SB 209
Enacts provisions relating to group personal lines property and casualty insurance
Sponsor:
LR Number:
0162S.01I
Last Action:
2/23/2021 - Voted Do Pass S Insurance and Banking Committee
Journal Page:
Title:
Calendar Position:
Effective Date:
August 28, 2021

Current Bill Summary

SB 209 - This act enacts provisions relating to group personal lines property and casualty insurance.

The act specifies that no policy of group personal lines property and casualty insurance shall be issued or delivered in the state unless it conforms to one of the categories described in the act. (Section 379.1800.1)

The act describes policies issued to an employer or trustees of a fund established by an employer (Section 379.1800.1(1)), policies issued to a labor union or similar employee organization (Section 379.1800.1(2)), policies issued to a trust, or trustees of a fund, established by two or more employers or by one or more labor unions or similar employee organizations or by a combination thereof (Section 379.1800.1(3)), and policies issued to an association or to a trust, or trustees of a fund, established for the benefit of members of one or more associations. (Section 379.1800.1(4)). For each, the act specifies persons' eligibility for coverage under the policies, and the sources of funds from which the policy premiums may be paid. For policies issued for the benefit of an association or associations, the act further requires that the association or associations have at the outset least 100 members, have been organized and maintained in good faith for purposes other than obtaining insurance, and have been in active existence for at least 1 year. (Section 379.1800.1(4)). The association or associations' constitution and bylaws shall require that the association shall meet at least annually to further the purposes of the members, shall collect dues or solicit member contributions, and shall provide members with voting privileges and representation on the governing board and committees. (Section 379.1800.1(4)). Lastly, if compensation of any kind will be paid to the policyholder in connection with a group policy issued for the benefit of an association or associations, the insurer shall notify prospective insureds as required in the act. (Section 379.1800.1(4)(c)c)

Group personal lines property and casualty insurance issued to a group other than one described above shall meet additional requirements. (Section 379.1800.2). No such policy shall be issued or delivered in this state unless the Director of the Department of Commerce and Insurance finds that the issuance of the group policy is not contrary to the best interest of the public, would result in economies of acquisition or administration, and that the benefits are reasonable in relation to the premiums charged. (Section 379.1800.2(1)). No policy issued or delivered in another state shall offer coverage in this state unless the Director, or another state with comparable requirements, determines these additional requirements have been met. (Section 379.1800.2(2)). Premiums for these plans shall be paid from funds that are contributed by the policyholder, by covered persons, or by both. (Section 379.1800.2(3)). If compensation is to be paid to the policyholder in connection with the group policy, the insurer shall notify prospective insureds as specified in the act. (Section 379.1800.2(4)).

For all group personal lines property and casualty insurance, master policies shall be issued to the policyholders, and eligible employees or members insured under a master policy shall be issued certificates of coverage setting forth a statement as to the insurance protection to which they are entitled. (Section 379.1803.1). No master policy or certificate of insurance, nor any subsequent amendments to the policy forms, shall be issued or delivered in this state unless the forms and any amendments thereto have met the applicable filing requirements of this state. (Section 379.1803.2). The master policy shall set forth coverages, exclusions, and conditions of the insurance provided, together with the terms and conditions of the agreement between the policyholder and insurer, as provided in the act. (Section 379.1803.3). If the master policy provides for remittance of premiums by the policyholder, failure by the policyholder to remit premiums timely paid by an employee or member shall not be considered nonpayment of premium by the employee or member. (Section 379.1803.4).

The master policy shall provide a basic package of coverages and limits that are available to all eligible employees or members, including at least the minimum coverages and limits required in the employee's or member's state of residence or in the state where the subject property is located, and may offer additional coverages or limits to qualified employees or members for an increased premium. (Section 379.1806.1). The master policy shall provide coverage for all eligible employees or members who elect coverage during their initial period of eligibility, which may be up to 31 days. Employees or members who do not elect coverage during the initial period and later request coverage shall be subject to the insurer's underwriting standards. (Section 379.1806.2). Coverage under a master policy may be reduced only as to all members of a class, and shall never be reduced to a level below the limits required by applicable law. (Section 379.1806.3). Coverage under the master policy may be terminated as to an employee or member only for reasons specified in the act. (Section 379.1806.4). If optional coverages or limits are required by law to be available, the policyholder's acceptance or rejection of them on behalf of the group shall be binding on the employees or members. If the policyholder rejects any coverages or limits that are required by law to be provided unless rejected by the named insured, notice of the rejection shall be given to the employees or members upon or before delivery of their certificates of coverage. (Section 379.1806.5). The act prohibits the stacking of coverages or limits under a master policy, except that state law shall apply with regard to the stacking of coverages for separate certificates of coverage issued to relatives living in the same household. (Section 379.1806.6).

No master policy or certificate of insurance shall be issued or delivered in this state unless the rating plan and amendments thereto have met applicable filing requirements of this state. (Section 379.1809.1). Group insurance premium rates shall not be deemed to be unfairly discriminatory if adjusted to reflect past and prospective loss experience or group expense factors, or if averaged broadly among persons covered under the master policy. The rates likewise shall not be deemed unfairly discriminatory if they do not reflect individual rating factors including surcharges and discounts required for individual personal lines property and casualty policies. (Section 379.1809.2). Experience refunds or dividends may be paid to the policyholder of a group personal lines property and casualty policy if justified by the insurer's experience under that policy. However, if an experience refund or dividend is paid, it shall be applied for the sole benefit of the insured employees or members to the extent it exceeds the policyholder's contribution to premiums for the applicable period. (Section 379.1809.3).

An insurer issuing or delivering group personal lines property and casualty insurance shall maintain separate statistics as to the loss and expense experience pertinent thereto. (Section 379.1812.1). No insurer shall issue or deliver a policy if purchasing insurance is a condition of employment or membership in the group, or if any employee or member shall be penalized for nonparticipation. (Section 379.1812.2). The act prohibits insurers from issuing or delivering a policy if the purchase is contingent on purchase of other insurance, product, or services, or on the purchase of additional coverage under the policy, except as specified in the act. (Section 379.1812.3). The insurer's experience from the policies shall be included in the determination of its participation in residual market plans. (Section 379.1812.4). For purposes of premium taxes, the insurer shall allocate premiums in accordance with the rules for individual personal lines policies, except that the allocation may be based on an annual survey of the insureds. Premiums shall be apportioned among states without differentiation between the source of payment. (Section 379.1812.5)

The act requires persons acting as an insurance broker or agent in connection with the policies to be licensed in this state as an insurance producer, except as otherwise specified in the act (Section 379.1815.1), and provides that the signature of a licensed producer residing in this state shall not be required for issuance or delivery of a policy. (Section 379.1815.2).

Regarding termination of coverage, the act requires insurers to give 30 days written notice, as specified in the act, to persons whose coverage is being terminated for reasons other than by their own request or a failure to pay premiums. (Section 379.1818.1). The employee or member whose coverage is terminated shall be entitled to be issued a comparable individual policy if he or she applies and pays the first premium within 30 days of receiving the notice. (Section 379.1818.2). These notice and replacement policy provisions shall not apply if the master policy is replaced within 30 days. (Section 379.1818.3).

The act further requires insurers to be duly licensed, specifies that the act is not applicable to mass marketing of individual policies, excludes certain credit insurance, specifies that it does not apply or modify motor vehicle insurance, and provides that it shall not modify the authority of the Director with respect to consumer complaints or disputes. (Section 379.1821).

The provisions of this act shall take effect on January 1, 2022. A master policy or certificate of insurance that is lawfully in effect at that time shall comply with this act within 12 months of such date. (Section 379.1824).

This act is identical to SB 843 (2020), and similar to HB 2085 (2020), provisions in HB 1634 (2020), and provisions in HCS/SB 551 (2020).

ERIC VANDER WEERD

Amendments

No Amendments Found.