H. B. 3214
(By Delegates Staton and Walters)
[Introduced March 30, 2001; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact section four, article eleven, chapter
thirty-three of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, and to amend article eleven-
a of said chapter by adding thereto a new section,
designated section twelve-a, relating to structured
settlement annuities and other insurance contracts issued to
fund structured settlement annuities; prohibiting rebates
from commissions or other payments from an insurance company
issuing an annuity pursuant to a structured settlement
agreement settling a claim against an insured of a property
or casualty insurance company.
Be it enacted by the Legislature of West Virginia:
That article eleven-a, chapter thirty-three of the code of
West Virginia, one thousand nine hundred thirty-one, as amended,
be amended by adding thereto a new section, designated section
twelve-a, to read as follows:
ARTICLE 11. UNFAIR TRADE PRACTICES.
§33-11-4. Unfair methods of competition and unfair or deceptive
acts or practices defined.
The following are hereby defined as unfair methods of
competition and unfair or deceptive acts or practices in the
business of insurance:
(1) Misrepresentation and false advertising of insurance
policies. -- No person shall make, issue, circulate, or cause to
be made, issued or circulated, any estimate, circular, statement,
sales presentation, omission, or comparison which:
(a) Misrepresents the benefits, advantages, conditions or
terms of any insurance policy; or
(b) Misrepresents the dividends or share of the surplus to
be received on any insurance policy; or
(c) Make any false or misleading statements as to the
dividends or share of surplus previously paid on any insurance
policy; or
(d) Is misleading or is a misrepresentation as to the
financial condition of any person, or as to the legal reserve
system upon which any life insurer operates; or
(e) Uses any name or title of any insurance policy or class
of insurance policies misrepresenting the true nature thereof; or
(f) Is a misrepresentation for the purpose of inducing or
tending to induce the lapse, forfeiture, exchange, conversion or
surrender of any insurance policy; or
(g) Is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance
policy; or
(h) Misrepresents any insurance policy as being shares of
stock.
(2) False information and advertising generally. -- No
person shall make, publish, disseminate, circulate or place
before the public, or cause, directly or indirectly, to be made,
published, disseminated, circulated or placed before the public,
in a newspaper, magazine or other publication, or in the form of
a notice, circular, pamphlet, letter or poster or over any radio
or television station, or in any other way, an advertisement,
announcement or statement containing any assertion,
representation or statement with respect to the business of
insurance or with respect to any person in the conduct of his
insurance business, which is untrue, deceptive or misleading.
(3) Defamation. -- No person shall make, publish,
disseminate or circulate, directly or indirectly, or aid, abet or
encourage the making, publishing, disseminating or circulating of
any oral or written statement or any pamphlet, circular, article
or literature which is false, or maliciously critical of or
derogatory to the financial condition of any person and which is
calculated to injure such person.
(4) Boycott, coercion and intimidation. -- No person shall
enter into any agreement to commit, or by any concerted action
commit, any act of boycott, coercion or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly
in, the business of insurance.
(5) False statements and entries. -- (a) No person shall
knowingly file with any supervisory or other public official, or
knowingly make, publish, disseminate, circulate or deliver to any
person, or place before the public, or knowingly cause directly
or indirectly, to be made, published, disseminated, circulated,
delivered to any person or placed before the public, any false
material statement of fact as to the financial condition of a
person.
(b) No person shall knowingly make any false entry of a
material fact in any book, report or statement of any person or
knowingly omit to make a true entry of any material fact
pertaining to the business of such person in any book, report or
statement of such person.
(6) Stock operations and advisory board contracts. -- No
person shall issue or deliver or permit agents, officers or
employees to issue or deliver, agency company stock or other
capital stock, or benefit certificates or shares in any common-
law corporation, or securities or any special or advisory board
contracts or other contracts of any kind promising returns and
profits as an inducement to insurance.
(7) Unfair discrimination. -- (a) No person shall make or
permit any unfair discrimination between individuals of the same
class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity or in the dividends
or other benefits payable thereon, or in any other of the terms
and conditions of such contract.
(b) No person shall make or permit any unfair discrimination
between individuals of the same class and of essentially the same
hazard in the amount of premium policy fees, or rates charged for
any policy or contract of accident and sickness insurance or in
the benefits payable thereunder, or in any of the terms or
conditions of such contract, or in any other manner whatever.
(c) As to kinds of insurance other than life and accident
and sickness, no person shall make or permit any unfair
discrimination in favor of particular persons, or between
insureds or subjects of insurance having substantially like
insuring, risk and exposure factors or expense elements, in the
terms or conditions of any insurance contract, or in the rate or
amount of premium charge therefor. This paragraph shall not
apply as to any premium or premium rate in effect pursuant to
article twenty of this chapter.
(8) Rebates. -- (a) Except as otherwise expressly provided
by law, no person shall knowingly permit or offer to make or make
any contract of life insurance, life annuity, annuity or other
contract of insurance to fund a structured settlement, as defined
in section one, article six-h, chapter forty-six-a of this code,
or accident and sickness insurance, or agreement as to such
contract other than as plainly expressed in the insurance contract issued thereon, or pay or allow or give or offer to pay,
allow or give, directly or indirectly, as inducement to such
insurance or annuity, any rebate of premiums payable on the
contract, or any special favor or advantage in the dividends or
other benefits thereon, or any valuable consideration or
inducement whatever not specified in the contract; or give or
sell, or purchase or offer to give, sell or purchase as
inducement to such insurance contract or annuity or in connection
therewith, any stocks, bonds, or other securities of any
insurance company or other corporation, association, or
partnership, or any dividends or profits accrued thereon, or
anything of value whatsoever not specified in the contract.
(b) Nothing in subdivision seven or paragraph (a) of
subdivision eight of this section shall be construed as including
within the definition of unfair discrimination or rebates any of
the following practices:
(i) In the case of any contract of life insurance or life
annuity, paying bonuses to policyholders or otherwise abating
their premiums in whole or in part out of surplus accumulated
from nonparticipating insurance: Provided, That any such bonuses
or abatement of premiums shall be fair and equitable to
policyholders and for the best interests of the insurer and its
policyholders;
(ii) In the case of life insurance policies issued on the
industrial debit plan, making allowance to policyholders who have continuously for a specified period made premium payments
directly to an office of the insurer in an amount which fairly
represents the saving in collection expenses;
(iii) Readjustment of the rate of premium for a group
insurance policy based on the loss or expense thereunder, at the
end of the first or any subsequent policy year of insurance
thereunder, which may be made retroactive only for such policy
year;
(iv) Issuing life or accident and sickness policies on a
salary savings or payroll deduction plan at a reduced rate
commensurate with the savings made by the use of such plan.
(c) With respect to insurance other than life, accident and
sickness, ocean marine or marine protection and indemnity
insurance, no person shall knowingly charge, demand or receive a
premium for such insurance except in accordance with an
applicable filing on file with the commissioner. No such person
shall pay, allow or give, directly or indirectly, either as an
inducement to insurance or after insurance has been effected, any
rebate, discount, abatement, credit or reduction of the premium
named in a policy of insurance, or any special favor or advantage
in the dividends or other benefits to accrue thereon, or any
valuable consideration or inducement whatever, not specified in
the policy of insurance, except to the extent provided for in an
applicable filing. No insured named in a policy of insurance,
nor any relative, representative or employee of such insured shall knowingly receive or accept directly or indirectly, any
such rebate, discount, abatement, credit or reduction of premium,
or any such special favor or advantage or valuable consideration
or inducement. Nothing in this section shall be construed as
prohibiting the payment of commissions or other compensation to
duly licensed agents and brokers, nor as prohibiting any insurer
from allowing or returning to its participating policyholders,
members or subscribers, dividends, savings or unabsorbed premium
deposits. As used in this section the word "insurance" includes
suretyship and the word "policy" includes bond.
(9) Unfair claim settlement practices. -- No person shall
commit or perform with such frequency as to indicate a general
business practice any of the following:
(a) Misrepresenting pertinent facts or insurance policy
provisions relating to coverages at issue;
(b) Failing to acknowledge and act reasonably promptly upon
communications with respect to claims arising under insurance
policies;
(c) Failing to adopt and implement reasonable standards for
the prompt investigation of claims arising under insurance
policies;
(d) Refusing to pay claims without conducting a reasonable
investigation based upon all available information;
(e) Failing to affirm or deny coverage of claims within a
reasonable time after proof of loss statements have been completed;
(f) Not attempting in good faith to effectuate prompt, fair
and equitable settlements of claims in which liability has become
reasonably clear;
(g) Compelling insureds to institute litigation to recover
amounts due under an insurance policy by offering substantially
less than the amounts ultimately recovered in actions brought by
such insureds, when such insureds have made claims for amounts
reasonably similar to the amounts ultimately recovered;
(h) Attempting to settle a claim for less than the amount to
which a reasonable man would have believed he was entitled by
reference to written or printed advertising material accompanying
or made part of an application;
(i) Attempting to settle claims on the basis of an
application which was altered without notice to, or knowledge or
consent of the insured;
(j) Making claims payments to insureds or beneficiaries not
accompanied by a statement setting forth the coverage under which
payments are being made;
(k) Making known to insureds or claimants a policy of
appealing from arbitration awards in favor of insureds or
claimants for the purpose of compelling them to accept
settlements or compromises less than the amount awarded in
arbitration;
(l) Delaying the investigation or payment of claims by requiring an insured, claimant or the physician of either to
submit a preliminary claim report and then requiring the
subsequent submission of formal proof of loss forms, both of
which submissions contain substantially the same information;
(m) Failing to promptly settle claims, where liability has
become reasonably clear, under one portion of the insurance
policy coverage in order to influence settlements under other
portions of the insurance policy coverage;
(n) Failing to promptly provide a reasonable explanation of
the basis in the insurance policy in relation to the facts or
applicable law for denial of a claim or for the offer of a
compromise settlement.
(o) Failing to notify the first party claimant and the
provider(s) of services covered under accident and sickness
insurance and hospital and medical service corporation insurance
policies whether the claim has been accepted or denied and if
denied, the reasons therefor, within fifteen calendar days from
the filing of the proof of loss: Provided, That should benefits
due the claimant be assigned, notice to the claimant shall not be
required: Provided, however, That should the benefits be payable
directly to the claimant, notice to the health care provider
shall not be required. If the insurer needs more time to
investigate the claim, it shall so notify the first party
claimant in writing within fifteen calendar days from the date of
the initial notification and every thirty calendar days, thereafter; but in no instance shall a claim remain unsettled and
unpaid for more than ninety calendar days from the first party
claimant's filing of the proof of loss unless there is, as
determined by the insurance commissioner, (1) a legitimate
dispute as to coverage, liability or damages; or (2) if the
claimant has fraudulently caused or contributed to the loss. In
the event that the insurer fails to pay the claim in full within
ninety calendar days from the claimant's filing of the proof of
loss, except for exemptions provided above, there shall be
assessed against the insurer and paid to the insured a penalty
which will be in addition to the amount of the claim and assessed
as interest on such at the then current prime rate plus one
percent. Any penalty paid b y an
insurer pursuant to this section shall not be a consideration in
any rate filing made by such insurer.
(10) Failure to maintain complaint handling procedures. --
No insurer shall fail to maintain a complete record of all the
complaints which it has received since the date of its last
examination under section nine, article two of this chapter.
This record shall indicate the total number of complaints, their
classification by line of insurance, the nature of each
complaint, the disposition of these complaints and the time it
took to process each complaint. For purposes of this subsection,
"complaint" shall mean any written communication primarily
expressing a grievance.
(11) Misrepresentation in insurance applications. -- No
person shall make false or fraudulent statements or
representations on or relative to an application for an insurance
policy, for the purpose of obtaining a fee, commission, money or
other benefit from any insurer, agent, broker or individual.
Article 11A. INSURANCE SALES CONSUMER PROTECTION ACT.
§33-11A-12a. Structured settlement annuities.
A life insurance company or an agent, officer or employee
of a life insurance company are prohibited from making any
payment, rebate or other consideration to a property or casualty
insurance company, their parent entities, subordinates or
affiliates, or any agent, officer or employee of the same, in
consideration of or as a condition of the issuance of an annuity
or other contract of insurance issued to fund a structured
settlement or structured settlement payment. For purposes of
this section, the term "structured settlement" has the same
meaning as that term is defined in section one, article six-h,
chapter forty-six-a of this code.
Note: The purpose of this bill is to prohibit the payment
of rebates or other compensation to a property or casualty
insurance company from an insurance company issuing an annuity to
fund a structured settlement of a claim against the property or
casualty insurance company.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added. Section 33-11A-12a is new; therefore,
strike-throughs and underlining are omitted.
Email
Webmaster | © 2024 West Virginia Legislature **
