Senate Bill No. 503
(By Senators Minard, Kessler, Hunter, Rowe and Fanning)
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[Introduced February 5, 2002; referred to the Committee
on Banking and Insurance; and then to the Committee on Finance.]
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A BILL to amend chapter thirty-three of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article six-e, relating to
automobile insurance premiums; permissible surcharges;
multitiering practices; and requiring notice requirements.
Be it enacted by the Legislature of West Virginia:
That chapter thirty-three, as amended, be amended by adding
thereto a new article, designated article six-e, to read as
follows:
Article 6E. Permissible surcharges and multitier rate
classifications for automobile liability
policies; limitations; notice requirements,
insurer duties.
§33-6E-1. Definitions.
(1) "At-fault accident" means an accident involving the use of a motor vehicle, including unlawful parking, in which damages or
losses are incurred and which is chargeable to the named insured or
any other insured under the policy. In the event of comparative
negligence, an accident shall be considered at-fault if fifty
percent or more of the fault is assessed to the insured.
(2) "Commissioner" means the insurance commissioner for the
state of West Virginia.
(3) "Experience period" means thirty-six months from the day
immediately preceding the date of application of a surcharge.
(4) "Insured" means the named insured and any other person
insured under the policy.
(5) "Policy" or "insurance policy" means the contract
effecting insurance.
(6) "Surcharge" means the additional amount added to the usual
premium charge for
insurance issued
to an existing policyholder as
a result of
an event or occurrence which negatively affects the
driving record of an insured, including, but not limited to,
accidents, claims, citations
or convictions involving a motor
vehicle, and includes a change in premium which results from the
insured being moved from one pricing tier into the next higher
pricing tier or placed with a related company offering comparable
or lesser coverage at a premium price which exceeds the premium
price of the company from which the insured is to be moved.
§33-6E-2. Notice.
(1) An insurer that increases the premium or adds a surcharge
to a personal motor vehicle insurance policy shall give written
notice of the increase or surcharge to the insured at least twenty
days before the increase takes effect, stating the effective date
of the surcharge, the amount of the surcharge and the reasons for
the imposition of the surcharge. This subsection does not apply
to:
(a) A premium increase resulting from a change requested by an
insured, if the insured was notified at the time the request is
made that the amount of the insured's premium will change as a
result of the requested policy change; or
(b) Rate increases approved by the Commissioner.
§33-6E-3. Permissible surcharge assessments.
(1) Except as otherwise provided in this article, insurers may
assess a single surcharge as the result of an event or occurrence
which negatively affects the driving record of an insured as set
forth in subsection (6), section one of this article or as the
result of an event or occurrence for which the insured is legally
liable to pay a third party, provided, that insurers may only
assess a single surcharge as a result of an at-fault accident for
which a liability payment is made by the insurer in excess of a
dollar threshold amount of one thousand dollars: Provided, That no
surcharge which exceeds, pro rata over the experience period, the
amount of the claim paid or reserved by the insurer may be imposed for the first at-fault accident during an experience period against
a policy which has been in effect for five consecutive years or
more: Provided, however, That no surcharge may be imposed by the
insurer as a result of the conviction of an insured for only one
moving violation within any given three-year period, except an
insurer may impose one or more surcharges for any one violation for
an offense under West Virginia code article five, chapter
seventeen-c.
(2) Where an insurance policy insures more than one motor
vehicle or more than one insured, insurers may assess a surcharge
to the percentage of the policy premium attributable to the motor
vehicle or the insured to be surcharged in accordance with
subsection one of this section, but not both.
(3) Insurers may assess a surcharge which is in accordance
with this article for the maximum experience period as defined in
section one of this article.
§33-6E-4. Impermissible surcharge assessments.
(1) No insurer may impose any surcharge program which results
in an insured being both assessed a percentage charge or dollar
amount and placed in a higher pricing tier or placed with a related
company offering comparable or lesser coverage at a premium price
which exceeds the premium price of the tier or company from which
the insured is to be moved.
(2) No surcharge may be imposed against an insured under a policy for any claim, whether or not payment is made, by an insurer
arising from a not at-fault accident.
(3) No surcharge may be imposed against an insured under a
policy for an accident in which the insured is involved that
results in either no payment made by the insurer or that results in
payment made by the insurer which is equal to or less than one
thousand dollars in excess of the insured's deductible.
§33-6E-5. Limitation on scope of article.
The provisions of this article apply only to surcharging by
the insurer with regard to existing policyholders after the initial
underwriting decision has been made and to renewals of existing
policyholders. Nothing in this article shall be construed to limit
the initial underwriting decision made by an insurer prior to
initiating a contract of insurance with the insured.
NOTE: The purpose of this bill is to legislate the regulation
of insurance company surcharging and multitiering practices, which
will end the wide variation in tiering and surcharging among
insurers and require companies to provide their insureds with
notice and explanation as to intended surcharging.
This article is new; therefore, strike-throughs and
underscoring have been omitted.
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