COMMITTEE SUBSTITUTE
FOR
H. B. 2491
(By Mr. Speaker, Mr. Chambers, and Delegate Ashley)
[By Request of the Executive]
[Introduced February 15, 1995; referred to the
Committee on Banking and Insurance]
A BILL to amend and reenact sections one-a, two, four and five,
article fifteen, chapter thirty-three of the code of West
Virginia, one thousand nine hundred thirty-one, as amended;
and to further amend said article by adding thereto a new
section, designated section one-b, all relating to accident
and sickness insurance, requiring the guarantee of
renewability for individual accident and sickness policies,
establishing rate criteria for individual major medical
policies, and deleting an optional relation of earnings to
insurance proviso.
Be it enacted by the Legislature of West Virginia:
That sections one-a, two, four and five, article fifteen,
chapter thirty-three of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, be amended and reenacted; and that said article be further amended by adding thereto a new
section, designated section one-b, all to read as follows:
ARTICLE 15. ACCIDENT AND SICKNESS INSURANCE.
§33-15-1a. Premium rate increase requests; loss ratio
requirement.
To be eligible to make a premium rate increase request after
the first day of July, one thousand nine hundred ninety-four
ninety-five, any insurer issuing offering or which has in force
accident and sickness insurance policies which are subject to the
provisions of this article shall have a minimum anticipated loss
ratio of sixty-five percent as to such policy form. In calculating
its minimum anticipated loss ratio, an insurer shall include in its
actual incurred claims the amount of premium taxes for the same
experience period which are attributable to the policy forms
affected by this section and which were paid to the state of West
Virginia pursuant to the provisions of article three of this
chapter.
§33-15-1b. Rates, individual major medical policies.
(a) No individual major medical coverage policy may be
approved by the commissioner for use in this state unless:
(1) The premium rates for the policy, after adjustment for any
difference in policy benefits, which include, but are not limited
to, deductibles, copayments and levels of care management, do not exceed by more than thirty percent the premium rates charged by the
same insurer on any and all other individual major medical policies
for those individuals with similar characteristics and factors,
which the insurer has had approved by the commissioner within a
five-year period preceding the date of the new policy filing by the
insurer;
(2) The insurer files with the commissioner the opinion of a
qualified actuary or other person acceptable to the commissioner
which states:
(A) That the policy premium rate is in compliance with
subdivision (1) of this subsection; and
(B) That the anticipated loss ratio for the combined
experience of the policy taken together with all other individual
major medical coverage policies which the insurer has had approved
by the commissioner within a five-year period preceding the date of
the new policy filing is equal to or greater than the loss ratio
requirements set forth in section one-a of this article.
(3) For a period of three years after the effective date of
this section, an insurer may have one or more policy forms which
exceed the one hundred thirty percent requirement of subdivision
(2) of this subsection: Provided, That any rate schedule increase
for such policy form shall not exceed thirty-three and one-third percent of the rate schedule increase for the lowest rate policy
form. During the final twelve months of this three year period, an
insurer may request an extension of time for compliance from the
commissioner based on extenuating circumstances.
(b) An initial individual major medical policy form may be
disapproved by the commissioner if the commissioner determines that
the rates proposed by the insurer for the policy form are set at a
level substantially less than rates charged by other insurers for
comparable insurance coverage.
(c) Nothing contained in this section may be construed to
prevent the use of age, sex, area, industry, occupational, and
avocational factors in setting premium rates or to prevent the use
of different rates after approval by the commissioner for smokers
and nonsmokers or for any other habit or habits of an insured
person which have a statistically proven effect on the health of
the person. Nothing contained in this section shall preclude the
establishment of a substandard classification based upon the health
condition of the insured: Provided, That the initial
classification may not be changed adversely to the insured after
the initial issuance of the policy.
(d) The commissioner has the right, upon application by an
insurer, and for good cause shown, to grant relief from any requirement of this section.
§33-15-2. Scope and format of policy.
No policy of accident and sickness insurance shall be
delivered or issued for delivery to any person in this state
unless:
(a) The entire money and other considerations therefor are
expressed therein; and
(b) The time at which the insurance takes effect and
terminates is expressed therein; and
(c) It purports to insure only one person, except that a
policy may insure, originally or by subsequent amendment upon the
application of an adult member of a family who shall be deemed the
policyholder, any two or more eligible members of that family,
including husband, wife, dependent children or any children under
a specified age which shall not exceed nineteen years and any other
person dependent upon the policyholder; and
(d) The policy is guaranteed to be renewable by the insured
unless there is fraud, nonpayment of premium, or material
misrepresentation by the insured in the application for insurance
and the misrepresentation has been acted upon by the insurer within
two years from the date of the issuance of the policy.
Notwithstanding the foregoing an insurer may request the
commissioner to terminate coverage. If the commissioner does not approve a request for termination of coverage, then the insurer may
terminate the coverage but shall be prohibited from writing new
business on coverage of the type terminated in this state for a
period of five years from the date of notice to the commissioner.
The insurer shall provide notice to all affected policyholders and
the commissioner at least one hundred twenty days prior to renewal.
In the event of nonrenewal, the commissioner and the insurer shall
assist policyholders regardless of geographic area, in finding
appropriate coverage without imposition of preexisting coverage or
benefit restrictions, if already satisfied, of the form; and
(d) (e) The style, arrangement and over-all appearance of the
policy give no undue prominence to any portion of the text, and
unless every printed portion of the text of the policy and of any
endorsements or attached papers is plainly printed in light-faced
type of a style in general use, the size of which shall be uniform
and not less than ten-point with a lowercase unspaced alphabet
length not less than one hundred and twenty-point (the "text" shall
include all printed matter except the name and address of the
insurer, name or title of the policy, the brief description, if
any, and captions and subcaptions), the policy shall clearly
indicate on the first page its optionally renewable nature the
conditions of renewability; and
(e) (f) The exceptions and reductions of indemnity are set forth in the policy and, except those which are set forth in
sections four and five of this article, are printed, at the
insurer's option, either included with the benefit provisions to
which they apply, or under an appropriate caption such as
"Exceptions," or "Exceptions and Reductions": Provided, That if an
exception or reduction specifically applies only to a particular
benefit of the policy, a statement of such exception or reduction
shall be included with the benefit provision to which it applies;
and
(f) (g) Each such form, including riders and endorsements,
shall be identified by a form number in the lower left-hand corner
of the first part thereof; and
(g) (h) It contains no provision purporting to make any
portion of the charter, rules, Constitution, or bylaws of the
insurer a part of the policy unless such portion is set forth in
full in the policy, except in the case of the incorporation of, or
reference to, a statement of rates or classification of risks, or
short-rate table filed with the commissioner.
§33-15-4. Required policy provisions.
Except as provided in section six of this article, each such
policy delivered or issued for delivery to any person in this state
shall contain the provisions specified in this section in the words
in which the same appear in this section: Provided, however, That the insurer may, at its option, substitute for one or more of such
provisions corresponding provisions of different wording approved
by the commissioner which are in each instance not less favorable
in any respect to the insured or the beneficiary. Such provisions
shall be preceded individually by the caption appearing in this
section or, at the option of the insurer, by such appropriate
individual or group captions or subcaptions as the commissioner may
approve.
(a) A provision as follows:
"Entire Contract; Changes: This policy, including the
endorsements and the attached papers, if any, constitutes the
entire contract of insurance. No change in this policy shall be
valid until approved by an executive officer of the insurer and
unless such approval be endorsed hereon or attached hereto. No
agent has authority to change this policy or to waive any of its
provisions."
(b) A provision as follows:
"Time Limit on Certain Defenses: (1) After two years from the
date of issue of this policy no misstatements, except fraudulent
misstatements, made by the applicant in the application for such
policy shall be used to void the policy or to deny a claim for loss
incurred or disability (as defined in the policy) commencing after
the expiration of such two-year period."
The foregoing policy provision shall not be so construed as to
affect any legal requirement for avoidance of a policy or denial of
a claim during such initial two-year period, nor to limit the
application of subdivisions (a), (b), (c), (d) and (e) of section
five of this article in the event of misstatement with respect to
age or occupation or other insurance. A policy which the insured
has the right to continue in force subject to its terms by the
timely payment of premium (i) until at least age fifty, or (ii) in
the case of a policy issued after age forty-four, for at least five
years from its date of issue, may contain in lieu of the foregoing
the following provision (from which the clause in parentheses may
be omitted at the insurer's option) under the caption
"Incontestable" :
"After this policy has been in force for a period of two years
during the lifetime of the insured (excluding any period during
which the insured is disabled), it shall become incontestable as to
the statements contained in the application.
(2) No claim for loss incurred or disability (as defined in
the policy) commencing after two years from the date of issue of
this policy shall be reduced or denied on the ground that a disease
or physical condition not excluded from coverage by name or
specific description effective on the date of loss had existed
prior to the effective date of coverage of this policy."
(c) A provision as follows:
"Grace Period: A grace period of __________________ (insert
a number not less than `7' for weekly premium policies, `10' for
monthly premium policies and `31' for all other policies) days will
be granted for the payment of each premium falling due after the
first premium, during which grace period the policy shall continue
in force."
A policy in which the insurer reserves the right to refuse
renewal shall have at the beginning of the above provision, "Unless
not less than thirty days prior to the premium due date the insurer
has delivered to the insured or has mailed to his last address as
shown by the records of the insurer written notice of its intention
not to renew this policy beyond the period for which the premium
has been accepted. . . "
(d) A provision as follows:
"Reinstatement: If any renewal premium be not paid within the
time granted the insured for payment, as subsequent acceptance of
premium by the insurer or by any agent duly authorized by the
insurer to accept such premium, without requiring in connection
therewith an application for reinstatement, shall reinstate the
policy: Provided, however, That if the insurer or such agent
requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated
upon approval of such application by the insurer, or lacking such
approval, upon the forty-fifth day following the date of such
conditional receipt unless the insurer has previously notified the
insured in writing of its disapproval of such application. The
reinstated policy shall cover only loss resulting from such
accidental injury as may be sustained after the date of
reinstatement and loss due to such sickness as may begin more than
ten days after such date. In all other respects the insured and
insurer shall have the same rights thereunder as they had under the
policy immediately before the due date of the defaulted premium,
subject to any provisions endorsed hereon or attached hereto in
connection with the reinstatement." Any premium accepted in
connection with a reinstatement shall be applied to a period for
which premium has not been previously paid, but not to any period
more than sixty days prior to the date of reinstatement
The last sentence of the above provision may be omitted from
any policy which the insured has the right to continue in force
subject to its terms by the timely payment of premiums (1) until at
least age fifty, or, (2) in the case of a policy issued after age
forty-four, for at least five years from its date of issue.
(e) A provision as follows:
"Notice of Claim: Written notice of claim must be given to the insurer within twenty days after the occurrence or commencement
of any loss covered by the policy, or as soon thereafter as is
reasonably possible. Notice given by or on behalf of the insured
or the beneficiary to the insurer at ____________________ (insert
the location of such office as the insurer may designate for the
purpose), or to any authorized agent of the insurer, with
information sufficient to identify the insured, shall be deemed
notice to the insurer."
In a policy providing a loss-of-time benefit which may be
payable for at least two years, an insurer may at its option insert
the following between the first and second sentences of the above
provision:
"Subject to the qualifications set forth below, if the insured
suffers loss of time on account of disability for which indemnity
may be payable for at least two years, he shall, at least once in
every six months after having given notice of claim give to the
insurer notice of continuance of said disability, except in the
event of legal incapacity. The period of six months following any
filing of proof by the insured or any payment by the insurer on
account of such claim or any denial of liability, in whole or in
part, by the insurer shall be excluded in applying this provision.
Delay in the giving of such notice shall not impair the insured's
right to any indemnity which would otherwise have accrued during the period of six months preceding the date on which such notice is
actually given."
(f) A provision as follows:
"Claim Forms: The insurer, upon receipt of a notice of claim,
will furnish to the claimant such forms as are usually furnished by
it for filing proofs of loss. If such forms are not furnished
within fifteen days after the giving of such notice the claimant
shall be deemed to have complied with the requirements of this
policy as to proof of loss upon submitting, within the time fixed
in the policy for filing proofs of loss, written proof covering the
occurrence, the character and the extent of the loss for which
claim is made."
(g) A provision as follows:
"Proof of Loss: Written proof of loss must be furnished to
the insurer at its said office in case of claim for loss for which
this policy provides any periodic payment contingent upon
continuing loss within ninety days after the termination of the
period for which the insurer is liable and in case of claim for any
other loss within ninety days after the date of such loss. Failure
to furnish such proof within the time required shall not invalidate
nor reduce any claim if it was not reasonably possible to give
proof within such time, provided such proof is furnished as soon as
reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise
required."
(h) A provision as follows:
"Time of Payment of Claims: Indemnities payable under this
policy for any loss other than loss for which this policy provides
any periodic payment will be paid immediately upon receipt of due
written proof of such loss. Subject to due written proof of loss,
all accrued indemnities for loss for which this policy provides
periodic payment will be paid _____________ (insert period for
payment which must not be less frequently than monthly) and any
balance remaining unpaid upon the termination of liability will be
paid immediately upon receipt of due written proof."
(i) A provision as follows:
"Payment of Claims: Indemnity for loss of life will be
payable in accordance with the beneficiary designation and the
provisions respecting such payment which may be prescribed herein
and effective at the time of payment. If no such designation or
provision is then effective, such indemnity shall be payable to the
estate of the insured. Any other accrued indemnities unpaid at the
insured's death may, at the option of the insurer, be paid either
to such beneficiary or to such estate. All other indemnities will
be payable to the insured."
The following provisions, or either of them, may be included with the foregoing provisions at the option of the insurer:
"If any indemnity of this policy shall be payable to the
estate of the insured, or to an insured or beneficiary who is a
minor or otherwise not competent to give a valid release, the
insurer may pay such indemnity, up to an amount not exceeding
$_________ (insert an amount which shall not exceed one thousand
dollars), to any relative by blood or connection by marriage of the
insured or beneficiary who is deemed by the insurer to be equitably
entitled thereto. Any payment made by the insurer in good faith
pursuant to this provision shall fully discharge the insurer to the
extent of such payment."
"Subject to any written direction of the insured in the
application or otherwise all or a portion of any indemnities
provided by this policy on account of hospital nursing, medical, or
surgical services may, at the insurer's option and unless the
insured requests otherwise in writing not later than the time of
filing proofs of such loss, be paid directly to the hospital or
person rendering such services; but it is not required that the
service be rendered by a particular hospital or person."
(j) A provision as follows:
"Physical Examinations and Autopsy: The insurer at its own
expense shall have the right and opportunity to examine the person
of the insured when and as often as it may reasonably require during the pendency of a claim hereunder and to make an autopsy in
case of death where it is not forbidden by law."
(k) A provision as follows:
"Legal Actions: No action at law or in equity shall be
brought to recover on this policy prior to the expiration of sixty
days after written proof of loss has been furnished in accordance
with the requirements of this policy. No such action shall be
brought after the expiration of three years after the time written
proof of loss is required to be furnished."
(l) A provision as follows:
"Change of Beneficiary: Unless the insured makes an
irrevocable designation of beneficiary, the right to change of
beneficiary is reserved to the insured and the consent of the
beneficiary or beneficiaries shall not be requisite to surrender or
assignment of this policy or to any change of beneficiary or
beneficiaries, or to any other changes in this policy."
The first clause of this provision, relating to the
irrevocable designation of beneficiary, may be omitted at the
insurer's option.
(m) In addition each policy, except accident insurance only
policies, in which the insurer reserves the right to refuse renewal
on an individual basis shall provide, in substance, in a provision
thereof or in an endorsement thereon or in a rider attached thereto (entitled "Renewability" ), that subject to the right to terminate
the policy upon nonpayment of premiums when due, such right to
refuse renewal shall not be exercised before the renewal date
occurring on, or after and nearest, each anniversary, or in the
case of lapse and reinstatement at the renewal date occurring on,
or after and nearest, each anniversary of the last reinstatement,
and that any refusal of renewal shall be without prejudice to any
claim originating while the policy is in force.
§33-15-5. Optional policy provisions.
Except as provided in section six of this article, no such
policy delivered or issued for delivery to any person in this state
shall contain provisions respecting the matters set forth below
unless such provisions are in the words in which the same appear in
this section: Provided, That the insurer may, at its option, use
in lieu of any such provision a corresponding provision of
different wording approved by the commissioner which is not less
favorable in any respect to the insured or the beneficiary. Any
such provision contained in the policy shall be
preceded individually by the appropriate caption appearing in this
section or, at the option of the insurer, by such appropriate
individual or group captions or subcaptions as the commissioner may
approve.
(a) A provision as follows:
"Change of Occupation: If the insured be injured or contract
sickness after having changed his occupation to one classified by
the insurer as more hazardous than that stated in this policy or
while doing for compensation anything pertaining to an occupation
so classified, the insurer will pay only such portion of the
indemnities provided in this policy as the premium paid would have
purchased at the rates and within the limits fixed by the insurer
for such more hazardous occupation. If the insured changes his
occupation to one classified by the insurer as less hazardous than
that stated in this policy, the insurer, upon receipt of proof of
such change of occupation, will reduce the premium rate
accordingly, and will return the excess pro rata unearned premium
from the date of change of occupation or from the policy
anniversary date immediately preceding receipt of such proof,
whichever is the more recent. In applying this provision, the
classification of occupational risk and the premium rates shall be
such as have been last filed by the insurer prior to the occurrence
of the loss for which the insurer is liable or prior to date of
proof of change in occupation with the state official having
supervision of insurance in the state where the insured resided at
the time this policy was issued; but if such filing was not
required, then the classification of occupational risk and the
premium rates shall be those last made effective by the insurer in such state prior to the occurrence of the loss or prior to the date
of proof of change in occupation."
(b) A provision as follows:
"Misstatement of Age: If the age of the insured has been
misstated, all amounts payable under this policy shall be such as
the premium paid would have purchased at the correct age."
(c) A provision as follows:
"Other Insurance in This Insurer: If an accident or sickness
or accident and sickness policy or policies previously issued by
the insurer to the insured be in force concurrently herewith,
making the aggregate indemnity for ____________ (insert type of
coverage or coverages) in excess of $____________ (insert maximum
limit of indemnity or indemnities) the excess insurance shall be
void and all premiums paid for such excess shall be returned to the
insured or to his estate."
Or, in lieu thereof:
"Insurance effective at any one time on the insured under a
like policy or policies in this insurer is limited to the one such
policy elected by the insured, his beneficiary or his estate, as
the case may be, and the insurer will return all premiums paid for
all other such policies."
Provided that no policy hereafter issued for delivery in this
state which provides, with or without other benefits, for the payment of benefits or reimbursement for expenses with respect to
hospitalization, nursing care, medical or surgical examination or
treatment, or ambulance transportation shall contain any provision
for a reduction of such benefits or reimbursement, or any provision
for avoidance of the policy, on account of other insurance of such
nature carried by the same insured with the same or another
insurer.
(d) A provision as follows:
"Insurance with Other Insurers: If there be other valid
coverage, not with this insurer, providing benefits for the same
loss on other than an expense incurred basis and of which this
insurer has not been given written notice prior to the occurrence
or commencement of loss, the only liability for such benefits under
this policy shall be for such proportion of the indemnities
otherwise provided hereunder for such loss as the like indemnities
of which the insurer had notice (including the indemnities under
this policy) bear to the total amount of all like indemnities for
such loss, and for the return of such portion of the premium paid
as shall exceed the pro rata portion for the indemnities thus
determined."
The insurer may, at its option, include in this provision a
definition of "other valid coverage," approved as to form by the
commissioner, which definitions shall be limited in subject matter to coverage provided by organizations subject to regulations by
insurance law or by insurance authorities of this or any other
state of the United States or any province of Canada, and to any
other coverage the inclusion of which may be approved by the
commissioner. In the absence of such definition such term shall
not include group insurance, or benefits provided by union welfare
plans or by employer or employee benefit organizations. For the
purpose of applying the foregoing policy provisions with respect to
any insured any amount of benefit provided for such insured
pursuant to any compulsory benefit statute (including any workers'
compensation or employer's liability statute) whether provided by
a governmental agency or otherwise shall in all cases be deemed to
be "other valid coverage" of which the insurer has had notice. In
applying the foregoing policy provision no third party liability
coverage shall be included as "other valid coverage."
(e) A provision as follows:
"Relation of Earnings to Insurance: If the total monthly
amount of loss of time benefits promised for the same loss under
all valid loss of time coverage upon the insured, whether payable
on a weekly or monthly basis, shall exceed the monthly earnings of
the insured at the time disability commenced or his average monthly
earnings for the period of two years immediately preceding a
disability for which claim is made, whichever is the greater, the insurer will be liable only for such proportionate amount of such
benefits under this policy as the amount of such monthly earnings
or such average monthly earnings of the insured bears to the total
amount of monthly benefits for the same loss under all such
coverage upon the insured at the time such disability commences and
for the return of such part of the premiums paid during such two
years as shall exceed the pro rata amount of the premiums for the
benefits actually paid hereunder; but this shall not operate to
reduce the total monthly amount of benefits payable under all such
coverage upon the insured below the sum of two hundred dollars or
the sum of the monthly benefits specified in such coverages,
whichever is the lesser, nor shall it operate to reduce benefits
other than those payable for loss of time."
The foregoing policy provision may be inserted only in a
policy which the insured has the right to continue in force subject
to its terms by the timely payment of premiums (1) until at least
age fifty or, (2) in the case of a policy issued after age
forty-four, for at least five years from its date of issue. The
insurer may, at its option, include in this provision a definition
of "valid loss of time coverage," approved as to form by the
commissioner, which definition shall be limited in subject matter
to coverage provided by governmental agencies or by organizations
subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of
Canada, or to any other coverage the inclusion of which may be
approved by the commissioner or any combination of such coverages.
In the absence of such definition such term shall not include any
coverage provided for such insured pursuant to any compulsory
benefit statute (including any workers' compensation or employer's
liability statute), or benefits provided by union welfare plans or
by employer or employee benefit organizations.
(f) A provision as follows:
"Unpaid Premium: Upon the payment of a claim under this
policy, any premiums then due and unpaid or covered by any note or
written order may be deducted therefrom."
(g) A provision as follows:
"Return of Premium on Cancellation: If the insured cancels
this policy, the earned premium shall be computed by the use of the
short-rate table last filed with the state official having
supervision of insurance in the state where the insured resided
when the policy was issued. Cancellation shall be without
prejudice to any claim originating prior to the effective date of
cancellation."
(h) A provision as follows:
"Conformity with State Statutes: Any provision of this policy
which, on its effective date, is in conflict with the statutes of the state in which the insured resides on such date is hereby
amended to conform to the minimum requirements of such statutes."
(i) A provision as follows:
"Illegal Occupation: The insurer shall not be liable for any
loss to which a contributing cause was the insured's commission of
or attempt to commit a felony or to which a contributing cause was
the insured's being engaged in an illegal occupation."
(j) A provision as follows:
"Intoxicants and Narcotics: The insurer shall not be liable
for any loss sustained or contracted in consequence of the
insured's being intoxicated or under the influence of any narcotic
unless administered on the advice of a physician."