H. B. 2065
(By Delegate Cann)
[Introduced February 9, 2005; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend the code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §33-6E-1, §33-6E-2,
§33-6E-3, §33-6E-4 and §33-6E-5
, all 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 of the code of West Virginia, 1931,
as amended, be amended by adding thereto a new article, designated
§33-6E-1, §33-6E-2, §33-6E-3, §33-6E-4 and §33-6E-5
, all to read as
follows:
ARTICLE 6E. PERMISSIBLE SURCHARGE 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 in which damages or losses are incurred in excess
of two thousand five hundred dollars and which is chargeable to the
named insured or any other insured under the policy. In the event
of comparative negligence, an accident shall not be considered
at-fault if fifty percent or less of the fault is assessed to the
insured.
(2) "Commissioner" means the insurance commissioner for the
state of West Virginia.
(3) "Experience period" means twenty-four 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,
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.
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 sixty 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 two thousand five hundred dollars: Provided,
That no surcharge which exceeds, pro rata over the experience period, half 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 two-year period, except an insurer may impose one surcharge
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 two
thousand five hundred 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 provide for the
regulation of insurance company surcharging and multitiering
practices and to 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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