WEST virginia legislature
2017 regular session
Introduced
House Bill 2439
By Delegates Westfall, White, B. and Frich
[Introduced February 14,
2017; Referred
to the Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §33-11-4 of the Code of West Virginia, 1931, as amended, relating to insurance and unfair claim settlement practices; and providing that. any civil or administrative action authorized or contemplated by this section may only be maintained against an insurer and not against any individual.
Be it enacted by the Legislature of West Virginia:
That §33-11-4 of the Code of West Virginia, 1931, as amended, be amended and reenacted to read as follows:
ARTICLE 11. UNFAIR TRADE PRACTICES.
§33-11-4. Unfair methods of competition and unfair or deceptive acts or practices defined.
The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance:
(1) Misrepresentation
and false advertising of insurance policies. -- No person shall may
make, issue, circulate, or cause to be made, issued or circulated, any
estimate, circular, statement, sales presentation, omission or comparison
which:
(a) Misrepresents the benefits, advantages, conditions or terms of any insurance policy; or
(b) Misrepresents the dividends or share of the surplus to be received on any insurance policy; or
(c) Makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy; or
(d) Is misleading or is a misrepresentation as to the financial condition of any person, or as to the legal reserve system upon which any life insurer operates; or
(e) Uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof; or
(f) Is a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion or surrender of any insurance policy; or
(g) Is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; or
(h) Misrepresents any insurance policy as being shares of stock.
(2) False information
and advertising generally. -- No person shall may make, publish,
disseminate, circulate or place before the public, or cause, directly or
indirectly, to be made, published, disseminated, circulated or placed before
the public, in a newspaper, magazine or other publication, or in the form of a
notice, circular, pamphlet, letter or poster or over any radio or television
station, or in any other way, an advertisement, announcement or statement
containing any assertion, representation or statement with respect to the
business of insurance or with respect to any person in the conduct of his or
her insurance business, which is untrue, deceptive or misleading.
(3) Defamation. --
No person shall may make, publish, disseminate or circulate,
directly or indirectly, or aid, abet or encourage the making, publishing,
disseminating or circulating of any oral or written statement or any pamphlet,
circular, article or literature which is false, or maliciously critical of or
derogatory to the financial condition of any person and which is calculated to
injure the person.
(4) Boycott, coercion
and intimidation. -- No person shall may enter into any
agreement to commit, or by any concerted action commit, any act of boycott,
coercion or intimidation resulting in or tending to result in unreasonable
restraint of, or monopoly in, the business of insurance.
(5) False statements and
entries. -- (a) No person shall may knowingly file with any
supervisory or other public official, or knowingly make, publish, disseminate,
circulate or deliver to any person, or place before the public, or knowingly
cause directly or indirectly, to be made, published, disseminated, circulated,
delivered to any person, or placed before the public, any false material
statement of fact as to the financial condition of a person.
(b) No person shall may
knowingly make any false entry of a material fact in any book, report or
statement of any person or knowingly omit to make a true entry of any material
fact pertaining to the business of any person in any book, report or statement
of such person.
(6) Stock operations and
advisory board contracts. -- No person shall may issue or
deliver or permit agents, officers or employees to issue or deliver, agency
company stock or other capital stock, or benefit certificates or shares in any
common-law corporation, or securities or any special or advisory board
contracts or other contracts of any kind promising returns and profits as an
inducement to insurance.
(7) Unfair
discrimination. -- (a) No person shall may make or permit any
unfair discrimination between individuals of the same class and equal
expectation of life in the rates charged for any contract of life insurance or
of life annuity or in the dividends or other benefits payable thereon, or in
any other of the terms and conditions of the contract.
(b) No person shall may
make or permit any unfair discrimination between individuals of the same class
and of essentially the same hazard in the amount of premium policy fees, or
rates charged for any policy or contract of accident and sickness insurance or
in the benefits payable thereunder, or in any of the terms or conditions of the
contract, or in any other manner whatever.
(c) As to kinds of
insurance other than life and accident and sickness, no person shall may
make or permit any unfair discrimination in favor of particular persons, or
between insureds or subjects of insurance having substantially like insuring,
risk and exposure factors or expense elements, in the terms or conditions of
any insurance contract, or in the rate or amount of premium charge therefor.
This paragraph shall does not apply to any premium or premium
rate in effect pursuant to article twenty of this chapter.
(8) Rebates. -- (a)
Except as otherwise expressly provided by law, no person shall may
knowingly permit or offer to make or make any contract of life insurance, life
annuity, or accident and sickness insurance, or agreement to any contract other
than as plainly expressed in the insurance contract issued thereon, or pay or
allow or give or offer to pay, allow or give, directly or indirectly, as inducement
to any insurance or annuity, any rebate of premiums payable on the contract, or
any special favor or advantage in the dividends or other benefits thereon, or
any valuable consideration or inducement whatever not specified in the
contract; or give or sell, or purchase or offer to give, sell or purchase as
inducement to any insurance contract or annuity or in connection therewith, any
stocks, bonds or other securities of any insurance company or other
corporation, association or partnership, or any dividends or profits accrued
thereon, or anything of value whatsoever not specified in the contract.
(b) Nothing in subdivision
(7) or paragraph (a) of subdivision (8) of this section shall may
be construed as including within the definition of unfair discrimination or
rebates any of the following practices:
(i) In the case of any contract of life insurance or life annuity, paying bonuses to policyholders or otherwise abating their premiums, in whole or in part, out of surplus accumulated from nonparticipating insurance: Provided, That any such bonuses or abatement of premiums shall be fair and equitable to policyholders and for the best interests of the insurer and its policyholders;
(ii) In the case of life insurance policies issued on the industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments directly to an office of the insurer in an amount which fairly represents the saving in collection expenses;
(iii) Readjustment of the rate of premium for a group insurance policy based on the loss or expense thereunder, at the end of the first or any subsequent policy year of insurance thereunder, which may be made retroactive only for such policy year;
(iv) Issuing life or accident and sickness policies on a salary savings or payroll deduction plan at a reduced rate commensurate with the savings made by the use of the plan.
(c) With respect to
insurance other than life, accident and sickness, ocean marine or marine
protection and indemnity insurance, no person shall may knowingly
charge, demand or receive a premium for the insurance except in accordance with
an applicable filing on file with the commissioner. No person shall may
pay, allow or give, directly or indirectly, either as an inducement to
insurance or after insurance has been effected, any rebate, discount,
abatement, credit or reduction of the premium named in a policy of insurance,
or any special favor or advantage in the dividends or other benefits to accrue
thereon, or any valuable consideration or inducement whatever, not specified in
the policy of insurance, except to the extent provided for in an applicable
filing. No insured named in a policy of insurance, nor any relative,
representative or employee of the insured shall may knowingly
receive or accept directly or indirectly, any rebate, discount, abatement,
credit or reduction of premium, or any special favor or advantage or valuable
consideration or inducement. Nothing in this section shall may be
construed as prohibiting the payment of commissions or other compensation to
duly licensed agents and brokers, nor as prohibiting any insurer from allowing
or returning to its participating policyholders, members or subscribers,
dividends, savings or unabsorbed premium deposits. As used in this section the
word "insurance" includes suretyship and the word "policy"
includes bond.
(9) Unfair claim
settlement practices. -- No person shall may commit or
perform with such frequency to indicate a general business practice any of the
following:
(a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
(b) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;
(c) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
(d) Refusing to pay claims without conducting a reasonable investigation based upon all available information;
(e) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
(f) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
(g) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered;
(h) Attempting to settle a claim for less than the amount to which a reasonable man would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application;
(i) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured;
(j) Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made;
(k) Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;
(l) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;
(m) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;
(n) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement;
(o) Failing to notify the
first party claimant and the provider(s) of services covered under accident and
sickness insurance and hospital and medical service corporation insurance
policies whether the claim has been accepted or denied and if denied, the
reasons therefor, within fifteen calendar days from the filing of the proof of
loss: Provided, That should benefits due the claimant be assigned,
notice to the claimant shall not be required: Provided, however, That
should the benefits be payable directly to the claimant, notice to the health
care provider shall not be required. If the insurer needs more time to
investigate the claim, it shall so notify the first party claimant in writing
within fifteen calendar days from the date of the initial notification and
every thirty calendar days, thereafter; but in no instance shall may
a claim remain unsettled and unpaid for more than ninety calendar days from the
first party claimant's filing of the proof of loss unless, as determined by the
Insurance Commissioner: (1) There is a legitimate dispute as to coverage, liability
or damages; or (2) the claimant has fraudulently caused or contributed to the
loss. In the event that If the insurer fails to pay the claim in
full within ninety calendar days from the claimant's filing of the proof of
loss, except for exemptions provided above, there shall be assessed against the
insurer and paid to the insured a penalty which will be in addition to the
amount of the claim and assessed as interest on the claim at the then current
prime rate plus one percent. Any penalty paid by an insurer pursuant to this
section shall may not be a consideration in any rate filing made
by the insurer.
(p) Notwithstanding any other provision of this code to the contrary, any civil or administrative action authorized or contemplated by this section, or seeking to address or recover for alleged violations of this section, may be brought or maintained only against an insurer and not against any individual.
(10) Failure to maintain
complaint handling procedures. -- No insurer shall may fail
to maintain a complete record of all the complaints which it has received since
the date of its last examination under section nine, article two of this
chapter. This record shall indicate the total number of complaints, their
classification by line of insurance, the nature of each complaint, the
disposition of these complaints, and the time it took to process each
complaint. For purposes of this subsection, "complaint" shall
means any written communication primarily expressing a grievance.
(11) Misrepresentation
in insurance applications. -- No person shall may make false
or fraudulent statements or representations on or relative to an application
for an insurance policy, for the purpose of obtaining a fee, commission, money
or other benefit from any insurer, agent, broker or individual.
(12) Failure to maintain
privacy of consumer financial and health information. -- Any licensee who
violates any provision of the commissioner's rule relating to the privacy of
consumer financial and health information shall be deemed is
considered to have violated the provisions of this article: Provided,
That any licensee who complies with the provisions of this subsection, a
commissioner's rule, or a court order shall may not be deemed
considered to be in violation of any other provisions of sections three
and four of this article by their compliance with this subsection, the rule or
court order. For purposes of this subsection, "licensee" means all
licensed insurers, producers and other persons licensed or required to be
licensed, or authorized or required to be authorized, or registered or required
to be registered pursuant to this chapter.
NOTE: The purpose of this bill is to prohibit civil or administrative actions for unfair claim settlement practices against individuals and to require that these actions may only be maintained against insurance companies.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.