COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 30
(By Senator Minard)
____________
[Originating in the Committee on Banking and Insurance;
reported March 16, 2005.]
____________
A BILL to
amend and reenact §33-2-20 of the Code of West Virginia,
1931, as amended; to amend said code by adding thereto a new
section, designated §33-2-21; to amend and reenact §33-6-8 of
said code; to amend and reenact §33-16B-1 and §33-16B-3 of
said code; to amend and reenact §33-17-8 and 33-17-9 of said
code; to amend said code by adding thereto three new sections,
designated §33-17A-4a, §33-17A-4b and §33-17A-4c; and to amend
and reenact §33-20-4 of said code, all relating to insurance;
allowing the Commissioner to permit automobile insurers to
withdraw from doing business in this state; requiring insurer
to submit a plan; permitting promulgation of rules;
redesignating a section of the insurance code enacted as part
of the bill assigning workers' compensation duties to the
Insurance Commissioner; clarifying that certain rules remain
in effect; exempting commercial insurance lines from the
requirement of prior approval of rates and forms; creating a presumption of prospective relief when forms are disapproved
and providing factors to be considered in determining whether
relief should be retroactive; defining terms; clarifying that
certain health insurance forms marketed to associations must
be filed with the Commissioner; providing that commercial and
certain health insurance forms marketed to associations are
effective upon first use after filing; clarifying that prior
rate approval applies to health insurance certificates and
endorsements; providing an alternative method for nonrenewal
of property insurance; providing a manner of electing an
alternative method; requiring report to the Legislature; and
providing alternative methods of determining insurer liability
in cases of loss to real property.
Be it enacted by the Legislature of West Virginia:
That §33-2-20 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; that said code be amended by adding
thereto a new section, designated §33-2-21; that §33-6-8 of said
code be amended and reenacted; that §33-16B-1 and §33-16B-3 of said
code be amended and reenacted; that §33-17-8 and §33-17-9 of said
code be amended and reenacted; that said code be amended by adding
thereto three new sections, designated §33-17A-4a, §33-17A-4b and
§33-17A-4c; and that §33-20-4 of said code be amended and
reenacted, all to read as follows:
ARTICLE 2. INSURANCE COMMISSIONER.
§33-2-20. Authority of Commissioner to allow withdrawal of insurance carriers from doing business in the state.
(a) Notwithstanding any provision of the code to the contrary,
the Commissioner may, consistent with the provisions of this
section, authorize an insurer to withdraw from the line of
automobile liability insurance for personal, private passenger
automobiles covered by article six-a of this chapter or from doing
business entirely in this state if:
(1) The insurer has submitted and received approval from the
Commissioner of a withdrawal plan; and
(2) The insurer demonstrates to the satisfaction of the
Commissioner that allowing the insurer to withdraw would be in the
best interest of the insurer, its policyholders and the citizens of
this state.
(b) Any insurer that elects to nonrenew or cancel the
particular type or line of insurance coverage provided
for by
section five, article seventeen-a of this chapter shall submit to
the Insurance Commissioner a withdrawal plan for informational
purposes only prior to cancellation or nonrenewal of all its
business in this state.
(c) The Commissioner shall promulgate rules pursuant to
chapter twenty-nine-a of this code setting forth the criteria for
withdrawal plans:
Provided, That the procedural rules previously
promulgated setting forth the criteria for withdrawal plans, which
rules were made effective the twenty-fifth day of September, two
thousand four, shall continue in effect in the same manner as if
this section had not been amended during the first extraordinary session of the Legislature in two thousand five.
§33-2-21. Authority of Insurance Commissioner to regulate workers
compensation industry; authority of Insurance
Commissioner to administer chapter twenty-three of
the Code of West Virginia.
(a) Upon the termination of the Workers' Compensation
Commission pursuant to chapter twenty-three of this code, the
powers and duties heretofore imposed upon the Workers' Compensation
Commission as they relate to general administration of the
provisions of chapter twenty-three of this code are hereby
transferred to and imposed upon the Insurance Commissioner.
(b) Unless otherwise specified in chapter twenty-three of this
code, upon termination of the Workers' Compensation Commission, the
duties imposed upon the Workers' Compensation Commission as they
relate to the award and payment of disability and death benefits
and the review of claims in articles four and five, chapter twenty-
three of this code will be imposed upon the Employers Mutual
Insurance Company established pursuant to article two-c, chapter
twenty-three of this code, a private carrier offering workers'
compensation insurance in this state and self-insured employers.
Whenever reference is made to the Workers' Compensation
Commissioner in those articles, the duty prescribed shall apply to
the Employers Mutual Insurance Company, a private carrier or self-
insured employer, as applicable.
(c) From the effective date of this enactment, the Insurance Commissioner shall regulate all insurers licensed to transact
workers' compensation insurance in this state and all of the
provisions of this chapter shall apply to such insurers, unless
otherwise exempted by statute.
ARTICLE 6. THE INSURANCE POLICY.
§33-6-8. Filing of forms.
(a)
Except as provided in section eight, article seventeen of
this chapter (fire and marine forms), no No insurance policy form,
no group certificate form, no insurance application form where
a
written application is required and is to be made a part of the
policy and no rider, endorsement or other form to be attached to
any policy shall be delivered or issued for delivery in this state
by an insurer unless it has been filed with
the Commissioner and,
to the extent required by subdivision (1), subsection (b) of this
section, approved by the Commissioner, except that as to group
insurance policies delivered outside this state, only the group
certificates to be delivered or issued for delivery in this state
shall be filed for approval with the Commissioner. This section
shall does not apply to policies, riders, endorsements or forms of
unique character designed for and used with relation to insurance
upon a particular subject, or which relate to the manner of
distribution of benefits or to the reservation of rights and
benefits under life or accident and sickness insurance policies,
and are used at the request of the individual policyholder,
contract holder or certificate holder, nor to the surety bond forms.
(b) Every
such filing
shall be made specified in subsection (a) of this section shall be subject to the following:
(1) Forms for personal lines shall be filed not less than
sixty days in advance of any such delivery
At and at the expiration
of
such sixty days,
unless the period has been extended by the
Commissioner for the purpose of obtaining additional information
from the insurer, the form so filed
shall be deemed is considered
approved unless prior thereto it has been affirmatively approved or
disapproved by the Commissioner. Approval of any such form by the
Commissioner shall constitute a waiver of any unexpired portion of
such the waiting period.
The Commissioner may at any time, after
notice and for cause shown, withdraw any such approval.
(2) Forms for: (A) Commercial lines property and casualty
risks; and (B) any mass-marketed life and/or health insurance
policy offered to members of any association by the association
need not be approved by the Commissioner prior to use although the
Commissioner may at any time request information to ensure
compliance with applicable statutory provisions or to disapprove
form filings not in compliance with applicable statutory provisions
within the first thirty days after receipt of the form filing. If
the Commissioner does not disapprove the filing within the thirty-
day period, the form filing is effective upon first usage after
filing.
(c) Any order of the Commissioner disapproving any such form
or withdrawing a previous approval shall state the grounds
therefor.
(c) When a filing is not accompanied by the information upon which the insurer supports the filing and the Commissioner does not
have sufficient information to determine whether the filing meets
the requirements of this article, he or she shall require the
insurer to furnish the information upon which it supports the
filing and in the event the waiting period shall, with respect to
a filing involving personal lines risks, commence as of the date
the information is furnished: Provided, That the Commissioner may
request additional information after the initial sixty-day period
(with respect to personal lines) or thirty-day period (with respect
to commercial lines and mass-marketed life and/or health insurance
to associations) to ensure continuing compliance with applicable
statutory provisions and may at any time, after notice and for
cause shown, withdraw any approval or disapprove any filing:
Provided, however, That any disapproval by the Commissioner of any
form or withdrawal of a previous approval shall state the grounds
therefor.
(d) Any disapproval by the Commissioner or withdrawal of prior
approval is presumed to be prospective only and does not affect the
validity of forms already in use unless the Commissioner determines
that retroactive action is necessary after consideration of the
nature and extent of harm to the consumers if the forms in use are
permitted to remain in use, whether any violation of law by the
insurer was willful, and the costs to the insurer.
(d) (e) The Commissioner may, by order, exempt from the
requirements of this section for so long as he
or she deems
considers proper any insurance document or form or type thereof as specified in
such the order, to which, in his
or her opinion, this
section may not practicably be applied, or the filing and approval
of which are, in his
or her opinion, not desirable or necessary for
the protection of the public.
(e) (f) Notwithstanding any other provisions of this section,
any mass marketed life and/or health insurance policy offered to
members of any association by the association shall be exempt from
the provision requiring prior approval under this section:
Provided, That for For purposes of this section:
the association
shall
(1) An association must have a minimum of sixty-one members at
the outset of the issuance of the mass-marketed life and/or health
insurance policy and shall have been organized and maintained in
good faith for purposes other than that of obtaining or providing
insurance.
Provided, however, That the The association shall also
have been in active existence for at least two years and shall have
a constitution and bylaws which provide that: (i) The association
holds annual meetings to further purposes of its members; (ii)
except in the case of credit unions, the association collects dues
or solicits contributions from members; and (iii) the members have
voting privileges and representation on the governing board and
committees that exist under the authority of the association:
Provided, further, That upon written application by an association
and for good cause shown, the Commissioner may grant an exemption
to the association from the minimum member requirements of this
section.
(2) "Commercial lines" means insurance for business and
professional interests, except that it does not include medical
malpractice insurance.
(3) "Personal lines" means insurance for personal, family or
household needs.
(f) (g) This section shall apply also to any form used by
domestic insurers for delivery in a jurisdiction outside West
Virginia if the insurance supervisory official of
such the
jurisdiction informs the Commissioner that
such the form is not
subject to approval or disapproval by
such the official and upon
the Commissioner's order requiring the form to be submitted to him
or her for
the that purpose. The applicable same standards shall
apply to
such the forms as apply to forms for domestic use.
ARTICLE 16B. ACCIDENT AND SICKNESS RATES.
§33-16B-1. Filing and approval of accident and sickness rates.
Premium rate charges for any individual
or group accident and
sickness insurance policy,
or for any group accident and sickness
insurance policy issued pursuant to this chapter certificate or
other evidence of insurance issued, endorsed or delivered in this
state shall be filed with the Commissioner for a waiting period of
sixty days before
such these charges become effective. At the
expiration of
such the sixty days the premium rate charges so filed
shall be deemed are considered approved unless prior thereto the
charges have been affirmatively approved or disapproved by the
Commissioner.
The Commissioner shall disapprove accident and health insurance premium rates which are not in compliance with the
requirements of this chapter or any rule promulgated by the
Commissioner pursuant to section two of this article. The
Commissioner shall send written notice of
such the disapproval to
the insurer. The Commissioner may approve the premium rates before
the sixty-day period expires by giving written notice of approval.
§33-16B-3. Exceptions.
This article
shall does not apply to
policies issued to group
accident and health insurance plans upon which premiums are
negotiated with the
individual group policyholder and are
based on
the historic and projected loss experience of the group to be
insured experienced rated.
ARTICLE 17. FIRE AND MARINE INSURANCE.
§33-17-8. Filing of forms.
(a) No fire or marine policy, rider or endorsement to be
attached to any policy covering any risk located or to be performed
in West Virginia shall be delivered or issued for delivery in this
state unless
either that form is: (1) Filed with and approved by
the Commissioner;
or (2) conforms to applicable rules approved by
the Commissioner or is identical as to language to a policy, rider
or endorsement approved by the Commissioner;
or (3) qualifies under
subsection (c) of this section. If the use of any such form under
the provisions of clause (2) above by any insurer or by the members
and subscribers of any rating organization
shall be is so extensive
that in the opinion of the Commissioner the public interest requires, the Commissioner may require that
such the form be filed
with him
or her by
such the insurer or by
such the rating
organization on behalf of its members and subscribers.
(b) The procedure for filing and approval or disapproval of
forms under this section
shall be that is provided in
paragraphs
(b), (c), (d), and (e) of section eight,
of article six of this
chapter. Grounds for disapproval
shall be are those set forth in
section nine of said article.
Such These filings may be made on
behalf of any insurer by a rating organization licensed
as such
under the provisions of article twenty of this chapter. This
section
shall does not apply to ocean marine policies, riders or
endorsements, or to forms on specially rated inland marine risks.
(c) For commercial lines risks, a fire or marine policy, rider
or endorsement is subject to the provisions of section six, article
eight of this chapter governing other commercial lines form
filings.
§33-17-9. Total or partial fire loss.
(a) All insurers
issuing policies providing fire insurance on
real property
situate in West Virginia shall be liable, in case of
total loss by fire or otherwise, as stated in the policy, for the
whole amount of insurance stated in the policy, upon such real
property; and in case of partial loss by fire or otherwise, as
aforesaid, of the real property insured, the liability shall be for
the total amount of
such the partial loss, not to exceed the whole
amount of insurance upon
such the real property as stated in the
policy. This section
shall does not apply where such insurance has been procured from two or more insurers covering the same interest
in such real property.
(b) Notwithstanding the provisions of subsection (a) of this
section, if the policy contains a provision that requires the
insured to actually repair or replace the damaged or destroyed
structure in order to be indemnified for the cost of the repair or
replacement, the liability of the insurer shall be as prescribed by
the policy.
(c) The Commissioner may promulgate rules to implement the
provisions of this section.
ARTICLE 17A. PROPERTY INSURANCE DECLINATION, TERMINATION AND
DISCLOSURE.
§33-17A-4a. Alternative method for nonrenewal for property
insurance.
(a) On or after the first day of July, two thousand five, an
insurer may nonrenew a property insurance policy for any reason
that is consistent with its underwriting standards.
(b) Notwithstanding any other provisions in this section,
race, religion, nationality, ethnic group, age, sex, marital status
or other reason prohibited by the provisions of this chapter may
not be considered as a reason for nonrenewal.
(c) Notwithstanding the provisions of subsection (c), section
four of this article, a nonrenewal may only be issued pursuant to
the provisions of this section upon notice to the named insured at
least thirty days before the end of the policy period of the insurer's election not to renew the policy.
(d) Commencing the first day of July, two thousand five, the
total number of nonrenewal notices issued by the insurer each year
pursuant to this section that result in nonrenewals may not exceed
one percent per year of the total number of the policies of the
insurer in force at the end of the previous calendar year in this
state:
Provided, That the total number of such nonrenewal notices
issued each year to insureds within any given county in this state
that result in nonrenewals may not exceed one percent per year of
the total number of such policies in force in that county at the
end of the previous calendar year:
Provided, however, That an
insurer may nonrenew one policy per year in any county if the
applicable percentage limitation results in less than one policy.
(e) A notice issued pursuant to this section shall state the
specific reason or reasons for refusal to renew and shall advise
the named insured that nonrenewal of the policy for any reason is
subject to a hearing and review as provided in section seven of
this article:
Provided, That the hearing shall relate to whether
the nonrenewal of the policy was issued for a discriminatory
reason, was based upon inadequate notice, was based on an
underwriting standard found by the Commissioner to be in violation
of this chapter or causes the insurer to exceed the percentage
limitations, or percentage limitations by county, of nonrenewal
notices set forth in this section. Cost of the hearing shall be
assessed against the losing party but may not exceed seventy-five
dollars. The notice shall also advise the insured of possible eligibility for coverage through the West Virginia Essential
Property Insurance Association.
(f) Each insurer licensed to write property insurance policies
in this state shall file with the Commissioner a copy of its
underwriting standards, including any amendments or supplements.
The Commissioner shall review and examine the underwriting
standards to ensure that they are consistent with generally
accepted underwriting principles. The underwriting standards filed
with the Commissioner shall be considered confidential by law and
privileged, are exempt from disclosure pursuant to chapter twenty-
nine-b of this code, are not open to public inspection, are not
subject to subpoena, are not subject to discovery or admissible in
evidence in any criminal, civil or administrative action and are
not subject to production pursuant to court order. The
Commissioner shall promulgate legislative rules pursuant to chapter
twenty-nine-a of this code to implement the provisions of this
section.
(g) Each insurer that has elected to issue nonrenewal notices
pursuant to the percentage limitations provided in this section
shall report to the Commissioner, on a form prescribed by the
Commissioner, on or before the thirtieth day of September of each
year the total number of nonrenewal notices issued in this state
and in each county of this state for the preceding year and the
specific reason or reasons for the nonrenewals by county.
§33-17A-4b. Manner of making election relating to nonrenewals.
(a) Each insurer licensed to write property insurance policies in this state, as of the first day of July, two thousand five, may
elect to issue all nonrenewal notices either pursuant to subsection
(c), section four of this article or section four-a of this
article. Each insurer may notify the Commissioner of its election
on or before the first day of July, two thousand five, and shall
remain bound by the election for a period of five years. For each
subsequent five-year period, each insurer shall notify the
Commissioner of its election to issue all nonrenewal notices either
pursuant to subsection (c), section four of this article or section
four-a of this article. The failure of an insurer to notify the
Commissioner of its election by the first day of July, two thousand
five, will be considered to be an election by the insurer to issue
all nonrenewal notices pursuant to subsection (c), section four of
this article and the insurer will be bound by the election for a
period of five years.
(b) An insurer that is not licensed to write property
insurance policies in this state as of the first day of July, two
thousand five, but which becomes licensed to write such policies
after that date shall, no later than four years after the date the
insurer becomes licensed to write such policies, make an election
to issue all nonrenewal notices either pursuant to subsection (c),
section four of this article or section four-a of this article and
shall notify the Commissioner of its election. If the insurer
elects to issue all nonrenewal notices pursuant to section four-a
of this article, the total number of nonrenewals may not exceed the
percentage limitations set forth in said section. An insurer first becoming licensed to issue property insurance policies in this
state after the first day of July, two thousand five, shall be
bound by its election for a period of five years and for each
subsequent five-year period shall notify the Commissioner of its
election to issue all nonrenewal notices either pursuant to
subsection (c), section four of this article or section four-a of
this article.
(c) An insurer that elects to issue nonrenewals pursuant to
subsection (c), section four of this article may include as a
permitted reason for nonrenewal of a policy, in addition to the
reasons enumerated in section five of this article, two or more
paid claims under a policy within a period of thirty-six months,
each of which occurs after the first day of July, two thousand
five.
§33-17A-4c. Report to the Legislature.
By the first day of January, two thousand ten, the
Commissioner shall submit a report to the Legislature. The report
shall contain the following:
(1) An analysis of the impact of legislation enacted during
the two thousand five legislative session upon rates and insurance
availability in the state; and
(2) Statistics reflecting the rate history of insurers
conducting business in West Virginia from the first day of July,
two thousand five, until the first day of July, two thousand nine.
ARTICLE 20. RATES AND RATING ORGANIZATIONS.
§33-20-4. Rate filings.
(a) (1) Every insurer shall file with the Commissioner every
manual of classifications, territorial rate areas established
pursuant to subdivision (2), subsection (c), section three of this
article, rules and rates, every rating plan and every modification
of any of the foregoing which it proposes to use for casualty
insurance to which this article applies.
(2) Every insurer shall file with the Commissioner, except as
to inland marine risks which by general custom of the business are
not written according to manual rates or rating plans, every
manual, minimum, class rate, rating schedule or rating plan and
every other rating rule and every modification of any of the
foregoing which it proposes to use for fire and marine insurance to
which this article applies. Specific inland marine rates on risks
specially rated, made by a rating organization, shall be filed with
the Commissioner.
(b) Every such filing shall state the proposed effective date
thereof and shall indicate the character and extent of the coverage
contemplated. When a filing is not accompanied by the information
upon which the insurer supports such filing and the Commissioner
does not have sufficient information to determine whether
such
the filing meets the requirements of this article, he
or she shall
require
such the insurer to furnish the information upon which it
supports such filing and in
such the event the waiting period shall
commence as of the date
such the information is furnished. The
information furnished in support of a filing may include: (1) The
experience or judgment of the insurer or rating organization making the filing; (2) the experience or judgment of the insurer or rating
organization in the territorial rate areas established by
subdivision (2), subsection (c), section three of this article; (3)
its interpretation of any statistical data it relies upon; (4) the
experience of other insurers or rating organizations; or (5) any
other relevant factors. A filing and any supporting information
shall be is open to public inspection as soon as the filing is
received by the Commissioner. Any interested party may file a
brief with the Commissioner supporting his
or her position
concerning the filing. Any person or organization may file with
the Commissioner a signed statement declaring and supporting his
or
her or its position concerning the filing. Upon receipt of
such
the statement prior to the effective date of the filing, the
Commissioner shall mail or deliver a copy of
such the statement to
the filer, which may file
such a reply as it may desire to make.
This section
shall is not
be applicable to any memorandum or
statement of any kind by any employee of the Commissioner.
(c) An insurer may satisfy its obligation to make such filing
by becoming a member of, or a subscriber to, a licensed rating
organization which makes such filings and by authorizing the
Commissioner to accept such filings on its behalf:
Provided, That
nothing contained in this article shall be construed as requiring
any insurer to become a member of or a subscriber to any rating organization.
(d) The Commissioner shall review filings as soon as
reasonably possible after they have been made in order to determine
whether they meet the requirements of this article.(e) Subject to the exceptions specified in subsections (f),
and (g)
and (h) of this section, each filing shall be on file for
a waiting period of sixty days before it becomes effective. Upon
written application by such insurer or rating organization, the
Commissioner may authorize a filing which he
or she has reviewed to
become effective before the expiration of the waiting period. A
filing
shall be deemed is considered to meet the requirements of
this article unless disapproved by the Commissioner within the
waiting period.
(f) Any special filing with respect to a surety bond required
by law or by court or executive order or by order, rule or
regulation of a public body, not covered by a previous filing,
shall become effective when filed and
shall be deemed is
considered to meet the requirements of this article until
such time
as the Commissioner reviews the filing and so long thereafter as
the filing remains in effect.
(g) Specific inland marine rates on risks specially rated by
a rating organization shall become effective when filed and
shall
be deemed are considered to meet the requirements of this article
until
such time as the Commissioner reviews the filing and so long
thereafter as the filing remains in effect.
(h) Rates for commercial lines property and casualty risks
must be filed with the Commissioner and such filings need not be
approved by the Commissioner. The Commissioner may request
additional information to ensure compliance with applicable
statutory standards, but if the Commissioner does not disapprove the filing within the initial thirty-day period after receipt, the
rate filing will become effective upon first usage after filing:
Provided, That the Commissioner may at any time thereafter, after
notice and for cause shown, disapprove any rate filing.
(h) (i) Under such rules
and regulations as he
or she shall
adopt, the Commissioner may, by written order, suspend or modify
the requirement of filing as to any kind of insurance, subdivision
or combination thereof, or as to classes of risks, the rates for
which cannot practicably be filed before they are used.
Such These
orders
and rules
and regulations shall be made known to insurers
and rating organizations affected thereby. The Commissioner may
make
such an examination as he
or she may
deem consider advisable
to ascertain whether any rates affected by
such an order meet the
standards set forth in subsection (b), section three of this article.
(i) (j) Upon the written application of the insured, stating
his
or her reasons therefor, filed with and approved by the
Commissioner, a rate in excess of that provided by a filing
otherwise applicable may be used on any specific risks.
(j) (k) No insurer shall make or issue a contract or policy
except in accordance with the filings which are in effect for said
insurer as provided in this article.
or in accordance with
subsection (h) or (i) of this section. This subsection
shall does
not apply to contracts or policies for inland marine risks as to
which filings are not required.
(k) (l) In instances when an insurer files a request for an
increase of automobile liability insurance rates in the amount of fifteen percent or more, the Insurance Commissioner shall provide
notice of such increase with the office of the Secretary of State
to be filed in the state register and shall provide interested
persons the opportunity to comment on such request up to the time
the Commissioner approves or disapproves
such the rate increase.
(m) For purposes of this section, "commercial" means insurance
for business and professional interests.
_________
(NOTE: The purposes of this bill are to: (1) Amend the
insurance code to discontinue the use of the prior approval system
of rate and form filings for most commercial insurance line risks
and establish a file and use system, while reserving the right for
the Commissioner to request additional information or to disapprove
filings altogether if not meeting statutorily applicable
provisions; (2) provide an alternative method for the non-renewal
of homeowner's policies; and (3) provide a new method of assessing
insurer liability in situations of total or partial loss of real
property.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§§33-2-21, 33-17A-4a, 33-17A-4b and 33-17A-4c are new;
therefore, underscoring and strike-throughs have been omitted.