Senate Bill No. 363
(By Senator Wagner)
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[Introduced February 16, 1994;
referred to the Committee on Banking and Insurance.]
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A BILL to amend and reenact sections two, three, four, six and
seven, article sixteen-e, chapter thirty-three of the code
of West Virginia, one thousand nine hundred thirty-one, as
amended, relating to limited benefits accident and sickness
insurance policies and certificates.
Be it enacted by the Legislature of West Virginia:
That sections two, three, four, six and seven, article
sixteen-e, chapter thirty-three of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended and
reenacted 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 anyother applicable provision of this chapter. Such policies
include, but are not limited to, accident and sickness
disability, 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 or article sixteen-c
of this chapter; and
(5) Accident and sickness policies which provide benefits
for loss of income due to disability.
(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.
§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 shall be expected to return to
policyholders and certificateholders 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. and
(3) At least fifty-five percent of the earned premiums in
the case of an individual or group accident and sickness
disability policy or certificate.
(b) 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.
(c) 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 ninety-five, any insurer offering a limited
benefits policy or certificate in West Virginia shall make
premium refunds to policyholders and certificateholders if it
fails to return to such policyholders and certificateholders 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. and
(3) At least forty-five percent of the earned premiums in
the case of an individual or group accident and sickness
disability policy or certificate.
(b) With respect to a policy form or certificate form which
has been offered by an insurer either in West Virginia or
nationally for more than five years, refunds to West Virginia
policyholders or certificateholders 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.
(c) With respect to a policy form or certificate form which
has been offered by an insurer for more than five years, refunds
to West Virginia policyholders or certificateholders made
pursuant to the requirements of this section and based uponnational annual earned premium volume shall be calculated by:
(1) 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; 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 certificateholders
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.
(d) 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.
(e) Refunds shall be made to all West Virginia policyholders
and certificateholders 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 theexperience period for which a refund is determined to be due.
(f) Refunds of less than ten dollars shall be aggregated and
held by the insurer in a policyholders' and certificateholders'
liability fund and shall be used to offset any future rate
increases.
§33-16E-6. Notice of cancellation or nonrenewal.
No insurer may cancel or nonrenew a limited benefits policy
or certificate unless written notice of such cancellation or
nonrenewal is forwarded to the policyholder or certificateholder
not less than sixty days prior to the expiration date of the
policy or certificate, or in the case of nonpayment of premium
not less than thirty days prior to the expiration date of the
policy or certificate.
§33-16E-7. Prohibition against preexisting conditions, waiting
periods, elimination periods and probationary periods in
replacement policies or certificates.
(a) If a limited benefits policy or certificate replaces
another limited benefits policy or certificate providing similar
coverage, the replacing insurer shall waive any time periods
applicable to preexisting conditions, waiting periods,
elimination periods and probationary periods in the new limited
benefits policy or certificate for similar benefits or benefit
amounts to the extent that such time was spent under the original
policy or certificate. If a limited benefits policy or
certificate replaces another limited benefits policy or
certificate with greater benefits or benefit amounts, thisrestriction shall only apply to the extent the coverages are the
same, and not to any excess or greater coverage.
(b) If a limited benefits policy or certificate replaces
another limited benefits policy or certificate providing similar
coverage that has been in effect for at least six months, the
replacing policy may not provide any time periods applicable to
preexisting conditions, waiting periods, elimination periods and
probationary periods.
NOTE: The purpose of this bill is to clarify provisions
applicable to limited benefits accident and sickness insurance
policies and certificates.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.