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Committee hears bill to clarify treatment of subscription legal plans; insurer regulator takes neutral stance
Summary
Supporters of AB512 told the Assembly Commerce and Labor Committee that the bill would exempt non‑indemnity subscription legal plans from the Nevada Insurance Code. The Nevada Division of Insurance said it is neutral and noted it has regulated certain legal‑expense products under the miscellaneous category.
The Assembly Commerce and Labor Committee on Friday heard testimony on Assembly Bill 512, which would clarify that non‑indemnity legal plans—subscription arrangements that give members access to provider law firms—are not casualty insurance under Nevada law.
Proponents, including representatives of LegalShield, said the bill would modernize Nevada’s statute and align the state with the majority of other states that treat the plans as non‑insurance. "This proposed legislation simply will bring clarity and modernization to the law here in Nevada and exempt these modern non indemnity legal plans from insurance," said Mark Nelms, vice president and assistant general counsel for prepaid legal services (LegalShield). He described the plan model as one in which members contact a provider law firm for consultations, document review or referrals, and emphasized that LegalShield does not indemnify members or pay claims.
Nelms said LegalShield’s provider law‑firm model uses a first point of contact at the firm and that the company has provider firms around the country; he told the committee the plans do not reimburse legal expenses and "we do not indemnify our members for legal fees. We don't pay claims. We don't reimburse members." Trey Abney, speaking with Nelms for LegalShield, said the change would align Nevada with states that have adopted similar clarifying statutes and argued the plans increase access to legal help for people who do not qualify for legal aid.
Representing the Nevada Division of Insurance, Adam Plain testified the division is neutral on AB512. Plain told the committee the division has regulated certain legal‑expense products under the existing miscellaneous category and currently applies a "fortuitous event" standard to determine whether an undefined product should be treated as insurance. "We're fine with the redefinition if that's what the legislature chooses," Plain said, but he noted the division will continue to enforce the law as the legislature defines it.
No callers or members of the public registered testimony in support or opposition during the hearing; no formal committee vote on AB512 was recorded in the transcript of this meeting.
Supporters said the bill is narrowly written to distinguish non‑indemnity legal plans from casualty insurance by clarifying that plans that reimburse or pay for specific legal expenses would remain within the insurance code, while fixed, prearranged payment plans that provide access to provider attorneys would be exempt. LegalShield and its witnesses repeatedly described the product as an access model—members pay a subscription for legal access rather than submit claims for reimbursement.
Committee staff posted a version of proposed amendments on the bill page and LegalShield witnesses said they worked from the amendment posted to NELIS. The division of insurance said it submitted written testimony and a constituent letter and will adapt enforcement to whatever legislative definition is adopted.
The committee did not take a final vote on AB512 during the hearing. Unless the bill moves to a committee vote at a later meeting, the committee's record at this hearing consists of proponent testimony from LegalShield and a neutral position from the Division of Insurance.
