Senate Bill No. 538
(By Senators Rowe and Hunter)
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[Introduced February 16, 2004; referred to the Committee on
Banking and Insurance.]
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A BILL to amend and reenact §33-2-17 of the code of West Virginia,
1931, as amended; and to amend and reenact §33-20-3 of said
code, all relating to establishing the authority of the office
of consumer advocacy involving insurance matters over premium
rate increases as well as other consumer-related insurance
matters; and prohibiting premium rate setting on the basis of
an individual credit report.
Be it enacted by the Legislature of West Virginia:
That §33-2-17 of the code of West Virginia, 1931, as amended,
be amended and reenacted; and that §33-20-3 of said code be amended
and reenacted, all to read as follows:
ARTICLE 2. INSURANCE COMMISSIONER.
§33-2-17. Authority of office of consumer advocacy; retroactive
effect of authority prohibited.
(a) In addition to the authority established under the rules promulgated by the director, the office of consumer advocacy is
authorized to:
(1) Institute, intervene in, or otherwise participate in, as
an advocate for the public interest and the interests of insurance
consumers, proceedings in state and federal courts, before
administrative agencies, or before the health care cost review
authority, concerning applications or proceedings before the health
care cost review authority or the review of any act, failure to
act, or order of the health care cost review authority;
(2) At the request of one or more policyholders, or whenever
the public interest is served, to advocate the interests of those
policyholders in proceedings arising out of any filing made with
the insurance commissioner by any insurance company or relating to
any complaint alleging an unfair or deceptive act or practice in
the business of insurance, or involving any matter, including, but
not limited to, rate increases or policy exclusions proposed or
incorporated by any insurance company which relates to the issuance
or renewal of any casualty, liability, accident-related, life,
automobile, homeowner, rental, umbrella or other insurance
coverage;
(3) Institute, intervene in, or otherwise participate in, as
an advocate for the public interest and the interests of insurance
consumers, proceedings in state and federal courts, before
administrative agencies, or before the insurance commissioner, concerning applications or proceedings before the commissioner or
the review of any act, failure to act, or order of the insurance
commissioner;
(4) Review and compile information, data and studies of the
reasonable and customary rate schedules of health care providers,
and health insurers, for the purposes of reviewing, establishing,
investigating, or supporting any policy regarding health care
insurance rates;
(5) Exercise all the same rights and powers regarding
examination and cross-examination of witnesses, presentation of
evidence, rights of appeal and other matters as any party in
interest appearing before the insurance commissioner or the health
care cost review authority;
(6) Hire consultants, experts, lawyers, actuaries, economists,
statisticians, accountants, clerks, stenographers, support staff,
assistants, and other personnel necessary to carry out the
provisions of this section and sections sixteen and eighteen of
this article, which personnel shall be paid from special revenue
funds appropriated for the use of the office;
(7) Contract for the services of technically qualified persons
in the area of insurance matters to assist in the preparation and
presentation of matters before the courts, the insurance
commissioner, administrative agencies, or the health care cost
review authority, which persons shall be paid from special revenue funds appropriated for the use of the office;
(8) Make recommendations to the Legislature concerning
legislation to assist the office in the performance of its duties;
(9) Communicate and exchange data and information with other
federal or state agencies, divisions, departments, or officers, and
with other interested parties including, but not limited to, health
care providers, insurance companies, consumers or other interested
parties; and
(10) Perform other duties to effect the purposes of the
office.
(b) The provisions of this section do not apply to any filing
made by an insurance company, or act or order performed or issued
by the commissioner, or complaint filed by a policyholder with the
commissioner prior to the thirtieth day of June, one thousand nine
hundred ninety-one. All proceedings and orders in connection with
these prior matters shall be governed by the law in effect at the
time of the filing, or performance or issuance of the act or order.
(c) The scope of authority granted under this section and
section sixteen of this article is restricted to matters related to
health care costs and health insurance policies, subscriber
contracts issued by organizations under article twenty-four of this
chapter, health care corporations under article twenty-five of this
chapter, health maintenance organizations under article
twenty-five-a of this chapter, contracts supplemental to health insurance policies, and other matters related to health insurance
issues identified by rules of the commissioner promulgated under
section one of this article and chapter twenty-nine-a of this code.
§33-20-3. Rate making.
All rates shall be made in accordance with the following
provisions:
(a) Due consideration shall be given to past and prospective
loss experience within and outside this state, to catastrophe
hazards, if any, to a reasonable margin for underwriting profit and
contingencies, to dividends, savings or unabsorbed premium deposits
allowed or returned by insurers to their policyholders, members or
subscribers, to past and prospective expenses both countrywide and
those specially applicable to this state, and to all other relevant
factors within and outside this state.
(b) Rates shall not be excessive, inadequate or unfairly
discriminatory.
(c) Rates for casualty and surety insurance to which this
article applies shall also be subject to the following provisions:
(1) The systems of expense provisions included in the rates
for use by any insurer or group of insurers may differ from those
of other insurers or groups of insurers to reflect the requirements
of the operating methods of any such insurer or group with respect
to any kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate
expense provisions are applicable.
(2) Risks shall be grouped by classifications and by
territorial areas for the establishment of rates and minimum
premiums. Classification of rates shall be modified to produce
rates for individual risks in a territorial area in accordance with
rating plans which establish standards for measuring variations in
hazards or expense provisions, or both. Such standards may measure
any differences among risks that can be demonstrated to have a
probable effect upon losses or expenses: Provided, That such
standards shall include the establishment of at least seven
territorial rate areas within the state: Provided, further
however, That such territorial rate established by any insurer or
group of insurers may differ from those of other insurers or group
of insurers.
(3) Due consideration shall be given to such factors as
expense, management, individual experience, underwriting judgment,
degree or nature of hazard or any other reasonable considerations,
provided such factors apply to all risks under the same or
substantially the same circumstances or conditions.
(d) Rates for fire and marine insurance to which this article
applies shall also be subject to the following provisions:
(1) Manual, minimum, class rates, rating schedules or rating
plans shall be made and adopted, except in the case of specific inland marine rates on risks specially rated.
(2) Due consideration shall be given to the conflagration
hazard, and in the case of fire insurance rates consideration shall
be given to the experience of the fire insurance business during a
period of not less than the most recent five-year period for which
such experience is available.
(e) Except to the extent necessary to meet the provisions of
subdivisions (b) and (c) of this section, uniformity among insurers
in any matters within the scope of this section is neither required
nor prohibited.
(f) No premium rate may be set on the basis of a credit report
of the insured or members of the household of an insured.
(f) (g) Rates made in accordance with this section may be used
subject to the provisions of this article.
NOTE: The purpose of this bill is to establish the authority
of the insurance office of consumer advocacy over premium rate
increases as well as other consumer-related insurance matters,
while prohibiting premium rate setting on the basis of credit
reports.
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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