Although we are only a little over a quarter of the way through this legislative year, the insurance industry has already seen some significant enacted bills that will impact P&C companies’ policies and procedures.
The Auto Front
Automobile insurance underwriting in Colorado will be changing soon with the enactment of HB 1289 on Apr. 12, 2012. With a projected effective date of Aug. 9, 2012, this bill substantially changes the procedures for a complaint (currently referred to as the “right of the insured to protest”) to be filed by an individual for specified adverse actions by an insurer. Existing detailed provisions for the right to protest, including requiring the policyholder to sign two copies of the notice and send them to the commissioner within 10 days after receipt of the notice, will be eliminated.
In its place is a simplified approach in which individuals will use a complaint process, providing similar rights available under the right to protest while making the process more flexible and streamlined for consumers and insurers. However, insurers must continue to advise policyholders of the right of the insured to file a complaint with the division of insurance regarding the action that is the subject of the notice.
Another state with a recent enactment affecting adverse actions is Idaho. HB 1268 has increased the upper limit of permitted deductibles when insurers are conditionally renewing automobile insurance policies. Effective July 1, 2012, the maximum deductible is $250 for comprehensive coverage, formerly $150, and $500 for collision or physical damage coverages, formerly $300.
Policies and Claims Practices
Addressing policy issuance, Virginia’s HB 133, effective July 1, 2012, provides for the posting of property and casualty insurance forms and endorsements that do not contain personally identifiable information to the insurer’s publicly available website.
Insurers opting for this process, instead of the more traditional methods of delivering policy forms and endorsement, must provide written notice at time of the issuance of the initial policy forms and any renewal forms of a method by which policyholders may obtain, upon request and without charge, a paper or electronic copy of their policy or contract. Similar notice requirements apply to insurers in communicating to policyholders when changes are made to the forms or endorsements and of the right to obtain, upon request and without charge, a paper or electronic copy.
Claims changes are also impacting insurers. Kentucky’s HB 207, signed into law on Apr. 11, requires insurers to provide a loss run statement to an insured or an insurer’s agent within 20 calendar days of receiving a written request submitted by the insured or the insurer’s agent. In turn, an insurer’s agent that receives such a loss run is to provide a copy of the loss run statement to the insured within five calendar days of receipt. Specifically, the loss run must be a five-year loss run history for the prior five years or a complete loss run history with the insurer if the history is less than five years. Penalties for failure to comply with these requirements are also included in HB 207.
This Kentucky bill also addresses steering in motor vehicle insurance claims. Effective July 1, 2012, insurers are required to inform a claimant upon notification of a motor vehicle damage claim that he or she has the right to choose the repair facility of his or her choice to repair a damaged vehicle. Additionally, all appraisals are required to include the following notice, printed in not less than 10-point boldfaced type: “NOTICE: UNDER KENTUCKY LAW, THE CONSUMER AND/OR LESSEE HAS THE RIGHT TO CHOOSE THE REPAIR FACILITY TO MAKE REPAIRS TO HIS OR HER MOTOR VEHICLE.”
We also have a statutory change which affects both underwriting and claim processes. Maryland’s HB 301 revises that state’s fraud warning as it no longer requires knowing and willful conduct as elements of the crime of insurance fraud. Effective Jan. 1, 2013, all applications for insurance and all claim forms, regardless of the form of transmission, are required to contain the following statement or a substantially similar statement:
“Any person who knowingly or willfully presents a false or fraudulent claim for payment of a loss or benefit or who knowingly or willfully presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison.”
The year is definitely still young, but the legislative developments requiring changes in the way insurers do business continue. As we move forward in 2012, many pending proposals are sure to be enacted with even more impacts on existing policies and procedures.