COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 372
(By Senators Tomblin, Mr. President, and Boley,
By Request of the Executive)
____________
[Originating in the Committee on Banking and Insurance;
reported February 27, 1995.]
____________
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; to further amend said article by adding thereto
a new section, designated section one-b; and to amend and
reenact section three, article sixteen of said chapter,
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; deleting an optional
relation of earnings to insurance proviso; and revising
the continuation of benefits after termination on group policies.
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;
that said article be further amended by adding thereto a new
section, designated section one-b; and that section three,
article sixteen of said chapter be amended and reenacted, 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-
five, any insurer 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 a 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
(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 the conditions of renewability; and
(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
(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
(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, 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), 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."
(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, 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."
(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.
§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 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."
ARTICLE 16. GROUP ACCIDENT AND SICKNESS INSURANCE.
§33-16-3. Required policy provisions.
Each such policy hereafter delivered or issued for
delivery in this state shall contain in substance the following
provisions:
(a) A provision that the policy, the application of the
policyholder, a copy of which shall be attached to such policy,
and the individual applications, if any, submitted in
connection with such policy by the employees or members, shall
constitute the entire contract between the parties and that all
statements made by any applicant or applicants shall be deemed
representations and not warranties and that no such statement
shall void the insurance or reduce benefits thereunder unless
contained in a written application.
(b) A provision that the insurer will furnish to the
policyholder, for delivery to each employee or member of the
insured group, an individual certificate setting forth in
substance the essential features of the insurance coverage of
such employee or member and to whom benefits thereunder are
payable. If dependents are included in the coverage, only one
certificate need be issued for each family unit.
(c) A provision that all new employees or members, as the
case may be, in the groups or classes eligible for insurance,
shall from time to time be added to such groups or classes
eligible to obtain such insurance in accordance with the terms
of the policy.
(d) No provision relative to notice or proof of loss or
the time for paying benefits or the time within which suit may
be brought upon the policy shall be less favorable to the
insured than would be permitted in the case of an individual
policy by the provisions set forth in article fifteen of this
chapter.
(e) A provision that all members in groups or classes
eligible for insurance provided through an employee's group
plan shall be permitted to pay the premiums at the same group rate and receive the same coverages for a period not to exceed
thirty-six months when they are involuntarily or voluntarily
terminated from work: Provided, That the provisions of this
subsection do not apply to members who have been involuntarily
terminated from work for criminal activity.
(f) Such further provisions establishing group accident
and sickness minimum policy coverage standards as the
commissioner shall promulgate by rule pursuant to chapter
twenty-nine-a of this code.