ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 377
(Senator Wagner, original sponsor)
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[Passed March 9, 1995; in effect ninety days from passage.]
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AN ACT 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, all 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, all 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 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 of this chapter 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.
(d) "Annual loss ratio" is the ratio of earned premium
received by the insurer on a given form during the experience
period compared to the incurred losses paid out by the insurer on
the same form during the same experience period and expressed in
percentage of earned premiums paid out.
§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
certificate holders 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.
(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
policyholders 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.
(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.
(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 certificate holders if it
fails to return to such policyholders and certificate holders 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.
(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 policyholders
and certificate holders if it fails to return to such policyholders
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.
(c) With respect to a policy form or certificate form which
has been in force or offered by an insurer either in West Virginia
or nationally for more than five years, refunds to West Virginia
policyholders or certificate holders 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.
(d) With respect to a policy form or certificate form which
has been in force or offered by an insurer for more than five
years, refunds to West Virginia policyholders or certificate holders made pursuant to the requirements of this section and based
upon national annual earned premium volume shall be calculated by:
(1) Multiplying the 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 certificate holders
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.
(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.
(f) Refunds shall be made to all West Virginia policyholders
and certificate holders 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.
(g) Refunds of less than ten dollars shall be aggregated and
held by the insurer in a policyholders' and certificate holders'
liability fund and shall be used to offset any future rate
increases.