H. B. 4466


(By Delegate Beane)

[Introduced February 13, 2002; referred to the

Committee on Banking and Insurance then Finance.]





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 required notice requirements.

Be it enacted by the Legislature of West Virginia:
That chapter thirty-three of the code of West Virginia, one thousand nine hundred thirty-one, 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 (1) 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.