from the insurance code," Nelms said, adding that LegalShield operates a provider‑law‑firm model that gives members access to consultations and document review but does not indemnify or reimburse legal fees.

The bill would add statutory language to define "legal expense insurance" and would clarify that fixed, prearranged payment plans that provide access to legal services but do not pay claims are not casualty insurance. Abney explained the drafting intent: if a plan reimburses or pays for specific legal services or expenses, "that is an insurance plan," but fixed prearranged payment arrangements would not be classified as insurance under the new text.

Nelms told the committee that most states do not treat non‑indemnity legal plans as insurance regulators do in a minority of states. "This will align Nevada with the vast majority of states," he said, and framed the change as an access‑to‑justice measure: legal plans, he said, fill a gap between legal aid, which serves relatively few people, and full‑rate private counsel. Nelms gave a landlord‑tenant example to show how a single unrepresented civil case can cascade into eviction, judgments and employment effects.

Adam Plain of the Nevada Division of Insurance testified in neutral. Plain described the agency's current practice: because legal services insurance is not defined in statute, the division regulates such products under a "fortuitous event standard" and has historically treated them as miscellaneous casualty insurance. Plain said AB512 would put a definition into statute so the division would no longer rely on the fortuitous event standard; the division indicated it had no preference on whether to retain the current regulatory approach or adopt the bill's definition. He also noted that section 1 of the bill tracks an earlier regulation intended to address unintended consequences from last session.

There was no public testimony in support or opposition by callers or attendees during the hearing. Committee members asked no follow‑up questions of the proponents, and the chair closed the AB512 hearing without a vote recorded in the transcript.

The bill's principal effect, as presented, is statutory clarification: it would define what constitutes legal expense casualty insurance and exempt non‑indemnity subscription access plans from the Nevada insurance code, according to proponents. The Division of Insurance supplied written materials referenced during testimony and stood ready to answer technical drafting questions on section 1 if the committee requested further detail.

AB512 moves forward as a policy option to change how legal subscription plans are classified in Nevada statutes; no formal committee action (motion or vote) appears in the transcript from this hearing.