Senate Bill No. 377
(By Senator Wagner)
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[Introduced February 15, 1995; referred to the Committee
on Banking and Insurance.]
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A BILL to amend and reenact sections two, three and four, article
sixteen-e, chapter thirty-three of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
relating to excluding accident and sickness disability
insurance from the definition of limited benefits accident
and sickness insurance polices and certificates; and to
amend the refund requirements for limited benefits policies
and certificates.
Be it enacted by the Legislature of West Virginia:
That sections two, three and four, article sixteen-e,
chapter thirty-three of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, be amended and reenacted to
read as follows:
ARTICLE 16E. LIMITED BENEFITS ACCIDENT AND SICKNESS INSURANCE
POLICIES AND CERTIFICATES.
§33-16E-2. Definitions.
For purposes of this article:
(a) "Limited benefits policy or certificate" means any
individual or group accident and sickness insurance policy that
is not required to offer or provide all benefits mandated by any
other applicable provision of this chapter. Such policies
include, but are not limited to,
accident and sickness
disability, accident only, sickness only disability, sickness
only, accident only disability, hospital indemnity, specified
disease, and travel accident insurance policies:
Provided, That
the following types of policies and certificates are excluded
from the definition of "limited benefits policy or certificate"
for purposes of this article:
(1) Credit accident and sickness insurance;
(2) Long-term care insurance;
(3) Medicare supplement insurance; and
(4) Minimum benefits accident and sickness insurance issued
pursuant to section fifteen, article fifteen or article sixteen-c
of this chapter
.;
(5) Accident and sickness policies which provide benefits
for loss of income due to disability;
(6) Major medical policies;
(7) Dental policies; and
(8) Vision policies.
(b) "Experience period" means the period beginning on the
first day of the calendar year during which a premium rate first
takes effect and ending on the last day of the calendar year
during which the insurer earns five hundred thousand dollars in premiums on the form in West Virginia or, if the annual premium
earned on the form in West Virginia is less than five hundred
thousand dollars, earns nationally.
(c) "Successive experience period" means the experience
period beginning on the first day following the end of the
preceding experience period.
§33-16E-3. Premium rate increase requests; loss ratio
requirements.
(a) To be eligible to make a premium rate increase request
after the first day of July, one thousand nine hundred ninety-
three, any insurer offering a limited benefits policy form or
certificate form in West Virginia
which was not delivered or
issued for delivery in West Virginia prior to the effective date
of this article shall be expected to return to policyholders and
certificateholders in the form of five-year aggregate loss ratios
under the policy form or certificate form:
(1) At least seventy-five percent of the earned premiums in
the case of a group policy or certificate;
and
(2) At least sixty-five percent of the earned premiums in
the case of an individual policy
; and.
(3) At least fifty-five percent of the earned premiums in
the case of an individual or group accident and sickness
disability policy or certificate.
(b) To be eligible to make a premium rate increase request
after the first day of July, one thousand nine hundred ninety-
three, any insurer renewing a limited benefits policy form or certificate form which was in force in West Virginia on the
effective date of this article, shall be expected to return to
policy holders and certificate holders in the form of annual loss
ratios under the policy or certificate a percentage of the earned
premium which is equal to the anticipated loss ratio originally
filed with the insurance commissioner.
(b) (c) With respect to a policy form or certificate form
which has been offered by an insurer in West Virginia or
nationally for five years or less the insurer may use the
anticipated loss ratio filed with and approved by the
commissioner for that form to determine compliance with the
requirements of this section.
(c) (d) For purposes of this section, limited benefits
policies and certificates issued as a result of solicitation of
individuals through the mail or mass media advertising, including
both print and broadcast advertising, shall be treated as
individual policies.
§33-16E-4. Premium refunds; calculation of refunds; payments.
(a) Beginning on the first day of July, one thousand nine
hundred ninety-four, any insurer offering a limited benefits
policy or certificate
which was not delivered or issued for
delivery in West Virginia
prior to the effective date of this
article shall make premium refunds to policyholders and
certificateholders if it fails to return to such policyholders
and certificateholders in the form of annual loss ratios under
the policy or certificate:
(1) At least sixty-five percent of the earned premiums in
the case of a group policy or certificate;
and
(2) At least fifty-five percent of the earned premiums in
the case of an individual policy
; and .
(3) At least forty-five percent of the earned premiums in
the case of an individual or group accident and sickness
disability policy or certificate.
(b) Any insurer offering a limited benefits policy or
certificate which was in force in West Virginia on the effective
date of this article, shall make premiums refunds to policy
holders and certificate holders if it fails to return to such
policy holders and certificate holders in the form of annual loss
ratios under the policy or certificate a percentage of the earned
premium which is the anticipated loss ratio originally filed by
the insurer with the insurance commissioner less five percent.
(b) (c) With respect to a policy form or certificate form
which has been offered by an insurer either in West Virginia or
nationally for more than five years, refunds to West Virginia
policyholders or certificateholders made pursuant to the
requirements of this section and based upon annual earned premium
volume in West Virginia shall be calculated by multiplying the
anticipated loss ratio by the applicable earned premium during
the experience period and subtracting from that result the actual
incurred claims during the experience period.
(c) (d) With respect to a policy form or certificate form
which has been offered by an insurer for more than five years, refunds to West Virginia policyholders or certificateholders made
pursuant to the requirements of this section and based upon
national annual earned premium volume shall be calculated by:
(1) Multiplying the
anticipated mandated loss ratio by the
applicable earned premium during the experience period and
subtracting from that result the actual incurred claims during
the experience period; and
(2) Multiplying the results of subdivision (1) of this
subsection by the total earned premium during the experience
period from all West Virginia policyholders or certificateholders
eligible for refunds; and
(3) Dividing the results of subdivision (2) of this
subsection by the total earned premium during that period in all
states on the policy form.
(d) (e) With respect to a policy form or certificate form
which has been offered by an insurer in West Virginia or
nationally for five years or less, the insurer may use the
anticipated loss ratio filed with and approved by the
commissioner to determine the amount of premium refunds, if any,
that must be made pursuant to subsection (a) of this section.
(e) (f) Refunds shall be made to all West Virginia
policyholders and certificateholders who are insured under the
applicable policy form or certificate as of the last day of the
experience period. Such refund shall include interest, at the
current accident and health reserve interest rate established by
the national association of insurance commissioners, from the end of the experience period until the date of payment. Payment
shall be made during the third quarter of the year following the
experience period for which a refund is determined to be due.
(f) (g) Refunds of less than ten dollars shall be aggregated
and held by the insurer in a policyholders' and
certificateholders' liability fund and shall be used to offset
any future rate increases.
NOTE: The purpose of this bill is to exclude accident and
sickness disability insurance from the definition of limited
benefits accident and sickness insurance policies and
certificates and to amend the refund requirements for limited
benefits policies and certificates.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
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